2. Forward-Looking Statements
Certain statements contained in this presentation constitute forward-looking statements. Such forward-looking statements are based on
management's current expectations and involve known and unknown risks, uncertainties and other factors that may cause the
Company’s actual results to be materially different from those expressed or implied by such forward-looking statements. Such factors
include, among others, the following: general economic and business conditions, both nationally and regionally; industry capacity;
demographic changes; changes in, or the failure to comply with, laws and governmental regulations; the ability to enter into managed
care provider arrangements on acceptable terms; changes in Medicare and Medicaid payments or reimbursement, including those
resulting from a shift from traditional reimbursement to managed care plans; liability and other claims asserted against the Company;
competition, including the Company’s failure to attract patients to its hospitals; the loss of any significant customers; technological and
pharmaceutical improvements that increase the cost of providing, or reduce the demand for, health care; a shortage of raw materials, a
breakdown in the distribution process or other factors that may increase the Company’s cost of supplies; changes in business strategy
or development plans; the ability to attract and retain qualified personnel, including physicians, nurses and other health care
professionals, including the impact on the Company’s labor expenses resulting from a shortage of nurses or other health care
professionals; the significant indebtedness of the Company; the availability of suitable acquisition opportunities and the length of time it
takes to accomplish acquisitions; the Company's ability to integrate new businesses with its existing operations; and the availability and
terms of capital to fund the expansion of the Company's business, including the acquisition of additional facilities. Certain additional
risks and uncertainties are discussed in the Company’s filings with the Securities and Exchange Commission, including the Company’s
annual report on Form 10-K and quarterly reports on Form 10-Q. Do not rely on any forward-looking statement, as we cannot predict or
control many of the factors that ultimately may affect our ability to achieve the results estimated. We make no promise to update any
forward-looking statement, whether as a result of changes in underlying factors, new information, future events or otherwise.
Non-GAAP Information
This document includes certain financial measures and statistics, including measures such as adjusted EBITDA, which are not
calculated in accordance with Generally Accepted Accounting Principles (GAAP). Management recommends that you focus on the
GAAP numbers as the best indicator of financial performance. These alternative measures are provided only as a supplement to aid in
analysis of the Company.
Reconciliation between non-GAAP measures and related GAAP measures can be found in our quarterly earnings release issued on
August 5, 2008.
2
4. “Same-hospital” (1) vs. “Core same-hospital” (2) stats
Core
Growth rates are Q2’08 over Q2’07
Same-Hospital Same-Hospital
Admissions growth (%) 1.9 2.2
Paying admissions growth (%) 1.8 2.2
Outpatient visit growth (%) (0.3) 0
Paying O/P visit growth (%) 0.4 0.6
Adjusted admissions growth (%) 2.8 3.2
Surgeries growth (%) 2.3 3.0
Commercial Admit growth (%) (2.2) (1.7)
Commercial O/P visit growth (%) (1.8) (1.5)
Commercial admit growth in 8 1.3 1.9
TGI service lines (%)
Commercial revenue growth (%) 7.5 8.1
Adjusted EBITDA ($mm) 171 171
(1) Same-hospital excludes Coastal Carolina Medical Center and Sierra Providence East Medical Center
(2) Core same-hospital also excludes Irvine Regional Hospital and Medical Center and Community Hospital of
Los Gatos from same-hospital data
4
5. Growth strategies and performance improvement
initiatives are working
2.2% growth in core, same-hospital admissions
Extends recent admissions growth trends
Strongest growth in four years
2.2% increase in paying admissions
0.6% increase in paying outpatient visits
Commercial admissions declined by 1.7% (core, same-hospital)
Over 90% of commercial decline in OB admissions, which is generally de-
emphasized under TGI
1.9% increase in commercial admissions in eight primary TGI service lines
(core, same-hospital)
3.2% increase in same-hospital controllable operating expense per adjusted
patient day
2.6% increase on a core, same-hospital basis
3.0% increase in core, same-hospital surgeries
5
6. 2008 - 2009 Outlook updated only for USC sale
California concentration reduced
USC plus four other hospital divestitures and/or lease expirations
Encino and Tarzana sales (already in disc ops) reduces cash drain
Broadlane investment to be monetized
$155mm
MOB sale of 31 buildings continues to move forward
$750mm to $950mm in cash expected to be raised in next 18 months
Including $650mm to $850mm in 2008
Approx $50mm raised through 6/30/08
6
7. 2009 P & L impact of actions to enhance balance
sheet efficiencies (1)
$50 million = approximate full run rate(2) reduction in EBITDA
$80 million = approximate full year reduction of net interest expense,
depreciation, and other items
Up to $30 million = net positive future impact on pre-tax income and
free cash flow
And,
$50mm in seismic requirements eliminated
$40mm annual cash flow consumption at Encino-Tarzana curtailed
(1) Tenet has not yet made a final decision on use of cash proceeds. Analysis is illustrative, for modeling purposes only.
(2) Results for 2008 are not fully impacted as $10mm to $15mm still in 2008 results
7
9. Key strategies are working
Supporting evidence visible in:
Admissions growth
Commercial volume growth in TGI service lines
Net growth of active medical staff
9
10. Admissions growth is accelerating
Admissions increased by 2.2% (core, same-hospital)
Every region up by 2.5%, or greater, with exception of
Southern States Region
Florida admissions increased by 3.0%
Philadelphia admissions increased by 5.1%
Philadelphia’s Q3’08 growth will be reduced by pre-admission review
diverting incremental patients to observation status
While Florida and Philadelphia are not large
commercial markets, their volume growth is solidly
profitable
10
11. Commercial admissions growth in TGI service lines(1)
TGI exceeds total commercial admissions growth
Core, same-hospital commercial admissions
4%
TGI Service lines (1)
1.9%
2%
All service lines
0%
Y-o-Y Growth
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
-2%
-4%
-6% 2008
2007
-8%
2006
(1) 8 service lines which are typically emphasized by TGI: general surgery, major trauma, neonatal,
neurological medicine, neurosurgery, open heart, orthopedic surgery, and Cath/EP.
11
12. Physician Relationship Program driving
PRP
continued growth in medical staffs
3,836 visits to 2,109 new physicians in Q2’08
354 net new physicians added in Q2’08 to active
medical staff
Includes 119 physicians added to new El Paso hospital
14,657 visits to 7,642 current medical staff members
Admissions from these 7,642 physicians increased by
5.0% in Q2’08 over Q2’07 admissions
12
13. Outpatient
Visits
0.6% increase in paying core O/P visits
28% increase in freestanding ASC volumes
13
15. Growing evidence that inflection point has been
passed
Admissions up 2.2%
Paying outpatient visits up 0.6%
Medical staff up by 354, or 2.8%, in Q2’08
Cost efficiency enhanced
15
24. Core, Same-Hospital Adjusted EBITDA and EBITDA
Margins Have Been Expanding
($ in millions)
Adjusted EBITDA
Adjusted EBITDA Margin
$250 12.0%
10.0%
$200
Without CMS Adjustment
8.0%
$150
6.0%
$100
4.0%
$50
2.0%
$0 0.0%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2006 2007 2008
24
25. Revised 2008-2009 Outlook
(Continuing operations excluding Irvine and Los Gatos)
2009
2008
Adjusted Adjusted
($mm) Revenue Cost Revenue Cost
Line
EBITDA EBITDA
#
1 Prior year (excluding Irvine & Los Gatos) 8,167 (7,510) 657 8,715 (7,890) 825
2 2007 Cost Report Adjustments (40) - (40) - - -
3 Georgia/ Florida Medicaid (56) - (56) - - -
4 Volume(1) 114 (68) 46 154 (93) 61
5 Pricing – Base Line Increase (2) 358 (21) 337 286 (22) 264
6 Managed Care (3) 47 - 47 34 - 34
7 Other Initiatives (4) 47 (16) 31 - - -
8 Costs – Base Line Inflation(5) - (274) (274) - (253) (253)
9 Cost Reduction Initiatives (6) - 92 92 - 29 29
10 Other(7) 78 (93) (15) 86 (46) 40
11 Total(8) 8,715 (7,890) 825 9,275 (8,275) 1,000
(1) 2008: assumes admissions growth of 1.5%; flat outpatient visit volumes; using 2007’s average pricing. 2009: admissions growth of 2.0%; outpatient
visit growth of 1.5%; using 2008’s average pricing. Margin assumption on incremental revenues is 40%.
(2) Base line pricing increases of 4.4% for 2008. These assumptions are before discrete initiatives valued in this analysis, and include certain
assumptions on adverse mix change
(3) Rate parity price increases in existing contracts and anticipated future increases.
(4) Full-year impact of 2007’s ED acuity capture effort and incremental adjustments to chargemaster.
(5) Inflation rate reflecting normal merit increases, union contract adjustments, supplies cost increases and other items before discrete initiatives valued in
this analysis.
(6) Full year impact of cost initiatives initiated in 2007.
(7) Includes impact of Sierra Providence East Medical Center (El Paso), Coastal Carolina Hospital, physician practices and other non-acute operations.
(8) Various risks including volume growth, volume mix, and bad debt create at least $75 million in uncertainties for 2008 performance, hence the adjusted
EBITDA outlook range from $750 mm to $825mm. 2009 uncertainties exceed those identified for 2008.
This schedule is not intended to provide a series of spot estimates or line item guidance. Other combinations of line item
performance could produce the same or higher, or lower results.
25
26. Free Cash Flow Objective – 2009
($mm)
EBITDA 1,000
Stock compensation expense 40
Interest expense (net) (360)
Working capital (0 - 50)
Capital expenditures (550 – 600)
Free Cash Flow 30 – 130
Global settlement payment (90)
Net Free Cash Flow (60) - 40
Beyond 2009 Free Cash Flow is expected to improve from:
Global settlement obligation is retired in 2010
40% estimated margin rate on volume growth
26
27. 2008 Cash Walk Forward
Low High
($mm)
December 31, 2007 Beginning Cash 572
2008 EBITDA 750 825
Add Back: Stock Compensation Charges 38 38
Changes in Cash from Operating Assets and Liabilities (17) 8
Interest Payments (396) (396)
375 475
Adjusted Net Cash Provided by Operating Activities
Income Tax (payments) refunds, net (45) (45)
Payments against reserves for restructuring charges, litigation costs and
(100) (100)
settlements
Net cash used in operating activities from discontinued operations/leased
(55) (30)
facilities
Capital Expenditures (600) (650)
Other Investing Activities 58 83
Net Financing Activities (5) (5)
Potential cash from initiatives and divestitures 650 850
Cash Outlook December 31, 2008 850 1,150
27
28. 2008 Cash Walk Forward
High
Low
($mm)
June 30, 2008 Cash Balance 352
EBITDA Outlook, remainder of 2008 365 440
Add back: Stock compensation charges 19 19
Working capital timing and improvements 144 169
Interest Payments (200) (200)
328 428
Adjusted Net Cash Provided by Operating Activities
Income Tax (payments) refunds, net (42) (42)
Payments against reserves for restructuring charges, litigation costs and
(44) (44)
settlements
Net cash used in operating activities from discontinued operations/leased
(57) (32)
facilities
Capital Expenditures (301) (351)
Other Investing Activities 20 45
Net Financing Activities (6) (6)
Potential cash initiatives and divestitures 600 800
Cash Outlook December 31, 2008 850 1,150
28
29. Reconciliation of 2008 Outlook net loss to
adjusted EBITDA
($mm) Low High
Net loss (120) (20)
Less: Loss from discontinued ops, net of tax (25) -
Income (loss) from continuing operations (95) (20)
Income tax benefit 5 5
Income (loss) from continuing operations, before income taxes (100) (25)
Interest expense, net (400) (400)
Operating income 300 375
Litigation and investigation costs (50) (50)
Depreciation and amortization (400) (400)
Adjusted EBITDA 750 825
29
