<PAGE>   1

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                             ---------------------

                                   FORM 10-K

(MARK ONE)

   [X]     ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
           EXCHANGE ACT OF 1934

            FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000

                                       OR

   [ ]     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: 0-29818

                             ---------------------

                           LIFEPOINT HOSPITALS, INC.
             (Exact Name of Registrant as Specified in its Charter)

                             ---------------------

<TABLE>
<S>                                            <C>
                   DELAWARE                                      52-2165845
(State or Other Jurisdiction of Incorporation       (I.R.S. Employer Identification No.)
               or Organization)

         103 POWELL COURT, SUITE 200                               37027
             BRENTWOOD, TENNESSEE                                (Zip Code)
   (Address Of Principal Executive Offices)
</TABLE>

                                 (615) 372-8500
              (Registrant's Telephone Number, Including Area Code)

        Securities registered pursuant to Section 12(b) of the Act: None

          Securities registered pursuant to Section 12(g) of the Act:

                     Common Stock, par value $.01 per share
                                (Title of Class)

                        Preferred Stock Purchase Rights
                                (Title of Class)

     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 [ ]

     Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.  [ ]

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>   2

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

                       COMMISSION FILE NUMBER: 333-84755

                             ---------------------

                       LIFEPOINT HOSPITALS HOLDINGS, INC.
             (Exact Name of Registrant as Specified in its Charter)

                             ---------------------

<TABLE>
<S>                                            <C>
                   DELAWARE                                      52-2167869
(State or Other Jurisdiction of Incorporation       (I.R.S. Employer Identification No.)
               or Organization)

         103 POWELL COURT, SUITE 200                               37027
             BRENTWOOD, TENNESSEE                                (Zip Code)
   (Address of Principal Executive Offices)
</TABLE>

                                 (615) 372-8500
              (Registrant's Telephone Number, including Area Code)

        Securities registered pursuant to Section 12(b) of the Act: None

        Securities registered pursuant to Section 12(g) of the Act: None

     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 [ ]

     Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.  [ ]

     The aggregate market value of the shares of Common Stock (based upon the
closing sale price of these shares on February 27, 2001) of LifePoint Hospitals,
Inc. held by non-affiliates on February 27, 2001, was approximately
$1,183,590,040.

     As of February 27, 2001, the number of outstanding shares of Common Stock
of LifePoint Hospitals, Inc. was 34,731,655, and all of the shares of Common
Stock of LifePoint Hospitals Holdings, Inc. were owned by LifePoint Hospitals,
Inc.

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>   3

                      DOCUMENTS INCORPORATED BY REFERENCE

     Portions of the definitive proxy statement for our annual meeting of
stockholders to be held on May 14, 2001 are incorporated by reference into Part
III of this report.

                                     PART I

ITEM 1.  BUSINESS

GENERAL

     We operate 21 general, acute care hospitals with an aggregate of 1,988
licensed beds in growing, non-urban communities. In all but one of our
communities, our hospital is the only provider of acute care hospital services.
Our hospitals are located in Alabama, Florida, Kansas, Kentucky, Tennessee, Utah
and Wyoming. For the year ended December 31, 2000, we generated $557.1 million
in net revenues and EBITDA of $105.8 million.

     We were formed as a division of HCA -- The Healthcare Company in November
1997 to operate general, acute care hospitals in non-urban communities. We
became an independent, publicly-traded company on May 11, 1999 when HCA
distributed all outstanding shares of our common stock to its stockholders.

THE NON-URBAN HEALTHCARE MARKET

     We believe that growing, non-urban healthcare markets are attractive
because of the following factors:

     - Less Competition.  Non-urban communities have smaller populations with
       fewer hospitals and other healthcare service providers. We believe that
       the smaller populations and relative significance of the one or two acute
       care hospitals in these markets may discourage the entry of alternate
       non-hospital providers, including outpatient surgery centers and
       rehabilitation or diagnostic imaging centers.

     - More Favorable Payment Environment.  The lower number of healthcare
       providers in non-urban markets limits the ability of managed care
       organizations to create price competition among local providers.
       Consequently, non-urban hospitals can often negotiate reimbursement rates
       with managed care plans that are more favorable, in general, than those
       available in urban markets. In addition, there is generally a lower level
       of managed care presence in non-urban markets than in urban markets. We
       believe that non-urban markets are less attractive to these payors
       because their limited size and diverse, non-national employer bases
       minimize the ability of managed care organizations to achieve economies
       of scale. We believe that marketing expenses incurred by managed care
       plans do not produce the level of return in non-urban markets that they
       do in urban markets.

     - Community Focus.  We believe that non-urban areas generally view the
       local hospital as an integral part of the community. Therefore, we
       believe patients and physicians tend to be more loyal to the hospital.

     - Acquisition Opportunities.  Currently, not-for-profit and governmental
       entities own most non-urban hospitals. These entities typically have
       limited access to the capital needed to keep pace with advances in
       medical technology. In addition, these entities sometimes lack the
       management resources necessary to control hospital expenses, recruit and
       retain physicians, expand healthcare services and comply with
       increasingly complex reimbursement and managed care requirements. As a
       result, patients may migrate to, may be referred by local physicians to,
       or may be encouraged by managed care plans to travel to, hospitals in
       larger, urban markets. We believe that as a result of these pressures,
       not-for-profit and governmental owners of non-urban hospitals who wish to
       preserve the local availability of quality healthcare services are
       interested in selling or leasing these hospitals to companies, like us,
       that are committed to the local delivery of healthcare and that have
       greater access to capital and management resources.

                                        1
<PAGE>   4

OPERATING PHILOSOPHY

     We are committed to operating acute care hospitals in growing, non-urban
markets. As a result, we adhere to an operating philosophy that is focused on
the unique patient and provider needs and opportunities in these communities.
This philosophy includes a commitment to:

     - improving the quality and scope of available healthcare services;

     - providing physicians a positive environment in which to practice
       medicine, with access to necessary equipment and resources;

     - providing an outstanding work environment for employees;

     - recognizing and expanding the hospital's role as a community asset; and

     - continuing to improve each hospital's financial performance.

BUSINESS STRATEGY

     We manage our hospitals in accordance with our operating philosophy and
have developed the following strategies tailored for each of our markets:

     - Expand Breadth of Service and Attract Community Patients.  We strive to
       increase revenues by improving the quality and broadening the scope of
       healthcare services available at our facilities, and to recruit
       physicians with a broader range of specialties. We have undertaken
       projects in the majority of our hospitals targeted at expanding or
       renovating specialty service facilities including the following:

<TABLE>
<CAPTION>
                                                                             CAPITAL
                                                                  TOTAL    EXPENDITURES
                                                    NUMBER OF    PROJECT   ------------
EXPANSION OR RENOVATION PROJECT                     FACILITIES   BUDGET    1999    2000
-------------------------------                     ----------   -------   ----    ----
                                                                 (DOLLARS IN MILLIONS)
<S>                                                 <C>          <C>       <C>     <C>
Operating room expansion..........................      6         $22.4    $5.8    $6.4
MRI addition......................................      6           7.9      --     3.0
CT scanner addition...............................      8           3.7     2.7     0.6
Emergency room expansion..........................      2           2.5     0.4     1.7
Obstetric care addition...........................      2           6.1     4.5     1.4
</TABLE>

      We believe that our expansion of available treatments and our community
      focus will encourage residents in the non-urban markets that we serve to
      seek care locally at our facilities rather than at facilities outside the
      area.

     - Strengthen Physician Recruiting and Retention.  We seek to increase our
       revenue by enhancing the quality of care available locally. We believe
       that recruiting physicians in local communities is critical to increasing
       the quality of healthcare and the breadth of available services at our
       facilities. Following the distribution of our stock from HCA, we
       recruited 70 physicians in 1999, including 42 specialists. In 2000, we
       recruited 80 physicians, including 49 specialists. Our physician
       recruitment program is currently focused primarily on recruiting
       additional specialty care physicians. Our management is focused on
       working more effectively with individual physicians and physician
       practices. We believe that expansion of the range of available treatments
       at our hospitals should also assist in physician recruiting and
       contribute to the sense that our hospitals are community assets.

     - Retain and Develop Stable Management.  We seek to retain the executive
       teams at our hospitals to enhance medical staff relations and maintain
       continuity of relationships within the community. We make a commitment to
       the rural communities that we serve by focusing our recruitment of
       managers and healthcare professionals on those who wish to live and
       practice in the communities in which our hospitals are located. Almost
       85% of the chief executive officers at our hospitals have been in their
       current position since the distribution of our stock from HCA in May
       1999.

                                        2
<PAGE>   5

     - Improve Managed Care Position.  We strive to improve our revenues from
       managed care plans by negotiating facility-specific contracts with these
       payors on terms appropriate for smaller, non-urban markets. As part of
       HCA, our facilities typically were included in managed care contracts
       negotiated by HCA on a market wide basis emphasizing large urban
       facilities. Our independence from HCA allows us to negotiate contracts
       that are more appropriate for non-urban markets. In addition, our
       position as a significant provider of acute care services in our markets
       enables us to negotiate contract terms that are generally more favorable
       for our facilities and to decrease the levels of discount in the
       arrangements in which we participate.

     - Improve Expense Management.  We seek to control costs by, among other
       things, reducing labor costs, improving labor productivity, controlling
       supply expenses and reducing uncollectible revenues. We have implemented
       cost control initiatives including adjusting staffing levels according to
       patient volumes, modifying supply purchases according to usage patterns
       and providing training to hospital staff in more efficient billing and
       collection processes. For the year ended December 31, 2000 compared to
       the year ended December 31, 1999, salaries and benefits decreased as a
       percentage of revenue to 40.2% from 42.2%, supplies decreased to 12.0%
       from 12.5%, and other operating expenses decreased to 21.3% from 22.7%,
       respectively. We believe that as our company grows, we will likely
       benefit from our ability to spread fixed administrative costs over a
       larger base of operations.

     - Acquire Other Hospitals.  We continue to pursue a disciplined acquisition
       strategy and seek to identify and acquire attractive hospitals in
       growing, non-urban markets. We also regularly monitor our existing
       facilities and seek to take advantage of opportunities to improve our
       portfolio of hospitals. We seek to acquire hospitals that are located in
       non-urban markets with above average population growth, a strong economic
       base and a favorable payor mix. In 2000, we acquired two hospitals that
       met this criteria. We acquired Lander Valley Medical Center in Lander,
       Wyoming and Putnam Community Medical Center in Palatka, Florida on July
       1, 2000 and June 16, 2000, respectively. Each of these hospitals is
       located in a growing non-urban area where patients often travel outside
       of the community for healthcare services. By implementing our operating
       strategies, we believe that we can attract many of these patients that
       historically have sought care elsewhere.

      We believe that our strategic goals align our interests with those of the
      local communities served by our hospitals. We believe that the following
      qualities enable us to successfully compete for acquisitions:

      - our commitment to maintaining the local availability of healthcare
        services;

      - our reputation for providing market-specific, high quality healthcare;

      - our focus on physician recruiting and retention;

      - our management's operating experience; and

      - our access to financing.

      We have also sold under-performing or non-strategic facilities to
      strengthen our overall portfolio of hospitals. During the past year, we
      sold Springhill Medical Center, Barrow Medical Center, Trinity Hospital
      and Halstead Hospital to community-focused buyers. In addition, we sold
      Riverview Medical Center to one of the largest acute care hospitals in
      Baton Rouge, Louisiana. These sales allowed us to pay down existing
      borrowings under our credit facility, reinvest in existing markets and
      provide funds for future acquisitions.

OPERATIONS

     Our general, acute care hospitals usually provide the range of medical and
surgical services commonly available in hospitals in non-urban markets. These
hospitals also provide diagnostic and emergency services, as well as outpatient
and ancillary services including outpatient surgery, laboratory, radiology,
respiratory therapy and physical therapy.
                                        3
<PAGE>   6

     A board of trustees governs each of our hospitals. The board of trustees
includes members of the hospital's medical staff as well as community leaders.
The board establishes policies concerning medical, professional and ethical
practices, monitors these practices, and is responsible for ensuring that these
practices conform to established standards. We maintain quality assurance
programs to support and monitor quality of care standards and to meet
accreditation and regulatory requirements. We also monitor patient care
evaluations and other quality of care assessment activities on a regular basis.

     Like most hospitals located in non-urban areas, our hospitals do not engage
in extensive medical research and medical education programs. However, a number
of our hospitals have an affiliation with medical schools, including the
clinical rotation of medical students.

     In addition to providing capital resources, we make available a variety of
management services to our healthcare facilities. These services include:

     - information systems;

     - leasing contracts;

     - accounting, financial and clinical systems;

     - legal support;

     - personnel management;

     - internal auditing; and

     - resource management.

     We participate, along with HCA, Triad and Health Management Associates,
Inc. in a group purchasing organization which makes certain national supply and
equipment contracts available to our facilities.

PROPERTIES

     The following table lists the hospitals owned, except as otherwise
indicated, by us as of March 1, 2001:

<TABLE>
<CAPTION>
                                                                              LICENSED
                     FACILITY NAME                           CITY      STATE    BEDS
                     -------------                       ------------  -----  --------
<S>                                                      <C>           <C>    <C>
Andalusia Hospital.....................................  Andalusia      AL      101
Bartow Memorial Hospital...............................  Bartow         FL       56
Putnam Community Medical Center........................  Palatka        FL      141
Western Plains Regional Hospital(1)....................  Dodge City     KS      110
Georgetown Community Hospital..........................  Georgetown     KY       75
Jackson Purchase Medical Center........................  Mayfield       KY      107
Meadowview Regional Medical Center.....................  Maysville      KY      111
Bourbon Community Hospital.............................  Paris          KY       58
Logan Memorial Hospital................................  Russellville   KY       92
Lake Cumberland Regional Hospital......................  Somerset       KY      227
Bluegrass Community Hospital(2)........................  Versailles     KY       25
Smith County Memorial Hospital.........................  Carthage       TN       63
Crockett Hospital......................................  Lawrenceburg   TN      107
</TABLE>

                                        4
<PAGE>   7

<TABLE>
<CAPTION>
                                                                              LICENSED
                     FACILITY NAME                           CITY      STATE    BEDS
                     -------------                       ------------  -----  --------
<S>                                                      <C>           <C>    <C>
Livingston Regional Hospital...........................  Livingston     TN      122
Hillside Hospital......................................  Pulaski        TN       95
Emerald-Hodgson Hospital...............................  Sewanee        TN       40
Southern Tennessee Medical Center......................  Winchester     TN      159
Castleview Hospital....................................  Price          UT       88
Ashley Valley Medical Center...........................  Vernal         UT       39
Lander Valley Medical Center(3)........................  Lander         WY      102
Riverton Memorial Hospital.............................  Riverton       WY       70
</TABLE>

---------------

(1) We operate and hold a 70% equity interest in a consolidated joint venture
    which owns and operates Western Plains Regional Hospital.
(2) We lease Bluegrass Community Hospital from Woodford Healthcare, Inc., a
    Kentucky not-for-profit corporation, pursuant to a lease agreement that
    expires on December 31, 2002. We can extend the term of the lease until
    December 31, 2014 and have an option to purchase the hospital between
    January 1, 2004 and January 1, 2007.
(3) We lease the real estate associated with Lander Valley Medical Center from
    the City of Lander, Wyoming pursuant to a ground lease that expires on
    December 31, 2073.

     We operate medical office buildings in conjunction with many of our
hospitals. These office buildings are primarily occupied by physicians who
practice at our hospitals.

     Our headquarters are located in approximately 25,500 square feet of space
in one office building in Brentwood, Tennessee. Our headquarters, hospitals and
other facilities are suitable for their respective uses and are, in general,
adequate for our present needs. Our obligations under our bank credit facilities
are secured by a pledge of substantially all of our assets, including first
priority mortgages on each of our hospitals.

SERVICES AND UTILIZATION

     We believe that two important factors relating to the overall utilization
of a hospital are the quality and market position of the hospital and the
number, quality and specialties of physicians providing patient care within the
facility. Generally, we believe that the ability of a hospital to meet the
healthcare needs of its community is determined by the following:

     - breadth of services;

     - level of technology; and

     - emphasis on quality of care and convenience for patients and physicians.

     Other factors which impact utilization include:

     - the size of and growth in local population;

     - local economic conditions;

     - the availability of reimbursement programs such as Medicare and Medicaid;
       and

     - the ability to negotiate contracts with managed care organizations that
       are appropriate for non-urban markets.

     Utilization across the industry also is being affected by improved
treatment protocols as a result of advances in medical technology and
pharmacology.

                                        5
<PAGE>   8

     The following table contains operating statistics for our hospitals for
each of the past five years ended December 31. Medical/surgical hospital
operations are subject to seasonal fluctuations, including decreases in patient
utilization during holiday periods and increases in patient utilization during
the cold weather months.

<TABLE>
<CAPTION>
                                                       YEARS ENDED DECEMBER 31,
                                            ----------------------------------------------
                                             1996     1997      1998      1999      2000
                                            ------   -------   -------   -------   -------
<S>                                         <C>      <C>       <C>       <C>       <C>
Number of hospitals at end of period......      22        22        23        23        20
Number of licensed beds at end of
  period(a)...............................   2,074     2,080     2,169     2,169     1,963
Weighted average licensed beds(b).........   2,060     2,078     2,127     2,169     2,056
Admissions(c).............................  59,381    60,487    62,269    64,081    66,085
Equivalent admissions(d)..................  98,869   105,126   110,029   114,321   119,812
Average length of stay (days)(e)..........     4.7       4.4       4.4       4.2       4.1
</TABLE>

---------------

(a)   Licensed beds are those beds for which a facility has been granted
      approval to operate from the applicable state licensing agency.
(b)   Represents the average number of licensed beds weighted based on periods
      owned.
(c)   Represents the total number of patients admitted (in the facility for a
      period in excess of 23 hours) to our hospitals and is used by management
      and investors as a general measure of inpatient volume. Amounts for the
      years ended December 31, 1998 and 1999 have been restated to conform to
      current year definitions.
(d)   Equivalent admissions is used by management and investors as a general
      measure of combined inpatient and outpatient volume. Equivalent admissions
      is computed by multiplying admissions (inpatient volume) by the sum of
      gross inpatient revenue and gross outpatient revenue and then dividing the
      resulting amount by gross inpatient revenue. The equivalent 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. Amounts for the years
      ended December 31, 1998 and 1999 have been restated to conform to current
      year definitions.
(e)   Represents the average number of days admitted patients stay in our
      hospitals. Average length of stay has declined due to the continuing
      pressures from managed care and other payers to restrict admissions and
      reduce the number of days that are covered by the payers for certain
      procedures, and by technological and pharmaceutical improvements.

     Our hospitals have experienced significant growth in outpatient care
services compared to inpatient care services. We believe outpatient services
provided at our hospitals have increased for two primary reasons. First, because
of our ongoing recruiting efforts, many new physicians work at our hospitals.
These new physicians tend to provide primarily outpatient care services until
they become established in the community and develop a patient base. Once they
become established in a community, inpatient admissions from physicians tend to
increase.

     Second, improvements in technology and clinical practices and hospital
payment changes by Medicare, insurance carriers and self-insured employers have
also resulted in increased outpatient care services relative to inpatient care
services. These hospital payment changes generally encourage the utilization of
outpatient, rather than inpatient, services whenever possible, and shortened
lengths of stay for inpatient care.

     In response to this increasing demand for outpatient care, we are
reconfiguring some of our hospitals to more effectively accommodate outpatient
services and restructuring existing surgical capacity in some of our hospitals
to permit additional outpatient volume and a greater variety of outpatient
services.

                                        6
<PAGE>   9

SOURCES OF REVENUE

     Our hospitals receive payment for patient services from the federal
government primarily under the Medicare program, state governments under their
respective Medicaid programs, HMOs, PPOs and other private insurers, as well as
directly from patients. The approximate percentages of net patient revenues from
continuing operations of our facilities from these sources during the periods
specified below were as follows:

<TABLE>
<CAPTION>
                                                                   YEARS ENDED
                                                                  DECEMBER 31,
                                                              ---------------------
                                                              1998    1999    2000
                                                              -----   -----   -----
<S>                                                           <C>     <C>     <C>
Medicare....................................................   37.8%   34.8%   34.6%
Medicaid....................................................   11.1    12.6    12.4
Managed Care................................................   20.1    24.3    27.4
Other sources...............................................   31.0    28.3    25.6
                                                              -----   -----   -----
          Total.............................................  100.0%  100.0%  100.0%
                                                              =====   =====   =====
</TABLE>

     Medicare provides hospital and medical insurance benefits to persons age 65
and over, some disabled persons and persons with end-stage renal disease.
Medicaid, a joint federal-state program that is administered by the states,
provides hospital benefits to qualifying individuals who are unable to afford
care. All of our hospitals are certified as providers of Medicare and Medicaid
services. Amounts received under the Medicare and Medicaid programs are
generally significantly less than the hospital's customary charges for the
services provided.

     To attract additional volume, most of our hospitals offer discounts from
established charges to certain large group purchasers of healthcare services,
including private insurance companies, employers, HMOs, PPOs and other managed
care plans. These discount programs often limit our ability to increase charges
in response to increasing costs.

     In addition to government programs, our hospitals are reimbursed by private
payers including HMOs, PPOs, private insurance companies, employers and
individual private payers. Patients are generally not responsible for any
difference between customary hospital charges and amounts reimbursed for the
services under Medicare, Medicaid, some private insurance plans, HMOs or PPOs,
but are responsible for services not covered by these plans, exclusions,
deductibles or co-insurance features of their coverage. The amount of
exclusions, deductibles and co-insurance has generally been increasing each
year.

COMPETITION

     The hospital industry is highly competitive. We compete with other
hospitals and healthcare providers for patients. The competition among hospitals
and other healthcare providers for patients has intensified in recent years. Our
hospitals are located in growing, non-urban market areas. In 20 of our 21
communities, our hospitals face no direct competition within their communities
because there are no other hospitals in their communities. However, these
hospitals do face competition from hospitals outside of their communities,
including hospitals in the market area and nearby urban areas that provide more
complex services. These facilities are generally located in excess of 25 miles
from our facilities. Patients in our primary service areas may travel to these
other hospitals for a variety of reasons, including the need for services we do
not offer or physician referrals. Some of these competing hospitals use
equipment and services more specialized than those available at our hospitals.
Patients who require services from these other hospitals may subsequently shift
their preferences to those hospitals for services we do provide. In addition,
some of the hospitals that compete with us are owned by tax-supported
governmental agencies or not-for-profit entities supported by endowments and
charitable contributions. These hospitals can make capital expenditures without
paying sales, property and income taxes. We also face competition from other
specialized care providers, including outpatient surgery, orthopedic, oncology
and diagnostic centers.

     State certificate of need laws, which place limitations on a hospital's
ability to expand hospital services and add new equipment, also may have the
effect of restricting competition. Of the seven states

                                        7
<PAGE>   10

where we own hospitals, Alabama, Florida, Kentucky and Tennessee have
certificate of need laws. The application process for approval of covered
services, facilities, changes in operations and capital expenditures is,
therefore, highly competitive in these states.

     The number and quality of the physicians on a hospital's staff is an
important factor in a hospital's competitive advantage. Physicians decide
whether a patient is admitted to the hospital and the procedures to be
performed. We believe that physicians refer patients to a hospital primarily on
the basis of the quality of services it renders to patients and physicians, the
quality of other physicians on the medical staff, the location of the hospital
and the quality of the hospital's facilities, equipment and employees. Admitting
physicians may be on the medical staffs of other hospitals in addition to those
of our hospitals.

     One element of our business strategy is expansion through the acquisition
of acute care hospitals in growing, non-urban markets. The competition to
acquire rural hospitals is significant. We intend to acquire, on a selective
basis, hospitals that are similar to those we currently own and operate.
However, we may not find suitable acquisitions that can be accomplished on terms
favorable to us.

EMPLOYEES AND MEDICAL STAFF

     At January 31, 2001, we had approximately 6,450 employees, including
approximately 1,560 part-time employees. None of our employees are subject to
collective bargaining agreements. We consider our employee relations to be good.
While some of our hospitals experience union organizing activity from time to
time, we do not expect these efforts to materially affect our future operations.
Our hospitals, like most hospitals, have experienced labor costs rising faster
than the general inflation rate.

     Our hospitals are staffed by licensed physicians who have been admitted to
the medical staff of individual hospitals. Any licensed physician may apply to
be admitted to the medical staff of any of our hospitals, but admission to the
staff must be approved by the hospital's medical staff and the appropriate
governing board of the hospital in accordance with established credentialing
criteria. With certain exceptions, physicians generally are not employees of our
hospitals. However, we have conducted a physician practice management program
pursuant to which some physicians provide services in our hospitals by contract.
We attempt to restructure or phase out these physician contracts as they come up
for renewal and do not intend to expand this program in the future.

GOVERNMENT REGULATION

     Overview.  All participants in the healthcare industry are required to
comply with extensive government regulation at the federal, state and local
levels. Under these laws and regulations, hospitals must meet requirements to be
certified as hospitals and qualified to participate in government programs,
including the Medicare and Medicaid programs. These requirements relate to the
adequacy of medical care, equipment, personnel, operating policies and
procedures, maintenance of adequate records, hospital use, rate-setting,
compliance with building codes, and environmental protection laws. There are
also extensive regulations governing a hospital's participation in these
government programs. If we fail to comply with applicable laws and regulations,
we can be subject to criminal penalties and civil sanctions, our hospitals can
lose their licenses and we could lose our ability to participate in these
government programs. In addition, government regulations may change. If that
happens, we may have to make changes in our facilities, equipment, personnel and
services so that our hospitals remain certified as hospitals and qualified to
participate in these programs. We believe that our hospitals are in substantial
compliance with current federal, state and local regulations and standards.

     Hospitals are subject to periodic inspection by federal, state, and local
authorities to determine their compliance with applicable regulations and
requirements necessary for licensing and certification. All of our hospitals are
licensed under appropriate state laws and are qualified to participate in
Medicare and Medicaid programs. In addition, all of our hospitals are accredited
by the Joint Commission on Accreditation of Healthcare Organizations. This
accreditation indicates that a hospital satisfies the applicable health and
administrative standards to participate in Medicare and Medicaid programs.

                                        8
<PAGE>   11

     Fraud and Abuse Laws.  Participation in the Medicare program is heavily
regulated by federal statute and regulation. If a hospital fails substantially
to comply with the numerous federal laws governing a facility's activities, the
hospital's participation in the Medicare program may be terminated and/or civil
or criminal penalties may be imposed. For example, a hospital may lose its
ability to participate in the Medicare and/or Medicaid programs if it performs
any of the following acts:

     - making claims to Medicare for services not provided or misrepresenting
       actual services provided in order to obtain higher payments;

     - paying money to induce the referral of patients where services are
       reimbursable under a federal or state health program; or

     - failing to provide appropriate emergency medical screening services to
       any individual who comes to a hospital's emergency room or otherwise
       failing to properly treat and transfer emergency patients.

     HIPAA broadened the scope of the fraud and abuse laws by adding several
criminal statutes that are not related to receipt of payments from a federal
healthcare program. HIPAA created civil penalties for conduct, including
upcoding and billing for medically unnecessary goods or services. It established
new enforcement mechanisms to combat fraud and abuse. These include a bounty
system, where a portion of the payments recovered is returned to the government
agencies, as well as a whistleblower program. This law also expanded the
categories of persons that may be excluded from participation in federal and
state healthcare programs.

     A provision of the Social Security Act, known as the "anti-kickback"
statute, prohibits the payment, receipt, offer, or solicitation of money with
the intent of generating referrals or orders for services or items covered by a
federal or state healthcare program. Violations of the anti-kickback statute may
be punished by criminal and civil fines, exclusion from federal and state
healthcare programs, and damages up to three times the total dollar amount
involved.

     The Office of Inspector General of the Department of Health and Human
Services is responsible for identifying fraud and abuse activities in government
programs. In order to fulfill its duties, the Office of Inspector General
performs audits, investigations, and inspections. In addition, it provides
guidance to healthcare providers by identifying types of activities that could
violate the anti-kickback statute. The Office of the Inspector General has
identified the following incentive arrangements as potential violations:

     - payment of any incentive by a hospital each time a physician refers a
       patient to the hospital;

     - use of free or significantly discounted office space or equipment for
       physicians in facilities usually located close to the hospital;

     - provision of free or significantly discounted billing, nursing, or other
       staff services;

     - free training for a physician's office staff including management and
       laboratory techniques;

     - guarantees which provide that if the physician's income fails to reach a
       predetermined level, the hospital will pay any portion of the remainder;

     - low-interest or interest-free loans, or loans which may be forgiven if a
       physician refers patients to the hospital;

     - payment of the costs of a physician's travel and expenses for
       conferences;

     - payment of services which require few, if any, substantive duties by the
       physician, or payment for services in excess of the fair market value of
       the services rendered; or

     - purchasing goods or services from physicians at prices in excess of their
       fair market value.

     We have a variety of financial relationships with physicians who refer
patients to our hospitals. Physician investors have an ownership interest in one
of our hospitals. Physicians may also own our stock. We also have contracts with
physicians providing for a variety of financial arrangements, including
employment contracts, leases, independent contractor agreements, and
professional service agreements. We
                                        9
<PAGE>   12

provide financial incentives to recruit physicians to relocate to communities
served by our hospitals. These incentives include minimum revenue guarantees
and, in some cases, loans. The Office of Inspector General is authorized to
publish regulations outlining activities and business relationships that would
be deemed not to violate the anti-kickback statute. These regulations are known
as "safe harbor" regulations. The failure of a particular activity to comply
with the safe harbor regulations does not mean that the activity violates the
anti-kickback statute. We believe that all of our business arrangements are in
full compliance with the anti-kickback law. We try to structure each of our
arrangements, especially each of our business arrangements with physicians, to
fit as closely as possible within an applicable safe harbor. However, not all of
our business arrangements fit wholly within safe harbors, and so we cannot
guarantee that these arrangements will not be scrutinized by government
authorities, or if scrutinized, that they will be determined to be in compliance
with the anti-kickback law or other applicable laws. If that happened, we would
be subject to criminal and civil penalties and/or possible exclusion from
participating in Medicare, Medicaid, or other governmental healthcare programs.

     The Social Security Act also includes a provision commonly known as the
"Stark law." This law prohibits physicians from referring Medicare and Medicaid
patients to selected types of healthcare entities in which they or any of their
immediate family members have ownership or other financial interests. These
types of referrals are commonly known as "self referrals." Sanctions for
violating the Stark law include civil monetary penalties, assessments equal to
twice the dollar value of each service, and exclusion from Medicare and Medicaid
programs. There are ownership and compensation arrangement exceptions to the
self-referral prohibition. One exception allows a physician to make a referral
to a hospital if the physician owns an interest in the entire hospital, as
opposed to an ownership interest in a department of the hospital. Another
exception allows a physician to refer patients to a healthcare entity in which
the physician has an ownership interest if the entity is located in a rural
area, as defined in the statute. There are also exceptions for many of the
customary financial arrangements between physicians and providers, including
employment contracts, leases, and recruitment agreements. The federal government
released regulations interpreting some, but not all, of the provisions included
in the Stark law in January 2001, and the government expects to release a second
phase of final Stark regulations in the near future. Phase II of the Stark
regulations to be published at an unknown date in the future will address those
exceptions not addressed in the regulations released on January 4, 2001. We have
structured our financial arrangements with physicians to comply with the
statutory exceptions included in the Stark law. However, Phase II of the new
regulations may interpret provisions of this law in a manner different from the
manner with which we have interpreted them. We cannot predict the effect these
regulations will have on us.

     Many states in which we operate also have adopted, or are considering
adopting, similar laws. Some of these state laws apply even if the payment for
care does not come from the government. These statutes typically provide
criminal and civil penalties as well as loss of licensure. While there is little
precedent for the interpretation or enforcement of these state laws, we have
attempted to structure our financial relationships with physicians and others in
light of these laws. However, if we are found to have violated these state laws,
it could result in the imposition of criminal and civil penalties as well as
possible licensure revocation.

     Corporate Practice of Medicine and Fee-Splitting.  Some states have laws
that prohibit unlicensed persons or business entities, including corporations,
from employing physicians. Some states also have adopted laws that prohibit
direct or indirect payments or fee-splitting arrangements between physicians and
unlicensed persons or business entities. Possible sanctions for violations of
these restrictions include loss of a physician's license, civil and criminal
penalties and rescission of business arrangements. These laws vary from state to
state, are often vague and have seldom been interpreted by the courts or
regulatory agencies. We attempt to structure our arrangements with healthcare
providers to comply with the relevant state laws and the few available
regulatory interpretations.

     Emergency Medical Treatment and Active Labor Act.  The Emergency Medical
Treatment and Active Labor Act imposes requirements as to the care that must be
provided to anyone who comes to facilities providing emergency medical services
seeking care. Regulations have recently been adopted that expand the areas
within a facility that must provide emergency screening and treatment to include
                                        10
<PAGE>   13

provider-based outpatient departments. Sanctions for failing to fulfill these
requirements include exclusion from participation in Medicare and Medicaid
programs and civil money penalties. In addition, the law creates private civil
remedies which enable an individual who suffers personal harm as a direct result
of a violation of the law to sue the offending hospital for damages and
equitable relief. A medical facility that suffers a financial loss as a direct
result of another participating hospital's violation of the law also has a
similar right. Although we believe we comply with the Emergency Medical
Treatment and Active Labor Act, differing interpretations are applied by the
regulatory agencies responsible for enforcement.

     Federal False Claims Act.  Another trend in healthcare litigation is the
use of the Federal False Claims Act. The Federal False Claims Act prohibits
providers from knowingly submitting false claims for payment to the federal
government. This law has been used not only by the U.S. government, but also by
individuals who bring an action on behalf of the government under the law's "qui
tam" or "whistleblower" provisions. When a private party brings a qui tam action
under the Federal False Claims Act, the defendant will generally not be aware of
the lawsuit until the government makes a determination whether it will intervene
and take a lead in the litigation.

     Civil liability under the Federal False Claims Act can be up to three times
the actual damages sustained by the government plus civil penalties for each
separate false claim. There are many potential bases for liability under the
Federal False Claims Act. Although liability under the Federal False Claims Act
arises when an entity knowingly submits a false claim for reimbursement to the
federal government, the Federal False Claims Act defines the term "knowingly"
broadly. Thus, although simple negligence generally will not give rise to
liability under the Federal False Claims Act, submitting a claim with reckless
disregard to its truth or falsity can constitute "knowingly" submitting a claim.

     Healthcare Reform.  The healthcare industry continues to attract much
legislative interest and public attention. In recent years, an increasing number
of legislative proposals have been introduced or proposed in Congress and in
some state legislatures that would affect major changes in the healthcare
system. Proposals that have been considered include cost controls on hospitals,
insurance market reforms to increase the availability of group health insurance
to small businesses, and mandatory health insurance coverage for employees. The
costs of implementing some of these proposals would be financed, in part, by
reductions in payments to healthcare providers under Medicare, Medicaid, and
other government programs.

     Conversion Legislation.  Many states have adopted legislation regarding the
sale or other disposition of hospitals operated by not-for-profit entities. In
other states that do not have specific legislation, the attorneys general have
demonstrated an interest in these transactions under their general obligations
to protect charitable assets from waste. These legislative and administrative
efforts primarily focus on the appropriate valuation of the assets divested and
the use of the proceeds of the sale by the not-for-profit seller. These review
and, in some instances, approval processes can add additional time to the
closing of a not-for-profit hospital acquisition. Future actions on the state
level may seriously delay or even prevent our ability to acquire hospitals.

     Certificates of Need.  The construction of new facilities, the acquisition
of existing facilities and the addition of new services and expensive equipment
at our facilities may be subject to state laws that require prior approval by
state regulatory agencies. These certificate of need laws generally require that
a state agency determine the public need and give approval prior to the
construction or acquisition of facilities or the addition of new services. We
operate hospitals in four states that have adopted certificate of need laws,
Kentucky, Tennessee, Florida and Alabama. If we fail to obtain necessary state
approval, we will not be able to expand our facilities, complete acquisitions or
add new services in these states. Violation of these state laws may result in
the imposition of civil sanctions or the revocation of a hospital's licenses.

     HIPAA Privacy and Security Requirements.  The Administrative Simplification
Provisions of the Health Insurance Portability and Accountability Act of 1996
require the use of uniform electronic data transmission standards for healthcare
claims and payment transactions submitted or received electronically. These
provisions are intended to encourage electronic commerce in the healthcare
industry. On August 17, 2000, the Health Care Financing Administration published
final regulations establishing electronic data
                                        11
<PAGE>   14

transmission standards that all healthcare providers must use when submitting or
receiving certain healthcare transactions electronically. Compliance with these
regulations is required by October 16, 2002. We cannot predict the impact that
final regulations, when fully implemented, will have on us.

     The Administrative Simplification Provisions also require the Health Care
Financing Administration to adopt standards to protect the security and privacy
of health-related information. The Health Care Financing Administration proposed
regulations containing security standards on August 12, 1998. These proposed
security regulations have not been finalized, but as proposed, would require
healthcare providers to implement organizational and technical practices to
protect the security of electronically maintained or transmitted health-related
information. In addition, the Health Care Financing Administration released
final regulations containing privacy standards in December 2000. These privacy
regulations are effective April 14, 2001, but compliance with these regulations
is not required until April 2003. Therefore, these privacy regulations could be
further amended prior to the compliance date. However, as currently drafted, the
privacy regulations will extensively regulate the use and disclosure of
individually identifiable health-related information. The security regulations,
as proposed, and the privacy regulations could impose significant costs on our
facilities in order to comply with these standards. We cannot predict the final
form that these regulations will take or the impact that final regulations, when
fully implemented, will have on us. If we violate HIPAA, we are subject to
monetary fines and penalties, criminal sanctions and civil causes of action.

PAYMENT

     Medicare.  Under the Medicare program, we are paid for inpatient and
outpatient services performed by our hospitals.

     Payments for inpatient acute services are generally made pursuant to a
prospective payment system, commonly known as "PPS." Under PPS, our hospitals
are paid a prospectively determined amount for each hospital discharge based on
the patient's diagnosis. Specifically, each discharge is assigned to a diagnosis
related group, commonly known as a "DRG," based on the patient's condition and
treatment during the relevant inpatient stay. This assignment also effects the
prospectively determined capital rate paid with each DRG. Each DRG is assigned a
payment rate that is prospectively set using national average costs per case for
treating a patient for a particular diagnosis. DRG payments do not consider the
actual costs incurred by a hospital in providing a particular inpatient service.
However, DRG and capital payments are adjusted by a predetermined geographic
adjustment factor assigned to the geographic area in which the hospital is
located. In addition to DRG and capital payments, hospitals may qualify for
"outlier" payments. Hospitals qualify for outlier payments when the relevant
patient's treatment costs exceed a specified threshold. Hospitals qualify for
disproportionate share payments when their percentage of low income patients
exceed specified thresholds. Under the Medicare, Medicaid, and SCHIP Benefits,
Improvement and Protection Act of 2000, known as "BIPA," a majority of our
hospitals qualify to receive disproportionate share payments.

     The DRG rates are adjusted by an update factor each federal fiscal year,
which begins on October 1. The index used to adjust the diagnostic related group
rates, known as the "market basket index," gives consideration to the inflation
experienced by hospitals in purchasing goods and services. For several years,
however, the percentage increases in the diagnostic related group payments have
been lower than the projected increase in the costs of goods and services
purchased by hospitals. DRG rate increases were 1.1% for federal fiscal year
1995, 1.5% for federal fiscal year 1996, 2.0% for federal fiscal year 1997, 0.0%
for federal fiscal year 1998, and 0.5% for federal fiscal year 1999. The DRG
rate was increased by market basket minus 1.8% for federal fiscal year 2000.
BIPA provides some relief to the low diagnostic related group increases mandated
by the Balanced Budget Act. Under BIPA, the DRG rate will increase in the amount
of the full market basket for fiscal year 2001 and in an amount equal to the
market basket minus 0.55% for fiscal years 2002 and 2003.

     Outpatient services have traditionally been paid at the lower of customary
charges or on a reasonable cost basis. The Balanced Budget Act established a PPS
for outpatient hospital services that commenced on

                                        12
<PAGE>   15

August 1, 2000. The Balanced Budget Refinement Act of 1999 eliminated the
anticipated average reduction of 5.7% for various Medicare outpatient business
under the Balanced Budget Act of 1997. Under the Balanced Budget Refinement Act
of 1999, losses for non-urban hospitals with 100 beds or less are mitigated
through a "hold harmless" provision until December 31, 2003. Eleven of our
hospitals qualify for this relief. Losses under Medicare outpatient PPS of
non-urban hospitals with greater than 100 beds and urban hospitals will be
mitigated through a corridor reimbursement approach, where a percentage of
losses will be reimbursed through December 31, 2003. Substantially all of our
remaining hospitals qualify for relief under this provision.

     Skilled nursing facilities have historically been paid by Medicare on the
basis of actual costs, subject to limitations. The Balanced Budget Act
established a PPS for Medicare skilled nursing facilities. The new PPS commenced
in July 1998, and is being implemented progressively over a three year term. We
have experienced reductions in payments for our skilled nursing services.
However, BIPA requires HCFA to increase the current reimbursement amount for
each resource utilization group component of the skilled nursing facility PPS by
16.7% for services furnished between April 1, 2001 and September 30, 2002.
Additionally, BIPA increases the skilled nursing facility PPS update to the full
market basket for fiscal year 2001 and market basket minus 0.5% for fiscal year
2002.

     The Balanced Budget Act also required the Department of Health and Human
Services to establish a PPS for home health services. The Balanced Budget Act of
1997 put in place the interim payment system, commonly known as "IPS," until the
home health PPS could be implemented. As of October 1, 2000, the home health PPS
replaced IPS. We have experienced reductions in payments for our home health
services and a decline in home health visits due to a reduction in benefits by
reason of the Balanced Budget Act. However, the Balanced Budget Refinement Act
delayed until one year following implementation of the PPS a 15.0% payment
reduction that would have otherwise applied effective October 1, 2000. The BIPA
further delays the one-time 15.0% payment reduction until October 1, 2002.
Additionally, the BIPA increases the home health agency PPS annual update to
2.2% for services furnished between April 1, 2001 and September 30, 2001, and
for a two year period beginning April 1, 2001, increases Medicare payments to
10.0% for home health services furnished in specified rural areas.

     The Balanced Budget Act mandated a PPS for inpatient rehabilitation
hospital services. A PPS system for Medicare inpatient rehabilitation services
is scheduled for a two year phase in beginning April 1, 2001. Prior to the
implementation of the prospective payment systems, payments to exempt hospitals
and units, such as inpatient psychiatric, rehabilitation and skilled nursing
services, are based upon reasonable cost, subject to a cost per discharge
target. These limits are updated annually by a market basket index.

     As of December 31, 2000, we operated five inpatient psychiatric units, four
inpatient rehabilitation units, ten hospital-based skilled nursing facility
units, three rural health clinics, two home health agencies, one comprehensive
outpatient rehabilitation facility and eight hospitals utilizing swing beds.

     Medicaid.  Most state Medicaid payments are made under a PPS or under
programs which negotiate payment levels with individual hospitals. Medicaid is
currently funded jointly by state and federal governments. The federal
government and many states are currently considering significantly reducing
Medicaid funding, while at the same time expanding Medicaid benefits. This could
adversely affect future levels of Medicaid payments received by our hospitals.

     Annual Cost Reports.  Hospitals participating in the Medicare and some
Medicaid programs, whether paid on a reasonable cost basis or under a PPS, are
required to meet certain financial reporting requirements. Federal and, where
applicable, state regulations require submission of annual cost reports
identifying medical costs and expenses associated with the services provided by
each hospital to Medicare beneficiaries and Medicaid recipients.

     Annual cost reports required under the Medicare and some Medicaid programs
are subject to routine governmental audits. These audits may result in
adjustments to the amounts ultimately determined to be

                                        13
<PAGE>   16

due to us under these reimbursement programs. Finalization of these audits often
takes several years. Providers can appeal any final determination made in
connection with an audit.

     Commercial Insurance.  Our hospitals provide services to individuals
covered by private healthcare insurance. Private insurance carriers pay our
hospitals or in some cases reimburse their policyholders based on the hospital's
established charges and the coverage provided in the insurance policy.
Commercial insurers are trying to limit the costs of hospital services by
negotiating discounts, including PPS, which would reduce payments by commercial
insurers to our hospitals. Reductions in payments for services provided by our
hospitals to individuals covered by commercial insurers could adversely affect
us.

REGULATORY COMPLIANCE PROGRAM

     It is our policy to conduct our business with integrity and in compliance
with the law. We have in place and continue to develop a corporate-wide
compliance program, which focuses on all areas of regulatory compliance,
including reimbursement and cost reporting practices and laboratory operations.

     This regulatory compliance program is intended to ensure that high
standards of conduct are maintained in the operation of our business and to help
ensure that policies and procedures are implemented so that employees act in
full compliance with all applicable laws, regulations and company policies.
Under the regulatory compliance program, we provide initial and periodic legal
compliance and ethics training to every employee, review various areas of our
operations, and develop and implement policies and procedures designed to foster
compliance with the law. We regularly monitor our ongoing compliance efforts.
The program also includes a mechanism for employees to report, without fear of
retaliation, any suspected legal or ethical violations to their supervisors or
designated compliance officers in our hospitals.

     In December 2000, we entered into a corporate integrity agreement with the
Office of Inspector General and agreed to maintain our compliance program in
accordance with the corporate integrity agreement. Violations of the integrity
agreement could subject us to substantial monetary penalties. The compliance
measures and reporting and auditing requirements contained in the integrity
agreement include:

     - continuing the duties and activities of our audit and compliance
       committee, corporate compliance officer, internal audit and compliance
       department, local ethics and compliance officers, corporate compliance
       committee and hospital compliance committees;

     - maintaining our written code of conduct, which sets out our commitment to
       full compliance with all statutes, regulations, and guidelines applicable
       to federal healthcare programs;

     - maintaining our written policies and procedures addressing the operation
       of our compliance program;

     - providing general training on the compliance policy;

     - providing specific training for the appropriate personnel on billing,
       coding and cost report issues;

     - having an independent third party conduct periodic audits of our
       facilities' inpatient DRG coding;

     - continuing our confidential disclosure program and compliance hotline to
       enable employees or others to disclosure issues or questions regarding
       possible inappropriate policies or behavior;

     - enhancing our screening program to ensure that we do not hire or engage
       employees or contractors who are ineligible persons for federal
       healthcare programs;

     - reporting any material deficiency which resulted in an overpayment to us
       by a federal healthcare program; and

     - submitting annual reports to the Inspector General which describe in
       detail the operations of our corporate compliance program for the past
       year.

                                        14
<PAGE>   17

ARRANGEMENTS RELATING TO THE DISTRIBUTION

     Immediately prior to HCA's distribution of our common stock, we entered
into agreements with HCA to define our ongoing relationships after the
distribution and to allocate tax, employee benefits and other liabilities and
obligations arising from periods prior to the distribution date.

     Distribution Agreement.  We entered into a distribution agreement with HCA
and Triad which governed the corporate transactions required to effect the
distribution and other arrangements between the parties after the distribution.
The distribution agreement also allocated financial responsibility between the
parties for liabilities arising out of the assets and entities that constitute
our company, including liabilities arising out of the transfer of the assets and
entities to us. HCA agreed in the distribution agreement to indemnify us for any
losses arising from the pending governmental investigations of HCA's business
practices prior to the date of the distribution and losses arising from legal
proceedings, present or future, related to the investigation or actions engaged
in prior to the distribution that relate to the investigation.

     Tax Sharing and Indemnification Agreement.  We also entered into a tax
sharing and indemnification agreement with HCA and Triad, which allocated tax
liabilities among the parties and addressed other tax matters, including
responsibility for filing tax returns, control of and cooperation in tax
litigation, and qualification of the distribution as a tax-free transaction.
Generally, HCA is responsible for taxes that are allocable to periods before the
distribution date, and each of HCA, LifePoint and Triad is responsible for its
own tax liabilities, including its allocable portion of taxes shown on any
consolidated, combined or other tax return filed by HCA, for periods after the
distribution date.

     The tax sharing and indemnification agreement prohibits us from taking
actions that could jeopardize the tax treatment of the distribution or the
restructuring that preceded the distribution, and requires us to indemnify HCA
and Triad for any taxes or other losses that result from our actions. In
connection with preserving the tax treatment of the distribution and the
restructuring that preceded the distribution, we agreed to take certain actions
that HCA may request and we made covenants, including covenants that, for a
period of three years following the distribution, we will not authorize,
undertake or facilitate any of the following without the consent of HCA:

     - issue additional stock or other equity instruments;

     - merge, dissolve, consolidate, redeem our securities or liquidate;

     - transfer or dispose of assets, other than the disposition of assets that
       were previously identified for divestiture; or

     - recapitalize or otherwise change our capital structure.

     Benefits and Employment Matters Agreement.  We entered into a benefits and
employment matters agreement with HCA and Triad, which allocated
responsibilities for employee compensation, benefits, labor, benefit plan
administration and certain other employment matters on and after the
distribution date.

     Insurance Allocation and Administration Agreement.  Before the
distribution, HCA maintained various insurance policies for the benefit of the
facilities that now make up our company. A wholly owned insurance subsidiary of
HCA insures HCA against substantially all losses in periods before the
distribution. In addition, HCA maintains excess loss policies. We also entered
into an insurance allocation and administration agreement with HCA that
describes our continuing rights and obligations regarding insurance after the
distribution date and that defines our relationship regarding insurance on HCA's
property and our property.

     Computer and Data Processing Services Agreement.  HCA's wholly owned
subsidiary, Columbia Information Systems, Inc., entered into a computer and data
processing services agreement with us. Columbia Information Systems provides
computer installation, support, training, maintenance, data

                                        15
<PAGE>   18

processing and other related services to us under this agreement. Columbia
Information Systems charges fees to us for services provided under this
agreement that are market competitive based on Columbia Information Systems'
costs incurred in providing these services.

     Other Agreements.  HCA entered into agreements with us by which HCA shares
telecommunications services with us under HCA's agreements with its
telecommunications services provider and by which HCA makes account collection
services available to us. We also participate, along with HCA, Triad and Health
Management Associates, Inc. in a group purchasing organization which makes
national supply and equipment contracts available to our facilities.

ITEM 2.  PROPERTIES

     Information with respect to our hospitals and our other properties can be
found in Item 1 of this report under the caption, "Business -- Properties."

ITEM 3.  LEGAL PROCEEDINGS

     General.  We are, from time to time, subject to claims and suits arising in
the ordinary course of business, including claims for damages for personal
injuries, breach of management contracts, for wrongful restriction of or
interference with physicians' staff privileges and employment related claims. In
certain of these actions, plaintiffs request punitive or other damages against
us that may not be covered by insurance. We are currently not a party to any
proceeding which, in management's opinion, would have a material adverse effect
on our business, financial condition or results of operations.

     Americans with Disabilities Act Claim.  On January 12, 2001, Access Now,
Inc., a disability rights organization, filed a class action lawsuit against
each of our hospitals alleging non-compliance with the accessibility guidelines
under the Americans with Disabilities Act. The lawsuit, filed in the United
States District Court for the Eastern District of Tennessee, seeks injunctive
relief requiring facility modification, where necessary, to meet the ADA
guidelines, along with attorneys fees and costs. We are working with Access Now
to determine the scope of facility modification needed to comply with the Act.

     Governmental Investigation of HCA and Related Litigation.  HCA has been the
subject of various federal and state investigations, qui tam actions,
shareholder derivative and class action suits filed in federal court,
shareholder derivative actions filed in state courts, patient/payer actions and
general liability claims. These investigations, actions and claims relate to HCA
and its subsidiaries, including subsidiaries that, prior to our formation as an
independent company, owned the facilities we now own.

     On December 14, 2000, HCA announced that it signed an agreement with the
Department of Justice and four U.S. attorneys' offices resolving all pending
federal criminal issues in the government's investigation. HCA also announced at
this time that it signed a civil settlement agreement with the Department of
Justice resolving civil false claims issues related to DRG coding, outpatient
laboratory and home health. The criminal agreement has been accepted by the
federal district courts. The civil settlement agreement is conditioned on court
approval of the settlement, which HCA expects to receive in the first quarter of
2001. These agreements relate only to conduct that was the subject of the
federal investigations resolved in the agreements, and HCA has stated publicly
that it continues to discuss civil claims relating to cost reporting and
physician relations with the government.

     Based on our review of documents filed by HCA with the Securities and
Exchange Commission, these agreements with the government also resolve many, but
not all, qui tam actions filed by private parties against HCA. In addition,
representatives of state attorneys general have agreed to recommend to state
officials that HCA be released from criminal and civil liability related to the
matters covered by the settlement agreements.

     HCA agreed to indemnify us for any losses, other than consequential
damages, arising from the pending governmental investigations of HCA's business
practices prior to the date of the distribution and losses arising from legal
proceedings, present or future, related to the investigation or actions engaged
in prior to the distribution that relate to the investigation. However, we could
be held responsible for any
                                        16
<PAGE>   19

claims that are not covered by the agreements reached with the federal
government or for which HCA is not required to, or fails to, indemnify us. We
may also be affected by the initiation of additional investigations or claims
against HCA in the future, if any, and the related media coverage.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     No matters were submitted to a vote of the stockholders during the fourth
quarter ended December 31, 2000.

                                        17
<PAGE>   20

                                    PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

     Our common stock began publicly trading on May 11, 1999, the date of the
distribution of all of our common stock to the HCA stockholders. Prior to that
date, no public market existed for our common stock. Our common stock is quoted
on the Nasdaq National Market under the symbol "LPNT." The following table shows
the range of high and low sales prices for our common stock for the periods
indicated, as reported by the Nasdaq National Market.

<TABLE>
<CAPTION>
                                                               HIGH     LOW
                                                              ------   ------
<S>                                                           <C>      <C>

1999
Second Quarter (beginning May 11, 1999).....................  $17.50   $ 9.13
Third Quarter...............................................   14.38     6.88
Fourth Quarter..............................................   12.63     7.69

2000
First Quarter...............................................  $18.00   $12.25
Second Quarter..............................................   23.56    15.50
Third Quarter...............................................   37.00    19.94
Fourth Quarter..............................................   51.75    31.13

2001
First Quarter (through February 27, 2001)...................  $50.36   $28.25
</TABLE>

     On February 27, 2001, the last reported sales price for our common stock on
the Nasdaq National Market was $40.56 per share. At February 27, 2001, there
were 34,731,655 shares of our common stock held by 7,567 holders of record.

     We have never declared or paid dividends on our common stock. We intend to
retain future earnings to finance the growth and development of our business
and, accordingly, do not intend to declare or pay any dividends on the common
stock in the foreseeable future. Our board of directors will evaluate our future
earnings, results of operations, financial condition and capital requirements in
determining whether to declare or pay cash dividends. Delaware law prohibits us
from paying any dividends unless we have capital surplus or net profits
available for this purpose. In addition, our credit facilities impose
restrictions on our ability to pay dividends. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Liquidity and
Capital Resources."

                                        18
<PAGE>   21

ITEM 6.  SELECTED CONSOLIDATED FINANCIAL DATA

     The following table contains selected historical financial data for each of
the years in the five year period ended December 31, 2000. We derived the
selected historical financial data as of December 31, 1996 from unaudited
financial statements. You should read this table in conjunction with the
consolidated financial statements and related notes included elsewhere in this
report and "Management's Discussion and Analysis of Financial Condition and
Results of Operations."

<TABLE>
<CAPTION>
                                                            YEARS ENDED DECEMBER 31,
                                               ---------------------------------------------------
                                                1996       1997       1998       1999       2000
                                               -------   --------   --------   --------   --------
                                                 (DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<S>                                            <C>       <C>        <C>        <C>        <C>
SUMMARY OF OPERATIONS:
Revenues.....................................  $ 464.0   $  487.6   $  498.4   $  515.2   $  557.1

  Salaries and benefits......................    175.2      196.6      220.8      217.4      224.2
  Supplies...................................     50.9       55.0       62.0       64.2       67.0
  Other operating expenses...................     99.3      119.5      117.2      117.3      118.1
  Provision for doubtful accounts............     28.0       34.5       41.6       38.2       42.0
  Depreciation and amortization..............     23.5       27.4       28.3       31.4       34.1
  Interest expense...........................     14.1       15.4       19.1       23.4       30.7
  Management fees............................      6.2        8.2        8.9        3.2         --
  ESOP expense...............................       --         --         --        2.9        7.1
  Impairment of long-lived assets............       --         --       26.1       25.4       (1.4)
                                               -------   --------   --------   --------   --------
                                                 397.2      456.6      524.0      523.4      521.8
                                               -------   --------   --------   --------   --------
Income (loss) from continuing operations
  before minority interests and income
  taxes......................................     66.8       31.0      (25.6)      (8.2)      35.3
Minority interests in earnings of
  consolidated entities......................      1.2        2.2        1.9        1.9        2.2
                                               -------   --------   --------   --------   --------
Income (loss) from continuing operations
  before income taxes........................     65.6       28.8      (27.5)     (10.1)      33.1
Provision (benefit) for income taxes.........     26.3       11.7       (9.8)      (2.7)      15.2
                                               -------   --------   --------   --------   --------
Income (loss) from continuing
  operations(a)..............................  $  39.3   $   17.1   $  (17.7)  $   (7.4)  $   17.9
                                               =======   ========   ========   ========   ========
          Net income (loss)(a)...............  $  41.2   $   12.5   $  (21.8)  $   (7.4)  $   17.9
                                               =======   ========   ========   ========   ========
Basic earnings (loss) per share:
  Income (loss) from continuing
     operations(a)...........................  $  1.31   $   0.57   $  (0.59)  $  (0.24)  $   0.57
  Net income (loss)(a).......................  $  1.37   $   0.41   $  (0.73)  $  (0.24)  $   0.57
  Shares used in computing basic earnings
     (loss) per share (in millions)..........     30.0       30.0       30.0       30.5       31.6
Diluted earnings (loss) per share:
  Income (loss) from continuing
     operations(a)...........................  $  1.30   $   0.57   $  (0.59)  $  (0.24)  $   0.54
  Net income (loss)(a).......................  $  1.36   $   0.41   $  (0.73)  $  (0.24)  $   0.54
  Shares used in computing diluted earnings
     (loss) per share (in millions)..........     30.3       30.2       30.0       30.5       32.9
Cash dividends declared per common share.....       --         --         --         --         --
FINANCIAL POSITION (AS OF END OF YEAR):
Assets.......................................  $ 376.0   $  397.9   $  355.0   $  420.4   $  488.0
Long-term debt, including amounts due within
  one year...................................      1.6        1.6        0.6      260.2      289.4
Intercompany balances payable to HCA.........    176.3      182.5      167.6         --         --
Working capital..............................     39.0       41.1       26.9       42.2       65.4
</TABLE>

                                        19
<PAGE>   22

<TABLE>
<CAPTION>
                                                            YEARS ENDED DECEMBER 31,
                                               ---------------------------------------------------
                                                1996       1997       1998       1999       2000
                                               -------   --------   --------   --------   --------
                                                 (DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<S>                                            <C>       <C>        <C>        <C>        <C>
OTHER OPERATING DATA:
EBITDA(b)....................................  $ 110.6   $   82.0   $   56.8   $   78.1   $  105.8
Capital expenditures.........................     53.4       51.8       29.3       64.8       31.4
Number of hospitals at end of year...........       22         22         23         23         20
Number of licensed beds at end of year(c)....    2,074      2,080      2,169      2,169      1,963
Weighted average licensed beds(d)............    2,060      2,078      2,127      2,169      2,056
Admissions(e)................................   59,381     60,487     62,269     64,081     66,085
Equivalent admissions(f).....................   98,869    105,126    110,029    114,321    119,812
Average length of stay (days)(g).............      4.7        4.4        4.4        4.2        4.1
</TABLE>

---------------

(a)  Includes charges related to impairment of long-lived assets of $25.4
     million ($16.2 million after-tax) and $26.1 million ($15.9 million
     after-tax) for the years ended December 31, 1999 and 1998, respectively,
     and gain on impairment of long-lived assets of $1.4 million ($0.8 million
     after-tax) for the year ended December 31, 2000.
(b)  EBITDA is defined as income from continuing operations before depreciation
     and amortization, interest expense, management fees, impairment of
     long-lived assets, ESOP expense, minority interests in earnings of
     consolidated entities and income taxes. EBITDA is commonly used as an
     analytical indicator within the healthcare industry and also serves as a
     measure of leverage capacity and debt service ability. EBITDA should not be
     considered as a measure of financial performance under generally accepted
     accounting principles, and the items excluded from EBITDA are significant
     components in understanding and assessing financial performance. EBITDA
     should not be considered in isolation or as an alternative to net income,
     cash flows generated by operating, investing or financing activities or
     other financial statement data presented in the consolidated financial
     statements as an indicator of financial performance or liquidity. Because
     EBITDA is not a measurement determined in accordance with generally
     accepted accounting principles and is thus susceptible to varying
     calculations, EBITDA as presented may not be comparable to other similarly
     titled measures of other companies.
(c)  Licensed beds are those beds for which a facility has been granted approval
     to operate from the applicable state licensing agency.
(d)  Represents the average number of licensed beds weighted based on periods
     owned.
(e)  Represents the total number of patients admitted (in the facility for a
     period in excess of 23 hours) to our hospitals and is used by management
     and investors as a general measure of inpatient volume. Amounts for the
     years ended December 31, 1998 and 1999 have been restated to conform to
     current year definitions.
(f)  Equivalent admissions is used by management and investors as a general
     measure of combined inpatient and outpatient volume. Equivalent admissions
     is computed by multiplying admissions (inpatient volume) by the sum of
     gross inpatient revenue and gross outpatient revenue and then dividing the
     resulting amount by gross inpatient revenue. The equivalent 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. Amounts for the years ended December 31,
     1998 and 1999 have been restated to conform to current year definitions.
(g)  Represents the average number of days admitted patients stay in our
     hospitals. Average length of stay has declined as a result of the
     continuing pressures from managed care and other payers to restrict
     admissions and reduce the number of days that are covered by the payers for
     certain procedures and by technological and pharmaceutical improvements.

                                        20
<PAGE>   23

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

     You should read this discussion together with our consolidated historical
financial statements and related notes included elsewhere in this report.

OVERVIEW

     At December 31, 2000, we operated 20 general, acute care hospitals. For the
year ended December 31, 2000, we generated $557.1 million in net revenues.
Effective January 2, 2001, we opened Bluegrass Community Hospital located in
Versailles, Kentucky. We currently operate in the states of Alabama, Florida,
Kansas, Kentucky, Tennessee, Utah and Wyoming.

FORWARD-LOOKING STATEMENTS

     This report and other materials we have filed or may file with the
Securities and Exchange Commission, as well as information included in oral
statements or other written statements made, or to be made, by us, contain, or
will contain, disclosures which are "forward-looking statements."
Forward-looking statements include all statements that do not relate solely to
historical or current facts and can be identified by the use of words such as
"may," "believe," "will," "expect," "project," "estimate," "anticipate," "plan"
or "continue." These forward-looking statements are based on the current plans
and expectations of our management and are subject to a number of uncertainties
and risks that could significantly affect our current plans and expectations and
future financial condition and results. These factors include, but are not
limited to:

     - the highly competitive nature of the healthcare business including the
       competition to recruit general and specialized physicians;

     - the efforts of insurers, healthcare providers and others to contain
       healthcare costs;

     - possible changes in the Medicare program that may further limit
       reimbursements to healthcare providers and insurers;

     - changes in federal, state or local regulation affecting the healthcare
       industry;

     - the possible enactment of federal or state healthcare reform;

     - the ability to attract and retain qualified management and personnel,
       including physicians, both general practitioners and specialists,
       consistent with our expectations and targets;

     - our ability to acquire hospitals on favorable terms;

     - liabilities and other claims asserted against us;

     - uncertainty with the newly issued HIPAA regulations;

     - the ability to enter into, renegotiate and renew payor arrangements on
       acceptable terms;

     - the availability and terms of capital to fund our business strategy;

     - implementation of our business strategy and development plans;

     - our ongoing efforts to monitor, maintain and comply with applicable laws,
       regulations, policies and procedures including those required by the
       corporate integrity agreement that we entered into with the government in
       December, 2000;

     - the ability to increase patient volumes and control the costs of
       providing services and supply costs;

     - successful development or license, performance and use of management
       information systems, including software for efficient claims processing;

     - limitations placed on us to preserve the tax treatment of the
       distribution of our common stock from HCA;

     - fluctuations in the market value of our common stock;

     - changes in accounting practices;

                                        21
<PAGE>   24

     - changes in general economic conditions; and

     - other risk factors described in this report.

     As a consequence, current plans, anticipated actions and future financial
conditions and results may differ from those expressed in any forward-looking
statements made by or on behalf of our company. We undertake no obligation to
publicly update or revise any forward-looking statements, whether as a result of
new information, future events or otherwise. You are cautioned not to unduly
rely on such forward-looking statements when evaluating the information
presented in this report.

RESULTS OF OPERATIONS

  Revenue/Volume Trends

     We expect our patient volumes and related revenues to continue to increase
as a result of the following factors:

     - Expanding Service Offerings.  We believe our efforts to improve the
       quality and broaden the scope of healthcare services available at our
       facilities will lead to increased patient volumes. Recruiting and
       retaining both general practitioners and specialists for our non-urban
       communities is a key to the success of these efforts. Between the date of
       the distribution of our stock from HCA and December 31, 2000, we
       recruited 150 physicians, of which approximately 61% are specialists.
       Adding new physicians should help increase patient volumes which, in
       turn, should increase revenues. Continuing to add specialists should also
       allow us to grow by offering new services.

     - Improving Managed Care Position.  We believe we have been able to
       negotiate contract terms that are generally more favorable for our
       facilities than terms available in urban markets.

     - Aging U.S. Population.  In general, the population of the United States
       and of the communities that we serve is aging. At the end of 2000,
       approximately 13% of the U.S. population was 65 years old or older
       compared to 11% of the population at the end of 1980. This aging trend is
       projected to continue so that by 2025, approximately 18% of the U.S.
       population is expected to be older than 65.

     Although we expect our patient volumes to increase, the resulting revenue
will likely be offset in part by the following factors:

     - Revenues from Medicare, Medicaid and Managed Care Plans.  We derive a
       significant portion of our revenues from Medicare, Medicaid and managed
       care plans. Admissions related to Medicare, Medicaid and managed care
       plan patients were 90.4% and 89.2% of total admissions for the years
       ended December 31, 2000 and 1999, respectively. These payors receive
       significant discounts compared to other payors.

     - Efforts to Reduce Payments.  Insurance companies, government programs
       (other than Medicare) and employers purchasing health care services for
       their employees also negotiate discounted fees rather than paying
       standard prices. Hospitals generally receive lower payments per patient
       under managed care plans than under traditional indemnity insurance
       plans. In addition, an increasing proportion of our services are
       reimbursed under prospective payment amounts regardless of the cost
       incurred.

     - Growth in Outpatient Services.  We expect the growth trend in outpatient
       services to continue. A number of procedures once performed only on an
       inpatient basis have been, and will likely continue to be, converted to
       outpatient procedures. This conversion has occurred through continuing
       advances in pharmaceutical and medical technologies and as a result of
       efforts made by payors to control costs. Generally, the payments we
       receive for outpatient procedures are less than for similar procedures
       performed in an inpatient setting.

     Reductions in Medicare and Medicaid payment levels, the increase in
outpatient services and the patient volume being related to patients
participating in managed care plans will present ongoing

                                        22
<PAGE>   25

challenges for us. These challenges are exacerbated by our inability to control
these trends and the associated risks. To maintain or improve operating margins
in the future, we must, among other things, increase patient volumes while
controlling the costs of providing services. If we are not able to achieve these
improvements and the trend toward declining reimbursements and payments
continues, results of operations and cash flow will deteriorate.

IMPACT OF ACQUISITIONS AND DIVESTITURES

  Acquisitions

     Effective July 1, 2000, we acquired Lander Valley Medical Center in Lander,
Wyoming for approximately $33.0 million. Effective June 16, 2000, we acquired
Putnam Community Medical Center in Palatka, Florida for approximately $49.4
million. We accounted for these two acquisitions using the purchase method of
accounting and allocated the purchase price of each transaction to identifiable
assets acquired and liabilities assumed based on their respective fair values.

  Divestitures

     Effective November 17, 2000, we sold Springhill Medical Center located in
Springhill, Louisiana for approximately $5.7 million. We deposited the proceeds
into a trust for tax planning reasons and we intend to use them for future
capital reinvestment.

     Effective September 1, 2000, we sold Barrow Medical Center in Winder,
Georgia for approximately $2.2 million.

     Effective August 1, 2000, we sold Riverview Medical Center in Gonzales,
Louisiana for approximately $20.7 million. We used the proceeds from this
transaction and our available cash to pay down existing borrowings under our
revolving credit facility.

     Effective April 1, 2000, we sold Halstead Hospital in Halstead, Kansas and
effective February 1, 2000, we sold Trinity Hospital in Erin, Tennessee. We
previously held Halstead Hospital, Trinity Hospital and Barrow Medical Center
for sale. We recorded an impairment of long-lived assets related to these three
hospitals of $24.8 million in 1998 and an additional impairment of $25.4 million
in 1999.

     During 2000, we recorded a $1.4 million pre-tax gain related to the
favorable settlement on the sale of one of the facilities that we previously
held for sale.

     We consolidated the operating results of the acquisitions and divestitures
for the periods subsequent to acquisition and for the periods prior to sale,
respectively.

     Because of the relatively small number of hospitals we own, each hospital
acquisition can materially affect our overall operating margin. We typically
take a number of steps to lower operating costs when we acquire a hospital. The
impact of our actions may be offset by other cost increases to expand services,
strengthen medical staff and improve market position. The benefits of our
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 our overall operating margins in the
short term. As we acquire additional hospitals, this effect should be mitigated
by the expanded financial base of our existing hospitals and the allocation of
corporate overhead among a larger number of hospitals.

                                        23
<PAGE>   26

OPERATING RESULTS SUMMARY

     The following table presents summaries of results from continuing
operations for the years ended December 31, 1998, 1999 and 2000:

<TABLE>
<CAPTION>
                                                 YEARS ENDED DECEMBER 31,
                                 ---------------------------------------------------------
                                       1998                1999                2000
                                 -----------------   -----------------   -----------------
                                            % OF                % OF                % OF
                                 AMOUNT   REVENUES   AMOUNT   REVENUES   AMOUNT   REVENUES
                                 ------   --------   ------   --------   ------   --------
<S>                              <C>      <C>        <C>      <C>        <C>      <C>
Revenues......................   $498.4    100.0%    $515.2    100.0%    $557.1   100.0%
Salaries and benefits.........    220.8     44.3      217.4     42.2      224.2     40.2
Supplies......................     62.0     12.4       64.2     12.5       67.0     12.0
Other operating expenses......    117.2     23.5      117.3     22.7      118.1     21.3
Provision for doubtful
  accounts....................     41.6      8.4       38.2      7.4       42.0      7.5
                                 ------    -----     ------    -----     ------    -----
                                  441.6     88.6      437.1     84.8      451.3     81.0
                                 ------    -----     ------    -----     ------    -----
EBITDA(a).....................     56.8     11.4       78.1     15.2      105.8     19.0
Depreciation and
  amortization................     28.3      5.7       31.4      6.2       34.1      6.2
Interest expense..............     19.1      3.8       23.4      4.5       30.7      5.5
Management fees...............      8.9      1.8        3.2      0.6         --       --
ESOP expense..................       --       --        2.9      0.6        7.1      1.3
Impairment of long-lived
  assets......................     26.1      5.2       25.4      4.9       (1.4)    (0.3)
                                 ------    -----     ------    -----     ------    -----
Income (loss) from continuing
  operations before minority
  interests and income
  taxes.......................    (25.6)    (5.1)      (8.2)    (1.6)      35.3      6.3
Minority interests in earnings
  of consolidated entities....      1.9      0.4        1.9      0.4        2.2      0.4
                                 ------    -----     ------    -----     ------    -----
Income (loss) from continuing
  operations before income
  taxes.......................    (27.5)    (5.5)     (10.1)    (2.0)      33.1      5.9
Provision (benefit) for income
  taxes.......................     (9.8)    (2.0)      (2.7)    (0.6)      15.2      2.7
                                 ------    -----     ------    -----     ------    -----
Income (loss) from continuing
  operations..................   $(17.7)    (3.5)%   $ (7.4)    (1.4)%   $ 17.9      3.2%
                                 ======    =====     ======    =====     ======    =====
% changes from prior year:
  Revenues....................                          3.4%                8.1%
  Income (loss) from
     continuing operations
     before income taxes......                         63.1               425.7
  Income (loss) from
     continuing operations....                         58.4               342.4
  Admissions(b)...............                          3.2                 3.1
  Equivalent admissions(c)....                          4.2                 4.8
  Revenues per equivalent
     admission................                         (0.8)                3.2
Same hospital % changes from
  prior year(d):
  Revenues....................                                              8.8
  Admissions(b)...............                                              2.6
  Equivalent admissions(c)....                                              6.5
  Revenues per equivalent
     admission................                                              2.2
</TABLE>

                                        24
<PAGE>   27

---------------

(a)  EBITDA is defined as income from continuing operations before depreciation
     and amortization, interest expense, management fees, impairment of
     long-lived assets, ESOP expense, minority interests in earnings of
     consolidated entities and income taxes. EBITDA is commonly used as an
     analytical indicator within the healthcare industry and also serves as a
     measure of leverage capacity and debt service ability. EBITDA should not be
     considered as a measure of financial performance under generally accepted
     accounting principles and the items excluded from EBITDA are significant
     components in understanding and assessing financial performance. EBITDA
     should not be considered in isolation or as an alternative to net income,
     cash flows generated by operating, investing or financing activities or
     other financial statement data presented in the consolidated financial
     statements as an indicator of financial performance or liquidity. Because
     EBITDA is not a measurement determined in accordance with generally
     accepted accounting principles and is susceptible to varying calculations,
     EBITDA as presented may not be comparable to other similarly titled
     measures of other companies.
(b)  Represents the total number of patients admitted (in the facility for a
     period in excess of 23 hours) to our hospitals and used by management and
     investors as a general measure of inpatient volume.
(c)  Management and investors use equivalent admissions as a general measure of
     combined inpatient and outpatient volume. We compute equivalent admissions
     by multiplying admissions (inpatient volume) by the sum of gross inpatient
     revenue and gross outpatient revenue and then dividing the resulting amount
     by gross inpatient revenue. The equivalent 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)  "Same hospital" information excludes the operations of hospitals which we
     either acquired or divested during the years presented.

  For the Years Ended December 31, 2000 and 1999

     Revenues increased 8.1% to $557.1 million for the year ended December 31,
2000 compared to $515.2 million for the year ended December 31, 1999, primarily
as a result of an 8.8% increase in same hospital revenues and our acquisition of
two hospitals during fiscal 2000. Our sale of five hospitals during fiscal 2000
partially offset the increase in revenues. The 8.8% increase in same hospital
revenues resulted primarily from a 2.6% increase in same hospital inpatient
admissions and a 6.5% increase in same hospital equivalent admissions, adjusted
to reflect combined inpatient and outpatient volume.

     Revenues per equivalent admission increased 3.2% primarily due to our
acquisition of two hospitals in fiscal 2000 with higher revenues per equivalent
admission compared to our average. The higher revenues per equivalent admission
at one of the acquired hospitals resulted primarily from a low number of
outpatient procedures performed at that hospital as revenues from outpatient
services are generally lower than inpatient services. In addition, the higher
revenues per equivalent admission at the other acquired hospital resulted
primarily from a lower percentage of revenues from managed care plans as
compared to our average. The increase in revenues per equivalent admission was
partially offset by an increase in outpatient revenues for the year ended
December 31, 2000 compared to the same period last year. Outpatient revenues as
a percentage of patient revenues were 48.1% for the year ended December 31, 2000
compared to 47.2% for the same period last year. We also recorded favorable
adjustments to estimated third party settlements of $3.2 million for the year
ended December 31, 2000 compared to $0.7 million for the year ended December 31,
1999.

     Our costs did not increase at the same rate as our revenue. The increase in
volumes and revenues per equivalent admission contributed to the reduction of
our operating expenses as a percent of revenue because we were able to spread
our operating costs over an increased base of revenues.

     Salaries and benefits decreased as a percentage of revenues to 40.2% for
the year ended December 31, 2000 from 42.2% for the year ended December 31, 1999
primarily as a result of improvements in labor productivity and an increase in
revenues per equivalent admission, as discussed above. In addition, man-hours
per equivalent admission decreased 5.4% over the same period last year.

                                        25
<PAGE>   28

     Supply costs decreased as a percentage of revenues to 12.0% for the year
ended December 31, 2000 from 12.5% for the year ended December 31, 1999. The
decrease related primarily to the increase in revenues per equivalent admission
and a lower number of high intensity services provided during the year ended
December 31, 2000 compared to the same period last year.

     Other operating expenses decreased as a percentage of revenues to 21.3% for
the year ended December 31, 2000 from 22.7% for the year ended December 31,
1999. Other operating expenses consist primarily of contract services, physician
recruitment, professional fees, repairs and maintenance, rents and leases,
utilities, insurance, marketing and non-income taxes. The decrease was primarily
the result of an increase in volumes and revenues per equivalent admission as
discussed above and a decrease in contract services as a percentage of revenues.

     Provision for doubtful accounts increased slightly as a percentage of
revenues to 7.5% for the year ended December 31, 2000 from 7.4% for the year
ended December 31, 1999.

     Depreciation and amortization expense increased to $34.1 million for the
year ended December 31, 2000 from $31.4 million for the year ended December 31,
1999 primarily due to the opening of a replacement facility in Bartow, Florida
in December 1999 and the acquisition of two hospitals in fiscal 2000. This
increase was partially offset by a decrease in depreciation and amortization
expense related to the sale of hospitals during 2000.

     Interest expense increased to $30.7 million for the year ended December 31,
2000 from $23.4 million for the year ended December 31, 1999. This increase is
primarily due to the interest expense we incurred on the debt obligations we
assumed from HCA as a result of the distribution. The increase is also due to
our increased borrowings to finance acquisitions and an increase in interest
rates. For the year ended December 31, 1999, interest expense consisted of
interest incurred on the net intercompany balance with HCA and approximately
seven and a half months of interest expense on the debt obligations we assumed
from HCA.

     Management fees incurred during 1999 represent fees allocated to us by HCA
before the distribution. This amount represented allocations, using revenues as
the allocation basis, of the corporate, general and administrative expenses of
HCA.

     ESOP expense increased to $7.1 million for the year ended December 31, 2000
from $2.9 million for the year ended December 31, 1999. We established the ESOP
in June 1999; therefore, only seven months of expense for the ESOP is reflected
in the year ended December 31, 1999. The increase in ESOP expense is also due to
a higher average fair market value of our common stock for the year ended
December 31, 2000 compared to the same period last year. We recognize ESOP
expense based on the average fair market value of the shares committed to be
released during the period.

     During the year ended December 31, 2000, we recorded a $1.4 million pre-tax
gain related to the favorable settlement on the sale of a facility that we
previously held for sale. During the year ended December 31, 1999, we recorded a
$25.4 million impairment charge related to the three facilities we identified as
held for sale during 1998. We sold the three hospital facilities held for sale
during the year ended December 31, 2000. We recorded the impairment charge and
the gain in the accompanying consolidated statements of operations as impairment
of long-lived assets. For the year ended December 31, 2000 and 1999, these
facilities had net revenues of $14.4 million and $42.6 million, EBITDA of $(1.0)
million and $(0.7) million, admissions of 1,140 and 4,689 and equivalent
admissions of 2,781 and 8,722, respectively.

     Minority interests in earnings of consolidated entities increased slightly
to $2.2 million for the year ended December 31, 2000 from $1.9 million for the
year ended December 31, 1999.

     Income (loss) from continuing operations before income taxes increased to
$33.1 million for the year ended December 31, 2000 compared to $(10.1) million
for the year ended December 31, 1999 primarily because of the $25.4 million
impairment charge we incurred during 1999, increases in revenues and decreases
in expenses as described above.

                                        26
<PAGE>   29

     The provision (benefit) for income taxes for the year ended December 31,
2000 was $15.2 million compared to $(2.7) million for the year ended December
31, 1999. These provisions reflect effective income tax rates of 46.1% for 2000
and 26.7% for 1999. The increase in the effective rate relates primarily to the
impairment charge taken in the fourth quarter of 1999 as discussed above and
also due to the increase in the nondeductible portion of ESOP expense.

     Net income (loss) increased to $17.9 million for the year ended December
31, 2000 compared to $(7.4) million for the year ended December 31, 1999 due to
the reasons described above.

  For the Years Ended December 31, 1999 and 1998

     Revenues increased 3.4% to $515.2 million for the year ended December 31,
1999 compared to $498.4 million for the year ended December 31, 1998 primarily
because of increases in the volume of patients treated at our facilities.
Inpatient admissions increased 3.2% and equivalent admissions, adjusted to
reflect combined inpatient and outpatient volume, increased 4.2% for the year
ended December 31, 1999 compared to the year ended December 31, 1998. Revenues
per equivalent admission decreased 0.8% for the year ended December 31, 1999
compared to the prior year. The decline in revenues per equivalent admission
resulted from several factors, including:

     - decreases in Medicare reimbursement rates mandated by the Balanced Budget
       Act which became effective October 1, 1997. These rates lowered revenues
       by approximately $10.1 million for the year ended December 31, 1999
       compared to periods before the effective date of the Balanced Budget Act;

     - continued increases in the number of managed care payers which as a
       percentage of total admissions increased to 20.2% for the year ended
       December 31, 1999 compared to 18.6% for the year ended December 31, 1998;
       and

     - favorable adjustments to third party settlements of $0.7 million recorded
       during the year ended December 31, 1999 compared to $1.2 million recorded
       during the year ended December 31, 1998.

     Salaries and benefits decreased as a percentage of revenues to 42.2% for
the year ended December 31, 1999 from 44.3% for the year ended December 31, 1998
primarily as a result of improvements in labor productivity. Man-hours per
equivalent admission decreased 9.2% over the prior year.

     Supply costs increased slightly to 12.5% as a percentage of revenues for
the year ended December 31, 1999 from 12.4% for the year ended December 31,
1998.

     Other operating expenses decreased as a percentage of revenues to 22.7% for
the year ended December 31, 1999 from 23.5% for the year ended December 31, 1998
primarily because of a decrease in professional fees and contract services.

     Provision for doubtful accounts decreased as a percentage of revenues to
7.4% for the year ended December 31, 1999 from 8.4% for the year ended December
31, 1998. In fiscal year 1998, a majority of our facilities converted their
computer information systems which hampered their business office billing
functions. Some facilities did not timely bill accounts and our allowance for
bad debt increased in 1998. During 1999, we began to recover from the
conversions and focus more on collections of accounts receivable.

     Depreciation and amortization expense increased to $31.4 million for the
year ended December 31, 1999 from $28.3 million for the year ended December 31,
1998 primarily as a result of capital expenditures related to computer
information systems. The majority of our facilities began depreciating the
systems in the fourth quarter of 1998.

     Interest expense increased to $23.4 million for the year ended December 31,
1999 from $19.1 million for the year ended December 31, 1998 primarily as a
result of the interest expense we incurred on the debt obligations that we
assumed from HCA in connection with the distribution. For the year ended
December 31, 1998, our interest expense primarily included interest that we
incurred on the net

                                        27
<PAGE>   30

intercompany balance with HCA. On the date HCA distributed our common stock to
its stockholders, we eliminated the intercompany amounts payable by us to HCA.

     Management fees allocated by HCA equaled $3.2 million for the year ended
December 31, 1999 and $8.9 million for the year ended December 31, 1998. These
amounts represented allocations, using revenues as the allocation basis, of the
corporate, general and administrative expenses of HCA; HCA stopped allocating
management fees to us after the distribution. Increases in salaries, supplies
and other operating costs related to the establishment and operation of our
corporate office during 1999 offset the elimination of management fee
allocations by HCA.

     ESOP expense of $2.9 million during 1999 relates to the newly established
ESOP.

     During the fourth quarter of 1998, we decided to sell three hospital
facilities that we identified as not compatible with our operating plans based
on management's review of all facilities, consideration of current and expected
market conditions and consideration of current and expected capital needs in
each market. At December 31, 1998, the carrying value before the impairment
charge of the long-lived assets related to these hospital facilities equaled
approximately $47.2 million. We reduced the carrying value to fair value, based
on estimates of selling values at that time, for a total non-cash charge of
$24.8 million. During the fourth quarter of 1999, based on revised selling
values, we recorded an additional non-cash charge of $25.4 million (comprised of
$22.4 million in further impairment charges for these facilities and $3.0
million in anticipated selling/closing costs). For the year ended December 31,
1999 and 1998, these facilities had net revenues of $42.6 million and $48.0
million, EBITDA of $(0.7) million and $0.3 million, admissions of 4,689 and
5,454 and equivalent admissions of 8,722 and 9,295, respectively.

     We recorded, during the third quarter of 1998, an impairment loss of
approximately $1.3 million related to the write-off of intangibles and other
long-lived assets of physician practices where we determined that the recorded
asset values were not fully recoverable based on the operating results trends
and projected future cash flows. We have now recorded these assets being held
and used at estimated fair value based on discounted, estimated future cash
flows.

     These impairment charges did not have a significant impact on our cash
flows and we do not expect the charges to significantly impact cash flows for
future periods. Depreciation and amortization expense related to these assets
will decrease in future periods as a result of the right downs. In the
aggregate, we do not expect the net effect of the change in depreciation and
amortization expense to have a material effect on operating results for future
periods.

     Minority interests in earnings of consolidated entities remained unchanged
as a percentage of revenues at 0.4% compared to the prior year.

     Loss from continuing operations before income taxes was $10.1 million for
the year ended December 31, 1999 compared to a loss of $27.5 million for the
year ended December 31, 1998 primarily because of increases in revenue and
decreases in certain expenses as described above.

     Net loss equaled $7.4 million for the year ended December 31, 1999 compared
to a loss of $21.8 million for the year ended December 31, 1998. The year ended
December 31, 1998 included a $4.1 million after-tax loss from our discontinued
home health operations, resulting primarily from declines in Medicare rates of
reimbursement under the Balanced Budget Act and declines in home health visits.
We divested our home health operations during 1998.

LIQUIDITY AND CAPITAL RESOURCES

     We rely upon our bank credit facilities and other traditional funding
sources to supplement any cash needs not met by operations. At December 31,
2000, we had working capital of $65.4 million compared to $42.2 million at
December 31, 1999 primarily due to a $27.2 million increase in cash resulting
from net cash collections during 2000 and to a decrease in accounts payable. The
increase in working capital was offset by increases in current maturities on
long-term debt.

                                        28
<PAGE>   31

     Cash provided by operating activities increased to $83.4 million in 2000
compared to $59.3 million in 1999 and $47.5 million in 1998. The increase in
2000 resulted primarily from receipt of an income tax refund of $4.4 million in
2000 compared to income tax payments of $15.4 million during 1999. The increase
in 1999 over 1998 was primarily attributable to less of a net loss in 1999 than
in 1998.

     Cash used in investing activities increased to $91.8 million during 2000
compared to $68.8 million in 1999 and $31.5 million in 1998. The increase in
2000 resulted primarily from our two hospital acquisitions during fiscal 2000.
The increase was partially offset by proceeds of $24.3 million from the sale of
facilities and by decreased capital expenditures of $31.4 million during 2000
compared to $64.8 million in 1999 (which included the construction of a
replacement facility). Capital expenditures totaled $29.3 million in 1998. At
December 31, 2000, we had projects under construction which had an estimated
additional cost to complete and equip of approximately $12.0 million. We
anticipate that these projects will be completed over the next twelve months. We
believe our capital expenditure program is adequate to expand, improve and equip
our existing healthcare facilities. We expect to make total capital expenditures
in 2001 of approximately $35 to $40 million, excluding acquisitions.

     Cash provided by financing activities increased to $35.6 million in 2000
compared to $22.0 million in 1999. This increase resulted primarily from an
increase in long-term debt to pay for acquisitions. Cash used in financing
activities was $16.0 million in 1998 primarily due to a decrease in intercompany
balances with HCA.

     In June 2000, we borrowed the remaining $35 million from our $60 million
term loan facility and $30 million under our $65 million revolving credit
facility. We utilized this additional debt to fund acquisitions. Effective
August 1, 2000, we sold Riverview Medical Center in Gonzales, Louisiana for
approximately $20.7 million. We used the proceeds from this transaction and our
available cash to pay off the $30 million outstanding balance under our
revolving credit facility. As of December 31, 2000 and as of February 28, 2001,
we did not have any amounts outstanding under our revolving credit facility.

     Management does not consider the sale of any assets to be necessary to
repay our indebtedness or to provide working capital. However, for other
reasons, we may sell facilities in the future from time to time. Management
expects that operations and amounts available under our bank credit agreement
will provide sufficient liquidity for the next twelve months.

     We intend to acquire additional hospitals and are actively seeking such
acquisitions. These acquisitions may, however, require additional financing. We
also continually review our capital needs and financing opportunities and may
seek additional financing for our acquisition program or other needs.

     We do not expect to pay dividends on our common stock in the foreseeable
future.

LONG-TERM DEBT

  Bank Credit Agreement

     On May 11, 1999, we assumed from HCA the obligations under a bank credit
agreement with a group of lenders with commitments aggregating $210 million. The
credit agreement consists of a $60 million term loan facility, an $85 million
term loan facility and a $65 million revolving credit facility.

     At the time of the distribution, $25 million of the $60 million term loan
facility was drawn. In June 2000, we borrowed the remaining $35 million of the
$60 million term loan facility. The final payment under this term loan facility
is due November 11, 2004.

     The $85 million term loan facility was drawn in full at the time of the
distribution from HCA. The final payment under this term loan facility is due
November 11, 2005.

                                        29
<PAGE>   32

     The $65 million revolving credit facility is available for working capital
and other general corporate purposes and any outstanding amounts under the
revolving credit facility will be due and payable on November 11, 2004. As of
December 31, 2000 and as of February 28, 2001, we did not owe any amounts under
this facility.

     We make payments under the term loan facilities in quarterly installments
with quarterly amortization based on annual amounts. Interest on the bank
facilities is currently based on LIBOR plus 2.75% for the revolving credit
facility and the $60 million term loan facility, and LIBOR plus 3.25% for the
$85 million term loan facility. The weighted average interest rate on the bank
facilities equaled approximately 9.7% at December 31, 2000. We also pay a
commitment fee equal to 0.5% of the average daily amount available under the
revolving credit facility.

     Our subsidiaries guarantee our obligations under the bank facilities. These
guarantees are secured by a pledge of substantially all of the subsidiaries'
assets. The credit agreement requires that we comply with various financial
ratios and tests and contains covenants, including but not limited to
restrictions on new indebtedness, the ability to merge or consolidate, asset
sales, capital expenditures and dividends.

  Senior Subordinated Notes

     On May 11, 1999, we assumed from HCA $150 million in senior subordinated
notes maturing on May 15, 2009 and bearing interest at 10.75%. In November 1999,
in a registered exchange offer, we issued a like aggregate principal amount of
notes in exchange for these notes. Interest is payable semi-annually. The notes
are unsecured obligations and are subordinated in right of payment to all
existing and future senior indebtedness. Our subsidiaries also guarantee our
obligations under the notes.

     The indenture pursuant to which the notes were made contains certain
covenants, including but not limited to restrictions on new indebtedness, the
ability to merge or consolidate, asset sales, capital expenditures and
dividends.

MARKET RISKS ASSOCIATED WITH FINANCIAL INSTRUMENTS

     Our interest expense is sensitive to changes in the general level of
interest rates. We do not currently use derivatives to alter the interest rate
characteristics of our debt instruments.

     With respect to our interest-bearing liabilities, approximately $139.3
million of our long-term debt at December 31, 2000 is subject to variable rates
of interest. The remaining balance in long-term debt of $150.1 million at
December 31, 2000 is subject to fixed interest rates. The fair value of our
total long-term debt (including current portion) equaled $301.4 million at
December 31, 2000. We determined the fair value of our senior subordinated notes
using the quoted market price at December 31, 2000. We estimate the fair value
of the remaining long-term debt using discounted cash flows, based on our
incremental borrowing rates. Based on a hypothetical 1% increase in interest
rates on our variable rate debt, the potential annualized losses in future
pretax earnings would be approximately $1.4 million. The impact of this change
in interest rates on the carrying value of long-term debt would not be
significant. We determine the estimated changes to interest expense and the fair
value of long-term debt by considering the impact of hypothetical interest rates
on our borrowing cost and long-term debt balances. These analyses do not take
into account the effects, if any, of the potential changes in our credit ratings
or the overall level of economic activity. Further, in the event of a change in
interest rates of significant magnitude, management would expect to take actions
intended to further mitigate its exposure to such change. For further
information, see the discussion above of our long-term debt.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

     In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities," which was required to be adopted in years beginning
after June 15, 1999. In June 1999, SFAS No. 137 was issued, deferring

                                        30
<PAGE>   33

the effective date of SFAS No. 133 for one year. Management does not anticipate
that the adoption of the new statement will have a material effect on our
financial condition or results of operations.

YEAR 2000 COMPLIANCE

     We did not experience any material disruptions or other effects caused by
the Year 2000 problem, nor do we expect to experience any material disruptions
or other effects caused by the Year 2000 problem in the future.

INFLATION

     The healthcare industry is labor intensive. Wages and other expenses
increase during periods of inflation and when shortages in marketplaces occur.
In addition, suppliers pass along rising costs to us in the form of higher
prices. Our ability to pass on these increased costs is limited because of
increasing regulatory and competitive pressures, as discussed above. In the
event we experience inflationary pressures, results of operations may be
materially effected.

HEALTHCARE REFORM

     In recent years, an increasing number of legislative proposals have been
introduced or proposed to Congress and in some state legislatures. While we are
unable to predict which, if any, proposals for healthcare reform will be
adopted, there can be no assurance that proposals adverse to our business will
not be adopted.

RISK FACTORS

  Our revenues may decline if federal or state programs reduce our Medicare or
  Medicaid payments or managed care companies reduce our reimbursements.

     For the year ended December 31, 2000, we derived 47.0% of our revenues from
the Medicare and Medicaid programs. In recent years, federal and state
governments made significant changes in the Medicare and Medicaid programs.
These changes have decreased the amounts of money we receive for our services to
patients who participate in these programs.

     In recent years, Congress and some state legislatures have introduced an
increasing number of other proposals to make major changes in the healthcare
system. Medicare-reimbursed, hospital-outpatient services converted to a
prospective payment system on August 1, 2000. This system creates limitations on
levels of payment for a substantial portion of hospital outpatient procedures.
Future federal and state legislation may further reduce the payments we receive
for our services.

     A number of states have adopted legislation designed to reduce their
Medicaid expenditures and to provide universal coverage and additional care to
their residents. Some states propose to enroll Medicaid recipients in managed
care programs and impose additional taxes on hospitals to help finance or expand
the states' Medicaid systems.

     In addition, insurance and managed care companies and other third parties
from whom we receive payment for our services increasingly attempt to control
healthcare costs by requiring that hospitals discount their fees in exchange for
exclusive or preferred participation in their benefit plans. We believe that
this trend may continue and may reduce the payments we receive for our services.

  We may be subjected to allegations that we failed to comply with governmental
  regulation which could result in sanctions that reduce our revenue and
  profitability.

     All participants in the healthcare industry are required to comply with
many laws and regulations at the federal, state and local government levels.
These laws and regulations require that hospitals meet various requirements,
including those relating to the adequacy of medical care, equipment, personnel,
operating policies and procedures, maintenance of adequate records, privacy,
compliance with building

                                        31
<PAGE>   34

codes and environmental protection. These laws often contain safe harbor
provisions which describe some of the conduct and business relationships that
are immune from prosecution. Some of our current business arrangements do not
qualify for a safe harbor. This does not automatically render our arrangements
illegal. However, we may be subject to scrutiny by enforcement authorities. If
we fail to comply with applicable laws and regulations, we could suffer civil or
criminal penalties, including the loss of our licenses to operate our hospitals
and our ability to participate in the Medicare, Medicaid and other federal and
state healthcare programs.

     Significant media and public attention recently has focused on the hospital
industry due to ongoing investigations related to referrals, cost reporting and
billing practices, laboratory and home healthcare services and physician
ownership and joint ventures involving hospitals. Both federal and state
government agencies have announced heightened and coordinated civil and criminal
enforcement efforts. In addition, the Office of the Inspector General of the
United States Department of Health and Human Services and the United States
Department of Justice periodically establish enforcement initiatives that focus
on specific billing practices or other suspected areas of abuse. Recent
initiatives include a focus on hospital billing practices.

     In public statements, governmental authorities have taken positions on
issues for which little official interpretation was previously available. Some
of these positions appear to be inconsistent with common practices within the
industry and which have not previously been challenged in this manner. Moreover,
some government investigations that have in the past been conducted under the
civil provisions of federal law are now being conducted as criminal
investigations under the Medicare fraud and abuse laws.

     The laws and regulations that we must comply with are complex and subject
to change. In the future, different interpretations or enforcement of these laws
and regulations could subject our current practices to allegations of
impropriety or illegality or could require us to make changes in our facilities,
equipment, personnel, services, capital expenditure programs and operating
expenses.

  If we fail to effectively recruit and retain physicians and nurses our ability
  to deliver healthcare services efficiently will suffer.

     Physicians generally direct the majority of hospital admissions. Our
success, in part, depends on the number and quality of physicians on our
hospitals' medical staffs, the admissions practices of these physicians and the
maintenance of good relations with these physicians. We generally do not employ
physicians. Only a limited number of physicians practice in the non-urban
communities where our hospitals are located. Our primary method of adding or
expanding medical services is the recruitment of new physicians into our
communities.

     The success of our recruiting efforts depends on several factors. In
general, there is a shortage of specialty care physicians. We face intense
competition in the recruitment of specialists because of the difficulty
convincing these individuals of the benefits of practicing in a rural community.
Physicians are concerned with the patient volume in rural hospitals and whether
the volume will allow them to generate income comparable to that which they
would generate in an urban setting. If the trend in the United States over the
last several years to move out of cities and into more rural areas changes and
the growth rate in the rural communities where our hospitals operate slows, then
we could experience difficulty attracting physicians to practice in our
communities.

     There is generally a shortage of nurses. Our hospitals may be forced to
hire expensive contract nurses if they are unable to recruit and retain nurses.
The shortage of nurses may affect our hospitals' ability to deliver healthcare
services efficiently.

  Our revenue is heavily concentrated in Kentucky and Tennessee, which makes us
  particularly sensitive to regulatory and economic changes in those states.

     Our revenue is particularly sensitive to regulatory and economic changes in
the states of Kentucky and Tennessee. As of December 31, 2000, we operated 20
hospitals with six located in the Commonwealth

                                        32
<PAGE>   35

of Kentucky and six located in the State of Tennessee. Based on those 20
hospitals, we generated 38.8% of our revenue from our Kentucky hospitals and
20.7% from our Tennessee hospitals for the year ended December 31, 2000.
Effective January 2, 2001, we began operating Bluegrass Community Hospital in
Versailles, Kentucky. One managed care organization that participates in
Tennessee's Medicaid program has been placed in receivership by the State of
Tennessee. Other managed care organizations in the states in which we derive
significant revenue may encounter similar difficulties in paying claims in the
future.

  We may have difficulty acquiring hospitals on favorable terms, avoiding
  unknown or contingent liabilities of acquired hospitals and, because of
  regulatory scrutiny, acquiring nonprofit entities.

     One element of our business strategy is expansion through the acquisition
of acute care hospitals in growing, non-urban markets. We face significant
competition to acquire other attractive, rural hospitals. We may not find
suitable acquisitions on favorable terms. We also may incur or assume additional
indebtedness as a result of the consummation of any acquisitions. In addition,
in order to ensure the tax-free treatment of the distribution of our stock from
HCA, our ability to issue stock as consideration for acquisitions is limited.
Our failure to acquire non-urban hospitals consistent with our growth plans
could prevent us from increasing our revenues.

     We also may acquire businesses with unknown or contingent liabilities,
including liabilities for failure to comply with healthcare laws and
regulations. We have policies to conform the practices of acquired facilities to
our standards and applicable law and generally will seek indemnification from
prospective sellers covering these matters. We may, however, incur material
liabilities for past activities of acquired businesses.

     In recent years, the legislatures and attorneys general of several states
have become more interested in sales of hospitals by not-for-profit entities.
This heightened scrutiny may increase the cost and difficulty, or prevent our
completion, of transactions with not-for-profit organizations in the future.

  Certificate of need laws may prohibit or limit any future expansion by us in
  states with these laws.

     Some states require prior approval for the purchase, construction and
expansion of health care facilities, based on a state's determination of need
for additional or expanded health care facilities or services. Four states in
which we currently own hospitals, Alabama, Florida, Kentucky and Tennessee,
require a certificate of need for capital expenditures exceeding a prescribed
amount, changes in bed capacity or services and certain other matters. We may
not be able to obtain certificates of need required for expansion activities in
the future. If we fail to obtain any required certificate of need, our ability
to operate or expand operations in these states could be impaired.

  Our substantial leverage may limit our ability to successfully run our
  business.

     We are highly leveraged. At December 31, 2000, our consolidated long-term
debt equaled approximately $289.4 million. We also may draw on a revolving
credit commitment of up to $65 million under our bank credit agreement. In
addition, we have the ability to incur additional debt, subject to limitations
imposed by our credit agreement and the indenture governing the notes issued by
our subsidiary, LifePoint Hospitals Holdings, Inc. Our leverage and debt service
requirements could have important consequences to our stockholders, including
the following:

     - make us more vulnerable to economic downturns and to adverse changes in
       business conditions, such as further limitations on reimbursement under
       Medicare and Medicaid programs;

     - limit our ability to obtain additional financing in the future for
       working capital, capital expenditures, acquisitions, general corporate
       purposes or other purposes;

     - require us to dedicate a substantial portion of our cash flow from
       operations to the payment of principal and interest on our indebtedness,
       reducing the funds available for our operations;

                                        33
<PAGE>   36

     - make us vulnerable to increases in interest rates because some of our
       borrowings are at variable rates of interest; and

     - require us to pay the indebtedness immediately if we default on any of
       the numerous financial and other restrictive covenants, including
       restrictions on our payments of dividends, incurrences of indebtedness
       and sale of assets.

     Any substantial increase in our debt levels could affect our ability to
borrow funds at favorable interest rates and our future operating cash flow.

  Federal and state investigations of HCA could subject our hospitals and
  operations to increased governmental scrutiny.

     HCA has been the subject of various federal and state investigations, qui
tam actions, shareholder derivative and class action suits, patient/payer
actions and general liability claims. These investigations, actions and claims
relate to HCA and its subsidiaries, including subsidiaries that, before our
formation as an independent company, owned the facilities we now own.

     On December 14, 2000, HCA announced that it signed an agreement with the
Department of Justice and four U.S. attorneys' offices resolving all pending
federal criminal issues in the government's investigation. HCA also announced at
this time that it signed a civil settlement agreement with the Department of
Justice resolving civil false claims issues related to DRG coding, outpatient
laboratory and home health. The criminal agreement has been accepted by the
federal district courts. The civil settlement agreement is conditioned on court
approval of the settlement, which HCA expects to receive in the first quarter of
2001. These agreements relate only to conduct that was the subject of the
federal investigations resolved in the agreements, and HCA has stated publicly
that it continues to discuss civil claims relating to cost reporting and
physician relations with the government.

     Based on our review of documents filed by HCA with the Securities and
Exchange Commission, these agreements with the government also resolve many, but
not all, qui tam actions filed by private parties against HCA. In addition,
representatives of state attorneys general have agreed to recommend to state
officials that HCA be released from criminal and civil liability related to the
matters covered by the settlement agreements.

     HCA agreed to indemnify us for any losses, other than consequential
damages, arising from the pending governmental investigations of HCA's business
practices prior to the date of the distribution and losses arising from legal
proceedings, present or future, related to the investigation or actions engaged
in before the distribution that relate to the investigation. However, we could
be held responsible for any claims that are not covered by the agreements
reached with the federal government or for which HCA is not required to, or
fails to, indemnify us. We may also be affected by the initiation of additional
investigations or claims against HCA in the future, if any, and the related
media coverage.

  We depend significantly on key personnel, and the loss of one or more senior
  or local management personnel could limit our ability to execute our business
  strategy.

     We depend on the continued services and management experience of James M.
Fleetwood, Jr. and our other executive officers. If Mr. Fleetwood or any of our
other executive officers resign their positions or otherwise are unable to
serve, our management expertise and ability to deliver healthcare services
efficiently could be weakened. In addition, if we fail to attract and retain
managers at our hospitals and related facilities our operations will suffer.

  Other hospitals provide similar services, which may raise the level of
  competition faced by our hospitals.

     Competition among hospitals and other healthcare providers for patients has
intensified in recent years. All but one of our hospitals operate in geographic
areas where we are currently the sole provider of hospital services in these
communities. While our hospitals face less direct competition in our immediate
service areas, we do compete with other hospitals, including larger tertiary
care centers. Although these
                                        34
<PAGE>   37

competing hospitals may be in excess of 30 to 50 miles away from our facilities,
patients in these markets may migrate to, may be referred by local physicians
to, or may be lured by incentives from managed care plans to travel to these
distant hospitals. Some of these competing hospitals use equipment and services
more specialized than those available at our hospitals. In addition, some of the
hospitals that compete with us are owned by tax-supported governmental agencies
or not-for-profit entities supported by endowments and charitable contributions.
These hospitals can make capital expenditures without paying sales, property and
income taxes. We also face competition from other specialized care providers,
including outpatient surgery, orthopedic, oncology and diagnostic centers.

  We have limited operating history as an independent company.

     Prior to May 11, 1999, we operated as the America Group division of HCA.
Accordingly, we do not have a long operating history as an independent,
publicly-traded company. Before the distribution of our stock from HCA, we
historically relied on HCA for various financial, administrative and managerial
expertise relevant to the conduct of our business. HCA continues to provide some
support services to us on a contractual basis. We did not generate a profit for
1999. Although we generated a profit in 2000, we may not have net profits in the
future. See "Business -- Arrangements Relating to the Distribution" for more
information regarding our arrangements with HCA and see "Management's Discussion
and Analysis of Financial Condition and Results of Operations" for factors that
could affect our ability to generate profits.

  If our access to HCA's information systems is restricted or we are not able to
  integrate changes to our existing information systems, our operations could
  suffer.

     Our business depends significantly on effective information systems to
process clinical and financial information. Information systems require an
ongoing commitment of significant resources to maintain and enhance existing
systems and develop new systems in order to keep pace with continuing changes in
information processing technology. We rely heavily on HCA for information
systems. Under a contract with an initial term that will expire on May 11, 2006,
HCA provides financial, clinical, patient accounting and network information
services to us. If our access to these systems is limited in the future or if
HCA develops systems more appropriate for the urban healthcare market and not
suited for our hospitals, our operations could suffer. In addition, as new
information systems are developed, we must integrate them into our existing
systems. Evolving industry and regulatory standards, including the Health
Insurance Portability and Accountability Act of 1996, commonly known as "HIPAA,"
may require changes to our information systems. We may not be able to integrate
new systems or changes required to our existing systems in the future
effectively.

  If we fail to comply with our corporate integrity agreement, we could be
  required to pay significant monetary penalties.

     In December 2000, we entered into a corporate integrity agreement with the
Office of Inspector General. Under this agreement, we have an affirmative
obligation to report violations of applicable laws and regulations. This
obligation could result in greater scrutiny of us by regulatory authorities.
Complying with our corporate integrity agreement will require additional efforts
and costs. Our failure to comply with the terms of the corporate integrity
agreement could subject us to significant monetary penalties.

  If we become subject to malpractice and related legal claims, we could be
  required to pay significant damages.

     In recent years, physicians, hospitals and other healthcare providers have
become subject to an increasing number of legal actions alleging malpractice or
related legal theories. Many of these actions involve large claims and
significant defense costs. To protect ourselves from the cost of these claims,
we generally maintain professional malpractice liability insurance and general
liability insurance coverage in amounts and with deductibles that we believe to
be appropriate for our operations. However, our insurance coverage may not cover
all claims against us or continue to be available at a reasonable cost for us to
maintain adequate levels of insurance.
                                        35
<PAGE>   38

  We could incur substantial liability if the distribution of our stock from HCA
  were to be taxable.

     On March 30, 1999, HCA received a private letter ruling from the Internal
Revenue Service concerning the United States federal income tax consequences of
the distribution by HCA of our common stock and the common stock of Triad
Hospitals, Inc., a publicly-traded company comprising the former Pacific Group
of HCA, and the restructuring transactions that preceded the distribution. The
private letter ruling provides that the distribution generally was tax-free to
HCA and HCA's stockholders, except for any cash received instead of fractional
shares. The IRS has issued additional private letter rulings that supplement its
March 30, 1999 ruling stating that certain transactions occurring after the
distribution do not adversely affect the private letter rulings previously
issued by the IRS. The March 30, 1999 ruling and the supplemental rulings are
based on the accuracy of representations as to numerous factual matters and as
to certain intentions of HCA, Triad and LifePoint. The inaccuracy of any of
those representations could cause the IRS to revoke all or part of any of the
rulings retroactively.

     If the distribution were to fail to qualify for tax-free treatment, then,
in general, additional corporate tax, which would be substantial, would be
payable by the consolidated group of which HCA is the common parent. Each member
of HCA's consolidated group at the time of the distribution, including
LifePoint, would be jointly and severally liable for this tax liability. In
addition, LifePoint entered into a tax sharing and indemnification agreement
with HCA and Triad, which prohibits LifePoint from taking actions that could
jeopardize the tax treatment of either the distribution or the restructuring
transactions that preceded the distribution, and requires LifePoint to indemnify
HCA and Triad for any taxes or other losses that result from LifePoint's
actions, which amounts could be substantial. If LifePoint were required to make
any indemnity payments or otherwise were liable for additional taxes relating to
the distribution, LifePoint's results of operations could be materially
adversely affected.

  We depend on dividends and other intercompany transfers of funds to meet our
  financial obligations.

     We are a holding company and hold most of our assets and conduct most of
our operations through direct and indirect subsidiaries. As a holding company,
our results of operations depend on the results of operations of our
subsidiaries. Moreover, we depend on dividends and other intercompany transfers
of funds from our subsidiaries to meet our debt service and other obligations,
including payment of principal and interest on the senior subordinated notes
issued by our subsidiary, LifePoint Hospitals Holdings, Inc. The ability of our
subsidiaries to pay dividends or make other payments or advances will depend on
their operating results and will be subject to applicable laws and restrictions
contained in agreements governing indebtedness of these subsidiaries.

  Our anti-takeover provisions may discourage acquisitions of control even
  though our stockholders may consider these proposals desirable.

     Provisions in our certificate of incorporation and bylaws may have the
effect of discouraging an acquisition of control not approved by our board of
directors. These provisions include:

     - the issuance of "blank check" preferred stock by the board of directors
       without stockholder approval;

     - higher stockholder voting requirements for some transactions, including
       business combinations with related parties (i.e., a "fair price
       provision");

     - a prohibition on taking actions by the written consent of stockholders;

     - restrictions on the persons eligible to call a special meeting of
       stockholders;

     - classification of the board of directors into three classes; and

     - the removal of directors only for cause and by a vote of 80% of the
       outstanding voting power.

     These provisions may also have the effect of discouraging third parties
from making proposals involving our acquisition or change of control, although a
proposal, if made, might be considered desirable

                                        36
<PAGE>   39

by a majority of our stockholders. These provisions could further have the
effect of making it more difficult for third parties to cause the replacement of
our board of directors.

     We have also adopted a stockholder rights plan. This stockholder rights
plan is designed to protect stockholders in the event of an unsolicited offer
and other takeover tactics which, in the opinion of the board of directors,
could impair our ability to represent stockholder interests. The provisions of
this stockholder rights plan may render an unsolicited takeover more difficult
or might prevent a takeover.

     Provisions of the tax sharing and indemnification agreement that are
intended to preserve the tax-free status of the distribution could also
discourage takeover proposals or make them more expensive. See
"Business -- Arrangements Relating to the Distribution."

     We are subject to provisions of Delaware corporate law which may also
restrict some business combination transactions. Delaware law may further
discourage, delay or prevent someone from acquiring or merging with us.

  We have never paid and have no current plans to pay a dividend on our common
  shares.

     We have never paid a cash dividend and we do not anticipate paying any cash
dividends in the foreseeable future. Our senior credit facility also restricts
the payment of cash dividends. If we incur any future indebtedness to refinance
our existing indebtedness or to fund our future growth, our ability to pay
dividends may be further restricted by the terms of this indebtedness.

  Our stock price has been and may continue to be volatile.

     The trading price of our common stock has been and may continue to be
subject to wide fluctuations. Our stock price may fluctuate in response to a
number of events and factors, including:

     - quarterly variations in operating results;

     - changes in financial estimates and recommendations by securities
       analysts;

     - the operating and stock price performance of other companies that
       investors may deem comparable; and

     - news reports relating to trends in our markets.

     Broad market and industry fluctuations may adversely affect the price of
our common stock, regardless of our operating performance.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     Information with respect to this Item is contained in Item 7 under the
caption "Management's Discussion and Analysis of Financial Condition and Results
of Operations -- Market Risks Associated with Financial Instruments."

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     Information with respect to this Item is contained in our consolidated
financial statements indicated in the Index on Page F-1 of this report.

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

     None.

                                        37
<PAGE>   40

                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

EXECUTIVE OFFICERS AND KEY EMPLOYEES

     Information with respect to our executive officers is incorporated by
reference to the information contained under the caption "Executive
Compensation -- Executive Officers of the Company" included in our proxy
statement relating to our annual meeting of stockholders to be held on May 14,
2001.

DIRECTORS

     Information with respect to our directors is incorporated by reference to
the information contained under the caption "Election of Directors" included in
our proxy statement relating to our annual meeting of stockholders to be held on
May 14, 2001.

COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

     Information with respect to compliance with Section 16(a) of the Securities
Exchange Act of 1934 is incorporated by reference to the information contained
under the heading "Section 16(a) Beneficial Ownership Reporting Compliance"
included in our proxy statement relating to our annual meeting of stockholders
to be held on May 14, 2001.

ITEM 11.  EXECUTIVE COMPENSATION

     This information is incorporated by reference to the information contained
under the heading "Executive Compensation" included in our proxy statement
relating to our annual meeting of stockholders to be held on May 14, 2001,
except that the Comparative Performance Graph and the Compensation Committee
Report on Executive Compensation included in the proxy statement are expressly
not incorporated by reference in this report.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     This information is incorporated by reference to the information contained
under the caption "Voting Securities and Principal Holders Thereof" included in
our proxy statement relating to our annual meeting of stockholders to be held on
May 14, 2001.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     This information is incorporated by reference to the information contained
under the caption "Certain Transactions" included in our proxy statement
relating to our annual meeting of stockholders to be held on May 14, 2001.

                                        38
<PAGE>   41

                                    PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

     (a) Index to Consolidated Financial Statements, Financial Statement
Schedules and Exhibits:

          (1) CONSOLIDATED FINANCIAL STATEMENTS:  See Item 8 in this report.

             The consolidated financial statements required to be included in
        Part II, Item 8, are indexed on Page F-1 and submitted as a separate
        section of this report.

          (2) CONSOLIDATED FINANCIAL STATEMENT SCHEDULES:

             All schedules are omitted because they are not applicable or not
        required, or because the required information is included in the
        consolidated financial statements or notes in this report.

          (3) EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT
NUMBER         DESCRIPTION OF EXHIBITS
-------        -----------------------
<C>       <C>  <S>
 2.1       --  Distribution Agreement dated May 11, 1999 by and among
               Columbia/HCA, Triad Hospitals, Inc. and LifePoint Hospitals,
               Inc. (a)
 3.1       --  Certificate of Incorporation of LifePoint Hospitals (a)
 3.2       --  Bylaws of LifePoint Hospitals (a)
 3.3       --  Certificate of Incorporation of LifePoint Holdings (b)
 3.4       --  Bylaws of LifePoint Holdings (b)
 4.1       --  Form of Specimen Certificate for LifePoint Hospitals Common
               Stock (c)
 4.2       --  Indenture (including form of 10 3/4% Senior Subordinated
               Notes due 2009) dated as of May 11, 1999, between
               HealthTrust, Inc. -- The Hospital Company and Citibank N.A.
               as Trustee (a)
 4.3       --  Form of 10 3/4% Senior Subordinated Notes due 2009 (filed as
               part of Exhibit 4.2)
 4.4       --  Registration Rights Agreement dated as of May 11, 1999
               between HealthTrust and the Initial Purchasers named therein
               (a)
 4.5       --  LifePoint Assumption Agreement dated May 11, 1999 between
               HealthTrust and LifePoint Hospitals (a)
 4.6       --  Holdings Assumption Agreement dated May 11, 1999 between
               LifePoint Hospitals and LifePoint Holdings (a)
 4.7       --  Guarantor Assumption Agreements dated May 11, 1999 between
               LifePoint Holdings and the Guarantors signatory thereto (a)
 4.8       --  Rights Agreement dated as of May 11, 1999 between the
               Company and National City Bank as Rights Agent (a)
10.1       --  Tax Sharing and Indemnification Agreement, dated May 11,
               1999, by and among Columbia/HCA, LifePoint Hospitals and
               Triad Hospitals (a)
10.2       --  Benefits and Employment Matters Agreement, dated May 11,
               1999 by and among Columbia/HCA, LifePoint Hospitals and
               Triad Hospitals (a)
10.3       --  Insurance Allocation and Administration Agreement, dated May
               11, 1999, by and among Columbia/HCA, LifePoint Hospitals and
               Triad Hospitals (a)
10.4       --  Transitional Services Agreement dated May 11, 1999 by and
               between Columbia/HCA and LifePoint Hospitals (a)
10.5       --  Computer and Data Processing Services Agreement dated May
               11, 1999 by and between Columbia Information Systems, Inc.
               and LifePoint Hospitals (a)
</TABLE>

                                        39
<PAGE>   42

<TABLE>
<CAPTION>
EXHIBIT
NUMBER         DESCRIPTION OF EXHIBITS
-------        -----------------------
<C>       <C>  <S>
10.6       --  Agreement to Share Telecommunications Services dated May 11,
               1999 by and between Columbia Information Systems, Inc. and
               LifePoint Hospitals (a)
10.7       --  Year 2000 Professional Services Agreement dated May 11, 1999
               by and between CHCA Management Services, L.P. and LifePoint
               Hospitals (a)
10.8       --  Sub-Lease Agreement dated May 11, 1999 by and between
               HealthTrust and LifePoint Hospitals (a)
10.9       --  Lease Agreement dated as of November 22, 1999 by and between
               LifePoint Hospitals and W. Fred Williams, Trustee for the
               Benefit of Highwoods/Tennessee Holdings, L.P. (d)
10.10      --  LifePoint Hospitals, Inc. 1998 Long-Term Incentive Plan (a)
10.11      --  LifePoint Hospitals, Inc. Executive Stock Purchase Plan (a)
10.12      --  Form of Share Purchase Loan and Note Agreement between
               LifePoint Hospitals and certain executive officers in
               connection with purchases of Common Stock pursuant to the
               Executive Stock Purchase Plan (d)
10.13      --  LifePoint Hospitals, Inc. Management Stock Purchase Plan (a)
10.14      --  LifePoint Hospitals, Inc. Outside Directors Stock and
               Incentive Compensation Plan (a)
10.15      --  Credit Agreement dated as of May 11, 1999 among HealthTrust,
               Inc. -- The Hospital Company, as Borrower, the several
               lenders from time to time party thereto, Fleet National Bank
               as arranger and administrative agent, ScotiaBanc, Inc. as
               documentation agent and co-arranger, Deutsche Bank
               Securities, Inc. as syndication agent and co-arranger, and
               SunTrust Bank, Nashville, N.A. as co-agent (a)
10.16      --  Amendment to Credit Agreement dated as of December 31, 1999
               among LifePoint Holdings, as Borrower, the several lenders
               which are parties to the Credit Agreement, Fleet National
               Bank as arranger and administrative agent, ScotiaBanc, Inc.
               as documentation agent and co-arranger, Deutsche Bank
               Securities, Inc. as syndication agent and co-arranger, and
               SunTrust Bank, Nashville, N.A. as co-agent (b)
10.17      --  Second Amendment to Credit Agreement dated as of May 23,
               2000 among LifePoint Hospitals Holdings, Inc., as Borrower,
               the several lenders which are parties to the Credit
               Agreement, Fleet National Bank as arranger and
               administrative agent, ScotiaBank, Inc. as documentation
               agent and co-arranger, Deutsche Bank Securities Inc. as
               syndication agent and co-arranger, and SunTrust Bank,
               Nashville, N.A. as co-agent (e)
10.18      --  Assumption Agreement dated as of May 11, 1999 by and between
               Fleet National Bank and LifePoint Hospitals (a)
10.19      --  Assumption Agreement dated as of May 11, 1999 by and between
               Fleet National Bank and LifePoint Holdings (a)
10.20      --  Employment Agreement of James M. Fleetwood, Jr.
10.21      --  Corporate Integrity Agreement dated as of December 21, 2000
               by and between the Office of the Inspector General of the
               Department of Health and Human Services and LifePoint
               Hospitals
21.1       --  List of the Subsidiaries of LifePoint Hospitals
21.2       --  List of the Subsidiaries of LifePoint Holdings
23.1       --  Consent of Ernst & Young LLP
</TABLE>

---------------

(a)  Incorporated by reference from exhibits to LifePoint Hospitals' Quarterly
     Report on Form 10-Q for the quarter ended March 31, 1999, File No. 0-29818.

(b)  Incorporated by reference from exhibits to LifePoint Holdings' Annual
     Report on Form 10-K for the year ended December 31, 1999, File No.
     333-84755.

                                        40
<PAGE>   43

(c)  Incorporated by reference from exhibits to LifePoint Hospitals'
     Registration Statement on Form 10 under the Securities Exchange Act of
     1934, as amended, File No. 0-29818.

(d)  Incorporated by reference from exhibits to LifePoint Hospitals' Annual
     Report on Form 10-K for the year ended December 31, 1999, File No. 0-29818.

(e)  Incorporated by reference from exhibits to LifePoint Holdings' Quarterly
     Report on Form 10-Q for the quarter ended September 30, 2000, File No.
     333-84755.

                                        41
<PAGE>   44

                 MANAGEMENT COMPENSATION PLANS AND ARRANGEMENTS

     The following is a list of all executive compensation plans and
arrangements filed as exhibits to this annual report on Form 10-K:

          1. LifePoint Hospitals, Inc. 1998 Long-Term Incentive Plan (filed as
     Exhibit 10.10)

          2. LifePoint Hospitals, Inc. Executive Stock Purchase Plan (filed as
     Exhibit 10.11)

          3. Form of Share Purchase Loan and Note Agreement between LifePoint
     Hospitals and certain executive officers in connection with purchases of
     Common Stock pursuant to the Executive Stock Purchase Plan (filed as
     Exhibit 10.12)

          4. LifePoint Hospitals, Inc. Management Stock Purchase Plan (filed as
     Exhibit 10.13)

          5. LifePoint Hospitals, Inc. Outside Directors Stock and Incentive
     Compensation Plan (filed as Exhibit 10.14)

          6. Employment Agreement of James M. Fleetwood, Jr. (filed as Exhibit
     10.20)

     (b) Reports on Form 8-K

     On October 5, 2000, we filed a Current Report on Form 8-K pursuant to Item
5 to report the execution of a definitive agreement to sell the assets of
Springhill Medical Center. On October 19, 2000, we filed a Current Report on
Form 8-K pursuant to Item 5 to provide information about the release of our
third quarter earnings and the related conference call.

                                        42
<PAGE>   45

                                   SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) 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, in the City of
Brentwood, State of Tennessee, on March 13, 2001.

                                          LifePoint Hospitals, Inc.

                                          By:  /s/ JAMES M. FLEETWOOD, JR.
                                            ------------------------------------
                                                  James M. Fleetwood, Jr.
                                             Chairman, Chief Executive Officer
                                                Chief Operating Officer and
                                                          President

     Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant in the capacities and on the date indicated.

<TABLE>
<CAPTION>
                        NAME                                        TITLE                    DATE
                        ----                                        -----                    ----
<C>                                                    <S>                              <C>

             /s/ JAMES M. FLEETWOOD, JR.               Chairman, Chief Executive        March 13, 2001
-----------------------------------------------------    Officer, Chief Operating
               James M. Fleetwood, Jr.                   Officer and President
                                                         (Principal Executive Officer)

               /s/ KENNETH C. DONAHEY                  Senior Vice President and Chief  March 13, 2001
-----------------------------------------------------    Financial Officer (Principal
                 Kenneth C. Donahey                      Financial and Accounting
                                                         Officer)

               /s/ RICKI TIGERT HELFER                 Director                         March 13, 2001
-----------------------------------------------------
                 Ricki Tigert Helfer

           /s/ JOHN E. MAUPIN, JR., D.D.S              Director                         March 13, 2001
-----------------------------------------------------
             John E. Maupin, Jr., D.D.S

                /s/ DEWITT EZELL, JR.                  Director                         March 13, 2001
-----------------------------------------------------
                  DeWitt Ezell, Jr.

                /s/ WILLIAM V. LAPHAM                  Director                         March 13, 2001
-----------------------------------------------------
                  William V. Lapham

                /s/ RICHARD H. EVANS                   Director                         March 13, 2001
-----------------------------------------------------
                  Richard H. Evans
</TABLE>

                                        43
<PAGE>   46

                                   SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) 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, in the City of
Brentwood, State of Tennessee, on March 13, 2001.

                                          LifePoint Hospitals Holdings, Inc.

                                          By:  /s/ JAMES M. FLEETWOOD, JR.
                                            ------------------------------------
                                                  James M. Fleetwood, Jr.
                                             Chairman, Chief Executive Officer
                                                Chief Operating Officer and
                                                          President

     Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons in the capacities and on the
date indicated.

<TABLE>
<CAPTION>
                      SIGNATURE                                     TITLE                    DATE
                      ---------                                     -----                    ----
<C>                                                    <S>                              <C>

             /s/ JAMES M. FLEETWOOD, JR.               Chairman, Chief Executive        March 13, 2001
-----------------------------------------------------    Officer, Chief Operating
               James M. Fleetwood, Jr.                   Officer and President
                                                         (Principal Executive Officer)

               /s/ KENNETH C. DONAHEY                  Director, Senior Vice President  March 13, 2001
-----------------------------------------------------    and Chief Financial Officer
                 Kenneth C. Donahey                      (Principal Financial and
                                                         Accounting Officer)
</TABLE>

                                        44
<PAGE>   47

                         INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                              PAGE
                                                              ----
<S>                                                           <C>

Report of Independent Auditors..............................  F-2

Consolidated Statements of Operations -- for the years ended
  December 31, 1998, 1999 and 2000..........................  F-3

Consolidated Balance Sheets -- December 31, 1999 and 2000...  F-4

Consolidated Statements of Cash Flows -- for the years ended
  December 31, 1998, 1999 and 2000..........................  F-5

Consolidated Statements of Stockholders' Equity -- for the
  years ended December 31, 1998, 1999 and 2000..............  F-6

Notes to Consolidated Financial Statements..................  F-7
</TABLE>

                                       F-1
<PAGE>   48

                         REPORT OF INDEPENDENT AUDITORS

To the Board of Directors and Stockholders
LifePoint Hospitals, Inc.

     We have audited the accompanying consolidated balance sheets of LifePoint
Hospitals, Inc. as of December 31, 1999 and 2000, and the related consolidated
statements of operations, stockholders' equity and cash flows for each of the
three years in the period ended December 31, 2000. These consolidated financial
statements are the responsibility of the management of LifePoint Hospitals, Inc.
(the "Company"). Our responsibility is to express an opinion on these financial
statements based on our audits.

     We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audits to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

     In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of LifePoint
Hospitals, Inc. at December 31, 1999 and 2000, and the consolidated results of
its operations and its cash flows for each of the three years in the period
ended December 31, 2000, in conformity with accounting principles generally
accepted in the United States.

                                                  /s/ Ernst & Young LLP

Nashville, Tennessee
January 29, 2001

                                       F-2
<PAGE>   49

                           LIFEPOINT HOSPITALS, INC.

                     CONSOLIDATED STATEMENTS OF OPERATIONS
              FOR THE YEARS ENDED DECEMBER 31, 1998, 1999 AND 2000
                (DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
                                                               1998      1999       2000
                                                              ------    ------     ------
<S>                                                           <C>       <C>        <C>
Revenues....................................................  $498.4    $515.2     $557.1
Salaries and benefits.......................................   220.8     217.4      224.2
Supplies....................................................    62.0      64.2       67.0
Other operating expenses....................................   117.2     117.3      118.1
Provision for doubtful accounts.............................    41.6      38.2       42.0
Depreciation and amortization...............................    28.3      31.4       34.1
Interest expense............................................    19.1      23.4       30.7
Management fees.............................................     8.9       3.2         --
ESOP expense................................................      --       2.9        7.1
Impairment of long-lived assets.............................    26.1      25.4       (1.4)
                                                              ------    ------     ------
                                                               524.0     523.4      521.8
                                                              ------    ------     ------
Income (loss) from continuing operations before minority
  interests and income taxes................................   (25.6)     (8.2)      35.3
Minority interests in earnings of consolidated entities.....     1.9       1.9        2.2
                                                              ------    ------     ------
Income (loss) from continuing operations before income
  taxes.....................................................   (27.5)    (10.1)      33.1
Provision (benefit) for income taxes........................    (9.8)     (2.7)      15.2
                                                              ------    ------     ------
Income (loss) from continuing operations....................   (17.7)     (7.4)      17.9
Discontinued operations:
  Loss from operations, net of income tax benefit of $2.6...    (4.1)       --         --
                                                              ------    ------     ------
     Net income (loss)......................................  $(21.8)   $ (7.4)    $ 17.9
                                                              ======    ======     ======
Basic earnings (loss) per share (see Note 14):
  Income (loss) from continuing operations..................  $(0.59)   $(0.24)    $ 0.57
  Loss from discontinued operations.........................   (0.14)       --         --
                                                              ------    ------     ------
     Net income (loss)......................................  $(0.73)   $(0.24)    $ 0.57
                                                              ======    ======     ======
Diluted earnings (loss) per share (see Note 14):
  Income (loss) from continuing operations..................  $(0.59)   $(0.24)    $ 0.54
  Loss from discontinued operations.........................   (0.14)       --         --
                                                              ------    ------     ------
     Net income (loss)......................................  $(0.73)   $(0.24)    $ 0.54
                                                              ======    ======     ======
</TABLE>

   The accompanying notes are an integral part of the consolidated financial
                                  statements.

                                       F-3
<PAGE>   50

                           LIFEPOINT HOSPITALS, INC.

                          CONSOLIDATED BALANCE SHEETS
                           DECEMBER 31, 1999 AND 2000
                (DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
                                                               1999        2000
                                                              -------     -------
<S>                                                           <C>         <C>
                           ASSETS
Current assets:
  Cash and cash equivalents.................................  $  12.5     $  39.7
  Accounts receivable, less allowances for doubtful accounts
     of $50.3 and $52.3 at December 31, 1999 and 2000,
     respectively...........................................     46.7        41.7
  Inventories...............................................     14.3        13.9
  Deferred taxes and other current assets...................     25.9        22.2
                                                              -------     -------
                                                                 99.4       117.5
Property and equipment:
  Land......................................................      7.9         8.7
  Buildings and improvements................................    204.1       236.9
  Equipment.................................................    260.6       244.9
  Construction in progress (estimated cost to complete and
     equip after December 31, 2000 -- $12.0)................     20.2         9.4
                                                              -------     -------
                                                                492.8       499.9
Accumulated depreciation....................................   (198.4)     (183.4)
                                                              -------     -------
                                                                294.4       316.5
Intangible assets, net......................................     26.4        53.8
Other.......................................................      0.2         0.2
                                                              -------     -------
                                                              $ 420.4     $ 488.0
                                                              =======     =======
                   LIABILITIES AND EQUITY
Current liabilities:
  Accounts payable..........................................  $  26.5     $  16.1
  Accrued salaries..........................................     14.7        13.8
  Other current liabilities.................................     12.9        11.1
  Current maturities of long-term debt......................      3.1        11.1
                                                              -------     -------
                                                                 57.2        52.1
Long-term debt..............................................    257.1       278.3
Deferred taxes..............................................     12.5        15.2
Professional liability risks and other liabilities..........      3.4         9.4
Minority interests in equity of consolidated entities.......      4.5         4.6
Stockholders' equity:
  Preferred stock, $.01 par value; 10,000,000 shares
     authorized; no shares issued...........................       --          --
  Common stock, $.01 par value; 90,000,000 shares
     authorized; 33,701,208
  shares and 34,709,504 shares issued and outstanding at
  December 31, 1999 and 2000, respectively..................      0.3         0.3
  Capital in excess of par value............................    137.9       156.5
  Unearned ESOP compensation................................    (28.9)      (25.7)
  Notes receivable for shares sold to employees.............    (10.2)       (7.2)
  Retained earnings (accumulated deficit)...................    (13.4)        4.5
                                                              -------     -------
                                                                 85.7       128.4
                                                              -------     -------
                                                              $ 420.4     $ 488.0
                                                              =======     =======
</TABLE>

   The accompanying notes are an integral part of the consolidated financial
                                  statements.

                                       F-4
<PAGE>   51

                           LIFEPOINT HOSPITALS, INC.

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
              FOR THE YEARS ENDED DECEMBER 31, 1998, 1999 AND 2000
                             (DOLLARS IN MILLIONS)

<TABLE>
<CAPTION>
                                                               1998      1999      2000
                                                              ------    ------    ------
<S>                                                           <C>       <C>       <C>
Cash flows from operating activities:
  Net income (loss).........................................  $(21.8)   $ (7.4)   $ 17.9
  Adjustments to reconcile net income (loss) to net cash
     provided by operating activities:
       ESOP expense.........................................      --       2.9       7.1
       Provision for doubtful accounts......................    41.6      38.2      42.0
       Depreciation and amortization........................    28.3      31.4      34.1
       Minority interests in earnings of consolidated
          entities..........................................     1.9       1.9       2.2
       Deferred income taxes (benefit)......................   (12.4)    (13.8)     13.6
       Loss (gain) on impairment of long-lived assets.......    26.1      25.4      (1.4)
       Loss from discontinued operations....................     4.1        --        --
       Reserve for professional liability risk..............      --       3.4       5.4
       Increase (decrease) in cash from operating assets and
          liabilities, net of effects from acquisitions and
          divestitures:
          Accounts receivable...............................   (21.3)    (29.8)    (32.8)
          Inventories and other assets......................     0.2      (1.1)     (1.7)
          Accounts payable and accrued expenses.............     0.9       7.1     (11.4)
          Income taxes payable..............................      --      (0.3)      6.2
       Other................................................    (0.1)      1.4       2.2
                                                              ------    ------    ------
          Net cash provided by operating activities.........    47.5      59.3      83.4
Cash flows from investing activities:
  Purchases of property and equipment, net..................   (29.3)    (64.8)    (31.4)
  Purchases of facilities...................................      --        --     (82.4)
  Proceeds from sale of facilities..........................      --        --      24.3
  Other.....................................................    (2.2)     (4.0)     (2.3)
                                                              ------    ------    ------
          Net cash used in investing activities.............   (31.5)    (68.8)    (91.8)
Cash flows from financing activities:
  Borrowings under bank debt................................      --        --      35.0
  Repayments of bank debt...................................      --        --      (5.7)
  Proceeds from exercise of stock options...................      --        --       7.2
  (Decrease) increase in intercompany balances with HCA,
     net....................................................   (14.9)     22.4        --
  Other.....................................................    (1.1)     (0.4)     (0.9)
                                                              ------    ------    ------
          Net cash (used in) provided by financing
            activities......................................   (16.0)     22.0      35.6
                                                              ------    ------    ------
Change in cash and cash equivalents.........................      --      12.5      27.2
Cash and cash equivalents at beginning of year..............      --        --      12.5
                                                              ------    ------    ------
Cash and cash equivalents at end of year....................  $   --    $ 12.5    $ 39.7
                                                              ======    ======    ======
Supplemental disclosure of cash flow information:
  Interest payments.........................................  $ 19.1    $ 21.2    $ 29.4
  Income taxes paid (received), net.........................  $   --    $ 15.4    $ (4.4)
Supplemental non-cash financing activities:
  Assumption of debt from HCA...............................  $   --    $260.0    $   --
  Elimination of intercompany amounts payable to HCA........  $   --    $224.9    $   --
</TABLE>

   The accompanying notes are an integral part of the consolidated financial
                                  statements.

                                       F-5
<PAGE>   52

                           LIFEPOINT HOSPITALS, INC.

                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
             FOR THE YEARS ENDED DECEMBER 31, 1998, 1999, AND 2000
                        (DOLLARS AND SHARES IN MILLIONS)

<TABLE>
<CAPTION>
                                                                                                NOTES
                                                   CAPITAL                                    RECEIVABLE
                                                     IN         RETAINED                         FOR
                                 COMMON STOCK     EXCESS OF     EARNINGS        EQUITY,         SHARES       UNEARNED
                                ---------------      PAR      (ACCUMULATED    INVESTMENTS      SOLD TO         ESOP
                                SHARES   AMOUNT     VALUE       DEFICIT)         BY HCA       EMPLOYEES    COMPENSATION    TOTAL
                                ------   ------   ---------   ------------   --------------   ----------   ------------   -------
<S>                             <C>      <C>      <C>         <C>            <C>              <C>          <C>            <C>
Balance at December 31,
  1997........................            $        $             $              $ 140.5         $             $           $ 140.5
  Net loss....................                                                    (21.8)                                    (21.8)
                                 ----     ----     -------       ------         -------         ------        ------      -------
Balance at December 31,
  1998........................                                                    118.7                                     118.7
  Net income before
    spin-off..................                                                      6.0                                       6.0
  Stock issued in connection
    with:
    Executive Stock Purchase
      Plan....................    1.0                 10.2                                       (10.2)                        --
    Employee Stock Ownership
      Plan....................    2.8                 32.1                                                     (32.1)          --
    Issuance of stock
      options.................                         1.6                                                                    1.6
  ESOP compensation earned....                        (0.3)                                                      3.2          2.9
  Assumption of debt from
    HCA.......................                      (260.0)                                                                (260.0)
  Elimination of intercompany
    debt to HCA...............                       229.9                                                                  229.9
  Spin-off capitalization.....   29.9      0.3       124.4                       (124.7)                                       --
  Net loss after spin-off.....                                    (13.4)                                                    (13.4)
                                 ----     ----     -------       ------         -------         ------        ------      -------
Balance at December 31,
  1999........................   33.7      0.3       137.9        (13.4)             --          (10.2)        (28.9)        85.7
  Net income..................                                     17.9                                                      17.9
  ESOP compensation earned....                         3.9                                                       3.2          7.1
  Exercise of stock options,
    including tax benefits and
    other.....................    1.0                 17.1                                                                   17.1
  Stock issued in connection
    with Management Stock
    Purchase Plan.............                         0.7                                                                    0.7
  Payment on Executive Stock
    Purchase Plan.............                        (3.1)                                        3.0                       (0.1)
                                 ----     ----     -------       ------         -------         ------        ------      -------
Balance at December 31,
  2000........................   34.7     $0.3     $ 156.5       $  4.5         $    --         $ (7.2)       $(25.7)     $ 128.4
                                 ====     ====     =======       ======         =======         ======        ======      =======
</TABLE>

   The accompanying notes are an integral part of the consolidated financial
                                  statements.

                                       F-6
<PAGE>   53

                           LIFEPOINT HOSPITALS, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               DECEMBER 31, 2000

NOTE 1 -- ORGANIZATION AND ACCOUNTING POLICIES

  Organization

     On May 11, 1999, HCA -- The Healthcare Company ("HCA") completed the
spin-off of its operations comprising the America Group to its stockholders by
distributing all outstanding shares of LifePoint Hospitals, Inc. (the
"Distribution"). LifePoint Hospitals, Inc., together with its subsidiaries, as
appropriate, is hereinafter referred to as the "Company." A description of the
Distribution and certain transactions with HCA is included in Note 2.

     At December 31, 2000, the Company was comprised of 20 general, acute care
hospitals and related health care entities. The entities are located in
non-urban areas in the states of Alabama, Florida, Kansas, Kentucky, Tennessee,
Utah and Wyoming.

  Principles of Consolidation

     The consolidated financial statements include the accounts of the Company
and all subsidiaries and entities controlled by the Company through the
Company's direct or indirect ownership of a majority voting interest or
exclusive rights granted to the Company by contract as the sole general partner
to manage and control the ordinary course of the affiliates' business. All
significant intercompany accounts and transactions within the Company have been
eliminated in consolidation. Investments in entities which the Company does not
control, but in which it has a substantial ownership interest and can exercise
significant influence, are accounted for using the equity method.

  Use of Estimates

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

  Reclassifications

     Certain prior year amounts have been reclassified to conform to the current
year presentation.

  Equity

     Equity for periods prior to the Distribution represents the net investment
in the Company by HCA. It includes Common Stock, additional paid-in-capital and
net earnings.

  Revenues

     The Company's health care facilities have entered into agreements with
third-party payers, including government programs and managed care health plans,
under which the facilities are paid based upon established charges, the cost of
providing services, predetermined rates per diagnosis, fixed per diem rates or
discounts from established charges.

     Revenues are recorded at estimated amounts due from patients and
third-party payers for the health care services provided. Settlements under
reimbursement agreements with third-party payers are estimated and recorded in
the period the related services are rendered and are adjusted in future periods
as final settlements are determined. The net adjustments to estimated
settlements resulted in increases to revenues of $1.2 million, $0.7 million and
$3.2 million for the years ended December 31, 1998, 1999 and 2000, respectively.
Management believes that adequate provisions have been made for adjustments that
may

                                       F-7
<PAGE>   54
                           LIFEPOINT HOSPITALS, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

result from final determination of amounts earned under these programs. HCA
retains sole responsibility for, and will be entitled to, any Medicare, Medicaid
or cost-based Blue Cross settlements relating to cost reporting periods ending
on or prior to the Distribution. The net settlement payable estimated as of
December 31, 1999 and 2000 and included in accounts receivable in the
accompanying balance sheets approximated $5.1 million and $13.5 million,
respectively.

     Laws and regulations governing Medicare and Medicaid programs are complex
and subject to interpretation. As a result, there is at least a reasonable
possibility that recorded estimates will change by a material amount in the near
term. The Company believes that it is in compliance with all applicable laws and
regulations and is not aware of any pending or threatened investigations
involving allegations of potential wrongdoing that would have a material effect
on the Company's financial statements. Compliance with such laws and regulations
can be subject to future government review and interpretation as well as
significant regulatory action including fines, penalties and exclusion from the
Medicare and Medicaid programs.

     The Company provides care without charge to patients who are financially
unable to pay for the health care services they receive. Because the Company
does not pursue collection of amounts determined to qualify as charity care,
they are not reported in revenues.

     The Company's revenue is particularly sensitive to regulatory and economic
changes in the states of Kentucky and Tennessee. As of December 31, 2000, the
Company operated 20 hospitals with six located in the Commonwealth of Kentucky
and six located in the State of Tennessee. Based on those 20 hospitals, the
Company generated 38.8% of its revenue from its Kentucky hospitals and 20.7%
from its Tennessee hospitals for the year ended December 31, 2000.

  Cash and Cash Equivalents

     Cash and cash equivalents consist of cash on hand and marketable securities
with original maturities of three months or less.

  Accounts Receivable

     The Company receives payment for services rendered from federal and state
agencies (under the Medicare, Medicaid and TRICARE programs), managed care
health plans, commercial insurance companies, employers and patients. During the
years ended December 31, 1998, 1999 and 2000, approximately 48.9%, 47.4% and
47.0%, respectively, of the Company's revenues related to patients participating
in the Medicare and Medicaid programs. Management recognizes that revenues and
receivables from government agencies are significant to its operations, but it
does not believe that there are significant credit risks associated with these
government agencies. Management does not believe that there are any other
significant concentrations of revenues from any particular payer that would
subject it to any significant credit risks in the collection of its accounts
receivable.

  Inventories

     Inventories are stated at the lower of cost (first-in, first-out) or
market.

  Long-Lived Assets

  (a) Property and Equipment

     Property and equipment are stated at cost. Routine maintenance and repairs
are charged to expense as incurred. Expenditures that increase capacities or
extend useful lives are capitalized.

                                       F-8
<PAGE>   55
                           LIFEPOINT HOSPITALS, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     Depreciation expense, computed using the straight-line method, was $27.1
million, $30.6 million and $32.8 million for the years ended December 31, 1998,
1999 and 2000, respectively. Buildings and improvements are depreciated over
estimated useful lives ranging generally from 10 to 40 years. Estimated useful
lives of equipment vary generally from 3 to 10 years.

  (b) Intangible Assets

     Intangible assets consist primarily of costs in excess of the fair value of
identifiable net assets of acquired entities and are amortized using the
straight-line method, generally over periods ranging from 30 to 40 years for
hospital acquisitions.

     When events, circumstances and operating results indicate that the carrying
values of certain long-lived assets and the related identifiable intangible
assets might be impaired, the Company prepares projections of the undiscounted
future cash flows expected to result from the use of the assets and their
eventual disposition. If the projections indicate that the recorded amounts are
not expected to be recoverable, such amounts are reduced to estimated fair
value. Fair value is estimated based upon internal evaluations of each asset
that include quantitative analyses of net revenue and cash flows, reviews of
recent sales of similar assets and market responses based upon discussions with
and offers received from potential buyers.

     Deferred loan costs are included in intangible assets on the balance sheet
and are amortized over the term of the related debt. In connection with the
Distribution, the Company recorded $10.7 million and $0.8 million of deferred
loan costs during the years ended December 31, 1999 and 2000, respectively.

     The following is a summary of intangible assets at December 31, (in
millions):

<TABLE>
<CAPTION>
                                                              1999      2000
                                                              -----     -----
<S>                                                           <C>       <C>
Cost in excess of net assets acquired.......................  $24.3     $53.6
Deferred loan costs.........................................   10.7      11.5
                                                              -----     -----
                                                               35.0      65.1
Less accumulated amortization...............................   (8.6)    (11.3)
                                                              -----     -----
          Total intangible assets...........................  $26.4     $53.8
                                                              =====     =====
</TABLE>

  Income Taxes

     For the periods prior to the Distribution, HCA filed consolidated federal
and state income tax returns which included all of its eligible subsidiaries,
including the Company. The provisions for income taxes (benefits) in the
consolidated statements of operations for periods prior to the Distribution were
computed on a separate return basis (i.e., assuming the Company had not been
included in a consolidated income tax return with HCA). All income tax payments
for these periods were made by the Company through HCA.

  Professional and General Liability Risks

     The Company is primarily self-insured for its professional and general
liability risks. The reserve for professional and general liability risks was
$3.4 million and $8.9 million at December 31, 1999 and 2000, respectively. The
reserves for self-insured professional and general liability losses and loss
adjustment expenses are based on actuarially projected estimates discounted to
their present value using a rate of 6.0%.

     The cost of self-insurance for the years ended December 31, 1998, 1999 and
2000 was approximately $6.8 million, $7.1 million and $7.6 million,
respectively.

                                       F-9
<PAGE>   56
                           LIFEPOINT HOSPITALS, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

  Management Fees

     For the year ended December 31, 1998 and for the period prior to the
Distribution in 1999, HCA incurred various corporate general and administrative
expenses. These corporate overhead expenses were allocated to the Company based
on net revenues. In the opinion of management, this allocation method was
reasonable.

  Stock Based Compensation

     The Company accounts for stock option grants in accordance with APB Opinion
No. 25, "Accounting for Stock Issued to Employees." The Company recognizes no
compensation expense for grants when the exercise price equals or exceeds the
market price of the underlying stock on the date of grant.

  Earnings Per Share

     Earnings per share ("EPS") is based on the weighted average number of
common shares outstanding and dilutive stock options, adjusted for the shares
issued to the ESOP. As the ESOP shares are committed to be released, the shares
become outstanding for earnings per share calculations.

  Recently Issued Accounting Pronouncements

     In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative
Instruments and Hedging Activities," which was required to be adopted in years
beginning after June 15, 1999. In June 1999, SFAS No. 137 was issued, deferring
the effective date of SFAS No. 133 for one year. Management does not anticipate
that the adoption of the new statement will have a material effect on the
financial condition or the results of operations of the Company.

NOTE 2 -- THE DISTRIBUTION AND TRANSACTIONS WITH HCA

     As a result of the Distribution, the Company became an independent,
publicly-traded company. Owners of HCA Common Stock received one share of the
Company's Common Stock for every 19 shares of HCA Common Stock held which
resulted in approximately 29.9 million shares of the Company's Common Stock
outstanding immediately after the Distribution. After the Distribution, HCA had
no ownership in the Company. Immediately after the Distribution, however,
certain HCA benefit plans received shares of the Company on behalf of HCA
employees.

     In connection with the Distribution, all intercompany amounts payable by
the Company to HCA were eliminated and the Company assumed certain indebtedness
from HCA (see Note 8). In addition, the Company entered into various agreements
with HCA which are intended to facilitate orderly changes for both companies in
a way which would be minimally disruptive to each entity. These agreements
provide certain indemnities to the parties (see Note 3), and provide for the
allocation of tax and other assets, liabilities, and obligations arising from
periods prior to the Distribution.

     In connection with the Distribution, HCA received a ruling from the
Internal Revenue Service (the "IRS") to the effect, among other things, that the
Distribution would qualify as a tax-free transaction under Section 355 of the
Internal Revenue Code of 1986, as amended. Such a ruling, while generally
binding upon the IRS, is subject to certain factual representations and
assumptions provided by HCA. The Company has agreed to certain restrictions on
its future actions to provide further assurances that the Distribution will
qualify as tax-free. Restrictions include, among other things, limitations on
the liquidation, merger or consolidation with another company, certain issuances
and redemptions of the Company's Common Stock and the sale or other disposition
of assets. If the Company fails to abide by such restrictions and, as a result,
the Distribution fails to qualify as a tax-free transaction, the Company will be
                                       F-10
<PAGE>   57
                           LIFEPOINT HOSPITALS, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

obligated to indemnify HCA for any resulting liability, which could have a
material adverse effect on the Company's financial position and results of
operations.

NOTE 3 -- HCA INVESTIGATIONS, LITIGATION AND INDEMNIFICATION RIGHTS

     HCA has been the subject of various federal and state investigations, qui
tam actions, shareholder derivative and class action suits, patient/payer
actions and general liability claims. These investigations, actions and claims
relate to HCA and its subsidiaries, including subsidiaries that, prior to the
Company's formation as an independent company, owned the facilities the Company
now owns.

     On December 14, 2000, HCA announced that it signed an agreement with the
Department of Justice and four U.S. attorneys' offices resolving all pending
federal criminal issues in the government's investigation. HCA also announced at
this time that it signed a civil settlement agreement with the Department of
Justice resolving civil false claims issues related to DRG coding, outpatient
laboratory and home health. The criminal agreement has been accepted by the
federal district courts. The civil settlement agreement is conditioned on court
approval of the settlement, which HCA expects to receive in the first quarter of
2001. These agreements relate only to conduct that was the subject of the
federal investigations resolved in the agreements, and HCA has stated publicly
that it continues to discuss civil claims relating to cost reporting and
physician relations with the government.

     Based on our review of documents filed by HCA with the Securities and
Exchange Commission, these agreements with the government also resolve many, but
not all, qui tam actions filed by private parties against HCA. In addition,
representatives of state attorneys general have agreed to recommend to state
officials that HCA be released from criminal and civil liability related to the
matters covered by the settlement agreements.

     HCA agreed to indemnify the Company for any losses, other than
consequential damages, arising from the pending governmental investigations of
HCA's business practices prior to the date of the distribution and losses
arising from legal proceedings, present or future, related to the investigation
or actions engaged in prior to the distribution that relate to the
investigation. However, the Company could be held responsible for any claims
that are not covered by the agreements reached with the federal government or
for which HCA is not required to, or fails to, indemnify the Company. The
Company may also be affected by the initiation of additional investigations or
claims against HCA in the future, if any, and the related media coverage.

NOTE 4 -- IMPACT OF ACQUISITIONS AND DIVESTITURES

  Acquisitions

     Effective July 1, 2000, the Company acquired Lander Valley Medical Center
in Lander, Wyoming for a purchase price of $33.0 million. Cost in excess of net
assets acquired totaled $9.5 million and is being amortized over 40 years.

     In June 2000, the Company acquired Putnam Community Medical Center in
Palatka, Florida for approximately $49.4 million. Cost in excess of net assets
acquired totaled $20.6 million and is being amortized over 40 years.

     The foregoing acquisitions were accounted for using the purchase method of
accounting. The purchase prices of these transactions were allocated to the
assets acquired and liabilities assumed based upon their

                                       F-11
<PAGE>   58
                           LIFEPOINT HOSPITALS, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

respective fair values. The following table summarizes the allocation of the
aggregate purchase price of the acquisitions for the year ended December 31,
2000 (in millions):

<TABLE>
<S>                                                           <C>
Net cash used for acquisitions..............................  $ 82.4
Fair value of assets acquired...............................   (55.0)
Liabilities assumed.........................................     2.7
                                                              ------
Cost in excess of net assets acquired.......................  $ 30.1
                                                              ======
</TABLE>

  Divestitures

     Effective November 17, 2000, the Company sold Springhill Medical Center in
Springhill, Louisiana for approximately $5.7 million. The proceeds were
deposited in a Starker Trust for future capital reinvestment and are reflected
in "Deferred taxes and other current assets" on the accompanying consolidated
balance sheets.

     Effective September 1, 2000, the Company sold Barrow Medical Center in
Winder, Georgia for approximately $2.2 million.

     Effective August 1, 2000, the Company sold Riverview Medical Center in
Gonzales, Louisiana for approximately $20.7 million. The proceeds from the
transaction and the Company's available cash were used to pay down existing
borrowings under the Company's revolving credit facility.

     Effective April 1, 2000, the Company sold Halstead Hospital in Halstead,
Kansas and effective February 1, 2000, the Company sold Trinity Hospital in
Erin, Tennessee.

     Halstead Hospital, Trinity Hospital, and Barrow Medical Center were the
three hospitals previously held for sale by the Company. The Company recorded an
impairment of long-lived assets related to the hospitals held for sale in 1998
and an additional impairment in 1999.

     During 2000, the Company recorded a $1.4 million pre-tax gain related to
the favorable settlement on the sale of a facility that was previously held for
sale. The gain is included in the accompanying consolidated statements of
operations as impairment of long-lived assets.

     The operating results of the acquisitions and divestitures have been
consolidated in the accompanying consolidated statements of operations for the
periods subsequent to acquisition and for the periods prior to sale,
respectively.

  Pro forma Results of Operations

     The following unaudited pro forma results of operations give effect to the
operations of the hospitals acquired and sold during the year ended December 31,
2000 as if the respective transactions had occurred at the beginning of the
periods presented (in millions, except per share data):

<TABLE>
<CAPTION>
                                                                 YEAR ENDED
                                                                DECEMBER 31,
                                                              -----------------
                                                               1999       2000
                                                              ------     ------
<S>                                                           <C>        <C>
Revenues....................................................  $513.2     $557.0
                                                              ======     ======
Net income..................................................  $ 15.3     $ 19.4
                                                              ======     ======
Earnings per share:
  Basic.....................................................  $ 0.50     $ 0.61
                                                              ======     ======
  Diluted...................................................  $ 0.50     $ 0.59
                                                              ======     ======
</TABLE>

                                       F-12
<PAGE>   59
                           LIFEPOINT HOSPITALS, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     The pro forma results of operations do not purport to represent what the
Company's results of operations would have been had such transactions in fact
occurred at the beginning of the periods presented or to project the Company's
results of operations in any future period.

NOTE 5 -- INCOME TAXES

     The provision (benefit) for income taxes for the years ended December 31,
1998, 1999 and 2000 consists of the following (dollars in millions):

<TABLE>
<CAPTION>
                                                          1998       1999       2000
                                                          -----     ------     ------
<S>                                                       <C>       <C>        <C>
Current:
  Federal...............................................  $ 2.6     $  9.6     $   --
  State.................................................     --        1.5        1.6
                                                          -----     ------     ------
                                                            2.6       11.1        1.6
Deferred:
  Federal...............................................  (10.5)     (13.3)      13.5
  State.................................................   (1.9)      (1.6)      (0.1)
                                                          -----     ------     ------
                                                          (12.4)     (14.9)      13.4
Increase in Valuation Allowance.........................     --        1.1        0.2
                                                          -----     ------     ------
          Total.........................................  $(9.8)    $ (2.7)    $ 15.2
                                                          =====     ======     ======
</TABLE>

     The net change in the total valuation allowance for the years ended
December 31, 1999 and 2000 was an increase of $1.1 million and $0.2 million,
respectively. The increases are primarily as a result of state net operating
loss carryforwards that management believes may not be fully utilized because of
the uncertainty regarding the Company's ability to generate taxable income in
certain states. Various subsidiaries have state net operating loss carryforwards
of approximately $26.2 million with expiration dates through the year 2020.

     The Company generated a federal net operating loss of approximately $8.4
million for the year ended December 31, 2000 which will expire in the year 2020.

     A reconciliation of the statutory federal income tax rate to the Company's
effective income tax rate on income (loss) from continuing operations before
income taxes for the years ended December 31, 1998, 1999 and 2000 follows:

<TABLE>
<CAPTION>
                                                              1998     1999      2000
                                                              ----     -----     ----
<S>                                                           <C>      <C>       <C>
Federal statutory rate......................................  35.0%     35.0%    35.0%
State income taxes, net of federal income tax benefit.......   3.9      10.6      2.6
ESOP........................................................    --        --      4.4
Non-deductible intangible assets............................  (2.6)     (3.0)     1.3
Valuation allowance.........................................    --     (10.8)     0.9
Other items, net............................................  (0.7)     (5.1)     1.9
                                                              ----     -----     ----
Effective income tax rate...................................  35.6%     26.7%    46.1%
                                                              ====     =====     ====
</TABLE>

                                       F-13
<PAGE>   60
                           LIFEPOINT HOSPITALS, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     Deferred income taxes result from temporary differences in the recognition
of assets, liabilities, revenues and expenses for financial accounting and tax
purposes. Sources of these differences and the related tax effects are as
follows (dollars in millions):

<TABLE>
<CAPTION>
                                                               1999       2000
                                                              ------     ------
<S>                                                           <C>        <C>
Deferred tax liabilities:
  Depreciation and fixed asset basis differences............  $(18.4)    $(21.7)
  Other.....................................................    (0.6)      (1.9)
                                                              ------     ------
          Total deferred tax liabilities....................   (19.0)     (23.6)
                                                              ------     ------
Deferred tax assets:
  Provision for doubtful accounts...........................    14.3        6.0
  Employee compensation.....................................     5.9        3.0
  Professional liability....................................     1.3        3.8
  Other.....................................................     5.5        5.4
                                                              ------     ------
          Total deferred tax assets.........................    27.0       18.2
Valuation allowance.........................................    (1.1)      (1.3)
                                                              ------     ------
     Net deferred tax assets................................    25.9       16.9
                                                              ------     ------
     Net deferred tax assets (liabilities)..................  $  6.9     $ (6.7)
                                                              ======     ======
</TABLE>

     The balance sheet classification of deferred income tax assets
(liabilities) is as follows (dollars in millions):

<TABLE>
<CAPTION>
                                                               1999       2000
                                                              ------     ------
<S>                                                           <C>        <C>
Current.....................................................  $ 19.4     $  8.5
Long-term...................................................   (12.5)     (15.2)
                                                              ------     ------
          Total.............................................  $  6.9     $ (6.7)
                                                              ======     ======
</TABLE>

     HCA and the Company entered into a tax sharing and indemnification
agreement. Under the agreement, HCA maintains full control and absolute
discretion with regard to any combined or consolidated tax filings for periods
prior to the Distribution. In addition, the agreement provides that HCA will
generally be responsible for all taxes that are allocable to periods prior to
the Distribution and HCA and the Company will each be responsible for its own
tax liabilities for periods after the Distribution.

     The agreement does not have an impact on the realization of deferred tax
assets or the payment of deferred tax liabilities of the Company except to the
extent that the temporary differences give rise to such deferred tax assets and
liabilities after the Distribution and are adjusted as a result of final tax
settlements after the Distribution. In the event of such adjustments, the tax
sharing and indemnification agreement provides for certain payments between HCA
and the Company as appropriate.

NOTE 6 -- IMPAIRMENT OF LONG-LIVED ASSETS

     During the fourth quarter of 1998, the Company decided to sell three
hospital facilities that were identified as not compatible with the Company's
operating plans, based upon management's review of all facilities, and giving
consideration to current and expected market conditions and the current and
expected capital needs in each market. At December 31, 1998, the carrying value
before the impairment charge of the long-lived assets related to these hospital
facilities was approximately $47.2 million. The carrying value was reduced to
fair value, based on estimates of selling values at that time, for a total
non-cash charge of $24.8 million. During the fourth quarter of 1999, the Company
recorded an additional non-cash charge of $25.4 million (comprised of $22.4
million in further impairment charges for these facilities and $3.0 million in
anticipated selling/closing costs). The remaining carrying value of the
long-lived assets

                                       F-14
<PAGE>   61
                           LIFEPOINT HOSPITALS, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

related to these hospital facilities of approximately $22.4 million was written
down based on the revised selling values. The three hospital facilities held for
sale were sold during the year ended December 31, 2000 (see Note 4). For the
years ended December 31, 1998, 1999 and 2000, respectively, these divested
facilities had net revenues of $48.0 million, $42.6 million and $14.4 million
and a loss from continuing operations before income tax benefit and the asset
impairment charges of approximately $2.9 million, $3.8 million and $2.3 million,
respectively.

     During the third quarter of 2000, the Company recorded a $1.4 million
pre-tax gain related to the favorable settlement on the sale of a facility that
was previously held for sale. The gain is recorded in the accompanying
consolidated statement of operations as an impairment of long-lived assets.

     The Company recorded, during the third quarter of 1998, an impairment loss
of approximately $1.3 million related to the write-off of intangibles and other
long-lived assets of certain physician practices where the recorded asset values
were not deemed to be fully recoverable based upon the operating results trends
and projected future cash flows. These assets being held and used are now
recorded at estimated fair value based upon discounted, estimated future cash
flows.

     The impairment charges did not have a significant impact on the Company's
cash flows and are not expected to significantly impact cash flows for future
periods. As a result of the write-downs, depreciation and amortization expense
related to these assets will decrease in future periods. In the aggregate, the
net effect of the change in depreciation and amortization expense is not
expected to have a material effect on operating results for future periods.

NOTE 7 -- DISCONTINUED OPERATIONS

     During 1998, the Company completed the divestiture of its home health
businesses for amounts approximating their carrying value. The Company
implemented plans to sell the home health businesses during 1997. The estimated
loss on sale and operating results of the home health businesses are reflected
as discontinued operations in the consolidated statement of operations.

     Revenues for the disposed home health businesses were approximately $18.9
million for the year ended December 31, 1998.

NOTE 8 -- LONG-TERM DEBT

     Long-term debt consists of the following (in millions):

<TABLE>
<CAPTION>
                                                                DECEMBER 31,
                                                              -----------------
                                                               1999       2000
                                                              ------     ------
<S>                                                           <C>        <C>
Bank Facilities.............................................  $110.0     $139.3
Senior Subordinated Notes...................................   150.0      150.0
Other debt..................................................     0.2        0.1
                                                              ------     ------
                                                               260.2      289.4
Less current maturities.....................................    (3.1)     (11.1)
                                                              ------     ------
                                                              $257.1     $278.3
                                                              ======     ======
</TABLE>

                                       F-15
<PAGE>   62
                           LIFEPOINT HOSPITALS, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     Maturities of long-term debt at December 31, 2000 are as follows (in
millions):

<TABLE>
<S>                                                           <C>
2001........................................................  $ 11.1
2002........................................................    15.9
2003........................................................    15.9
2004........................................................    15.8
2005........................................................    80.7
Thereafter..................................................   150.0
                                                              ------
                                                              $289.4
                                                              ======
</TABLE>

  Bank Credit Agreement

     On May 11, 1999, the Company assumed from HCA the obligations under a bank
credit agreement (the "Credit Agreement") with a group of lenders with
commitments aggregating $210 million. The Credit Agreement consists of a $60
million term loan facility, an $85 million term loan facility, and a $65 million
revolving credit facility (collectively the "Bank Facilities").

     As of December 31, 2000, the $60 million term loan facility was drawn in
full. The final payment under this term loan facility is due November 11, 2004.

     The $85 million term loan facility was drawn in full at the time of the
Distribution. The final payment under this term loan is due November 11, 2005.

     The $65 million revolving credit facility is available for working capital
and other general corporate purposes, and any outstanding amounts thereunder
will be due and payable on November 11, 2004. No amounts were outstanding under
this facility as of December 31, 2000.

     Repayments under the term loan facilities are due in quarterly installments
with quarterly amortization based on annual amounts. Interest on the Bank
Facilities is currently based on LIBOR plus 2.75% for the revolving credit
facility and the $60 million term loan facility, and LIBOR plus 3.25% for the
$85 million term loan facility. The weighted average interest rate on the Bank
Facilities was approximately 9.7% at December 31, 2000. The Company also pays a
commitment fee equal to 0.5% of the average daily amount available under the
revolving credit facility.

     The Company's obligations under the Bank Facilities are guaranteed by its
subsidiaries. These guarantees are secured by a pledge of substantially all of
the subsidiaries' assets. The Credit Agreement requires that the Company comply
with various financial ratios and tests and contains covenants, including but
not limited to restrictions on new indebtedness, the ability to merge or
consolidate, asset sales, capital expenditures and dividends.

  Senior Subordinated Notes

     On May 11, 1999, the Company assumed from HCA $150 million in Senior
Subordinated Notes maturing on May 15, 2009 and bearing interest at 10.75%. In
November 1999, in a registered exchange offer, the Company issued a like
aggregate principal amount of notes in exchange for these notes (the "Notes").
Interest is payable semi-annually. The Notes are unsecured obligations and are
subordinated in right of payment to all existing and future senior indebtedness.

     The indenture pursuant to which the Notes were made contains certain
covenants, including but not limited to restrictions on new indebtedness, the
ability to merge or consolidate, asset sales, capital expenditures and
dividends.

                                       F-16
<PAGE>   63
                           LIFEPOINT HOSPITALS, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     The Notes are guaranteed jointly and severally on a full and unconditional
basis by all of the Company's operating subsidiaries ("Subsidiary Guarantors").
The Company is a holding company with no operations apart from its ownership of
the Subsidiary Guarantors. The aggregate assets, liabilities, equity and
earnings of the Subsidiary Guarantors are substantially equivalent to the total
assets, liabilities, equity and earnings of the Company and its subsidiaries on
a consolidated basis.

     At December 31, 2000, all but one of the Subsidiary Guarantors were wholly
owned and fully and unconditionally guaranteed the Notes. Separate financial
statements and other disclosures of the wholly owned Subsidiary Guarantors are
not presented because management believes that such separate financial
statements and disclosures would not provide additional material information to
investors.

     As of May 11, 1999, two of the Subsidiary Guarantors were not wholly owned,
and the guarantees of such non-wholly owned entities were limited. During the
fourth quarter of 1999, the Company acquired ownership of the remaining interest
in one such Subsidiary Guarantor, and the limitations on the guarantee of such
Subsidiary Guarantor, as well as the limitations on the guarantee of the
remaining non-wholly owned Subsidiary Guarantor, were eliminated. Therefore, at
December 31, 2000, only one of the Company's consolidating subsidiaries, Dodge
City Healthcare Group, L.P., was not wholly owned, although all assets,
liabilities, equity and earnings of this entity fully and unconditionally,
jointly and severally guarantee the Notes. The Company owns approximately 70% of
the partnership interests in this mostly owned Subsidiary Guarantor.

     Presented below is summarized condensed consolidating financial information
for the Company and its subsidiaries as of and for the years ended December 31,
1999 and 2000 segregating the parent company, the issuer of the Notes (LifePoint
Hospitals Holdings, Inc.), the combined wholly owned Subsidiary Guarantors, the
mostly owned Subsidiary Guarantor and eliminations.

                                       F-17
<PAGE>   64
                           LIFEPOINT HOSPITALS, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

                           LIFEPOINT HOSPITALS, INC.
                CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
                      FOR THE YEAR ENDED DECEMBER 31, 1999
                                 (IN MILLIONS)

<TABLE>
<CAPTION>
                                                      WHOLLY OWNED   MOSTLY OWNED
                                          ISSUER OF    GUARANTOR      GUARANTOR                    CONSOLIDATED
                                 PARENT     NOTES     SUBSIDIARIES    SUBSIDIARY    ELIMINATIONS      TOTAL
                                 ------   ---------   ------------   ------------   ------------   ------------
<S>                              <C>      <C>         <C>            <C>            <C>            <C>
Revenues.......................  $  --     $   --        $482.5         $32.7          $  --          $515.2
Salaries and benefits..........     --         --         206.2          11.2             --           217.4
Supplies.......................     --         --          60.0           4.2             --            64.2
Other operating expenses.......    0.2         --         112.3           4.8             --           117.3
Provision for doubtful
  accounts.....................     --         --          35.4           2.8             --            38.2
Depreciation and
  amortization.................     --         --          29.7           1.7             --            31.4
Interest expense...............     --       17.7           5.1           0.6             --            23.4
Management fees................     --         --           2.5           0.7             --             3.2
ESOP expense...................     --         --           2.9            --             --             2.9
Equity in earnings of
  affiliates...................    7.3       (7.0)           --            --           (0.3)             --
Impairment of long-lived
  assets.......................     --         --          25.4            --             --            25.4
                                 -----     ------        ------         -----          -----          ------
                                   7.5       10.7         479.5          26.0           (0.3)          523.4
                                 -----     ------        ------         -----          -----          ------
Income (loss) before minority
  interests and income taxes...   (7.5)     (10.7)          3.0           6.7            0.3            (8.2)
Minority interests in earnings
  of consolidated entities.....     --        1.9            --            --             --             1.9
                                 -----     ------        ------         -----          -----          ------
Income (loss) before income
  taxes........................   (7.5)     (12.6)          3.0           6.7            0.3           (10.1)
Provision (benefit) for income
  taxes........................   (0.1)      (5.3)          2.7            --             --            (2.7)
                                 -----     ------        ------         -----          -----          ------
     Net income (loss).........  $(7.4)    $ (7.3)       $  0.3         $ 6.7          $ 0.3          $ (7.4)
                                 =====     ======        ======         =====          =====          ======
</TABLE>

                                       F-18
<PAGE>   65
                           LIFEPOINT HOSPITALS, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

                           LIFEPOINT HOSPITALS, INC.
                CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
                      FOR THE YEAR ENDED DECEMBER 31, 2000
                                 (IN MILLIONS)

<TABLE>
<CAPTION>
                                                     WHOLLY OWNED   MOSTLY OWNED
                                         ISSUER OF    GUARANTOR      GUARANTOR                    CONSOLIDATED
                                PARENT     NOTES     SUBSIDIARIES    SUBSIDIARY    ELIMINATIONS      TOTAL
                                ------   ---------   ------------   ------------   ------------   ------------
<S>                             <C>      <C>         <C>            <C>            <C>            <C>
Revenues......................  $   --    $   --        $524.9         $32.2          $   --         $557.1
Salaries and benefits.........      --        --         213.9          10.3              --          224.2
Supplies......................      --        --          62.8           4.2              --           67.0
Other operating expenses......      --        --         113.1           5.0              --          118.1
Provision for doubtful
  accounts....................      --        --          39.4           2.6              --           42.0
Depreciation and
  amortization................      --        --          32.4           1.7              --           34.1
Interest expense..............      --      30.9          (0.5)          0.3              --           30.7
Management fees...............      --        --          (0.6)          0.6              --             --
ESOP expense..................      --        --           6.8           0.3              --            7.1
Impairment of long-lived
  assets......................      --        --          (1.4)           --              --           (1.4)
Equity in earnings of
  affiliates..................   (17.9)    (38.8)           --            --            56.7             --
                                ------    ------        ------         -----          ------         ------
                                 (17.9)     (7.9)        465.9          25.0            56.7          521.8
                                ------    ------        ------         -----          ------         ------
Income (loss) before minority
  interests and income
  taxes.......................    17.9       7.9          59.0           7.2           (56.7)          35.3
Minority interests in earnings
  of consolidated entities....      --       2.2            --            --              --            2.2
                                ------    ------        ------         -----          ------         ------
Income (loss) before income
  taxes.......................    17.9       5.7          59.0           7.2           (56.7)          33.1
Provision (benefit) for income
  taxes.......................      --     (12.2)         27.4            --              --           15.2
                                ------    ------        ------         -----          ------         ------
     Net income (loss)........  $ 17.9    $ 17.9        $ 31.6         $ 7.2          $(56.7)        $ 17.9
                                ======    ======        ======         =====          ======         ======
</TABLE>

                                       F-19
<PAGE>   66
                           LIFEPOINT HOSPITALS, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

                           LIFEPOINT HOSPITALS, INC.
                     CONDENSED CONSOLIDATING BALANCE SHEET
                               DECEMBER 31, 1999
                                 (IN MILLIONS)

<TABLE>
<CAPTION>
                                                           WHOLLY OWNED   MOSTLY OWNED
                                               ISSUER OF    GUARANTOR      GUARANTOR                    CONSOLIDATED
                                      PARENT     NOTES     SUBSIDIARIES    SUBSIDIARY    ELIMINATIONS      TOTAL
                                      ------   ---------   ------------   ------------   ------------   ------------
<S>                                   <C>      <C>         <C>            <C>            <C>            <C>
               ASSETS
Current assets:
  Cash and cash equivalents.........  $  --     $   --       $  12.5         $   --        $    --        $  12.5
  Accounts receivable, net..........     --         --          41.4            5.3             --           46.7
  Inventories.......................     --         --          13.1            1.2             --           14.3
  Deferred taxes and other current
    assets..........................     --         --          25.8            0.1             --           25.9
                                      -----     ------       -------         ------        -------        -------
                                         --         --          92.8            6.6             --           99.4
Property and equipment:
  Land..............................     --         --           7.6            0.3             --            7.9
  Buildings.........................     --         --         194.2            9.9             --          204.1
  Equipment.........................     --         --         250.3           10.3             --          260.6
  Construction in progress..........     --         --          20.2             --             --           20.2
                                      -----     ------       -------         ------        -------        -------
                                         --         --         472.3           20.5             --          492.8
Accumulated depreciation............     --         --        (187.2)         (11.2)            --         (198.4)
                                      -----     ------       -------         ------        -------        -------
                                         --         --         285.1            9.3             --          294.4
Net investment in and advances to
  subsidiaries......................   85.7      333.2            --             --         (418.9)            --
Intangible assets, net..............     --        9.8           6.1           10.5             --           26.4
Other...............................     --         --           0.2             --             --            0.2
                                      -----     ------       -------         ------        -------        -------
                                      $85.7     $343.0       $ 384.2         $ 26.4        $(418.9)       $ 420.4
                                      =====     ======       =======         ======        =======        =======
       LIABILITIES AND EQUITY
Current liabilities:
  Accounts payable..................  $  --     $   --       $  25.9         $  0.6        $    --        $  26.5
  Accrued salaries..................     --         --          14.7             --             --           14.7
  Other current liabilities.........     --        2.5          10.1            0.3             --           12.9
  Current maturities of long-term
    debt............................     --        2.9           0.2             --             --            3.1
                                      -----     ------       -------         ------        -------        -------
                                         --        5.4          50.9            0.9             --           57.2

Intercompany balances to
  affiliates........................     --       (9.7)         (1.0)          10.7             --             --
Long-term debt......................     --      257.1            --             --             --          257.1
Deferred income taxes...............     --         --          12.5             --             --           12.5
Professional liability risks and
  other liabilities.................     --         --           3.4             --             --            3.4
Minority interests in equity of
  consolidated entities.............     --        4.5            --             --             --            4.5
Stockholders' equity................   85.7       85.7         318.4           14.8         (418.9)          85.7
                                      -----     ------       -------         ------        -------        -------
                                      $85.7     $343.0       $ 384.2         $ 26.4        $(418.9)       $ 420.4
                                      =====     ======       =======         ======        =======        =======
</TABLE>

                                       F-20
<PAGE>   67
                           LIFEPOINT HOSPITALS, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

                           LIFEPOINT HOSPITALS, INC.
                     CONDENSED CONSOLIDATING BALANCE SHEET
                               DECEMBER 31, 2000
                                 (IN MILLIONS)

<TABLE>
<CAPTION>
                                                     WHOLLY OWNED   MOSTLY OWNED
                                         ISSUER OF    GUARANTOR      GUARANTOR                    CONSOLIDATED
                                PARENT     NOTES     SUBSIDIARIES    SUBSIDIARY    ELIMINATIONS      TOTAL
                                ------   ---------   ------------   ------------   ------------   ------------
<S>                             <C>      <C>         <C>            <C>            <C>            <C>
            ASSETS
Current assets:
  Cash and cash equivalents...  $   --    $   --       $  39.7         $   --        $    --        $  39.7
  Accounts receivable, net....      --        --          36.4            5.3             --           41.7
  Inventories.................      --        --          12.9            1.0             --           13.9
  Deferred taxes and other
     current assets...........      --        --          22.1            0.1             --           22.2
                                ------    ------       -------         ------        -------        -------
                                    --        --         111.1            6.4             --          117.5
Property and equipment:
  Land........................      --        --           8.4            0.3             --            8.7
  Buildings and
     improvements.............      --        --         227.0            9.9             --          236.9
  Equipment...................      --        --         234.4           10.5             --          244.9
  Construction in progress....      --        --           9.4             --             --            9.4
                                ------    ------       -------         ------        -------        -------
                                    --        --         479.2           20.7             --          499.9
Accumulated depreciation......      --        --        (170.9)         (12.5)            --         (183.4)
                                ------    ------       -------         ------        -------        -------
                                    --        --         308.3            8.2             --          316.5
Net investment in and advances
  to subsidiaries.............   128.4     401.5            --             --         (529.9)            --
Intangible assets, net........      --       9.1          34.5           10.2             --           53.8
Other.........................      --        --           0.2             --             --            0.2
                                ------    ------       -------         ------        -------        -------
                                $128.4    $410.6       $ 454.1         $ 24.8        $(529.9)       $ 488.0
                                ======    ======       =======         ======        =======        =======
    LIABILITIES AND EQUITY
Current liabilities:
  Accounts payable............  $   --    $   --       $  15.6         $  0.5        $    --        $  16.1
  Accrued salaries............      --        --          13.8             --             --           13.8
  Other current liabilities...      --       2.6           8.2            0.3             --           11.1
  Current maturities of
     long-term debt...........      --      11.0           0.1             --             --           11.1
                                ------    ------       -------         ------        -------        -------
                                    --      13.6          37.7            0.8             --           52.1

Intercompany balances to
  affiliates..................      --     (14.3)          6.4            7.9             --             --
Long-term debt................      --     278.3            --             --             --          278.3
Deferred income taxes.........      --        --          15.2             --             --           15.2
Professional liability risks
  and other liabilities.......      --        --           9.4             --             --            9.4
Minority interests in equity
  of consolidated entities....      --       4.6            --             --             --            4.6
Stockholders' equity..........   128.4     128.4         385.4           16.1         (529.9)         128.4
                                ------    ------       -------         ------        -------        -------
                                $128.4    $410.6       $ 454.1         $ 24.8        $(529.9)       $ 488.0
                                ======    ======       =======         ======        =======        =======
</TABLE>

                                       F-21
<PAGE>   68
                           LIFEPOINT HOSPITALS, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

                           LIFEPOINT HOSPITALS, INC.
                CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
                      FOR THE YEAR ENDED DECEMBER 31, 1999
                                 (IN MILLIONS)

<TABLE>
<CAPTION>
                                                                 WHOLLY
                                                                 OWNED       MOSTLY OWNED
                                                  ISSUER OF    GUARANTOR      GUARANTOR                    CONSOLIDATED
                                         PARENT     NOTES     SUBSIDIARIES    SUBSIDIARY    ELIMINATIONS      TOTAL
                                         ------   ---------   ------------   ------------   ------------   ------------
<S>                                      <C>      <C>         <C>            <C>            <C>            <C>
Cash flows from operating activities:
  Net income (loss)....................  $(7.4)     $(7.3)       $  0.3         $ 6.7          $  0.3         $ (7.4)
  Adjustments to reconcile net income
    (loss) to net cash provided by
    operating activities:
    ESOP expense.......................     --         --           2.9            --              --            2.9
    Equity in earnings of affiliates...    7.3       (7.0)           --            --            (0.3)            --
    Provision for doubtful accounts....     --         --          35.4           2.8              --           38.2
    Depreciation and amortization......     --         --          29.7           1.7              --           31.4
    Minority interests in earnings of
      consolidated entities............     --        1.9            --            --              --            1.9
    Deferred income taxes (benefit)....     --         --         (13.8)           --              --          (13.8)
    Impairment of long-lived assets....     --         --          25.4            --              --           25.4
    Reserve for professional liability
      risk.............................     --         --           3.4            --              --            3.4
    Increase (decrease) in cash from
      operating assets and liabilities:
         Accounts receivable...........     --         --         (27.5)         (2.3)             --          (29.8)
         Inventories and other current
           assets......................     --         --          (0.8)         (0.3)             --           (1.1)
         Accounts payable and accrued
           expenses....................     --       17.7         (10.3)         (0.3)             --            7.1
         Income taxes payable..........     --         --          (0.3)           --              --           (0.3)
    Other..............................    0.1        1.8          (0.5)           --              --            1.4
                                         -----      -----        ------         -----          ------         ------
         Net cash provided by operating
           activities..................     --        7.1          43.9           8.3              --           59.3
Cash flows from investing activities:
  Purchases of property and equipment,
    net................................     --         --         (63.6)         (1.2)             --          (64.8)
  Other................................     --         --          (4.0)           --              --           (4.0)
                                         -----      -----        ------         -----          ------         ------
         Net cash used in investing
           activities..................     --         --         (67.6)         (1.2)             --          (68.8)
Cash flows from financing activities:
  Distributions........................     --         --           6.0          (6.0)             --             --
    Increase (decrease) in intercompany
      balances with affiliates, net....     --       (7.1)          7.9          (0.8)             --             --
    Increase (decrease) in intercompany
      balances with HCA, net...........     --         --          22.4            --              --           22.4
    Other..............................     --         --          (0.1)         (0.3)             --           (0.4)
                                         -----      -----        ------         -----          ------         ------
         Net cash (used in) provided by
           financing activities........     --       (7.1)         36.2          (7.1)             --           22.0
                                         -----      -----        ------         -----          ------         ------
Change in cash and cash equivalents....     --         --          12.5            --              --           12.5
Cash and cash equivalents at beginning
  of period............................     --         --            --            --              --             --
                                         -----      -----        ------         -----          ------         ------
Cash and cash equivalents at end of
  period...............................  $  --      $  --        $ 12.5         $  --          $   --         $ 12.5
                                         =====      =====        ======         =====          ======         ======
</TABLE>

                                       F-22
<PAGE>   69
                           LIFEPOINT HOSPITALS, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

                           LIFEPOINT HOSPITALS, INC.
                CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
                      FOR THE YEAR ENDED DECEMBER 31, 2000
                                 (IN MILLIONS)

<TABLE>
<CAPTION>
                                                                WHOLLY
                                                                OWNED       MOSTLY OWNED
                                                 ISSUER OF    GUARANTOR      GUARANTOR                    CONSOLIDATED
                                        PARENT     NOTES     SUBSIDIARIES    SUBSIDIARY    ELIMINATIONS      TOTAL
                                        ------   ---------   ------------   ------------   ------------   ------------
<S>                                     <C>      <C>         <C>            <C>            <C>            <C>
Cash flows from operating activities:
  Net income (loss)...................  $ 17.9    $ 17.9        $ 31.6          $7.2          $(56.7)        $ 17.9
  Adjustments to reconcile net income
    (loss) to net cash provided by
    operating activities:
    ESOP expense......................      --        --           6.8           0.3              --            7.1
    Equity in earnings of
      affiliates......................   (17.9)    (38.8)           --            --            56.7             --
    Provision for doubtful accounts...      --        --          39.4           2.6              --           42.0
    Depreciation and amortization.....      --        --          32.4           1.7              --           34.1
    Minority interests in earnings of
      consolidated entities...........      --       2.2            --            --              --            2.2
    Deferred income taxes (benefit)...      --        --          13.6            --              --           13.6
    Gain on impairment of long-lived
      assets..........................      --        --          (1.4)           --              --           (1.4)
    Reserve for professional liability
      risk............................      --        --           5.4            --              --            5.4
    Increase (decrease) in cash from
      operating assets and
      liabilities, net of effects from
      acquisitions and divestitures:
         Accounts receivable..........      --        --         (30.2)         (2.6)             --          (32.8)
         Inventories and other current
           assets.....................      --        --          (1.9)          0.2              --           (1.7)
         Accounts payable and accrued
           expenses...................      --       0.1         (11.4)         (0.1)             --          (11.4)
         Income taxes payable.........      --        --           6.2            --              --            6.2
    Other.............................      --       0.5           1.7            --              --            2.2
                                        ------    ------        ------          ----          ------         ------
         Net cash (used in) provided
           by operating activities....      --     (18.1)         92.2           9.3              --           83.4
Cash flows from investing activities:
  Purchases of property and equipment,
    net...............................      --        --         (31.1)         (0.3)             --          (31.4)
  Purchases of facilities.............      --        --         (82.4)           --              --          (82.4)
  Proceeds from sale of facilities....      --        --          24.3            --              --           24.3
  Other...............................      --      (2.0)         (0.3)           --              --           (2.3)
                                        ------    ------        ------          ----          ------         ------
         Net cash used in investing
           activities.................      --      (2.0)        (89.5)         (0.3)             --          (91.8)
Cash flows from financing activities:
  Borrowings under bank debt..........      --      35.0            --            --              --           35.0
  Repayments of bank debt.............      --      (5.7)           --            --              --           (5.7)
  Distributions.......................      --        --           6.6          (6.6)             --             --
  Proceeds from exercise of stock
    options...........................      --        --           7.2            --              --            7.2
  Increase (decrease) in intercompany
    balances with affiliates, net.....      --      (8.3)         10.7          (2.4)             --             --
  Other...............................      --      (0.9)           --            --              --           (0.9)
                                        ------    ------        ------          ----          ------         ------
         Net cash provided by (used
           in) financing activities...      --      20.1          24.5          (9.0)             --           35.6
                                        ------    ------        ------          ----          ------         ------
Change in cash and cash equivalents...      --        --          27.2            --              --           27.2
Cash and cash equivalents at beginning
  of period...........................      --        --          12.5            --              --           12.5
                                        ------    ------        ------          ----          ------         ------
Cash and cash equivalents at end of
  period..............................  $   --    $   --        $ 39.7          $ --          $   --         $ 39.7
                                        ======    ======        ======          ====          ======         ======
</TABLE>

                                       F-23
<PAGE>   70
                           LIFEPOINT HOSPITALS, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 9 -- STOCK BENEFIT PLANS

     In connection with the Distribution, the Company adopted the 1998 Long-Term
Incentive Plan, for which 5,425,000 shares of the Company's Common Stock have
been reserved for issuance. The 1998 Long-Term Incentive Plan authorizes the
grant of stock options, stock appreciation rights and other stock based awards
to officers and employees of the Company. On the Distribution Date,
approximately 591,900 stock options were granted under this plan, relating to
pre-existing vested HCA options. These options were granted at various prices,
were exercisable on the date of grant, and expire at various dates not to exceed
10 years. Options to purchase an additional 2,740,000 and 260,700 shares were
granted to the Company's employees during the years ended December 31, 1999 and
2000, respectively, under this plan with an exercise price of the fair market
value on the date of grant. These options are exercisable beginning in part from
the date of grant to five years after the date of grant. All options granted
under this plan expire in 10 years from the date of grant. The Company also
granted 340,000 options to HCA executives in 1999 with an exercise price of the
fair market value on the date of grant. These options were exercisable on the
date of grant and HCA paid the Company $1.5 million in exchange for the issuance
of these options.

     The Company also adopted the Executive Stock Purchase Plan in 1999, in
which 1,000,000 shares of the Company's Common Stock were reserved and
subsequently issued. The Executive Stock Purchase Plan grants a right to
specified executives of the Company to purchase shares of Common Stock from the
Company. The Company loaned each participant in the plan 100% of the purchase
price of the Company's Common Stock at the fair value based on the date of
purchase (approximately $10.2 million), on a full recourse basis at interest
rates ranging from 5.2% to 5.3%. The loans are reflected as a reduction to
stockholders' equity as "Notes receivable for shares sold to employees." As of
December 31, 2000, approximately $3.0 million of such loans have been paid under
the Executive Stock Purchase Plan. In addition, such executives have been
granted options equal to three-quarters of a share for each share purchased.
Options to purchase 750,000 shares had been issued pursuant to the 1998
Long-Term Incentive Plan and 219,512 such options have been exercised as of
December 31, 2000. The exercise price of these stock options is equal to the
fair value on the date of grant. The options expire in 10 years and are
exercisable 50% on the date of grant and 50% five years after the Distribution.

     In addition, the Company has a Management Stock Purchase Plan which
provides to certain designated employees an opportunity to purchase restricted
shares of its Common Stock at a discount through payroll deductions over six
month intervals. Shares of Common Stock reserved for this plan were 250,000 at
December 31, 2000. Approximately 79,000 restricted shares were issued to
employees during the year ended December 31, 2000 under this plan.

     The Company also adopted an Outside Directors Plan for which 175,000 shares
of the Company's Common Stock have been reserved for issuance. Approximately
20,000 and 37,700 options were granted under such plan to non-employee directors
during the years ended December 31, 1999 and 2000, respectively. These options
are exercisable beginning in part from the date of grant to three years after
the date of grant and expire 10 years after grant.

     In addition, the Company granted an option to purchase 50,000 shares of the
Company's Common Stock to The LifePoint Community Foundation in 1999. The
exercise price of the stock option was equal to the fair value on the date of
grant.

                                       F-24
<PAGE>   71
                           LIFEPOINT HOSPITALS, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     Presented below is a summary of stock option activity for 1999 and 2000:

<TABLE>
<CAPTION>
                                              STOCK         OPTION PRICE   WEIGHTED AVERAGE
                                             OPTIONS         PER SHARE      EXERCISE PRICE
                                            ----------      ------------   ----------------
<S>                                         <C>             <C>            <C>
Balances, December 31, 1998...............          --      $         --        $   --
  Conversion of HCA options...............     591,900        0.07-18.38         12.12
  Granted.................................   3,900,000        7.63-12.00         10.62
  Exercised...............................      (9,300)       0.18-12.33          9.01
  Cancelled...............................     (71,200)       0.18-18.38         12.63
                                            ----------
Balances, December 31, 1999...............   4,411,400        0.07-18.38         10.79
  Granted.................................     298,400       17.25-39.69         22.06
  Exercised...............................  (1,268,800)       0.07-18.38         10.80
  Cancelled...............................    (101,300)       0.18-19.88         12.75
                                            ----------
Balances, December 31, 2000...............   3,339,700        0.07-39.69         11.73
                                            ==========
</TABLE>

     At December 31, 2000, there were approximately 982,200 options available
for grant.

     The following table summarizes information regarding the options
outstanding at December 31, 2000:

<TABLE>
<CAPTION>
                           OPTIONS OUTSTANDING
                   ------------------------------------    OPTIONS EXERCISABLE
                                  WEIGHTED                ----------------------
                                   AVERAGE     WEIGHTED     NUMBER      WEIGHTED
                     NUMBER       REMAINING    AVERAGE    EXERCISABLE   AVERAGE
    RANGE OF       OUTSTANDING   CONTRACTUAL   EXERCISE       AT        EXERCISE
EXERCISE PRICES    AT 12/31/00      LIFE        PRICE      12/31/00      PRICE
----------------   -----------   -----------   --------   -----------   --------
<S>                <C>           <C>           <C>        <C>           <C>
$ 0.07 to $ 5.81       20,500         1         $ 0.22        20,500     $ 0.22
  3.56 to   8.76       55,200         2           5.66        55,200       5.66
  5.56 to  10.95       18,700         3           8.21        18,700       8.21
 11.87 to  13.13       68,500         4          11.87        68,500      11.87
 12.22 to  14.98       59,200         5          12.33        59,200      12.33
 14.16 to  17.73      101,800         6          16.25       101,800      16.25
 17.11 to  18.38       30,900         7          18.34        30,900      18.34
 12.90 to  15.64       20,700         8          13.11        20,700      13.11
  7.63 to  12.00    2,694,100         9          10.61     1,008,500      10.64
 17.25 to  39.69      270,100        10          22.54         5,600      29.56
                    ---------                              ---------
                    3,339,700                              1,389,600
                    =========                              =========
</TABLE>

     If the Company had measured compensation cost for the stock options granted
during 1999 and 2000 under the fair value based method prescribed by SFAS No.
123, the net income (loss) would have been changed to the pro forma amounts set
forth below (dollars in millions, except per share amounts):

<TABLE>
<CAPTION>
                                                               1999    2000
                                                              ------   -----
<S>                                                           <C>      <C>
Net income (loss):
  As reported...............................................  $ (7.4)  $17.9
  Pro forma.................................................    (8.1)   16.6
Basic earnings (loss) per share:
  As reported...............................................  $(0.24)  $0.57
  Pro forma.................................................   (0.26)   0.52
Diluted earnings (loss) per share:
  As reported...............................................  $(0.24)  $0.54
  Pro forma.................................................   (0.26)   0.50
</TABLE>

                                       F-25
<PAGE>   72
                           LIFEPOINT HOSPITALS, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     The effect of applying SFAS No. 123 for providing pro forma disclosure is
not likely to be representative of the effect on reported net income for future
years.

     The per share weighted-average fair value of stock options granted
(including conversion of HCA options in 1999) during 1999 and 2000 was $3.73 and
$9.22, respectively, on the date of grant using a Black-Scholes option pricing
model, assuming no expected dividends and the following weighted average
assumptions:

<TABLE>
<CAPTION>
                                                                1999         2000
                                                              --------     --------
<S>                                                           <C>          <C>
Risk free interest rate.....................................     5.90%        6.16%
Expected life, in years.....................................      4.7          3.8
Expected volatility.........................................     35.0%        45.0%
</TABLE>

NOTE 10 -- CAPITAL STOCK

  Common Stock

     Holders of common stock are entitled to one vote for each share held of
record on all matters on which stockholders may vote. There are no preemptive,
conversion, redemption or sinking fund provisions applicable to our common
stock. In the event of liquidation, dissolution or winding up, holders of common
stock are entitled to share ratably in the assets available for distribution,
subject to any prior rights of any holders of preferred stock then outstanding.

  Preferred Stock

     The certificate of incorporation provides that up to 10,000,000 shares of
preferred stock, of which 90,000 shares have been designated as Series A Junior
Participating Preferred Stock, par value $.01 per share, may be issued. The
board of directors has the authority to issue preferred stock in one or more
series and to fix for each series the voting powers, full, limited or none, and
the designations, preferences and relative, participating, optional or other
special rights and qualifications, limitations or restrictions on the stock, and
the number of shares constituting any series and the designations of this
series, without any further vote or action by the stockholders. Because the
terms of the preferred stock may be fixed by the board of directors without
stockholder action, the preferred stock could be issued quickly with terms
calculated to defeat a proposed takeover or to make the removal of our
management more difficult.

  Preferred Stock Purchase Rights

     Pursuant to a stockholders' rights plan, each outstanding share of common
stock is accompanied by one preferred stock purchase right. Each right entitles
the registered holder to purchase one one-thousandth of a share of Series A
preferred stock at a price of $35 per one one-thousandth of a share, subject to
adjustment.

     Each share of Series A preferred stock will be entitled, when, as and if
declared, to a preferential quarterly dividend payment in an amount equal to the
greater of $10 or 1,000 times the aggregate of all dividends declared per share
of common stock. In the event of liquidation, dissolution or winding up, the
holders of Series A preferred stock will be entitled to a minimum preferential
liquidation payment equal to $1,000 per share, plus an amount equal to accrued
and unpaid dividends and distributions on the stock, whether or not declared, to
the date of such payment, but will be entitled to an aggregate payment of 1,000
times the payment made per share of common stock. The rights are not exercisable
until the rights distribution date as defined in the stockholders' rights plan.
The rights will expire on May 7, 2009, unless the expiration date is extended or
unless the rights are earlier redeemed or exchanged.

                                       F-26
<PAGE>   73
                           LIFEPOINT HOSPITALS, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     The rights have certain anti-takeover effects. The rights will cause
substantial dilution to a person or group that attempts to acquire the Company
on terms not determined by the board of directors to be in the best interests of
all stockholders. The rights should not interfere with any merger or other
business combination approved by the board of directors.

NOTE 11 -- RETIREMENT PLANS

     In connection with the Distribution, the Company established the LifePoint
Employee Stock Ownership Plan ("ESOP"), a defined contribution retirement plan
which covers substantially all employees. The ESOP purchased from the Company
approximately 8.3% of the Company's Common Stock at fair market value
(approximately 2.8 million shares at $11.50 per share). Shares are allocated
ratably to employee accounts over a period of 10 years (1999 through 2008). The
shares held by the ESOP which have not yet been allocated to employee accounts
are included in stockholders' equity as "Unearned ESOP compensation." Unearned
ESOP shares are released at historical cost upon being allocated to employee
accounts. ESOP expense is recognized using the average market price of shares
committed to be released during the accounting period with any difference
between the average market price and the cost being charged or credited to
capital in excess of par value. As the shares are committed to be released, the
shares become outstanding for earnings per share calculations. ESOP expense was
$2.9 million and $7.1 million for the years ended December 31, 1999 and 2000,
respectively.

     The ESOP shares as of December 31, 2000 were as follows:

<TABLE>
<S>                                                           <C>
Allocated shares............................................         379,671
Shares committed to be released.............................         179,673
Unreleased shares...........................................       2,237,375
                                                              --------------
          Total ESOP shares.................................       2,796,719
                                                              ==============
Fair value of unreleased shares.............................  $112.1 million
</TABLE>

     Prior to the Distribution, the Company participated in HCA's defined
contribution retirement plans, which covered substantially all employees.
Benefits were determined primarily as a percentage of a participant's earned
income and were vested over specific periods of employee service. Certain plans
also required the Company to make matching contributions at certain percentages.
The cost of these plans was $5.3 million during 1998. Amounts approximately
equal to expense for these plans were funded annually. After the Distribution,
the Company no longer participated in these plans.

NOTE 12 -- CONTINGENCIES

  Significant Legal Proceedings

     Various lawsuits, claims and legal proceedings have been and are expected
to be instituted or asserted against HCA and the Company, including those
relating to shareholder derivative and class action complaints; purported class
action lawsuits filed by patients and payers alleging, in general, improper and
fraudulent billing, coding and physician referrals, as well as other violations
of law; certain qui tam or "whistleblower" actions alleging, in general,
unlawful claims for reimbursement or unlawful payments to physicians for the
referral of patients, as well as other violations and litigation matters. While
the amounts claimed may be substantial, the ultimate liability cannot be
determined or reasonably estimated at this time due to the considerable
uncertainties that exist. Therefore, it is possible that the Company's results
of operations, financial position and liquidity in a particular period could be
materially, adversely affected upon the resolution of certain of these
contingencies. (See Note 3, for a description of the ongoing government
investigations and HCA's obligations to indemnify the Company with respect to
losses incurred by the Company arising from such governmental investigations and
related proceedings.)

                                       F-27
<PAGE>   74
                           LIFEPOINT HOSPITALS, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     On January 12, 2001, Access Now, Inc., a disability rights organization,
filed a class action lawsuit against each of the Company's hospitals alleging
non-compliance with the accessibility guidelines under the Americans with
Disabilities Act. The lawsuit, filed in the United States District Court for the
Eastern District of Tennessee, seeks injunctive relief requiring facility
modification, where necessary, to meet the Americans with Disabilities Act
guidelines, along with attorneys fees and costs. The Company is working with
Access Now to determine the scope of facility modification needed to comply with
the Act.

  Corporate Integrity Agreement

     In December 2000, the Company entered into a corporate integrity agreement
with the Office of Inspector General and agreed to maintain its compliance
program in accordance with the corporate integrity agreement. Complying with the
compliance measures and reporting and auditing requirements of the corporate
integrity agreement will require additional efforts and costs. Failure to comply
with the terms of the corporate integrity agreement could subject the Company to
significant monetary penalties.

  General Liability Claims

     The Company is, from time to time, subject to claims and suits arising in
the ordinary course of business, including claims for damages for personal
injuries, breach of management contracts, for wrongful restriction of, or
interference with, physicians' staff privileges and employment related claims.
In certain of these actions, plaintiffs request punitive or other damages
against the Company which may not be covered by insurance. The Company is
currently not a party to any proceeding which, in management's opinion, would
have a material adverse effect on the Company's business, financial condition or
results of operations.

  Physician Commitments

     The Company has committed to provide certain financial assistance pursuant
to recruiting agreements with various physicians practicing in the communities
it serves. In consideration for a physician relocating to one of its communities
and agreeing to engage in private practice for the benefit of the respective
community, the Company may loan certain amounts of money to a physician,
normally over a period of one year, to assist in establishing his or her
practice. The Company has committed to advance amounts of approximately $10.9
million at December 31, 2000. The actual amount of such commitments to be
subsequently advanced to physicians often depends upon the financial results of
a physician's private practice during the guaranteed period. Generally, amounts
advanced under the recruiting agreements may be forgiven prorata over a period
of 48 months contingent upon the physician continuing to practice in the
respective community. It is management's opinion that amounts actually advanced
and not repaid will not have a material adverse effect on the Company's results
of operations or financial position.

  Acquisitions

     The Company has acquired and will continue to acquire businesses with prior
operating histories. Acquired companies may have unknown or contingent
liabilities, including liabilities for failure to comply with health care laws
and regulations, such as billing and reimbursement, fraud and abuse and similar
anti-referral laws. Although the Company institutes policies designed to conform
practices to its standards following completion of acquisitions, there can be no
assurance that the Company will not become liable for past activities that may
later be asserted to be improper by private plaintiffs or government agencies.
Although the Company generally seeks to obtain indemnification from prospective
sellers covering such matters, there can be no assurance that any such matter
will be covered by indemnification, or if covered, that such indemnification
will be adequate to cover potential losses and fines.

                                       F-28
<PAGE>   75
                           LIFEPOINT HOSPITALS, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 13 -- OTHER INFORMATION

     A summary of other current liabilities as of December 31 follows (in
millions):

<TABLE>
<CAPTION>
                                                              1999      2000
                                                              -----     -----
<S>                                                           <C>       <C>
Employee benefit plan.......................................  $ 2.7     $ 3.2
Accrued interest related to long-term debt..................    2.6       2.6
Taxes, other than income....................................    0.3       0.3
Other.......................................................    7.3       5.0
                                                              -----     -----
                                                              $12.9     $11.1
                                                              =====     =====
</TABLE>

     A summary of activity in the Company's allowance for doubtful accounts
follows (in millions):

<TABLE>
<CAPTION>
                                                             ADDITIONS      ACCOUNTS
                                               BALANCES AT   CHARGED TO   WRITTEN OFF,    BALANCE
                                                BEGINNING    COSTS AND       NET OF       AT END
                                                OF PERIOD     EXPENSES     RECOVERIES    OF PERIOD
                                               -----------   ----------   ------------   ---------
<S>                                            <C>           <C>          <C>            <C>
Allowance for doubtful accounts:
  Year ended December 31, 1998...............     $37.5        $41.6         $(30.8)       $48.3
  Year ended December 31, 1999...............      48.3         38.2          (36.2)        50.3
  Year ended December 31, 2000...............      50.3         42.0          (40.0)        52.3
</TABLE>

NOTE 14 -- EARNINGS PER SHARE

     The following table sets forth the computation of basic and diluted
earnings per share from continuing operations (dollars and shares in millions,
except per share amounts):

<TABLE>
<CAPTION>
                                                             1998      1999     2000
                                                            ------    ------    -----
<S>                                                         <C>       <C>       <C>
Numerator (a):
  Income (loss) from continuing operations................  $(17.7)   $ (7.4)   $17.9
Denominator (b):
  Share reconciliation:
  Shares used for basic earnings (loss) per share.........    30.0      30.5     31.6
     Effect of dilutive securities (c):
       Stock options and other............................      --        --      1.3
                                                            ------    ------    -----
  Shares used for diluted earnings (loss) per share.......    30.0      30.5     32.9
                                                            ======    ======    =====
Earnings (loss) per share:
  Basic earnings (loss) per share from continuing
     operations...........................................  $(0.59)   $(0.24)   $0.57
                                                            ======    ======    =====
  Diluted earnings (loss) per share from continuing
     operations...........................................  $(0.59)   $(0.24)   $0.54
                                                            ======    ======    =====
</TABLE>

---------------

(a) Amount is used for both basic and diluted earnings (loss) per share
    computations since there is no earnings effect related to the dilutive
    securities.
(b) The Company expected to issue 30,000,000 shares of Common Stock at the time
    of the Distribution. Earnings per share information has been presented as if
    the 30,000,000 shares had been outstanding for the year ended December 31,
    1998.
(c) The dilutive effect of approximately 0.2 million and 0.1 million shares,
    related to stock options, for the years ended December 31, 1998 and 1999,
    respectively, was not included in the computation of diluted loss per share
    because to do so would have been antidilutive for those periods.

                                       F-29
<PAGE>   76
                           LIFEPOINT HOSPITALS, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 15 -- FAIR VALUE OF FINANCIAL INSTRUMENTS

     The carrying amounts reported in the consolidated balance sheets for cash,
accounts receivable and accounts payable approximates fair value.

     The carrying value of long-term debt (including current portion) was $289.4
million for the year ended December 31, 2000. The fair value of long-term debt
(including current portion) was $301.4 million for the year ended December 31,
2000. The fair value of the Notes has been determined using the quoted market
price at December 31, 2000. The fair values of the remaining long-term debt are
estimated using discounted cash flows, based on the Company's incremental
borrowing rates.

NOTE 16 -- UNAUDITED QUARTERLY FINANCIAL INFORMATION

     The quarterly interim financial information shown below has been prepared
by the Company's management and is unaudited. It should be read in conjunction
with the audited consolidated financial statements appearing herein (dollars in
millions, except per share amounts).

<TABLE>
<CAPTION>
                                                                  1999
                                                  ------------------------------------
                                                  FIRST     SECOND    THIRD     FOURTH
                                                  ------    ------    ------    ------
<S>                                               <C>       <C>       <C>       <C>
Revenues........................................  $134.2    $128.2    $125.4    $127.4
Net income (loss)...............................     4.0       1.0       1.1     (13.5)(a)
Basic and diluted earnings (loss) per share.....    0.13      0.04      0.03     (0.44)(a)
</TABLE>

<TABLE>
<CAPTION>
                                                                  2000
                                                  ------------------------------------
                                                  FIRST     SECOND    THIRD     FOURTH
                                                  ------    ------    ------    ------
<S>                                               <C>       <C>       <C>       <C>
Revenues........................................  $136.0    $133.3    $145.3    $142.5
Net income......................................     4.0       3.7       4.8(b)    5.4
Basic earnings per share........................    0.13      0.12      0.15(b)   0.17
Diluted earnings per share......................    0.13      0.11      0.14      0.16
</TABLE>

---------------

(a) During the fourth quarter of 1999, the Company recorded a $25.4 million
    pre-tax charge ($16.2 million after tax) related to the impairment of
    certain long-lived assets (See Note 6 -- Impairment of Long-Lived Assets).
(b) During the third quarter of 2000, the Company recorded a $1.4 million pretax
    gain ($0.8 million after tax) related to a previously impaired asset (See
    Note 6 -- Impairment of Long-Lived Assets).

NOTE 17 -- SUBSEQUENT EVENT

     Effective January 2, 2001, the Company entered into a two-year lease to
operate Bluegrass Community Hospital in Versailles, Kentucky.

                                       F-30
<PAGE>   77

                                 EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
NUMBER         DESCRIPTION OF EXHIBITS
-------        -----------------------
<C>       <S>  <C>
 2.1      --   Distribution Agreement dated May 11, 1999 by and among
               Columbia/HCA, Triad Hospitals, Inc. and LifePoint Hospitals,
               Inc.(a)
 3.1      --   Certificate of Incorporation of LifePoint Hospitals(a)
 3.2      --   Bylaws of LifePoint Hospitals(a)
 3.3      --   Certificate of Incorporation of LifePoint Holdings(b)
 3.4      --   Bylaws of LifePoint Holdings(b)
 4.1      --   Form of Specimen Certificate for LifePoint Hospitals Common
               Stock(c)
 4.2      --   Indenture (including form of 10 3/4% Senior Subordinated
               Notes due 2009) dated as of May 11, 1999, between
               HealthTrust, Inc. -- The Hospital Company and Citibank N.A.
               as Trustee(a)
 4.3      --   Form of 10 3/4% Senior Subordinated Notes due 2009 (filed as
               part of Exhibit 4.2)
 4.4      --   Registration Rights Agreement dated as of May 11, 1999
               between HealthTrust and the Initial Purchasers named
               therein(a)
 4.5      --   LifePoint Assumption Agreement dated May 11, 1999 between
               HealthTrust and LifePoint Hospitals(a)
 4.6      --   Holdings Assumption Agreement dated May 11, 1999 between
               LifePoint Hospitals and LifePoint Holdings(a)
 4.7      --   Guarantor Assumption Agreements dated May 11, 1999 between
               LifePoint Holdings and the Guarantors signatory thereto(a)
 4.8      --   Rights Agreement dated as of May 11, 1999 between the
               Company and National City Bank as Rights Agent(a)
10.1      --   Tax Sharing and Indemnification Agreement, dated May 11,
               1999, by and among Columbia/HCA, LifePoint Hospitals and
               Triad Hospitals(a)
10.2      --   Benefits and Employment Matters Agreement, dated May 11,
               1999 by and among Columbia/HCA, LifePoint Hospitals and
               Triad Hospitals(a)
10.3      --   Insurance Allocation and Administration Agreement, dated May
               11, 1999, by and among Columbia/HCA, LifePoint Hospitals and
               Triad Hospitals(a)
10.4      --   Transitional Services Agreement dated May 11, 1999 by and
               between Columbia/HCA and LifePoint Hospitals(a)
10.5      --   Computer and Data Processing Services Agreement dated May
               11, 1999 by and between Columbia Information Systems, Inc.
               and LifePoint Hospitals(a)
10.6      --   Agreement to Share Telecommunications Services dated May 11,
               1999 by and between Columbia Information Systems, Inc. and
               LifePoint Hospitals(a)
10.7      --   Year 2000 Professional Services Agreement dated May 11, 1999
               by and between CHCA Management Services, L.P. and LifePoint
               Hospitals(a)
10.8      --   Sub-Lease Agreement dated May 11, 1999 by and between
               HealthTrust and LifePoint Hospitals(a)
10.9      --   Lease Agreement dated as of November 22, 1999 by and between
               LifePoint Hospitals and W. Fred Williams, Trustee for the
               Benefit of Highwoods/Tennessee Holdings, L.P.(d)
10.10     --   LifePoint Hospitals, Inc. 1998 Long-Term Incentive Plan(a)
10.11     --   LifePoint Hospitals, Inc. Executive Stock Purchase Plan(a)
10.12     --   Form of Share Purchase Loan and Note Agreement between
               LifePoint Hospitals and certain executive officers in
               connection with purchases of Common Stock pursuant to the
               Executive Stock Purchase Plan(d)
</TABLE>
<PAGE>   78

<TABLE>
<CAPTION>
EXHIBIT
NUMBER         DESCRIPTION OF EXHIBITS
-------        -----------------------
<C>       <S>  <C>
10.13     --   LifePoint Hospitals, Inc. Management Stock Purchase Plan(a)
10.14     --   LifePoint Hospitals, Inc. Outside Directors Stock and
               Incentive Compensation Plan(a)
10.15     --   Credit Agreement dated as of May 11, 1999 among HealthTrust,
               Inc. -- The Hospital Company, as Borrower, the several
               lenders from time to time party thereto, Fleet National Bank
               as arranger and administrative agent, ScotiaBanc, Inc. as
               documentation agent and co-arranger, Deutsche Bank
               Securities, Inc. as syndication agent and co-arranger, and
               SunTrust Bank, Nashville, N.A. as co-agent(a)
10.16     --   Amendment to Credit Agreement dated as of December 31, 1999
               among LifePoint Holdings, as Borrower, the several lenders
               which are parties to the Credit Agreement, Fleet National
               Bank as arranger and administrative agent, ScotiaBanc, Inc.
               as documentation agent and co-arranger, Deutsche Bank
               Securities, Inc. as syndication agent and co-arranger, and
               SunTrust Bank, Nashville, N.A. as co-agent(b)
10.17     --   Second Amendment to Credit Agreement dated as of May 23,
               2000 among LifePoint Hospitals Holdings, Inc., as Borrower,
               the several lenders which are parties to the Credit
               Agreement, Fleet National Bank as arranger and
               administrative agent, ScotiaBank, Inc. as documentation
               agent and co-arranger, Deutsche Bank Securities Inc. as
               syndication agent and co-arranger, and SunTrust Bank,
               Nashville, N.A. as co-agent(e)
10.18     --   Assumption Agreement dated as of May 11, 1999 by and between
               Fleet National Bank and LifePoint Hospitals(a)
10.19     --   Assumption Agreement dated as of May 11, 1999 by and between
               Fleet National Bank and LifePoint Holdings(a)
10.20     --   Employment Agreement of James M. Fleetwood, Jr.
10.21     --   Corporate Integrity Agreement dated as of December 21, 2000
               by and between the Office of the Inspector General of the
               Department of Health and Human Services and LifePoint
               Hospitals
21.1      --   List of the Subsidiaries of LifePoint Hospitals
21.2      --   List of the Subsidiaries of LifePoint Holdings
23.1      --   Consent of Ernst & Young LLP
</TABLE>

---------------

(a)   Incorporated by reference from exhibits to LifePoint Hospitals' Quarterly
      Report on Form 10-Q for the quarter ended March 31, 1999, File No.
      0-29818.

(b)   Incorporated by reference from exhibits to LifePoint Holdings' Annual
      Report on Form 10-K for the year ended December 31, 1999, File No.
      333-84755.

(c)   Incorporated by reference from exhibits to LifePoint Hospitals'
      Registration Statement on Form 10 under the Securities Exchange Act of
      1934, as amended, File No. 0-29818.

(d)   Incorporated by reference from exhibits to LifePoint Hospitals' Annual
      Report on Form 10-K for the year ended December 31, 1999, File No.
      0-29818.

(e)   Incorporated by reference from exhibits to LifePoint Holdings' Quarterly
      Report on Form 10-Q for the quarter ended September 30, 2000, File No.
      333-84755.