Lehman Brothers Healthcare Conference

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Vic Campbell
Senior Vice President
Bill Rutherford CFO, Eastern Group Mark
Kimbrough VP, Investor Relations
Lehman Brothers Healthcare ConferenceMarch 2004
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This press release contains forward-looking
statements based on current management
expectations. Those forward-looking statements
include all statements regarding our estimated
results of operations in future periods and all
statements other than those made solely with
respect to historical fact. Numerous risks,
uncertainties and other factors may cause actual
results to differ materially from those expressed
in any forward-looking statements. These factors
include, but are not limited to (i) the highly
competitive nature of the health care business,
(ii) the efforts of insurers, health care
providers and others to contain health care
costs, (iii) possible changes in the Medicare and
Medicaid programs that may impact reimbursements
to health care providers and insurers, (iv) the
ability to achieve operating and financial
targets and achieve expected levels of patient
volumes and control the costs of providing
services, (v) increases in the amount and risk of
collectibility of uninsured accounts and
deductibles and co-pay amounts for insured
accounts, (vi) the ability to attract and retain
qualified management and personnel, including
affiliated physicians, nurses and medical support
personnel, (vii) potential liabilities and other
claims that may be asserted against the Company,
(viii) fluctuations in the market value of the
Companys common stock, (ix) the Companys
ability to complete the share repurchase program,
(x) changes in accounting practices, (xi) changes
in general economic conditions, (xii) future
divestitures which may result in additional
charges, (xiii) changes in revenue mix and the
ability to enter into and renew managed care
provider arrangements on acceptable terms, (xiv)
the availability and terms of capital to fund the
expansion of the Companys business, (xv) changes
in business strategy or development plans, (xvi)
delays in receiving payments for services
provided, (xvii) the possible enactment of
Federal or state health care reform, (xviii) the
outcome of pending and any future tax audits and
litigation associated with the Companys tax
positions, (xix) the outcome of the Companys
continuing efforts to monitor, maintain and
comply with appropriate laws, regulations,
policies and procedures and the Companys
corporate integrity agreement with the
government, (xx) changes in Federal, state or
local regulations affecting the health care
industry, (xxi) the impact of charity care and
self-pay discounting policy changes, (xxii) the
ability to successfully integrate the operations
of Health Midwest, (xxiii) the ability to develop
and implement the financial enterprise resource
planning information system within the expected
time and cost projections and, upon
implementation, to realize the expected benefits
and efficiencies, (xxiv) the ability to obtain
court approval of the settlement of the class
action securities lawsuits originally filed
against the Company in 1997 (xxv) the ability of
the Company to continue to fund a cash dividend
in the future at the current rate and (xxvi)
other risk factors detailed from time to time in
the Companys filings with the SEC. Many of the
factors that will determine the Companys future
results are beyond the ability of the Company to
control or predict. In light of the significant
uncertainties inherent in the forward-looking
statements contained herein, readers should not
place undue reliance on forward-looking
statements, which reflect managements views only
as of the date hereof. The Company undertakes no
obligation to revise or update any
forward-looking statements, or to make any other
forward-looking statements, whether as a result
of new information, future events or
otherwise.   All references to Company and
HCA as used throughout this document refer to
HCA Inc. and its affiliates.
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HCAHospital Corporation of America

• 190 HospitalsApproximately 22 billion in
  revenues

• Focused upon market leading positions in
  fast- growing urban and suburban communities

• Targeted capital investments to improve quality
  and availability of care

• Use scale/size to improve processes and operate
  more efficiently

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HCA is located in 16 of 20 Fastest Growing
Large US Cities
Dallas/Ft. Worth 12

• Generally 25-40 Market Share
• 40 of facilities in Texas Florida

Denver 9
Kansas City 5
U.K.
Las Vegas 22
Nashville 8
Switzerland
Richmond 8
Austin 18
Southern California 9
Panhandle 10


Palm Beach 11
Percent Growth in Market Population 2000-2005
Tampa Bay 8
Houston 10
Dade 8
Compared to the National Average of 4.5
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Focused on Strengthening Outpatient Services

• Outpatient services account for 37 of revenue or
  8 billion

• Existing outpatient units must operate in a
  manner consistent with retail nature of the
  business

• Increase the accessibility and convenience of the
  service

• Build or buy outpatient outlets that improve our
  market presence

• Develop management structure dedicated to the
  success of outpatient services

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Operations 2003 Key Observations
Payor Composition

• Payor class composition is changing. Medicare
  and self- pay are growing (2.7, 6.9). All
  other Payors have declined (-1.2)

• Self-pay admissions, although representing only
  4.4 of total admissions grew 6.9.

• Self-pay admissions via the emergency room grew
  14

Pricing

• No surprises in pricing (rate, acuity,
  technology) environment in 2003 (7.5), but
  2004 will be more difficult due to Medicare
  Outlier and Charity Care changes.

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Operations 2003 Key Observations
Expenses

• Impact on earnings from volume pressures
  minimized by efficient expense management
• SWB of Net Revenue ? 50 bps
• Contract labor/APD ? 33 from 1Q 03
• Avg. hourly rate increased 4.7 (? 40 bps from
  PY)
• SWB/AA declined 260 bps from prior year
• Employee Benefit Cost moderating 2.9 vs.13.7
  PY
• Supplies/AA costs slowing (? 80 bps vs. 2002)

• Bad Debt experience in 2003
• a. Bad Debt expense was 2.2B, up 574M (sf1),
  or 36 over 2002
• b. Charity care recognition grew dramatically in
  2003 to 821M up 230M (sf), or 40 over 2002
• c. We are forecasting no relief in Bad
  Debt/Charity in 2004
• At close of 2003, we had 2.65B reserved as Bad
  Debt, representing 88.3 of self-pay balances
  (only 351M on balance sheet not reserved)

1. sf Same Facility
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Operations 2003 Key Observations
Other Operating Highlights

• Net Revenue (less Bad Debt) is converting to cash
  at favorable levels (100.2)

• Successfully integrated Health MidWest

• Patient Safety agenda was aggressively deployed

• Total employee turnover, 20.1 vs. 22.8 in 2002.
  RN turnover1, 16.8 vs. 17.0 in 2002. Fourth
  consecutive year of improving turnover rates.

• Enhanced outpatient organization and strategy
  underway

• All patient/employee satisfaction scores remain
  positive and at record levels

1. Turnover results exclude Midwest Division.
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HCA Admission Trends 2001 to 2003Same Facility
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2003 Operating Indicators Same Facility vs. Prior
Year
2003 Quarterly Trending
2003 vs. 2002
Q1
Q2
Q3
Q4
(same facility)
Admissions
Net
Revenue/ AA
SWB/AA
Supplies/ AA
Labor Cost/
Manhour
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Increasing Uninsured Revenues Put Pressure on Bad
Debts

• Provision for Doubtful Accounts increased to
  approximately 10 of NR in 2003

• Increasing self-pay receivables combined with a
  deterioration in collectibility of this A/R
  contributed to the need to increase the provision
  for doubtful accounts

• Soft economy/unemployment is a major driver of
  the escalation of uninsured patients

• We anticipate no significant moderation in bad
  debts in 2004

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Response to Increasing Bad Debt

• Increasing level of intensity around front-end
  collections
• ? 40 from 01-02
• ? 30 from 02-03

• Enhance self-pay policy, procedure and process
  flow
• - Hospital self-pay committees
• - Review access pointsimpact on non-emergent
  access

• Aggressively pursue all alternative payment
  sources, including federal and/or state funding
  sources (i.e. Medicaid, etc.)
• - 15 of uninsured accounts convert to Medicaid

• Charity care and financial discount policy

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Capital Expenditures Dollars ( in billions)
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Distribution of Capital Dollars2002-2005 and
beyond
Ongoing Projects in Capital Plan
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Growth Capital Assets Placed in Service
1,400
1,200
1,000
(Dollars in Millions)
800
600
400
200
0
2000
2001
2002
2003
2004
2005
Total HCA 549 373 676 1,223 896 678
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New Facilities Denver, CO
Sky Ridge Medical Center Denver, Colorado
Opened 8/20/03 104 Beds Cost 147M 4 Month
Update Admissions 2,076 (47 vs.
Budget) ADC 45 (57 in December) ER
Visits 9,125 (56 vs. Budget)
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New Facilities Nashville, TN
StoneCrest Medical Center Nashville,
Tennessee Opened 11/30/03 75 Beds Cost
76M One Month of Operations Admissions
255 ER Visits 3,449
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Replacement Facility Tallahassee, FL
Before Replacement
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Replacement Facility Tallahassee, FL
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Replacement Facility Tallahassee, FL

• Capital Regional
• Medical Center
• Tallahassee, Florida
• Opened 8/26/03
• 180 Beds
• Cost 98M
• 4 Month Update
• ( change vs. PY)
• Admissions 15.3
• Surgeries 9
• ER Visits 28
• Caths 30
• Admissions growth for 12 months prior to the new
  facility opening 5

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Capital Targeted to Growth Opportunities
3.2 Admissions growth rate for facilities with
major projects opening in 2002 or 2003vs. 1.4
for Total Company

• Denver New Facility
• 2,076 admissions in the first 4 months of
  operations
• (47 vs. budget)

• Tallahassee Replacement Facility
• 15.3 growth in admissions in the first four
  months vs. 5 growth rate in the 12 months prior
  to opening

• Nashville New Facility
• 3,449 ER visits in the first month of operations

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Capital Targeted to Growth Opportunities

• Lewisville, TX 85 net new beds (1Q)
• 14.6 growth in admissions (April-December)

• Richmond, VA Major surgery expansions at 2
  facilities (2Q) 14.4 inpatient surgery growth
  (July-December)

• Brandon, FL Open heart program
• 323 open hearts in first year.

• Austin, TX 66 new beds in North Austin (3Q 02)
• 2003 admissions growth rate 12.5 vs. 10.3 PY

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HCA Board Approves Dividend IncreaseFrom 0.02
Per Share to 0.13 Per Share

• Prudent investment/use of free cash flow

• Share Repurchase
• Integral component of the Companys financial
  policies
• Since 1997, repurchased 6.9 billion of HCA stock
  (average cost 29.51)

• Dividend
• Cash-flows allow us to pay a significantly
  increased dividend
• Continue to reinvest in our markets, and
  strengthen our balance sheet

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HCA is Investing Significantly in Programs for
Patient Safety and Improved Patient Outcomes
? E MAR Medication Error Prevention ? E POM
Physician Order Entry ? 100 Participation in
CMS Quality Reporting Initiative ? Member of NQF
and Leapfrog ? Cardiovascular, OB and Emergency
Department Initiatives
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In Summary We Have.
Great Assets
Excellent Investment Opportunities
Strong Cash Flows
Excellent Long-Term Earnings Growth Outlook
A prudent financial strategy that provides for a
strong balance sheet and return of cash to
shareholders through share repurchase and/or
dividends