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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549




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FORM 10-Q

(Mark One)

|  |  |                                                                                         
|- |  | ----------------------------------------------------------------------------------------
|x |  | Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 
|  |  |                                                                                         
|  |  | For the quarterly period ended September 30, 2003 or                                    
|  |  |                                                                                         
|o |  | Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|  |  |                                                                                         
|  |  | For the transition period from
                 to                                      

Commission File Number 0-23639

PROVINCE HEALTHCARE COMPANY

(Exact Name of Registrant as Specified in Its Charter)


|                                                                                           |  |                                                
|------------------------------------------------------------------------------------------ |  | -----------------------------------------------
|Delaware
(State or Other Jurisdiction of
Incorporation or Organization)                    |  | 62-1710772
(I.R.S. Employer
Identification No.)
|                                                                                           |  |                                                
|105 Westwood Place
Suite 400
Brentwood, Tennessee
(Address of Principal Executive Offices) |  | 37027
(Zip Code)                               

(615) 370-1377
(Registrants Telephone Number, Including Area Code)

Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes x   No o

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act)
Yes x   No o

Indicate the number of shares outstanding of each of the issuers classes
of common stock, as of the latest practicable date.

|                                   |  |                                                  
|---------------------------------- |  | -------------------------------------------------
|Class
Common Stock, $.01 par value |  | Outstanding at November 1, 2003
48,729,834 shares





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TABLE OF CONTENTS



|                                       |                                                                                               |                                                             |  |  |  |  |  | 
|-------------------------------------- | --------------------------------------------------------------------------------------------- | ----------------------------------------------------------- |  |  |  |  |  | 
|PART I FINANCIAL INFORMATION          
|                                       | ITEM 1. FINANCIAL STATEMENTS                                                                 
|                                       |                                                                                               | CONDENSED CONSOLIDATED BALANCE SHEETS                      
|                                       |                                                                                               | CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)    
|                                       |                                                                                               | CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)    
|                                       |                                                                                               | CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
|                                       |                                                                                               | NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS       
|                                       | ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|                                       | ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                           
|                                       | ITEM 4. CONTROLS AND PROCEDURES                                                              
|PART II OTHER INFORMATION             
|                                       | Item 6. Exhibits and Reports on Form 8-K                                                     
|SIGNATURES                            
|EX-31.1  SECTION 302 CEO CERTIFICATION
|EX-31.2  SECTION 302 CFO CERTIFICATION
|EX-32.1  SECTION 906 CERTIFICATION    



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|                                                                                              |                                                                                               |  |    |   | 
|--------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------- |  | -- | - | 
|PART I
FINANCIAL INFORMATION                                                                 
|Item 1. Financial Statements (Unaudited)                                                      |                                                                                               |  |    |  
|                                                                                              | Condensed
Consolidated Balance SheetsSeptember 30, 2003 and December 31, 2002                 |  |    | 1 | 
|                                                                                              | Condensed
Consolidated Statements of Income
Three Months Ended September 30, 2003 and 2002    |  |    | 2 | 
|                                                                                              | Condensed
Consolidated Statements of Income
Nine Months Ended September 30, 2003 and 2002     |  |    | 3 | 
|                                                                                              | Condensed
Consolidated Statements of Cash Flows
Nine Months Ended September 30, 2003 and 2002 |  |    | 4 | 
|                                                                                              | Notes to Condensed Consolidated Financial Statements                                          |  |    | 5 | 
|Item 2. Managements Discussion and Analysis of Financial Condition
And Results of Operations |                                                                                               |  | 12 |  
|Item 3. Quantitative and Qualitative Disclosures About
Market Risk                            |                                                                                               |  | 23 |  
|Item 4. Controls and Procedures                                                               |                                                                                               |  | 23 |  
|PART II
OTHER INFORMATION                                                                    
|Item 6. Exhibits and Reports on Form 8-K                                                      |                                                                                               |  | 24 |  
|Signatures                                                                                    |                                                                                               |  | 26 |  





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##### Table of Contents









ITEM 1. FINANCIAL STATEMENTS

PROVINCE HEALTHCARE COMPANY AND SUBSIDIARIES




CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except per share amounts)


|                                     |                                                                                                                                                                                                                                     |                            |           |               |         |              |         |         |         | 
|------------------------------------ | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------- | --------- | ------------- | ------- | ------------ | ------- | ------- | ------- | 
|                                     |                                                                                                                                                                                                                                     |                            |           | September 30, |         | December 31,
|                                     |                                                                                                                                                                                                                                     |                            |           | 2003          |         | 2002        
|                                     |                                                                                                                                                                                                                                     |                            |           |               |         |             
|                                     |                                                                                                                                                                                                                                     |                            |           | (Unaudited)   |         | (Note 1)    
|ASSETS                               |                                                                                                                                                                                                                                     |                            |           |               |         |              |         |        
|Current assets:                      |                                                                                                                                                                                                                                     |                            |           |               |         |              |         |        
|                                     | Cash and cash equivalents                                                                                                                                                                                                           |                            | $         | 38,804        |         |              | $       | 14,417  |        
|                                     | Accounts receivable, less allowance for doubtful accounts
of $62,173 in 2003 and $68,158 in 2002                                                                                                                                    |                            |           | 114,378       |         |              |         | 117,431 |        
|                                     | Inventories                                                                                                                                                                                                                         |                            |           | 19,131        |         |              |         | 19,835  |        
|                                     | Prepaid expenses and other                                                                                                                                                                                                          |                            |           | 15,710        |         |              |         | 14,071  |        
|                                     |                                                                                                                                                                                                                                     |                            |           |               |         |              |         |        
|                                     |                                                                                                                                                                                                                                     |                            | 188,023   |               |         |              | 165,754 |        
|Property and equipment, net          |                                                                                                                                                                                                                                     |                            | 463,949   |               |         |              | 447,379 |        
|Goodwill                             |                                                                                                                                                                                                                                     |                            | 318,014   |               |         |              | 319,390 |        
|Unallocated purchase price           |                                                                                                                                                                                                                                     |                            | 3,247     |               |         |              | 466     |        
|Other assets                         |                                                                                                                                                                                                                                     |                            | 40,435    |               |         |              | 38,722  |        
|                                     |                                                                                                                                                                                                                                     |                            |           |               |         |              |         |        
|                                     |                                                                                                                                                                                                                                     | $                          | 1,013,668 |               |         | $            | 971,711 |        
|                                     |                                                                                                                                                                                                                                     |                            |           |               |         |              |         |        
|LIABILITIES AND STOCKHOLDERS EQUITY |                                                                                                                                                                                                                                     |                            |           |               |         |              |         |        
|Current liabilities:                 |                                                                                                                                                                                                                                     |                            |           |               |         |              |         |        
|                                     | Accounts payable                                                                                                                                                                                                                    |                            | $         | 17,680        |         |              | $       | 20,162  |        
|                                     | Accrued salaries and benefits                                                                                                                                                                                                       |                            |           | 25,903        |         |              |         | 25,380  |        
|                                     | Accrued expenses                                                                                                                                                                                                                    |                            |           | 25,701        |         |              |         | 13,198  |        
|                                     | Current portion of long-term debt                                                                                                                                                                                                   |                            |           | 1,724         |         |              |         | 1,668   |        
|                                     |                                                                                                                                                                                                                                     |                            |           |               |         |              |         |        
|                                     |                                                                                                                                                                                                                                     |                            | 71,008    |               |         |              | 60,408  |        
|Long-term debt, less current portion |                                                                                                                                                                                                                                     |                            | 451,546   |               |         |              | 461,576 |        
|Other liabilities                    |                                                                                                                                                                                                                                     |                            | 44,577    |               |         |              | 33,913  |        
|Minority interests                   |                                                                                                                                                                                                                                     |                            | 2,726     |               |         |              | 2,612   |        
|                                    
|Commitments and Contingencies        |                                                                                                                                                                                                                                     |                            |          |               |         |              |        |        
|                                    
|Stockholders equity:                |                                                                                                                                                                                                                                     |                            |           |               |         |              |         |        
|                                     | Preferred stock  $0.01 par value, 100,000 shares
authorized, none issued and outstanding                                                                                                                                           |                            |           |              |         |              |         |        |        
|                                     | Common stock  $0.01 par value; 150,000,000 shares
authorized at September 30, 2003 and December 31, 2002,
issued and outstanding 48,734,607 shares
and 48,581,549 shares at September 30, 2003 and
December 31, 2002, respectively |                            |           | 487           |         |              |         | 486     |        
|                                     | Additional paid-in-capital                                                                                                                                                                                                          |                            |           | 305,457       |         |              |         | 304,102 |        
|                                     | Retained earnings                                                                                                                                                                                                                   |                            |           | 138,886       |         |              |         | 109,567 |        
|                                     | Accumulated other comprehensive loss                                                                                                                                                                                                |                            |           | (1,019        | )       |              |         | (953    | )      
|                                     |                                                                                                                                                                                                                                     |                            |           |               |         |              |         |        
|                                     |                                                                                                                                                                                                                                     | Total stockholders equity |           |               | 443,811 |              |         |         | 413,202 | 
|                                     |                                                                                                                                                                                                                                     |                            |           |               |         |              |         |        
|                                     |                                                                                                                                                                                                                                     | $                          | 1,013,668 |               |         | $            | 971,711 |        
|                                     |                                                                                                                                                                                                                                     |                            |           |               |         |              |         |        

See accompanying notes

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PROVINCE HEALTHCARE COMPANY AND SUBSIDIARIES




CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

(In thousands, except per share data)


|                                         |                                      |                       |        |                                  |         |      |        |         |         | 
|---------------------------------------- | ------------------------------------ | --------------------- | ------ | -------------------------------- | ------- | ---- | ------ | ------- | ------- | 
|                                         |                                      |                       |        | Three Months Ended September 30,
|                                         |                                      |                       |        |                                 
|                                         |                                      |                       |        | 2003                             |         | 2002
|                                         |                                      |                       |        |                                  |         |     
|Revenue:                                 |                                      |                       |        |                                  |         |      |        |        
|                                         | Net patient service revenue          |                       | $      | 189,091                          |         |      | $      | 178,111 |        
|                                         | Other                                |                       |        | 6,338                            |         |      |        | 5,851   |        
|                                         |                                      |                       |        |                                  |         |      |        |        
|                                         |                                      | Net operating revenue |        |                                  | 195,429 |      |        |         | 183,962 | 
|                                        
|Expenses:                                |                                      |                       |        |                                  |         |      |        |        
|                                         | Salaries, wages and benefits         |                       |        | 71,109                           |         |      |        | 72,115  |        
|                                         | Purchased services                   |                       |        | 18,038                           |         |      |        | 19,305  |        
|                                         | Supplies                             |                       |        | 24,738                           |         |      |        | 23,396  |        
|                                         | Provision for doubtful accounts      |                       |        | 20,008                           |         |      |        | 14,042  |        
|                                         | Other operating expenses             |                       |        | 25,827                           |         |      |        | 21,576  |        
|                                         | Rentals and leases                   |                       |        | 2,385                            |         |      |        | 2,165   |        
|                                         | Depreciation and amortization        |                       |        | 9,738                            |         |      |        | 9,419   |        
|                                         | Interest expense                     |                       |        | 7,097                            |         |      |        | 6,218   |        
|                                         | Minority interests                   |                       |        | 52                               |         |      |        | 16      |        
|                                         | Loss on sale of assets               |                       |        | 82                               |         |      |        |        |        
|                                         | Loss on early extinguishment of debt |                       |        | 10                               |         |      |        |        |        
|                                         |                                      |                       |        |                                  |         |      |        |        
|                                         |                                      | Total expenses        |        |                                  | 179,084 |      |        |         | 168,252 | 
|                                         |                                      |                       |        |                                  |         |      |        |        
|Income before provision for income taxes |                                      |                       | 16,345 |                                  |         |      | 15,710 |        
|Income taxes                             |                                      |                       | 6,538  |                                  |         |      | 6,284  |        
|                                         |                                      |                       |        |                                  |         |      |        |        
|Net income                               |                                      | $                     | 9,807  |                                  |         | $    | 9,426  |        
|                                         |                                      |                       |        |                                  |         |      |        |        
|Net income per common share (Note 7):    |                                      |                       |        |                                  |         |      |        |        
|                                         | Basic                                |                       | $      | 0.20                             |         |      | $      | 0.19    |        
|                                         |                                      |                       |        |                                  |         |      |        |        
|                                         | Diluted                              |                       | $      | 0.20                             |         |      | $      | 0.19    |        
|                                         |                                      |                       |        |                                  |         |      |        |        

See accompanying notes

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PROVINCE HEALTHCARE COMPANY AND SUBSIDIARIES




CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

(In thousands, except per share data)


|                                         |                                      |                       |        |                                 |         |      |        |         |         | 
|---------------------------------------- | ------------------------------------ | --------------------- | ------ | ------------------------------- | ------- | ---- | ------ | ------- | ------- | 
|                                         |                                      |                       |        | Nine Months Ended September 30,
|                                         |                                      |                       |        |                                
|                                         |                                      |                       |        | 2003                            |         | 2002
|                                         |                                      |                       |        |                                 |         |     
|Revenue:                                 |                                      |                       |        |                                 |         |      |        |        
|                                         | Net patient service revenue          |                       | $      | 566,298                         |         |      | $      | 506,125 |        
|                                         | Other                                |                       |        | 19,344                          |         |      |        | 17,438  |        
|                                         |                                      |                       |        |                                 |         |      |        |        
|                                         |                                      | Net operating revenue |        |                                 | 585,642 |      |        |         | 523,563 | 
|                                        
|Expenses:                                |                                      |                       |        |                                 |         |      |        |        
|                                         | Salaries, wages and benefits         |                       |        | 221,379                         |         |      |        | 201,743 |        
|                                         | Purchased services                   |                       |        | 54,699                          |         |      |        | 54,605  |        
|                                         | Supplies                             |                       |        | 73,344                          |         |      |        | 63,606  |        
|                                         | Provision for doubtful accounts      |                       |        | 54,991                          |         |      |        | 41,533  |        
|                                         | Other operating expenses             |                       |        | 76,120                          |         |      |        | 60,275  |        
|                                         | Rentals and leases                   |                       |        | 7,241                           |         |      |        | 6,518   |        
|                                         | Depreciation and amortization        |                       |        | 28,515                          |         |      |        | 25,751  |        
|                                         | Interest expense                     |                       |        | 19,716                          |         |      |        | 15,959  |        
|                                         | Minority interests                   |                       |        | 201                             |         |      |        | 72      |        
|                                         | Loss on sale of assets               |                       |        | 85                              |         |      |        | 53      |        
|                                         | Loss on early extinguishment of debt |                       |        | 486                             |         |      |        |        |        
|                                         |                                      |                       |        |                                 |         |      |        |        
|                                         |                                      | Total expenses        |        |                                 | 536,777 |      |        |         | 470,115 | 
|                                         |                                      |                       |        |                                 |         |      |        |        
|Income before provision for income taxes |                                      |                       | 48,865 |                                 |         |      | 53,448 |        
|Income taxes                             |                                      |                       | 19,546 |                                 |         |      | 21,379 |        
|                                         |                                      |                       |        |                                 |         |      |        |        
|Net income                               |                                      | $                     | 29,319 |                                 |         | $    | 32,069 |        
|                                         |                                      |                       |        |                                 |         |      |        |        
|Net income per common share (Note 7):    |                                      |                       |        |                                 |         |      |        |        
|                                         | Basic                                |                       | $      | 0.60                            |         |      | $      | 0.67    |        
|                                         |                                      |                       |        |                                 |         |      |        |        
|                                         | Diluted                              |                       | $      | 0.60                            |         |      | $      | 0.64    |        
|                                         |                                      |                       |        |                                 |         |      |        |        

See accompanying notes

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PROVINCE HEALTHCARE COMPANY AND SUBSIDIARIES




CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(In thousands)


|                                                 |                                                                                   |                                                                                              |                                       |          |                                 |        |         |          |        |        |  
|------------------------------------------------ | --------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------- | ------------------------------------- | -------- | ------------------------------- | ------ | ------- | -------- | ------ | ------ | -
|                                                 |                                                                                   |                                                                                              |                                       |          | Nine Months Ended September 30,
|                                                 |                                                                                   |                                                                                              |                                       |          |                                
|                                                 |                                                                                   |                                                                                              |                                       |          | 2003                            |        | 2002   
|                                                 |                                                                                   |                                                                                              |                                       |          |                                 |        |        
|Cash flows from operating activities:            |                                                                                   |                                                                                              |                                       |          |                                 |        |         |         
|                                                 | Net income                                                                        |                                                                                              | $                                     | 29,319   |                                 |        | $       | 32,069   |       
|                                                 | Adjustments to reconcile net income to net cash provided by
operating activities: |                                                                                              |                                       |          |                                 |        |         |          |       
|                                                 |                                                                                   | Depreciation and amortization                                                                |                                       |          | 28,515                          |        |         |          | 25,751 |       
|                                                 |                                                                                   | Deferred income taxes                                                                        |                                       |          | 3,469                           |        |         |          | 1,840  |       
|                                                 |                                                                                   | Provision for professional liability                                                         |                                       |          | 4,806                           |        |         |          | 5,403  |       
|                                                 |                                                                                   | Loss on early extinguishment of debt                                                         |                                       |          | 486                             |        |         |          |       |       
|                                                 |                                                                                   | Loss on sale of assets                                                                       |                                       |          | 85                              |        |         |          | 53     |       
|                                                 |                                                                                   | Changes in operating assets and liabilities, net of effects
from acquisitions and disposals: |                                       |          |                                 |        |         |          |        |       
|                                                 |                                                                                   |                                                                                              | Accounts receivable                   |          |                                 | 4,068  |         |          |        | (2,480 | )
|                                                 |                                                                                   |                                                                                              | Inventories                           |          |                                 | 637    |         |          |        | (1,311 | )
|                                                 |                                                                                   |                                                                                              | Prepaid expenses and other            |          |                                 | 1,968  |         |          |        | 4,322  |  
|                                                 |                                                                                   |                                                                                              | Accounts payable and accrued expenses |          |                                 | 10,021 |         |          |        | 8,488  |  
|                                                 |                                                                                   |                                                                                              | Accrued salaries and benefits         |          |                                 | 523    |         |          |        | (1,873 | )
|                                                 |                                                                                   | Other                                                                                        |                                       |          | 6,173                           |        |         |          | 2,973  |       
|                                                 |                                                                                   |                                                                                              |                                       |          |                                 |        |         |         
|                                                 | Net cash provided by operating activities                                         |                                                                                              |                                       | 90,070   |                                 |        |         | 75,235   |       
|Cash flows from investing activities:            |                                                                                   |                                                                                              |                                       |          |                                 |        |         |         
|                                                 | Purchase of property and equipment                                                |                                                                                              |                                       | (44,406  | )                               |        |         | (36,109  | )     
|                                                 | Purchase of hospitals and healthcare entities                                     |                                                                                              |                                       | (3,247   | )                               |        |         | (171,707 | )     
|                                                 |                                                                                   |                                                                                              |                                       |          |                                 |        |         |         
|                                                 | Net cash used in investing activities                                             |                                                                                              |                                       | (47,653  | )                               |        |         | (207,816 | )     
|Cash flows from financing activities:            |                                                                                   |                                                                                              |                                       |          |                                 |        |         |         
|                                                 | Proceeds from long-term debt                                                      |                                                                                              |                                       | 194,199  |                                 |        |         | 134,355  |       
|                                                 | Repayments of debts                                                               |                                                                                              |                                       | (213,585 | )                               |        |         | (39,451  | )     
|                                                 | Issuance of common stock                                                          |                                                                                              |                                       | 1,356    |                                 |        |         | 10,505   |       
|                                                 |                                                                                   |                                                                                              |                                       |          |                                 |        |         |         
|                                                 | Net cash (used in) provided by financing activities                               |                                                                                              |                                       | (18,030  | )                               |        |         | 105,409  |       
|                                                 |                                                                                   |                                                                                              |                                       |          |                                 |        |         |         
|Increase (decrease) in cash and cash equivalents |                                                                                   |                                                                                              | 24,387                                |          |                                 |        | (27,172 | )       
|Cash and cash equivalents at beginning of period |                                                                                   |                                                                                              | 14,417                                |          |                                 |        | 39,375  |         
|                                                 |                                                                                   |                                                                                              |                                       |          |                                 |        |         |         
|Cash and cash equivalents at end of period       |                                                                                   | $                                                                                            | 38,804                                |          |                                 | $      | 12,203  |         
|                                                 |                                                                                   |                                                                                              |                                       |          |                                 |        |         |         
|Interest payments                                |                                                                                   | $                                                                                            | 10,603                                |          |                                 | $      | 10,323  |         
|Income taxes (refund) received, net              |                                                                                   | $                                                                                            | (7,013                                | )        |                                 | $      | (6,998  | )       

See accompanying notes

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PROVINCE HEALTHCARE COMPANY AND SUBSIDIARIES




NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)


1. BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with accounting principles generally accepted
in the United States for interim financial information and with the
instructions to Form 10-Q and Article 10 of Regulation
S-X. Accordingly, they do not include all of the information and footnotes
required by accounting principles generally accepted in the United States for
complete financial statements. Interim results are not necessarily indicative
of results that may be expected for the full year. In the opinion of
management, the accompanying interim financial statements contain all material
adjustments, consisting only of normal recurring adjustments, necessary to
present fairly the consolidated financial position, results of operations and
cash flows of Province Healthcare Company (the Company).

The balance sheet at December 31, 2002, has been derived from the audited
consolidated financial statements at that date, but does not include all of the
financial information and footnotes required by accounting principles generally
accepted in the United States for complete financial statements.

For further information, refer to the consolidated financial statements
and footnotes thereto included in the Companys Annual Report on Form 10-K for
the year ended December 31, 2002.

2. USE OF ESTIMATES

The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management of the
Company to make estimates and assumptions that affect the amounts reported in
the condensed consolidated financial statements. Actual results could differ
from the estimates.

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PROVINCE HEALTHCARE COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)  (continued)

3. ACQUISITIONS

Memorial Hospital of Martinsville and Henry County

In May 2002, the Company acquired Memorial Hospital of Martinsville and
Henry County in Martinsville, Virginia, for approximately $129.2 million,
including working capital. To finance this acquisition, the Company borrowed
$86.0 million under its revolving credit facility and used approximately $43.2
million of available cash. This is the Companys first Virginia hospital and is
the only hospital in the county, serving a population in excess of 100,000.

Los Alamos Medical Center

In June 2002, the Company acquired Los Alamos Medical Center in Los
Alamos, New Mexico, for approximately $39.0 million, including working capital.
To finance this acquisition, the Company borrowed $37.0 million under its
revolving credit facility and used $2.0 million from available cash. This is
the Companys first New Mexico hospital and is the only hospital in the
community, serving a population of approximately 50,000.

Other

In May 2003, the Company acquired a radiology and laboratory business in
Elko, Nevada, where the Company operates Northeastern Nevada Regional
Hospital, for approximately $3.2 million. The purchase price is not yet
allocated, pending the Companys receipt of a final appraisal of the healthcare
business.

The
operating results of the hospitals and healthcare business acquired in
2002 and 2003 have been included in the accompanying condensed consolidated
statements of income from the respective dates of acquisition.

4. GOODWILL AND INTANGIBLE ASSETS

The Company adopted Statement of Financial Accounting Standards No. 142
(SFAS No. 142), Goodwill and Other Intangible Assets, effective January 1,
2002. Under SFAS No. 142, goodwill is no longer amortized, but is subject to
annual impairment tests, or more frequently if certain indicators arise. The
Company performed its annual impairment test on October 1, 2002. The results
of the tests had no effect on the operations or financial position of the
Company. The Company currently is not aware of any impairment indicators at
September 30, 2003.

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PROVINCE HEALTHCARE COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)  (continued)

The
Company has other intangible assets, net of accumulated amortization,
of $1.2 million as of September 30, 2003, which are included in other assets
on the condensed consolidated balance sheet. The intangible assets relate
primarily to non-compete agreements and are amortized over two (2) years.

5. LONG-TERM DEBT

In May 2003, the Company completed its public offering of $200.0 million
aggregate principal amount of 7 1/2% Senior Subordinated Notes due 2013 at
par. Net proceeds of the offering totaling $194.2 million were used to repay
$114.3 million in existing borrowings under our senior credit facility and to
repurchase approximately $69.0 million of the Companys 4 1/2% Convertible
Subordinated Notes due 2005 through privately negotiated transactions. The
Company recorded a $486,000 pretax loss associated with the early
extinguishment of debt related to this repurchase. During May and June 2003,
the Company amended its senior credit facility to (i) add additional
hospitals as collateral security, (ii) obtain consent for various
transactions, including the issuance of $200.0 million of Senior Subordinated
Notes due 2013 and repurchase of a portion of the outstanding 4 1/2%
Convertible Subordinated Notes due 2005, (iii) increase the flexibility of
certain investment covenants, and (iv) increase the amount available on its
revolving line of credit to $250.0 million from $209.7 million.

In July, the Company repurchased an additional $5.0 million of the outstanding
4 1/2% Convertible Subordinated Notes due 2005, bringing total
repurchases to $74.0 million and reducing the outstanding
principal balance of such Notes
to $76.0 million. An insignificant loss was recorded in the third quarter of
2003 related to this repurchase.

During the second quarter of 2003, the Company terminated its previously
existing interest rate swap contract at fair value, which was recorded as a
liability on the balance sheet. The loss on the termination was not
considered material. During the third quarter of 2003, the Company entered
into an interest rate swap agreement which effectively converted, for a
ten-year period, $100.0 million of the $200.0 million fixed-rate borrowings
under its 7 1/2% Senior Subordinated Notes due 2013 to floating rate
borrowings. This agreement exposes the Company to credit losses in the event
of non-performance by the counterparty to the financial instrument. The
Company anticipates that the counterparty will fully satisfy its obligations
under the contract.

The Company entered into an interest rate swap agreement in July 2003,
which effectively converted for a ten-year period $100.0 million of the
$200.0 million fixed-rate borrowings under the 7 1/2% Senior Subordinated
Notes due 2013 to floating-rate borrowings. The Company secured a LIBOR plus
2.79% floating interest rate over the term of the interest

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PROVINCE HEALTHCARE COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)  (continued)

rate swap agreement. In accordance with the provisions of SFAS No. 133, the
Company designated its interest rate swap agreement as a fair value hedge.

6. COMPREHENSIVE INCOME

The following table presents the components of comprehensive income, net
of related taxes (in thousands):

|                                               |  |                    |       |                   |  |      |       |      |  |   |        |   |  |   |        | 
|---------------------------------------------- |  | ------------------ | ----- | ----------------- |  | ---- | ----- | ---- |  | - | ------ | - |  | - | ------ | 
|                                               |  | Three Months Ended |       | Nine Months Ended
|                                               |  | September 30,      |       | September 30,    
|                                               |  |                    |       |                  
|                                               |  | 2003               |       | 2002              |  | 2003 |       | 2002
|                                               |  |                    |       |                   |  |      |       |     
|Net income                                     |  | $                  | 9,807 |                   |  | $    | 9,426 |      |  | $ | 29,319 |   |  | $ | 32,069 | 
|Net change in fair value of interest rate swap |  |                    | 130   |                   |  |      | (177  | )    |  |   | (65    | ) |  |   | 4      | 
|                                               |  |                    |       |                   |  |      |       |      |  |   |        |   |  |   |        | 
|Comprehensive income                           |  | $                  | 9,937 |                   |  | $    | 9,249 |      |  | $ | 29,254 |   |  | $ | 32,073 | 
|                                               |  |                    |       |                   |  |      |       |      |  |   |        |   |  |   |        | 

The net change in fair value of the interest rate swap is included in retained
earnings on the condensed consolidated balance sheets.

7. EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted
earnings per share (in thousands, except per share data):

|                             |                                                                             |   |      |                    |  |                   |      |        |  |      |      |        |  |   |      |        |  | 
|---------------------------- | --------------------------------------------------------------------------- | - | ---- | ------------------ |  | ----------------- | ---- | ------ |  | ---- | ---- | ------ |  | - | ---- | ------ |  | 
|                             |                                                                             |   |      | Three Months Ended |  | Nine Months Ended
|                             |                                                                             |   |      | September 30,      |  | September 30,    
|                             |                                                                             |   |      |                    |  |                  
|                             |                                                                             |   |      | 2003               |  | 2002              |      | 2003   |  | 2002
|                             |                                                                             |   |      |                    |  |                   |      |        |  |     
|Numerator:                   |                                                                             |   |      |                    |  |                   |      |        |  |      |      |        |  |   |      |       
|                             | Net income                                                                  |   | $    | 9,807              |  |                   | $    | 9,426  |  |      | $    | 29,319 |  |   | $    | 32,069 | 
|                             | Add convertible notes interest net of tax                                   |   |      |                   |  |                   |      |       |  |      |      |       |  |   |      | 7,302  | 
|                             |                                                                             |   |      |                    |  |                   |      |        |  |      |      |        |  |   |      |       
|                             | Adjusted net income                                                         |   | $    | 9,807              |  |                   | $    | 9,426  |  |      | $    | 29,319 |  |   | $    | 39,371 | 
|                             |                                                                             |   |      |                    |  |                   |      |        |  |      |      |        |  |   |      |       
|Denominator:                 |                                                                             |   |      |                    |  |                   |      |        |  |      |      |        |  |   |      |       
|                             | Denominator for basic income per share 
Weighted-average shares            |   |      | 48,729             |  |                   |      | 48,544 |  |      |      | 48,681 |  |   |      | 48,002 | 
|                             | Effective of dilutive securities 
Employee stock options                   |   |      | 910                |  |                   |      | 1,063  |  |      |      | 462    |  |   |      | 1,523  | 
|                             | Convertible notes                                                           |   |      |                   |  |                   |      |       |  |      |      |       |  |   |      | 11,899 | 
|                             |                                                                             |   |      |                    |  |                   |      |        |  |      |      |        |  |   |      |       
|                             | Denominator for diluted income per share 
Adjusted weighted-average shares |   |      | 49,639             |  |                   |      | 49,607 |  |      |      | 49,143 |  |   |      | 61,424 | 
|                             |                                                                             |   |      |                    |  |                   |      |        |  |      |      |        |  |   |      |       
|Basic net income per share   |                                                                             | $ | 0.20 |                    |  | $                 | 0.19 |        |  | $    | 0.60 |        |  | $ | 0.67 |       
|                             |                                                                             |   |      |                    |  |                   |      |        |  |      |      |        |  |   |      |       
|Diluted net income per share |                                                                             | $ | 0.20 |                    |  | $                 | 0.19 |        |  | $    | 0.60 |        |  | $ | 0.64 |       
|                             |                                                                             |   |      |                    |  |                   |      |        |  |      |      |        |  |   |      |       

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PROVINCE HEALTHCARE COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)  (continued)

The add-back of the interest and potential issuance of shares related to
the convertible notes was not included in the computation for the three and
nine months ended September 30, 2003, and the three months ended September 30,
2002, because the effect would have been anti-dilutive.

8. STOCK BASED COMPENSATION

The Company, from time to time, grants stock options for a fixed number of
common shares to employees and directors. The Company accounts for employee
stock option grants using the intrinsic value method in accordance with
Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to
Employees(Opinion 25), and related interpretations, and accordingly,
recognizes no compensation expense for the stock option grants when the
exercise price of the options equals, or is greater than, the market price of
the underlying stock on the date of grant.

The following pro forma information is being presented in accordance with
SFAS No. 148, Accounting for Stock-Based Compensation-Transition & Disclosure
(adopted by the Company on January 1, 2003). If the compensation cost for the
Companys stock-based compensation plans had been determined based on the fair
value at the grant date for awards under these plans consistent with the
methodology prescribed under SFAS No. 123, Accounting for Stock-Based
Compensation, net income and earnings per share would have been reduced to the
pro forma amounts indicated in the following table:

|                                                                                                |             |   |                    |      |                   |   |        |      |      |   |        |      |  |   |         |      | 
|----------------------------------------------------------------------------------------------- | ----------- | - | ------------------ | ---- | ----------------- | - | ------ | ---- | ---- | - | ------ | ---- |  | - | ------- | ---- | 
|                                                                                                |             |   | Three Months Ended |      | Nine Months Ended
|                                                                                                |             |   | September 30,      |      | September 30,    
|                                                                                                |             |   |                    |      |                  
|                                                                                                |             |   | 2003               |      | 2002              |   | 2003   |      | 2002
|                                                                                                |             |   |                    |      |                   |   |        |      |     
|Net income  as reported                                                                        |             | $ | 9,807              |      |                   | $ | 9,426  |      |      | $ | 29,319 |      |  | $ | 32,069  |     
|Less stock-based compensation
expense determined under a
fair value method, net of
income taxes |             |   | (1,161             | )    |                   |   | (1,096 | )    |      |   | (3,328 | )    |  |   | (10,183 | )   
|                                                                                                |             |   |                    |      |                   |   |        |      |      |   |        |      |  |   |         |     
|Pro forma net income                                                                            |             | $ | 8,646              |      |                   | $ | 8,330  |      |      | $ | 25,991 |      |  | $ | 21,886  |     
|                                                                                                |             |   |                    |      |                   |   |        |      |      |   |        |      |  |   |         |     
|Basic earnings per share                                                                        |             |   |                    |      |                   |   |        |      |      |   |        |      |  |   |         |     
|                                                                                                | As reported |   | $                  | 0.20 |                   |   | $      | 0.19 |      |   | $      | 0.60 |  |   | $       | 0.67 | 
|                                                                                                | Pro forma   |   | $                  | 0.18 |                   |   | $      | 0.17 |      |   | $      | 0.53 |  |   | $       | 0.46 | 
|Diluted earnings per share                                                                      |             |   |                    |      |                   |   |        |      |      |   |        |      |  |   |         |     
|                                                                                                | As reported |   | $                  | 0.20 |                   |   | $      | 0.19 |      |   | $      | 0.60 |  |   | $       | 0.64 | 
|                                                                                                | Pro forma   |   | $                  | 0.17 |                   |   | $      | 0.17 |      |   | $      | 0.53 |  |   | $       | 0.44 | 

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PROVINCE HEALTHCARE COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)  (continued)

The weighted average fair values of the Companys stock options granted
during the three months ended September 30, 2003 and 2002 and nine months ended
September 30, 2003 and 2002 were $5.76, $9.85, $3.94 and $9.79, respectively.
The fair values were estimated at the date of grant using a Black-Scholes
option valuation model based on the following weighted-average assumptions:

|                         |  |                    |      |                   |  |      |      |      |  |  |      |   |  |  |      |  
|------------------------ |  | ------------------ | ---- | ----------------- |  | ---- | ---- | ---- |  |  | ---- | - |  |  | ---- | -
|                         |  | Three Months Ended |      | Nine Months Ended
|                         |  | September 30,      |      | September 30,    
|                         |  |                    |      |                  
|                         |  | 2003               |      | 2002              |  | 2003 |      | 2002
|                         |  |                    |      |                   |  |      |      |     
|Risk-free interest rate  |  |                    | 3.0  | %                 |  |      | 3.3  | %    |  |  | 2.4  | % |  |  | 4.2  | %
|Dividend yield           |  |                    | 0.0  | %                 |  |      | 0.0  | %    |  |  | 0.0  | % |  |  | 0.0  | %
|Volatility               |  |                    | 59.4 | %                 |  |      | 59.4 | %    |  |  | 63.6 | % |  |  | 59.4 | %
|Expected life (in years) |  |                    | 4.0  |                   |  |      | 5.0  |      |  |  | 4.0  |   |  |  | 3.8  |  

The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options that have no vesting restrictions
and are fully transferable. Option valuation models require the input of
highly subjective assumptions including the expected stock price volatility.
The Companys employee stock options have characteristics significantly
different from those of traded options. Changes in subjective input
assumptions can materially affect the fair value estimate. Other option
valuation models may produce significantly different fair values of the
Companys employee stock options.

9. COMMITMENTS AND CONTINGENCIES

Management continually evaluates contingencies based on the best available
evidence and believes that adequate provision for losses has been provided to
the extent necessary. In the opinion of management, the ultimate resolution of
the following contingencies will not have a material effect on the Companys
results of operations or financial position.

Commitments

Subsequent
to quarter end, the Company began construction of a new 41-bed
hospital facility in Bluffton, South Carolina, which is expected to
be completed in the first quarter of 2005. The total cost of this
facility is expected to approximate $32.0 million, with the majority
funded during 2004.

General and Professional Liability Risks

Effective January 1, 2003, the Company increased its self-insurance
retention related to general and professional liability risks to $5.0 million.
The 2003 policy provides coverage up to $50.0 million for claims incurred
during the annual policy term.

The Company estimates its self-insured retention portion of the
malpractice risks using historical claims data, demographic factors, severity
factors and other actuarial assumptions. The Company maintains a reserve for
the anticipated claims within its deductible and self-insured retentions. The
reserve for general and professional liability risks is included in other
liabilities on the condensed consolidated balance sheet.

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PROVINCE HEALTHCARE COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)  (continued)

Workers Compensation Risks

Effective January 1, 2003, the Company increased its deductible for
workers compensation claims to $500,000 per accident. The Company has
purchased a minimum cap of $12.0 million for total workers compensation losses
within this deductible for 2003. The Companys arrangement
with the insurance provider allows us to prepay the expected amounts of annual
workers compensation claims, which is based upon claims experience. The claims
processor tracks payments for the policy year. At the end of the policy year,
the claims processor compares the total amount prepaid by us to the actual
amount paid by the claims processor. This comparison will ultimately result in
a receivable from or a payable to the claims processor.

Litigation

The Company currently is, and from time to time is expected to be, subject
to claims and suits arising in the ordinary course of business. The Company is
not aware of any such proceeding which, in managements opinion, would have a
material adverse effect on the Companys business, financial condition or
results of operations.

Net Patient Service Revenue

Final determination of amounts earned under the Medicare and Medicaid
programs often occurs in subsequent periods because of audits by the programs,
rights of appeal and the application of numerous technical provisions.
Differences between original estimates and subsequent revisions (including
settlements) are included in the consolidated statements of income in the
period in which revisions are made, and resulted in an increase in net patient
service revenue of approximately $2.8 million and $1.2 million the three month
periods ended September 30, 2003 and 2002, respectively; and $3.6 million and
$1.3 million for the nine month periods ended September 30, 2003 and 2002,
respectively.

10. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In January 2003, the Financial Accounting Standards Board issued
Interpretation No. 46, Consolidation of Variable Interest Entities, an
Interpretation of Accounting Research Bulletin No. 51(FIN 46). FIN 46
requires certain variable interest entities to be consolidated by the primary
beneficiary of the entity if the equity investors in the entity do not have the
characteristics of a controlling financial interest or do not have sufficient
equity at risk for the entity to finance its activities without additional
subordinated financial support from other parties. FIN 46 is effective for all
new variable interest entities created or acquired after January 31, 2003. For
variable interest entities created or acquired prior to February 1, 2003, the
provisions of FIN 46, as amended, must be applied for the first interim or
annual period after December 15, 2003. The Company does not expect this new
interpretation to have a material effect on its future results of operations or
financial position.

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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following along with the Condensed Consolidated
Financial Statements and accompanying notes.

OVERVIEW

We are a healthcare services company focused on acquiring and operating
hospitals in attractive non-urban markets in the United States. As of
September 30, 2003, we owned or leased 20 general acute care hospitals in 13
states with a total of 2,281 licensed beds, and managed 37 hospitals in 14
states, with a total of 3,043 licensed beds.

Our owned and leased hospitals accounted for 98.0% and 98.1% of our net
operating revenue in the three months ended September 30, 2003 and 2002,
respectively.

IMPACT OF ACQUISITIONS

An integral part of our strategy is to acquire non-urban acute care
hospitals. Because of the relatively small number of owned and leased
hospitals, each hospital acquisition can materially affect our overall
operating performance. Upon the acquisition of a hospital, we typically take a
number of steps to lower operating costs. The impact of such actions may be
offset by cost increases to expand services, strengthen medical staff and
improve market position. The benefits of these investments and of other
activities to improve operating margins generally do not occur immediately.
Consequently, the financial performance of a newly-acquired hospital may
adversely affect overall operating margins in the near term. As we make
additional hospital acquisitions, we expect that this effect will be mitigated
by the expanded financial base of existing hospitals and the allocation of
corporate overhead among a larger number of hospitals. We also may divest
certain hospitals in the future, if we determine a hospital no longer fits
within our strategy.

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RESULTS OF OPERATIONS

Operating Results Summary

The following are comparative summaries of results from operations for the
three months and nine months ended September 30, 2003 and 2002 (dollars in
thousands):

|                                         |                                 |         |                       |         |                                  |         |          |      |        |       |          |         |                 |         |      |      |          |       |     |   |  |     |  
|---------------------------------------- | ------------------------------- | ------- | --------------------- | ------- | -------------------------------- | ------- | -------- | ---- | ------ | ----- | -------- | ------- | --------------- | ------- | ---- | ---- | -------- | ----- | --- | - |  | --- | -
|                                         |                                 |         |                       |         | Three Months Ended September 30, |         |          |      |       
|                                         |                                 |         |                       |         |                                  |         |          |      |       
|                                         |                                 |         |                       |         | 2003                             |         | 2002     |      |        |       |         
|                                         |                                 |         |                       |         |                                  |         |          |      |        |       |         
|                                         |                                 |         |                       |         |                                  |         |          |      | % of   |       |          |         |                 |         | % of |      | % Change
|                                         |                                 |         |                       |         | Amount                           |         | Revenues |      | Amount |       | Revenues |         | from prior year
|                                         |                                 |         |                       |         |                                  |         |          |      |        |       |          |         |                
|Revenue:                                 |                                 |         |                       |         |                                  |         |          |      |        |       |          |         |                 |         |      |      |          |       |     |  
|                                         | Net patient service revenue     |         | $                     | 189,091 |                                  |         |          |      |        |       | $        | 178,111 |                 |         |      |      |          |       |     |   | 
|                                         | Other                           |         |                       | 6,338   |                                  |         |          |      |        |       |          | 5,851   |                 |         |      |      |          |       |     |   | 
|                                         |                                 |         |                       |         |                                  |         |          |      |        |       |          |         |                 |         |      |      |          |       |     |  
|                                         |                                 |         | Net operating revenue |         |                                  | 195,429 |          |      |        | 100.0 | %        |         |                 | 183,962 |      |      |          | 100.0 | %   |   |  | 6.2 | %
|Expenses:                                |                                 |         |                       |         |                                  |         |          |      |        |       |          |         |                 |         |      |      |          |       |     |  
|                                         | Salaries, wages and benefits    |         |                       | 71,109  |                                  |         |          | 36.4 |        |       |          | 72,115  |                 |         |      | 39.2 |          |       |     |   | 
|                                         | Purchases services              |         |                       | 18,038  |                                  |         |          | 9.2  |        |       |          | 19,305  |                 |         |      | 10.5 |          |       |     |   | 
|                                         | Supplies                        |         |                       | 24,738  |                                  |         |          | 12.7 |        |       |          | 23,396  |                 |         |      | 12.7 |          |       |     |   | 
|                                         | Provision for doubtful accounts |         |                       | 20,008  |                                  |         |          | 10.2 |        |       |          | 14,042  |                 |         |      | 7.6  |          |       |     |   | 
|                                         | Other operating expenses        |         |                       | 25,827  |                                  |         |          | 13.2 |        |       |          | 21,576  |                 |         |      | 11.8 |          |       |     |   | 
|                                         | Rentals and leases              |         |                       | 2,385   |                                  |         |          | 1.2  |        |       |          | 2,165   |                 |         |      | 1.2  |          |       |     |   | 
|                                         | Depreciation and amortization   |         |                       | 9,738   |                                  |         |          | 5.1  |        |       |          | 9,419   |                 |         |      | 5.1  |          |       |     |   | 
|                                         | Interest expense                |         |                       | 7,097   |                                  |         |          | 3.6  |        |       |          | 6,218   |                 |         |      | 3.4  |          |       |     |   | 
|                                         | Minority interests              |         |                       | 52      |                                  |         |          |     |        |       |          | 16      |                 |         |      |     |          |       |     |   | 
|                                         | Loss on sale of assets          |         |                       | 82      |                                  |         |          |     |        |       |          |        |                 |         |      |     |          |       |     |   | 
|                                         | Loss on early extinguishment    |         |                       | 10      |                                  |         |          |     |        |       |          |        |                 |         |      |     |          |       |     |   | 
|                                         |                                 |         |                       |         |                                  |         |          |      |        |       |          |         |                 |         |      |      |          |       |     |  
|Income before provision for income taxes |                                 |         | 16,345                |         |                                  |         | 8.4      |      |        |       | 15,710   |         |                 |         | 8.5  |      |          |       | 4.0 | %
|Income taxes                             |                                 |         | 6,538                 |         |                                  |         | 3.4      |      |        |       | 6,284    |         |                 |         | 3.4  |      |          |       |     |  
|                                         |                                 |         |                       |         |                                  |         |          |      |        |       |          |         |                 |         |      |      |          |       |     |  
|Net income                               |                                 | $       | 9,807                 |         |                                  |         | 5.0      | %    |        | $     | 9,426    |         |                 |         | 5.1  | %    |          |       | 4.0 | %
|                                         |                                 |         |                       |         |                                  |         |          |      |        |       |          |         |                 |         |      |      |          |       |     |  
|Net income per common share:             |                                 |         |                       |         |                                  |         |          |      |        |       |          |         |                 |         |      |      |          |       |     |  
|                                         |                                 | Basic   |                       | $       | 0.20                             |         |          |      |        |       |          | $       | 0.19            |         |      |      |          |       |     |   |  |    
|                                         |                                 |         |                       |         |                                  |         |          |      |        |       |          |         |                 |         |      |      |          |       |     |  
|                                         |                                 | Diluted |                       | $       | 0.20                             |         |          |      |        |       |          | $       | 0.19            |         |      |      |          |       |     |   |  |    
|                                         |                                 |         |                       |         |                                  |         |          |      |        |       |          |         |                 |         |      |      |          |       |     |  

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|                                         |                                      |         |                       |         |                                 |         |          |      |        |       |          |         |                 |         |      |      |          |       |      |    |  |      |  
|---------------------------------------- | ------------------------------------ | ------- | --------------------- | ------- | ------------------------------- | ------- | -------- | ---- | ------ | ----- | -------- | ------- | --------------- | ------- | ---- | ---- | -------- | ----- | ---- | -- |  | ---- | -
|                                         |                                      |         |                       |         | Nine Months Ended September 30, |         |          |      |       
|                                         |                                      |         |                       |         |                                 |         |          |      |       
|                                         |                                      |         |                       |         | 2003                            |         | 2002     |      |        |       |         
|                                         |                                      |         |                       |         |                                 |         |          |      |        |       |         
|                                         |                                      |         |                       |         |                                 |         |          |      | % of   |       |          |         |                 |         | % of |      | % Change
|                                         |                                      |         |                       |         | Amount                          |         | Revenues |      | Amount |       | Revenues |         | from prior year
|                                         |                                      |         |                       |         |                                 |         |          |      |        |       |          |         |                
|Revenue:                                 |                                      |         |                       |         |                                 |         |          |      |        |       |          |         |                 |         |      |      |          |       |      |   
|                                         | Net patient service revenue          |         | $                     | 566,298 |                                 |         |          |      |        |       | $        | 506,125 |                 |         |      |      |          |       |      |    | 
|                                         | Other                                |         |                       | 19,344  |                                 |         |          |      |        |       |          | 17,438  |                 |         |      |      |          |       |      |    | 
|                                         |                                      |         |                       |         |                                 |         |          |      |        |       |          |         |                 |         |      |      |          |       |      |   
|                                         |                                      |         | Net operating revenue |         |                                 | 585,642 |          |      |        | 100.0 | %        |         |                 | 523,563 |      |      |          | 100.0 | %    |    |  | 11.9 | %
|Expenses:                                |                                      |         |                       |         |                                 |         |          |      |        |       |          |         |                 |         |      |      |          |       |      |   
|                                         | Salaries, wages and benefits         |         |                       | 221,379 |                                 |         |          | 37.8 |        |       |          | 201,743 |                 |         |      | 38.5 |          |       |      |    | 
|                                         | Purchases services                   |         |                       | 54,699  |                                 |         |          | 9.3  |        |       |          | 54,605  |                 |         |      | 10.4 |          |       |      |    | 
|                                         | Supplies                             |         |                       | 73,344  |                                 |         |          | 12.5 |        |       |          | 63,606  |                 |         |      | 12.1 |          |       |      |    | 
|                                         | Provision for doubtful accounts      |         |                       | 54,991  |                                 |         |          | 9.4  |        |       |          | 41,533  |                 |         |      | 7.9  |          |       |      |    | 
|                                         | Other operating expenses             |         |                       | 76,120  |                                 |         |          | 13.1 |        |       |          | 60,275  |                 |         |      | 11.7 |          |       |      |    | 
|                                         | Rentals and leases                   |         |                       | 7,241   |                                 |         |          | 1.2  |        |       |          | 6,518   |                 |         |      | 1.2  |          |       |      |    | 
|                                         | Depreciation and amortization        |         |                       | 28,515  |                                 |         |          | 4.9  |        |       |          | 25,751  |                 |         |      | 4.9  |          |       |      |    | 
|                                         | Interest expense                     |         |                       | 19,716  |                                 |         |          | 3.5  |        |       |          | 15,959  |                 |         |      | 3.1  |          |       |      |    | 
|                                         | Minority interests                   |         |                       | 201     |                                 |         |          |     |        |       |          | 72      |                 |         |      |     |          |       |      |    | 
|                                         | Loss on sale of assets               |         |                       | 85      |                                 |         |          |     |        |       |          | 53      |                 |         |      |     |          |       |      |    | 
|                                         | Loss on early extinguishment of debt |         |                       | 486     |                                 |         |          |     |        |       |          |        |                 |         |      |     |          |       |      |    | 
|                                         |                                      |         |                       |         |                                 |         |          |      |        |       |          |         |                 |         |      |      |          |       |      |   
|Income before provision for income taxes |                                      |         | 48,865                |         |                                 |         | 8.3      |      |        |       | 53,448   |         |                 |         | 10.2 |      |          |       | (8.6 | %)
|Income taxes                             |                                      |         | 19,546                |         |                                 |         | 3.3      |      |        |       | 21,379   |         |                 |         | 4.1  |      |          |       |      |   
|                                         |                                      |         |                       |         |                                 |         |          |      |        |       |          |         |                 |         |      |      |          |       |      |   
|Net income                               |                                      | $       | 29,319                |         |                                 |         | 5.0      | %    |        | $     | 32,069   |         |                 |         | 6.1  | %    |          |       | (8.6 | %)
|                                         |                                      |         |                       |         |                                 |         |          |      |        |       |          |         |                 |         |      |      |          |       |      |   
|Net income per common share:             |                                      |         |                       |         |                                 |         |          |      |        |       |          |         |                 |         |      |      |          |       |      |   
|                                         |                                      | Basic   |                       | $       | 0.60                            |         |          |      |        |       |          | $       | 0.67            |         |      |      |          |       |      |    |  |     
|                                         |                                      |         |                       |         |                                 |         |          |      |        |       |          |         |                 |         |      |      |          |       |      |   
|                                         |                                      | Diluted |                       | $       | 0.60                            |         |          |      |        |       |          | $       | 0.64            |         |      |      |          |       |      |    |  |     
|                                         |                                      |         |                       |         |                                 |         |          |      |        |       |          |         |                 |         |      |      |          |       |      |   

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|                        |                                            |            |         |                                  |         |      |         |          |         |  |     |      |      | 
|----------------------- | ------------------------------------------ | ---------- | ------- | -------------------------------- | ------- | ---- | ------- | -------- | ------- |  | --- | ---- | ---- | 
|                        |                                            |            |         | Three Months Ended September 30,
|                        |                                            |            |         |                                 
|                        |                                            |            |         | 2003                             |         | 2002 |         | % Change
|                        |                                            |            |         |                                  |         |      |         |         
|Consolidated Hospitals: |                                            |            |         |                                  |         |      |         |          |         |  |     |     
|                        | Number of hospitals at end of period       |            |         | 20                               |         |      |         | 20       |         |  |     |     | %   
|                        | Licensed beds at end of period (a)         |            |         | 2,281                            |         |      |         | 2,315    |         |  |     | (1.5 | )   
|                        | Beds in service at end of period           |            |         | 1,993                            |         |      |         | 1,905    |         |  |     | 4.6  |     
|                        | Net patient service revenue (in thousands) |            | $       | 189,091                          |         |      | $       | 178,111  |         |  |     | 6.2  |     
|                        | Admissions (b)                             |            |         | 18,683                           |         |      |         | 18,584   |         |  |     | 0.5  |     
|                        | Adjusted admissions (c)                    |            |         | 34,284                           |         |      |         | 33,520   |         |  |     | 2.3  |     
|                        | Patient days (d)                           |            |         | 76,084                           |         |      |         | 77,738   |         |  |     | (2.1 | )   
|                        | Adjusted patient days (e)                  |            |         | 139,634                          |         |      |         | 140,250  |         |  |     | (0.4 | )   
|                        | Average length of stay (days) (f)          |            |         | 4.1                              |         |      |         | 4.2      |         |  |     | (2.4 | )   
|                        | Gross revenue (in thousands) (g):          |            |         |                                  |         |      |         |          |         |  |     |      |     
|                        |                                            | Inpatient  |         | $                                | 228,966 |      |         | $        | 213,510 |  |     |      | 7.2  | 
|                        |                                            | Outpatient |         |                                  | 191,130 |      |         |          | 171,600 |  |     |      | 11.4 | 
|                        |                                            |            |         |                                  |         |      |         |          |         |  |     |     
|                        |                                            | $          | 420,096 |                                  |         | $    | 385,110 |          |         |  | 9.1 | %   
|                        |                                            |            |         |                                  |         |      |         |          |         |  |     |     
|Same Hospitals (h):     |                                            |            |         |                                  |         |      |         |          |         |  |     |     
|                        | Number of hospitals at end of period       |            |         | 20                               |         |      |         | 20       |         |  |     |     | %   
|                        | Licensed beds at end of period (a)         |            |         | 2,281                            |         |      |         | 2,315    |         |  |     | (1.5 | )   
|                        | Beds in service at end of period           |            |         | 1,993                            |         |      |         | 1,905    |         |  |     | 4.6  |     
|                        | Net patient service revenue (in thousands) |            | $       | 189,091                          |         |      | $       | 178,111  |         |  |     | 6.2  |     
|                        | Admissions (b)                             |            |         | 18,683                           |         |      |         | 18,584   |         |  |     | 0.5  |     
|                        | Adjusted admissions (c)                    |            |         | 34,284                           |         |      |         | 33,520   |         |  |     | 2.3  |     
|                        | Patient days (d)                           |            |         | 76,084                           |         |      |         | 77,738   |         |  |     | (2.1 | )   
|                        | Adjusted patient days (e)                  |            |         | 139,634                          |         |      |         | 140,250  |         |  |     | (0.4 | )   
|                        | Average length of stay (days) (f)          |            |         | 4.1                              |         |      |         | 4.2      |         |  |     | (2.4 | )   
|                        | Gross revenue (in thousands) (g):          |            |         |                                  |         |      |         |          |         |  |     |      |     
|                        |                                            | Inpatient  |         | $                                | 228,966 |      |         | $        | 213,510 |  |     |      | 7.2  | 
|                        |                                            | Outpatient |         |                                  | 191,130 |      |         |          | 171,600 |  |     |      | 11.4 | 
|                        |                                            |            |         |                                  |         |      |         |          |         |  |     |     
|                        |                                            | $          | 420,096 |                                  |         | $    | 385,110 |          |         |  | 9.1 | %   
|                        |                                            |            |         |                                  |         |      |         |          |         |  |     |     

See footnotes following next table

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|                        |                                            |            |           |                                 |         |      |           |          |         |  |      |      |      | 
|----------------------- | ------------------------------------------ | ---------- | --------- | ------------------------------- | ------- | ---- | --------- | -------- | ------- |  | ---- | ---- | ---- | 
|                        |                                            |            |           | Nine Months Ended September 30,
|                        |                                            |            |           |                                
|                        |                                            |            |           | 2003                            |         | 2002 |           | % Change
|                        |                                            |            |           |                                 |         |      |           |         
|Consolidated Hospitals: |                                            |            |           |                                 |         |      |           |          |         |  |      |     
|                        | Number of hospitals at end of period       |            |           | 20                              |         |      |           | 20       |         |  |      |     | %   
|                        | Licensed beds at end of period (a)         |            |           | 2,281                           |         |      |           | 2,315    |         |  |      | (1.5 | )   
|                        | Beds in service at end of period           |            |           | 1,993                           |         |      |           | 1,905    |         |  |      | 4.6  |     
|                        | Net patient service revenue (in thousands) |            | $         | 566,298                         |         |      | $         | 506,125  |         |  |      | 11.9 |     
|                        | Admissions (b)                             |            |           | 56,971                          |         |      |           | 54,432   |         |  |      | 4.7  |     
|                        | Adjusted admissions (c)                    |            |           | 102,477                         |         |      |           | 93,773   |         |  |      | 9.3  |     
|                        | Patient days (d)                           |            |           | 238,340                         |         |      |           | 234,492  |         |  |      | 1.6  |     
|                        | Adjusted patient days (e)                  |            |           | 428,648                         |         |      |           | 403,590  |         |  |      | 6.2  |     
|                        | Average length of stay (days) (f)          |            |           | 4.2                             |         |      |           | 4.3      |         |  |      | (2.3 | )   
|                        | Gross revenue (in thousands) (g):          |            |           |                                 |         |      |           |          |         |  |      |      |     
|                        |                                            | Inpatient  |           | $                               | 705,158 |      |           | $        | 633,588 |  |      |      | 11.3 | 
|                        |                                            | Outpatient |           |                                 | 563,273 |      |           |          | 457,010 |  |      |      | 23.3 | 
|                        |                                            |            |           |                                 |         |      |           |          |         |  |      |     
|                        |                                            | $          | 1,268,431 |                                 |         | $    | 1,090,598 |          |         |  | 16.3 | %   
|                        |                                            |            |           |                                 |         |      |           |          |         |  |      |     
|Same Hospitals (h):     |                                            |            |           |                                 |         |      |           |          |         |  |      |     
|                        | Number of hospitals at end of period       |            |           | 20                              |         |      |           | 20       |         |  |      |     | %   
|                        | Licensed beds at end of period (a)         |            |           | 2,281                           |         |      |           | 2,315    |         |  |      | (1.5 | )   
|                        | Beds in service at end of period           |            |           | 1,993                           |         |      |           | 1,905    |         |  |      | 4.6  |     
|                        | Net patient service revenue (in thousands) |            | $         | 502,347                         |         |      | $         | 488,904  |         |  |      | 2.7  |     
|                        | Admissions (b)                             |            |           | 52,546                          |         |      |           | 53,019   |         |  |      | (0.9 | )   
|                        | Adjusted admissions (c)                    |            |           | 92,655                          |         |      |           | 90,833   |         |  |      | 2.0  |     
|                        | Patient days (d)                           |            |           | 219,025                         |         |      |           | 228,602  |         |  |      | (4.2 | )   
|                        | Adjusted patient days (e)                  |            |           | 386,040                         |         |      |           | 391,263  |         |  |      | (1.3 | )   
|                        | Average length of stay (days) (f)          |            |           | 4.2                             |         |      |           | 4.3      |         |  |      | (2.3 | )   
|                        | Gross revenue (in thousands) (g):          |            |           |                                 |         |      |           |          |         |  |      |      |     
|                        |                                            | Inpatient  |           | $                               | 658,757 |      |           | $        | 621,281 |  |      |      | 6.0  | 
|                        |                                            | Outpatient |           |                                 | 502,448 |      |           |          | 442,363 |  |      |      | 13.6 | 
|                        |                                            |            |           |                                 |         |      |           |          |         |  |      |     
|                        |                                            | $          | 1,161,205 |                                 |         | $    | 1,063,644 |          |         |  | 9.2  | %   
|                        |                                            |            |           |                                 |         |      |           |          |         |  |      |     



| | (a) |  | Beds for which a hospital has been granted approval to operate from
the applicable state licensing agency.                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | --- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (b) |  | Represents the total number of patients admitted (in a facility
for a period in excess of 23 hours) and used by management and
investors as a general measure of inpatient volume.                                                                                                                                                                                                                                                                                                                                                                             
|
| | (c) |  | Used by management and investors as a general measure of combined
inpatient and outpatient volume. Adjusted admissions are computed by
multiplying admissions (inpatient volume) by the outpatient factor.
The outpatient factor is the sum of gross inpatient revenue and gross
outpatient revenue divided by gross inpatient revenue. The adjusted
admissions computation equates outpatient revenue to the volume
measure (admissions) used to measure inpatient volume, resulting in a
general measure of combined inpatient and outpatient volume.        
|
| | (d) |  | Represents the total number of days the patients who are admitted
stay in our hospitals.                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|
| | (e) |  | Used by management and investors as a general measure of combined
inpatient and outpatient volume. Adjusted patient days are computed
by multiplying patient days (inpatient volume) by the outpatient
factor. The outpatient factor is the sum of gross inpatient revenue
and gross outpatient revenue divided by gross inpatient revenue. The
adjusted patient days computation equates outpatient revenue to the
volume measure (patient days) used to measure inpatient volume,
resulting in a general measure of combined inpatient and outpatient
volume.
|
| | (f) |  | The average number of days admitted patients stay in our hospitals.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|
| | (g) |  | Represents revenues prior to reductions for discounts and
contractual allowances.                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|
| | (h) |  | Same hospital information includes the operations of only
those hospitals which were owned or leased during both entire
periods presented. Consolidated and same hospital amounts are
equal for the three-month periods ended September 30, 2003 and
2002, because there was no change in the number of hospitals
owned or leased since the beginning of the three months ended
September 30, 2002.                                                                                                                                                            

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Three Months Ended September 30, 2003 Compared to Three Months Ended September 30, 2002

Net operating revenue increased 6.2% or $11.4 million to $195.4 million
for the three months ended September 30, 2003, compared to the same period last
year. The increase was primarily attributable to a 3.8% increase in same
hospital net revenue per adjusted admissions and a 2.3% increase in adjusted
admissions. Net operating revenue also includes adjustments to estimated third
party payor settlements.

Salaries, wages and benefits as a percentage of net operating revenue,
decreased to 36.4% from 39.2%, primarily due to continued implementation of our
flexible staffing standards, which effectively matches labor with hospital
volume trends, and to containment of our employee benefit expenses.

Purchased services, as a percentage of net operating revenue, decreased to
9.2% for the three months ended September 30, 2003, compared to 10.5% for the
comparable period of the prior year. This decrease is primarily attributable
to reductions in contract labor and collection fees as our company was less
reliant on outside collection consultants and staffing.

Supplies remained at 12.7% of net operating revenue for the three months
ended September 30, 2003, compared to the same period of 2002.

The provision for doubtful accounts increased to 10.2% of net operating
revenue for the three months ended September 30, 2003 compared to 7.6% for the
comparable period of 2002, primarily due to increases in self-pay and uninsured
patient volumes as a percentage of total patient volumes, and the corresponding
effect of rate increases on those accounts. The net revenues associated with
those patients are generally recorded at gross charges, which are typically
higher than what government programs and managed care plans pay. As a result,
failure to receive payments from self-pay and uninsured patients results in
higher provision for doubtful accounts as a percentage of net operating
revenue. The provision for doubtful accounts is expected to remain in
the range of 10%
of net operating revenue through the first half of 2004.

Other operating expenses increased as a percentage of net operating
revenue to 13.2% from 11.8% in the prior year primarily due to increases in
insurance costs and physician recruitment expenses.

Rentals and leases were unchanged as a percentage of net operating revenue
for both periods.

Depreciation and amortization expense increased $0.3 million to $9.7
million for the three months ended September 30, 2003 compared to the same
period last year and remained at 5.1% of net operating revenue.

Interest expense increased to $7.1 million for the three months ended
September 30, 2003, compared to $6.2 million for the comparable period of 2002.
The increase was primarily due to the May 27, 2003, issuance of $200.0
million aggregate principal amount of 7 1/2% Senior Subordinated Notes due
2013, offset by repayments of outstanding borrowings on our senior bank

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credit facility, repurchases of a portion of our outstanding 4 1/2% Convertible
Subordinated Notes due 2005 and entering into a $100.0 million fixed to
floating interest rate swap agreement during the three months ended September
30, 2003.

The provision for income taxes was $6.5 million for the three months ended
September 30, 2003, compared to $6.3 million for the comparable period of 2002,
primarily due to the increase in pre-tax income.

Nine Months Ended September 30, 2003 Compared to Nine Months Ended September 30, 2002

Net operating revenue increased 11.9% or $62.0 million to $585.6 million
for the nine months ended September 30, 2003, compared to the same period last
year. The increase was primarily attributable to the acquisitions of Los Alamos
Medical Center and Memorial Hospital of Martinsville and Henry County, which
were completed in the second quarter of last year. Net operating revenue also
includes adjustments to estimated third party payor settlements.

Salaries, wages and benefits as a percentage of net operating revenue,
decreased to 37.8% from 38.5% for the nine months ended September 30, 2003
compared to the same period last year, primarily due to improvements resulting
from implementation of our flexible staffing standards throughout our
hospitals, which effectively matches labor with hospital volume
trends, and
to containment of our employee benefit expenses.

Purchased services, as a percentage of net operating revenue, decreased to
9.3% for the nine months ended September 30, 2003, compared to 10.4% for the
comparable period of the prior year. This decrease is primarily attributable
to reductions in contract labor and collection fees as our Company was less
reliant on outside collection consultants and staffing.

Supplies increased to 12.5% of net operating revenue, for the nine months
ended September 30, 2003, compared to 12.1% for the comparable period of 2002,
due primarily to the acquisitions of Memorial Hospital of Martinsville and
Henry County and Los Alamos Medical Center.

The provision for doubtful accounts increased to 9.4% of net operating
revenue for the nine months ended September 30, 2003 compared to 7.9% for the
comparable period of 2002, primarily due to the increases in self-pay and
uninsured patient volumes as a percent of total patient volumes and the
corresponding effect of rate increases on those accounts. The net patient
service revenues associated with those patients are generally recorded at gross
charges, which are typically higher than what government programs and managed
care plans pay. As a result, failure to receive payments from self-pay and
uninsured patients results in a higher provision for doubtful accounts as a
percentage of net operating revenue.

Other operating expenses increased as a percentage of net operating
revenue to 13.1% from 11.7% in the prior year primarily due to increases in
insurance costs and physician recruitment expenses.

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Rentals and leases were relatively unchanged as a percentage of net
operating revenue for both periods.

Depreciation and amortization expense increased $2.7 million to $28.5
million, for the nine months ended September 30, 2003, compared to $25.8
million for the comparable period of 2002 and remained at 4.9% of net operating
revenue. The increase in depreciation and amortization expense was primarily
due to depreciation at the two hospitals acquired in 2002.

Interest expense increased to $19.7 million for the nine months ended
September 30, 2003, compared to $16.0 million for the comparable period of
2002, primarily due to the issuance of $200.0 million aggregate principal
amount of 7 1/2% Senior Subordinated Notes due 2013, offset by repayments of
outstanding borrowings on our senior bank credit facility, repurchases of a
portion of our outstanding 4 1/2% Convertible Subordinated Notes due 2005 and
entering into a $100.0 million fixed to floating interest rate swap agreement
during the third quarter of 2003.

The write-off of deferred loan costs and the gain resulting from
repurchasing a portion of the 4 1/2% Convertible Subordinated Notes at a
discount resulted in a net pre-tax loss on extinguishment of debt of $0.5
million during the nine months ended September 30, 2003.

The provision for income taxes decreased to $19.5 million for the nine
months ended September 30, 2003, compared to $21.4 million for the comparable
period of 2002, primarily due to the decrease in pre-tax income.

LIQUIDITY AND CAPITAL RESOURCES

At September 30, 2003, we had working capital of $117.0 million, including
cash and cash equivalents of $38.8 million compared to working capital of
$105.3 million, including $14.4 million in cash and cash equivalents at
December 31, 2002.

Cash provided by operations was $90.1 million for the nine months ended
September 30, 2003, compared to $75.2 million for the same period last year,
primarily due to improved cash collections. Our average daily revenues were in
accounts receivable an average of 55 days at September 30, 2003, down from an
average of 61 days at September 30, 2002. Cash used in investing activities
was down significantly to $47.7 million for the nine months ended September 30,
2003, from $207.8 million for the same period last year, primarily due to the
purchases of Memorial Hospital of Martinsville and Henry County in May 2002,
and Los Alamos Medical Center in June 2002. Net cash used in financing
activities totaled $18.0 million for the nine months ended September 30, 2003
compared to $105.4 million of net cash provided by financing activities during
the same period last year. Last years net cash provided by financing
activities primarily reflected borrowings under our revolving credit facility
to fund acquisitions.

During the nine months ended September 30, 2003, we received $194.2
million in net proceeds from the issuance of the 7 1/2% Senior Subordinated
Notes due 2013. We used the proceeds, along with existing cash, to repay all
amounts outstanding ($114.3 million) on our senior credit facility and to
repurchase $74.0 million principal amount of our 4 1/2% Convertible
Subordinated Notes due 2005. At September 30, 2003, we had $246.4 million (net
of outstanding letters of credit) available for borrowing under our senior
credit facility.

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In May 2003, the Board of Directors authorized the repurchase from time to
time and subject to market conditions of our 4 1/2% Convertible Subordinated
Notes in open market or privately negotiated transactions. Of the $150.0
million principal amount of the 2005 notes originally issued, we had
repurchased $74.0 million principal amount through September 30, 2003.
Additional repurchases, if any, will be made out of cash provided by
operations.

We intend to acquire additional acute care facilities and are actively
seeking out such acquisitions. There can be no assurance that we will not
require additional debt or equity financing for any particular acquisition.
Also, we continually review our capital needs and financing opportunities and
may seek additional equity or debt financing for our acquisition program or
other needs.

Our
shelf registration statement on Form S-3, providing for the offer, from
time to time, of common stock and debt securities up to an aggregate of $300.0
million, remains effective. Following the issuance of $200.0 million
aggregate principal amount of our 7 1/2% Senior Subordinated Notes in May 2003,
the shelf registration statement remains available for us to issue up to $100.0
million of additional securities, subject to market conditions and our capital
needs.

Capital
expenditures for our owned and leased hospitals may vary from year to year
depending on facility improvements and service enhancements undertaken by the
hospitals. We expect to make total capital expenditures in 2003 of
approximately $60.0 million, exclusive of any acquisitions of businesses or new
hospital construction projects. Subsequent to the quarter end, we
began construction of a new 41-bed hospital facility in Bluffton, South
Carolina, which is expected to be completed in the first quarter of 2005. The
total cost of this facility is expected to approximate $32.0 million, with the
majority funded during 2004. Planned capital expenditures for 2003 consist
principally of capital improvements to owned and leased hospitals. We expect
to fund these expenditures through cash provided by operating activities and
borrowings under our revolving credit facility.

CRITICAL ACCOUNTING POLICIES AND IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS

A description of the accounting policies we consider critical to our
business is contained in our Annual Report on Form 10-K for the year ended
December 31, 2002. We have made no changes in those policies since year end.

MARKET RISKS ASSOCIATED WITH FINANCIAL INSTRUMENTS

Our interest expense is sensitive to changes in the general level of
interest rates. To mitigate the impact of fluctuations in interest rates, we
generally maintain 50%  75% of our debt at a fixed rate, either by borrowings
on a long-term basis or entering into an interest rate swap.

During the quarter ended September 30, 2003, we entered into an interest
rate swap agreement which effectively converted, for a ten-year period, $100.0
million of the $200.0 million fixed-rate borrowings under our 7 1/2% Senior
Subordinated Notes due 2013 to floating-rate borrowings. We secured a LIBOR
plus 2.79% floating interest rate over the term of the agreement.

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After giving effect to the interest rate swap agreement, approximately 77%
of our debt was at fixed rates as of September 30, 2003.

GENERAL

The Medicare program accounted for approximately 38.0% and 46.2% of net
patient revenue for the nine months ended September 30, 2003 and 2002,
respectively. The decrease resulted from the impact of the two acquisitions
made in 2002. The Medicaid programs accounted for approximately 11.4% and
12.1% of net patient revenue for the nine months ended September 30, 2003 and
2002, respectively. The majority of payment rates under the Medicare program
are now prospective, based upon the diagnosis of a patient. The Medicare
payment rate increases historically have been less than actual inflation.

The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires us to make
estimates and assumptions that affect the amounts reported in our financial
statements. Resolution of matters, for example, final settlements with third
party payors, may result in changes from those estimates. The timing and amount
of such changes in estimates may cause fluctuations in our quarterly or annual
operating results.

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FORWARD-LOOKING STATEMENTS

Our disclosure and analysis in this report contain some forward-looking
statements. Forward-looking statements give our current expectations or
forecasts of future events. You can identify these statements by the fact that
they do not relate strictly to historical or current facts. Such statements may
include words such as anticipate, estimate, expect, project, intend,
plan, believe and other words and terms of similar meaning in connection
with any discussion of future operating or financial performance. Any or all
of our forward-looking statements in this report may turn out to be wrong. They
can be affected by inaccurate assumptions we might make or by known or unknown
risks and uncertainties. Many factors mentioned in our discussion in this
report will be important in determining future results. Consequently, no
forward-looking statement can be guaranteed. Actual future results may vary
materially. Factors that may cause our plans, expectations, future financial
condition and results to change include, but are not limited to:



| |  |  | the highly competitive nature of the healthcare business;                                                                                                     
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | the efforts of insurers, healthcare providers and others to contain healthcare costs;                                                                         
|
| |  |  | the financial condition of managed care organizations that
pay us for healthcare services;                                                                    
|
| |  |  | possible changes in the levels and terms of reimbursement for
our charges by government programs, including Medicare and Medicaid
or other third-party payors;
|
| |  |  | changes in or failure to comply with federal, state or local
laws and regulations affecting the healthcare industry;                                          
|
| |  |  | the possible enactment of federal or state healthcare reform;                                                                                                 
|
| |  |  | the departure of key members of our management;                                                                                                               
|
| |  |  | claims and legal actions relating to professional liability;                                                                                                  
|
| |  |  | our ability to implement successfully our acquisition and development strategy;                                                                               
|
| |  |  | our ability to recruit and retain qualified personnel and physicians;                                                                                         
|
| |  |  | potential federal or state investigations;                                                                                                                    
|
| |  |  | fluctuations in the market value of our common stock or debt securities;                                                                                      
|
| |  |  | changes in accounting principles generally accepted in the
United States or in our critical accounting policies;                                              
|
| |  |  | changes in demographic, general economic and business
conditions, both nationally and in the regions in which we operate;                                     

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| |  |  | changes in the availability, cost and terms of insurance
coverage for our hospitals and physicians who practice at our
hospitals; and
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | other risks described in this report.                                                                                                

Except as required by law, we undertake no obligation to publicly update
any forward-looking statements, whether as a result of new information, future
events or otherwise. You are advised, however, to consult any additional
disclosures and discussions of risks we make in our Form 10-K, 10-Q and 8-K
reports and other filings with the Securities and Exchange Commission. These
are factors that we think could cause our actual results to differ materially
from expected results. Other factors besides those listed here also could
affect us adversely. This discussion is provided as permitted by the Private
Securities Litigation Reform Act of 1995.




ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

During the nine months ended September 30, 2003, there were no material
changes in the quantitative and qualitative disclosures about market risks
presented in our Annual Report on Form 10-K for the year ended December 31,
2002. Our only derivative instrument relates to an interest rate swap
agreement entered into during the three months ended September 30, 2003. See
Item 2. Managements Discussion and Analysis of Financial Condition and
Results of Operations  Market Risks Associated with Financial Instruments.




ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this report, our management carried
out an evaluation, with the participation of our chief executive officer and
chief financial officer, of the effectiveness of our disclosure controls and
procedures (as defined in Exchange Act Rules
13a-15(e) and 15d-15(e)). Based on their evaluation of such controls and
procedures, our management concluded that our disclosure controls and
procedures are effective to ensure that information required to be disclosed by
our company in the reports we file under the Securities Exchange Act of 1934,
as amended, is recorded, processed, summarized and reported within the time
periods specified in the rules and forms of the Securities and Exchange
Commission and that such information is accumulated and communicated to
management, including our chief executive officer and chief financial officer,
as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There have been no changes in our internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and
15d-15(f)) during the
period covered by this report that have materially affected, or are reasonably
likely to materially affect, our internal control over financial reporting.

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PART II
OTHER INFORMATION




Item 6. Exhibits and Reports on Form 8-K



|(a) |  | Exhibits
|--- |  | --------

|              |  |                                                                                                                                                                                                    
|------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|ExhibitNumber |  | Description of Exhibits                                                                                                                                                                            
|              |  |                                                                                                                                                                                                    
|3.1           |  | Amended and Restated Certificate of Incorporation of Province
Healthcare Company, as filed with the Delaware Secretary of State on
June 16, 2000 (a)                                               
|3.2           |  | Certificate of Amendment to the Amended and Restated
Certificate of Incorporation of Province Healthcare Company, as
filed with the Delaware Secretary of State on May 22, 2002 (b)                
|3.3           |  | Amended and Restated Bylaws of Province Healthcare Company
(c)                                                                                                                                     
|31.1          |  | Certification pursuant to Rule 13a-14(a) under the Securities
Exchange Act of 1934, as amended, as adopted pursuant to Section 302
of the Sarbanes-Oxley Act of 2002 (*)                           
|31.2          |  | Certification pursuant to Rule 13a-14(a) under the Securities
Exchange Act of 1934, as amended, as adopted pursuant to Section 302
of the Sarbanes-Oxley Act of 2002 (*)                           
|32.1          |  | Certifications pursuant to Rule 13a-14(b) of the Securities
Exchange Act of 1934, as amended, and 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(**)



---

|    |  |                                                                                                                                                                                      
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(a) |  | Incorporated by reference to the exhibits filed with the
Registrants Quarterly Report filed on Form 10-Q, for the quarterly
period ended June 30, 2000, Commission File No. 0-23639.
|   
|(b) |  | Incorporated by reference to the exhibits filed with the
Registrants Registration Statement on Form S-3/A, filed on June 11,
2002, Registration Number 333-86578.                   
|   
|(c) |  | Incorporated by reference to the exhibits filed with the
Registrants Current Report on Form 8-K, filed on December 12, 2002,
Commission File No. 0-23639.                           

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|*  |  | Filed herewith    
|-- |  | ------------------
|  
|** |  | Furnished herewith



|(b) |  | Reports on Form 8-K During the three months ended September 30, 2003, we furnished the
following report on Form 8-K:
|--- |  | --------------------------------------------------------------------------------------------------------------------



| | (i) |  | Form 8-K, furnished on August 4, 2003, with
respect to the announcement of our financial results for the
second quarter of 2003.
| | --- |  | --------------------------------------------------------------------------------------------------------------------------------

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

|                        |  |                             |  |                                               
|----------------------- |  | --------------------------- |  | ----------------------------------------------
|                        |  | PROVINCE HEALTHCARE COMPANY
|                        |  |                             |  |                                               
|Date: November 10, 2003 |  | By:                         |  | /s/ Brenda B. Rector                          
|                        |  |                             |  |                                               
|                        |  |                             |  | Brenda B. Rector
Vice President and Controller

26