Universal Health Services (UHS) 10-K risk factor changes: FY2018 vs FY2017

On a combined basis, these facilities contributed [added: 16% in 2018,] 15% in [removed: 2017,] [added: 2017 and] 16% in 2016 [removed: and 17% in 2015] of our consolidated net revenues.

On a combined basis, after deducting an allocation for corporate overhead expense, these facilities generated [removed: 11%] [added: 12%] in [removed: 2017, 7%] [added: 2018, 11%] in [removed: 2016] [added: 2017] and [removed: 11%] [added: 7%] in [removed: 2015,] [added: 2016,] of our income from operations after net income attributable to noncontrolling interest.

On a combined basis, these facilities contributed 17% [removed: in 2017, 16% in 2016 and 15% in 2015,] of our consolidated net [removed: revenues.][added: revenues during each of 2018 and 2017 and 16% in 2016.]

On a combined basis, after deducting an allocation for corporate overhead expense, these facilities generated [removed: 20%] [added: 24%] in [removed: 2017, 13%] [added: 2018, 20%] in [removed: 2016] [added: 2017] and [removed: 10%] [added: 13%] in [removed: 2015,] [added: 2016,] of our income from operations after net income attributable to noncontrolling interest.

On a combined basis, these facilities contributed 11% [removed: in 2017, 11% in 2016 and 11% in 2015,] of our consolidated net [removed: revenues.][added: revenues during each of 2018, 2017 and 2016.]

On a combined basis, after deducting an allocation for corporate overhead expense, these facilities generated [removed: 13%] [added: 16%] in [removed: 2017, 15%] [added: 2018, 13%] in [removed: 2016] [added: 2017] and [removed: 11%] [added: 15%] in [removed: 2015,] [added: 2016,] of our income from operations after net income attributable to noncontrolling interest.

Our revenues and results of operations are significantly affected by payments received from the government and other third party [removed: payors.][added: payers.]

We derive a significant portion of our revenue from third-party [removed: payors,] [added: payers,] including the Medicare and Medicaid programs.

In addition, the vast majority of the net revenues generated at our behavioral health facilities located in the United Kingdom are derived from governmental [removed: payors.][added: payers.]

If the rates paid or the scope of services covered by governmental [removed: payors] [added: payers] in the United States or United Kingdom are reduced, there could be a material adverse effect on our business, financial position and results of operations.

We receive Medicaid revenues in excess of $100 million annually from each of Texas, California, [removed: Nevada,] Washington, D.C., [added: Nevada,] Pennsylvania and Illinois, making us particularly sensitive to reductions in Medicaid and other state based revenue programs as well as regulatory, economic, environmental and competitive changes in those states.

In addition to changes in government reimbursement programs, our ability to negotiate favorable contracts with private [removed: payors,] [added: payers,] including managed care [removed: providers,] [added: organizations,] significantly affects the revenues and operating results of our hospitals.

Private [removed: payors,] [added: payers,] including managed care [removed: providers,] [added: organizations,] increasingly are demanding that we accept lower rates of payment.

Reductions in reimbursement amounts received from third-party [removed: payors] [added: payers] could have a material adverse effect on our financial position and our results of operations.

On February 9, 2018, President Trump signed into law [removed: H.R. 1892,] the Bipartisan Budget Act of 2018, which eliminated the DSH cuts scheduled for 2018 and 2019 but added additional DSH reductions of $4 billion in 2020 and $8 billion a year between 2021 and 2025.

[removed: Certain Legislation provisions, such as that] creating the Medicare Shared Savings Program creates uncertainty in how healthcare may be reimbursed by federal programs in the future.

The Legislation provides that a healthcare provider that retains an overpayment in excess of 60 days is subject to the federal civil False Claims Act, although [added: certain] final regulations implementing this statutory requirement remain pending.

Legislation has already been enacted that has [removed: repealed] [added: eliminated] the [removed: individual mandate] [added: penalty for failing] to [removed: obtain] [added: maintain] health [removed: insurance penalty] [added: coverage] that was part of the original Legislation.

In addition, Congress [removed: is considering] [added: has considered] legislation that would, [added: if enacted,] in material part: (i) eliminate the large employer mandate to obtain or provide health insurance coverage, respectively; (ii) permit insurers to impose a surcharge up to 30 percent on individuals who go uninsured for more than two months and then purchase coverage; (iii) provide tax credits towards the purchase of health insurance, with a phase-out of tax credits accordingly to income level; (iv) expand health savings accounts; (v) impose a per capita cap on federal funding of state Medicaid programs, or, if elected by a state, transition federal funding to block grants, and; (vi) permit states to seek a waiver of certain federal requirements that would allow such state to define essential health benefits differently from federal standards and that would allow certain commercial health plans to take health status, including pre-existing conditions, into account in setting premiums.

In relevant part, President Trump has already taken executive actions: (i) requiring all federal agencies with authorities and responsibilities under the Legislation to “exercise all authority and discretion available to them to waiver, defer, grant exemptions from, or delay” parts of the Legislation that place “unwarranted economic and regulatory burdens” on states, individuals or health care providers; (ii) the issuance of a [removed: proposed] [added: final] rule [added: in June, 2018] by the Department of Labor to enable the formation of [added: association] health plans that would be exempt from certain Legislation [added: requirements such as the provision of] essential health [removed: benefits requirements, and;] [added: benefits;] (iii) [added: the issuance of a final rule in August, 2018 by the Department of Labor, Treasury, and Health and Human Services to expand the availability of short-term, limited duration health insurance, (iv)] eliminating cost-sharing reduction payments to insurers that would otherwise offset deductibles and other out-of-pocket expenses for health plan enrollees at or below 250 percent of the federal poverty [removed: level.][added: level; (v) relaxing requirements for state innovation waivers that could reduce enrollment in the individual and small group markets and lead to additional enrollment in short-term, limited duration insurance and association health plans; and (vi) the issuance of a proposed rule by the Department of Labor, Treasury, and Health and Human Services that would incentivize the use of health reimbursement accounts by employers to permit employees to purchase health insurance in the individual market.]

The uncertainty resulting from these Executive Branch policies has led to reduced Exchange enrollment in 2018 and [added: 2019 and] is expected to further [added: worsen the individual and small group market risk pools in future years.]

Collection of receivables from third-party [removed: payors] [added: payers] and patients is our primary source of cash and is critical to our operating performance.

We estimate our provisions for doubtful accounts based on general factors such as [removed: payor] [added: payer] mix, the agings of the receivables, historical collection experience and assessment of probability of future collections.

Significant changes in business office operations, [removed: payor] [added: payer] mix, economic conditions or trends in federal and state governmental health coverage could affect our collection of accounts receivable, cash flow and results of operations.

In some markets, certain of our competitors may have greater financial resources, be better equipped and offer a broader range of services than [removed: we.][added: we offer.]

If we fail to continue to meet the [removed: meaningful use] [added: promoting interoperability] criteria related to electronic health record systems (“EHR”), our operations could be harmed.

We believe that all of our acute care hospitals have met the applicable [removed: meaningful use] [added: promoting interoperability] criteria and therefore are not subject to a reduced market basked update to the IPPS standardized amount.

However, under the HITECH Act, hospitals must continue to meet the applicable [removed: meaningful use] criteria in each fiscal year or they will be subject to a market basket update reduction in a subsequent fiscal year.

In addition, in some markets like California, there are [removed: requirements to maintain specified nurse-staffing levels.]

If we are deemed to have failed to comply with the anti-kickback statute, the Stark Law or other applicable laws and regulations, we could be subjected to liabilities, including criminal penalties, civil penalties (including the loss of our licenses to operate one or more facilities), and exclusion of one or more facilities from participation in the Medicare, Medicaid and other federal and state [removed: healthcare programs.]

Our growth strategy depends, in part, on acquisitions, and we may not be able to continue to [removed: acquire hospitals] [added: make acquisitions] that meet our target criteria.

Acquisitions [removed: of hospitals] in select markets are a key element of our growth strategy.

Further, [removed: the cost of] an acquisition could result in a dilutive effect on our results of operations, depending on various factors, including the amount paid for the acquisition, the acquired [removed: hospital’s] [added: properties] results of operations, allocation of the purchase price, effects of subsequent legislation and limits on rate increases.

We may fail to improve or integrate the operations of the [removed: hospitals] [added: assets] we acquire, which could harm our results of operations and adversely affect our growth strategy.

We may be unable to timely and effectively integrate the [removed: hospitals] [added: assets or entities] that we acquire with our ongoing operations.

We may experience delays in implementing operating procedures and systems in newly acquired [removed: hospitals.][added: operations.]

Integrating [removed: a new hospital] [added: an acquisition] could be expensive and time consuming and could disrupt our ongoing business, negatively affect cash flow and distract management and other key personnel.

In addition, acquisition activity requires transitions from, and the integration of, operations and, usually, information systems that are used by acquired [removed: hospitals.][added: operations.]

In addition, some of the [removed: hospitals] [added: acquisitions] we [removed: acquire] [added: have made] had significantly lower operating margins than the [removed: hospitals] [added: assets] we [removed: operate] [added: operated] prior to the time of our acquisition.

If we fail to improve the operating margins of the [removed: hospitals] [added: operations] we acquire, operate such [removed: hospitals] [added: assets] profitably or effectively integrate the [removed: operations of] acquired [removed: hospitals,] [added: operations,] our results of operations could be harmed.

Certain Legislation provisions, such as that

While attempts to repeal the entirety of the ACA have not been successful to date, a key provision of the ACA was repealed as part of the Tax Cuts and Jobs Act and, on December 14, 2018, a federal U.S. District Court judge in Texas ruled the entire ACA is unconstitutional.

While that ruling is stayed and has been appealed, it has caused greater uncertainty regarding the future status of the ACA.

If all or any parts of the ACA are found to be unconstitutional, it could have a material adverse effect on the Company.

In the 2019 IPPS final rule, CMS re-named the meaningful use program to “promoting interoperability”.

requirements to maintain specified nurse-staffing levels.

healthcare programs.

In November 2018, the United Kingdom and the European Union agreed upon a draft Withdrawal Agreement that set out the terms of the United Kingdom’s departure, including commitments on citizen rights after Brexit, a financial settlement from the United Kingdom, and a transition period from March 29, 2019 through December 31, 2020 to allow time for a future trade deal to be agreed.

On January 15, 2019, the draft Withdrawal Agreement was rejected by the British legislature, creating significant uncertainty about the terms and timing under which the United Kingdom will leave the European Union.

If the United Kingdom leaves the European Union with no agreement (a “hard Brexit”), it will likely have an adverse impact on labor and trade in addition to creating further currency volatility.

In the absence of a future trade deal, the United Kingdom’s trade with the European Union and the rest of the world would be subject to tariffs and duties set by the World Trade Organization.

These changes to the trading relationship between the United Kingdom and the European Union would likely result in increased cost of goods imported into the United Kingdom.

Additional currency volatility could result in a weaker British pound, which may decrease the profitability of our operations in the United Kingdom.

A weaker British pound versus the U.S. Dollar also causes local currency results of our United Kingdom operations to be translated into fewer U.S. Dollars during a reporting period.

The LIBOR calculation method may change and LIBOR is expected to be phased out after 2021.

Our Credit Agreement permits interest on borrowings to be calculated based on LIBOR, and a number of our interest rate swaps are based on LIBOR.

On July 27, 2017, the United Kingdom Financial Conduct Authority (the “FCA”) announced that it will no longer require banks to submit rates for the calculation of LIBOR after 2021.

In the meantime, actions by the FCA, other regulators, or law enforcement agencies may result in changes to the method by which LIBOR is calculated.

At this time, it is not possible to predict the effect of any such changes or any other reforms to LIBOR that may be enacted in the United Kingdom or elsewhere.

To the extent that these shares were converted into or exercised for shares of Class B Common Stock, the number of

worsen the individual and small group market risk pools in future years.

The ACA also

The United Kingdom has two years from that date to complete these negotiations.

The future relationship between the United Kingdom and the European Union remains uncertain, including the terms of trade between the United Kingdom and the European Union.

The effects of Brexit will depend on any agreements the United Kingdom makes to retain access to European Union markets either during a transitional period or more permanently.

As of February [removed: 28, 2018,] [added: 27, 2019,] we owned and/or operated [removed: 326] [added: 350] inpatient facilities and [removed: 32] [added: 37] outpatient and other facilities including the following located in 37 states, Washington, D.C., the United [removed: Kingdom, Puerto Rico] [added: Kingdom] and [removed: the U.S. Virgin Islands:][added: Puerto Rico:]

| | • | [removed: 4] [added: 9] free-standing emergency departments, and; |

| | • | [removed: 4] [added: 6] outpatient [removed: surgery/cancer care] centers & 1 surgical hospital. |

Behavioral health care facilities [removed: (300] [added: (324] inpatient facilities and [removed: 23] [added: 21] outpatient facilities):

| | • | [removed: 20] [added: 19] outpatient behavioral health care facilities. |

| | • | [removed: 108] [added: 133] inpatient behavioral health care facilities, and; |

| | • | [removed: 4] [added: 3] inpatient behavioral health care [removed: facilities, and;] [added: facilities.] |

As a percentage of our consolidated net revenues, net revenues from our acute care hospitals, outpatient facilities and commercial health insurer accounted for 53% during [removed: 2017, 52% during 2016] [added: each of 2018] and [removed: 51%] [added: 2017 and 52%] during [removed: 2015.][added: 2016.]

Net revenues from our behavioral health care facilities and commercial health insurer accounted for 47% of our consolidated net revenues during [removed: 2017, 48% during 2016] [added: each of 2018] and [removed: 49%] [added: 2017 and 48%] during [removed: 2015.][added: 2016.]

Our behavioral health care facilities located in the U.K. generated net revenues [removed: amounting to] [added: of] approximately [removed: $429] [added: $505] million in [removed: 2017, $241] [added: 2018, $429] million in [removed: 2016] [added: 2017] and [removed: $203] [added: $241] million in [removed: 2015.][added: 2016.]

Total assets at our U.K. behavioral health care facilities were approximately [removed: $1.098] [added: $1.224] billion as of December 31, [removed: 2017, $965 million] [added: 2018, $1.098 billion] as of December 31, [removed: 2016] [added: 2017] and [removed: $521] [added: $965] million as of December 31, [removed: 2015.][added: 2016.]

| | • | possible unfavorable changes in the levels and terms of reimbursement for our charges by third party [removed: payors] [added: payers] or government based [removed: payors,] [added: payers,] including Medicare or Medicaid in the United States, and government based [removed: payors] [added: payers] in the United Kingdom; |

| | • | the outcome of known and unknown litigation, government investigations, false claim act allegations, and liabilities and other claims asserted against us and other matters as disclosed in Item 3. Legal [removed: Proceedings;] [added: Proceedings, and the effects of adverse publicity relating to such matters;] |

| | • | as discussed below in Sources of Revenue, we receive revenues from various state and county based programs, including Medicaid in all the states in which we operate (we receive Medicaid revenues in excess of $100 million annually from each of Texas, California, [removed: Nevada,] Washington, D.C., [added: Nevada,] Pennsylvania and Illinois); CMS-approved Medicaid supplemental programs in certain states including Texas, Mississippi, Illinois, Oklahoma, Nevada, Arkansas, California and Indiana, and; state Medicaid disproportionate share hospital payments in certain states including Texas and South Carolina. We are therefore particularly sensitive to potential reductions in Medicaid and other state based revenue programs as well as regulatory, economic, environmental and competitive changes in those states. We can provide no assurance that reductions to revenues earned pursuant to these programs, particularly in the above-mentioned states, will not have a material adverse effect on our future results of operations; |

| | • | our financial statements reflect large amounts due from various commercial and private [removed: payors] [added: payers] and there can be no assurance that failure of the [removed: payors] [added: payers] to remit amounts due to us will not have a material adverse effect on our future results of operations; |

| | • | in August, 2011, the Budget Control Act of 2011 (the “2011 Act”) was enacted into law. The 2011 Act imposed annual spending limits for most federal agencies and programs aimed at reducing budget deficits by $917 billion between 2012 and 2021, according to a report released by the Congressional Budget Office. Among its other provisions, the law established a bipartisan Congressional committee, known as the Joint Select Committee on Deficit Reduction (the “Joint Committee”), which was tasked with making recommendations aimed at reducing future federal budget deficits by an additional $1.5 trillion over 10 years. The Joint Committee was unable to reach an agreement by the November 23, 2011 deadline and, as a result, across-the-board cuts to discretionary, national defense and Medicare spending were implemented on March 1, 2013 resulting in Medicare payment reductions of up to 2% per fiscal year [removed: (annual reduction of approximately $36 million to our Medicare net revenues)] with a uniform percentage reduction across all Medicare programs. The Bipartisan Budget Act of 2015, enacted on November 2, 2015, continued the 2% reductions to Medicare reimbursement imposed under the 2011 Act. We cannot predict whether Congress will restructure the implemented Medicare payment reductions or what other federal budget deficit reduction initiatives may be proposed by Congress going forward; |

We report net patient service revenue at the estimated net realizable amounts from patients and third-party [removed: payors] [added: payers] and others for services rendered.

We have agreements with third-party [removed: payors] [added: payers] that provide for payments to us at amounts different from our established rates.

Estimates of contractual [removed: allowances] [added: allowances, which represent explicit price concessions] under [added: ASC 606, under] managed care plans are based upon the payment terms specified in the related contractual agreements.

However, due to the complexities involved in these estimations, actual payments from [removed: payors] [added: payers] may be different from the amounts we estimate and record.

The funding of both federal Medicare and state Medicaid programs are subject to legislative and [added: regulatory changes.]

Adjustments related to the final settlement of these retrospectively determined amounts did not materially impact our results in [removed: 2017, 2016] [added: 2018, 2017] or [removed: 2015.][added: 2016.]

If it were to occur, each 1% adjustment to our estimated net Medicare revenues that are subject to retrospective review and settlement as of December 31, [removed: 2017,] [added: 2018,] would change our after-tax net income by approximately $1 million.

Because we do not pursue collection of amounts [removed: determined to] [added: that] qualify as charity care, [removed: they are not reported] [added: the transaction price is fully adjusted and there is no impact] in [added: our] net revenues or in [added: our] accounts receivable, net.

Charity Care, Uninsured Discounts and [removed: Provision for Doubtful Accounts:] [added: Other Adjustments to Revenue:] Collection of receivables from third-party payers and patients is our primary source of cash and is critical to our operating performance.

We estimate our [removed: provisions] [added: revenue adjustments] for [removed: doubtful accounts] [added: implicit price concessions] based on general factors such as payer mix, the agings of the receivables and historical collection [removed: experience.][added: experience, consistent with our estimates for provisions for doubtful accounts under ASC 605.]

[removed: Our] [added: Under ASC 605, our] hospitals [removed: establish] [added: established] a partial reserve for self-pay accounts in the allowance for doubtful accounts for both unbilled balances and those that have been billed and [removed: are] [added: were] under 90 days old.

All self-pay accounts [removed: are] [added: were] fully reserved at 90 days from the date of discharge.

Third party liability accounts [removed: are] [added: were] fully reserved in the allowance for doubtful accounts when the balance [removed: ages] [added: aged] past 180 days from the date of discharge.

Patients that express an inability to pay [removed: are] [added: were] reviewed for potential sources of financial assistance including our charity care policy.

If the patient [removed: is] [added: was] deemed unwilling to pay, the account [removed: is] [added: was] written-off as bad debt and transferred to an outside collection agency for additional collection effort.

[removed: Generally, patients] [added: Patients] treated at our hospitals for non-elective services, who have gross income less than 400% of the federal poverty guidelines, are deemed eligible for charity care.

When the patient’s ultimate eligibility is determined, reclassifications may occur which impacts [removed: the reported amounts] [added: net revenues] in future periods [removed: for the provision for doubtful accounts and other accounts such as Medicaid pending.][added: .]

Although the patient’s ultimate eligibility determination may result in [removed: amounts being reclassified among these accounts from period] [added: adjustments] to [removed: period,] [added: net revenues,] these [removed: reclassifications did] [added: adjustments do] not have a material impact on our results of operations in [removed: 2017, 2016] [added: 2018, 2017] or [removed: 2015] [added: 2016] since our facilities make estimates at each financial reporting period to [removed: reserve for amounts that are deemed to be uncollectible.][added: adjust revenue based on historical collections.]

Because we do not pursue collection of amounts classified as uninsured discounts, [removed: they are not reported] [added: the transaction price is fully adjusted and there is no impact] in our net revenues or in our net accounts receivable.

[removed: As of] [added: | | |] December 31, [removed: 2017:][added: 2018 | | | | | | | | December 31, 2017 | | | | | | |]

[removed: Our estimated liability for self-insured professional and general liability claims is based on a number of factors including, among other things, the number of asserted claims and reported incidents,] estimates of losses for these claims based on recent and historical settlement amounts, estimate of incurred but not reported claims based on historical experience, and estimates of amounts recoverable under our commercial insurance policies.

Long-Lived Assets: We review our long-lived [removed: assets, including intangible assets,] [added: assets] for impairment whenever events or circumstances indicate that the carrying value of these assets may not be recoverable.

We have designated October 1st as our annual impairment assessment date [removed: and performed an impairment assessment as of October 1, 2017 which indicated no impairment of] [added: for our] goodwill [removed: or] [added: and] indefinite-lived intangible assets.

There were also no [added: goodwill] impairments during [removed: 2016] [added: 2017] or [removed: 2015.][added: 2016.]

Located in Puerto Rico:

| | • | an increasing number of legislative initiatives have been passed into law that may result in major changes in the health care delivery system on a national or state level. Legislation has already been enacted that has eliminated the penalty for failing to maintain health coverage that was part of the original Legislation. President Trump has already taken executive actions: (i) requiring all federal agencies with authorities and responsibilities under the Legislation to “exercise all authority and discretion available to them to waiver, defer, grant exemptions from, or delay” parts of the Legislation that place “unwarranted economic and regulatory burdens” on states, individuals or health care providers; (ii) the issuance of a final rule in June, 2018 by the Department of Labor to enable the formation of association health plans that would be exempt from certain Legislation requirements such as the provision of essential health benefits; (iii) the issuance of a final rule in August, 2018 by the Department of Labor, Treasury, and Health and Human Services to expand the availability of short-term, limited duration health insurance, (iv) eliminating cost-sharing reduction payments to insurers that would otherwise offset deductibles and other out-of-pocket expenses for health plan enrollees at or below 250 percent of the federal poverty level; (v) relaxing requirements for state innovation waivers that could reduce enrollment in the individual and small group markets and lead to additional enrollment in short-term, limited duration insurance and association health plans; and (vi) the issuance of a proposed rule by the Department of Labor, Treasury, and Health and Human Services that would be incentivize the use of health reimbursement accounts by employers to permit employees to purchase health insurance in the individual market. The uncertainty resulting from these Executive Branch policies has led to reduced Exchange enrollment in 2018 and 2019 and is expected to further worsen the individual and small group market risk pools in future years. It is also anticipated that these and future policies may create additional cost and reimbursement pressures on hospitals, including ours. In addition, while attempts to repeal the entirety of the Affordable Care Act (“ACA”) have not been successful to date, a key provision of the ACA was repealed as part of the Tax Cuts and Jobs Act and on December 14, 2018, a federal U.S. District Court Judge in Texas ruled the entire ACA is unconstitutional. While that ruling is stayed and has been appealed, it has caused greater uncertainty regarding the future status of the ACA. If all or any parts of the ACA are found to be unconstitutional, it could have a material adverse effect on our business, financial condition and results of operations. See below in Sources of Revenue and Health Care Reform for additional disclosure; |

| | • | the availability of suitable acquisition and divestiture opportunities and our ability to successfully integrate and improve our acquisitions since failure to achieve expected acquisition benefits from certain of our prior or future acquisitions could result in impairment charges for goodwill and purchased intangibles; |

| | • | in June, 2016, the United Kingdom affirmatively voted in a non-binding referendum in favor of the exit of the United Kingdom from the European Union (the “Brexit”) and it has been approved by vote of the British legislature. On March 29, 2017, the United Kingdom triggered Article 50 of the Lisbon Treaty, formally starting negotiations regarding its exit from the European Union, scheduled for March 29, 2019. The actual exit of the United Kingdom from the European Union could cause disruptions to and create uncertainty surrounding our business. Any of these effects of Brexit (and the announcement thereof), and others we cannot anticipate, could harm our business, financial condition and results of operations; |

Revenue Recognition: On January 1, 2018, we adopted, using the modified retrospective approach, ASU 2014-09 and ASU 2016-08, “Revenue from Contracts with Customers (Topic 606)” and “Revenue from Contracts with Customers: Principal versus Agent Considerations (Reporting Revenue Gross versus Net)”, respectively, which provides guidance for revenue recognition.

The standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services.

The most significant change from the adoption of the new standard relates to our estimation for the allowance for doubtful accounts.

Under the previous standards, our estimate for amounts not expected to be collected based upon our historical experience, were reflected as provision for doubtful accounts, included within net revenue.

Under the new standard, our estimate for amounts not expected to be collected based on historical experience will continue to be recognized as a reduction to net revenue, however, not reflected separately as provision for doubtful accounts.

Under the new standard, subsequent changes in estimate of collectability due to a change in the financial status of a payer, for example a bankruptcy, will be recognized as bad debt expense in operating charges.

The adoption of this ASU in 2018, and amounts recognized as bad debt expense and included in other operating expenses, did not have a material impact on our consolidated financial statements.

See Note 10 to the Consolidated Financial Statements-Revenue Recognition, for additional disclosure related to our revenues including a disaggregation of our consolidated net revenues by major source for each of the periods presented herein.

Under ASC 606, while similar processes and

methodologies are considered, these revenue adjustments are considered at the time the services are provided in determination of the transaction price.

Under ASC 605, these estimates were reported in the provision for doubtful accounts.

An increase in the level of uninsured patients to our facilities and the resulting adverse trends in the adjustments to net revenues and uncompensated care provided could have a material unfavorable impact on our future operating results.

Our estimated liability for self-insured professional and general liability claims is based on a number of factors including, among other things, the number of asserted claims and reported incidents,

We performed an impairment assessment as of October 1, 2018 which indicated no impairment of goodwill.

For our indefinite-lived intangible assets, consisting primarily of a tradename initially valued at $124 million recorded in connection with our 2015 acquisition of Foundation Recovery Network, L.L.C. (“Foundations”), we recorded a pre-tax $49 million provision for asset impairment during the fourth quarter of 2018.

See below in Provision for Intangible Assets Impairment for additional information.

We previously provided a provisional estimate of the effects of the TCJA-17 in the fourth quarter of 2017 financial statements.

In the fourth quarter of 2018, we completed our analysis to determine the effects of the TCJA-17 as follows:

amounts and the tax basis of assets and liabilities under the provisions of the enacted laws.

Upon completion of our 2017 U.S. Corporate Income Tax Return, an increase of $1 million attributable to certain deferred tax assets and a decrease of $5 million attributable to certain deferred tax liabilities was recorded resulting in an additional net deferred tax benefit of $6 million.

Upon completion of our 2017 U.S. Corporate Income Tax Return, the final Transition Tax increased by $100,000 for a total of $11.4 million.

| Other (income) expense, net | | | (14,219 | ) | | | \-0.1 | % | | | 0 | | | | 0.0 | % | | | 0 | | | | 0.0 | % |

Net revenues increased 3.5% or $362 million to $10.77 billion during 2018 as compared to $10.41 billion during 2017.

| | • | $7 million of other combined net revenue decreases. |

| | • | a decrease of $4 million as discussed below in Behavioral Health Services (excluding the $49 million intangible asset impairment charge recorded during 2018 related to Foundations Recovery Network, LLC, as discussed below); |

| | • | a decrease of $102 million due to an increase recorded during 2018 to the reserve established in connection with the civil aspects of the government’s investigation of certain of our behavioral health care facilities (reserve increased to $123 million as of December 31, 2018; see Item 3 – Legal Proceedings for additional disclosure); |

| | • | a decrease of $49 million from an intangible asset (tradename) impairment charge recorded during 2018 in connection with Foundations Recovery Network, LLC which was acquired by us during 2015; |

| | • | a decrease of $10 million resulting from an increase in interest expense, as discussed below in Other Operating Results, and; |

| | • | an increase of $1 million due to a decrease in the income attributable to noncontrolling interests, and; |

| | • | an increase of $127 million resulting from a net decrease in the provision for income taxes resulting primarily from: (i) a decrease in the provision for income taxes resulting from the $99 million decrease in pre-tax income ($100 million decrease in income before income taxes partially offset by a $1 million increase in pre-tax income due to a decrease in income attributable to noncontrolling interests); (ii) a decrease in the provision for income taxes realized during 2018 resulting from the Tax Cuts and Jobs Act of 2017 which, among other things, reduced the U.S. federal corporate tax rate from 35% to 21%; (iii) a decrease resulting from an $11 million increase in the provision for income taxes recorded during 2017 due to the repatriation tax incurred pursuant to the Tax Cuts and Jobs Act of 2017 (in connection with our behavioral health care facilities located in the U.K), partially offset by; (iv) an increase resulting from a $30 million decrease in the provision for income taxes recorded during 2017 due to a reduction in our net deferred income tax liability resulting from a lower federal income tax rate beginning January 1, 2018 pursuant to the Tax Cuts and Jobs Act of 2017, and; (v) a $21 million increase to our provision for income taxes due to an unfavorable change resulting from our January 1, 2017 adoption of ASU 2016-09, which decreased our provision for income taxes by $1 million during 2018 as compared to $22 million during 2017. |

| Net revenues | | $ | 5,618,428 | | | | 100.0 | % | | | 5,372,488 | | | | 100.0 | % |

| Salaries, wages and benefits | | | 2,366,078 | | | | 42.1 | % | | | 2,241,127 | | | | 41.7 | % |

| Other operating expenses | | | 1,238,787 | | | | 22.0 | % | | | 1,244,186 | | | | 23.2 | % |

| Supplies expense | | | 967,833 | | | | 17.2 | % | | | 905,164 | | | | 16.8 | % |

| Depreciation and amortization | | | 278,558 | | | | 5.0 | % | | | 262,950 | | | | 4.9 | % |

| Subtotal-operating expenses | | | 4,908,485 | | | | 87.4 | % | | | 4,710,635 | | | | 87.7 | % |

Located in Puerto Rico and the U.S. Virgin Islands:

| | • | 1 outpatient behavioral health care facility. |

| | • | an increasing number of legislative initiatives have been passed into law that may result in major changes in the health care delivery system on a national or state level. No assurances can be given that the implementation of these laws will not have a material adverse effect on our business, financial condition or results of operations. See below in Sources of Revenue and Health Care Reform for additional disclosure; |

| | • | our ability to successfully integrate and improve our recent acquisitions and the availability of suitable acquisitions and divestiture opportunities; |

Revenue Recognition: We record revenues and related receivables for health care services at the time the services are provided.

Medicare and Medicaid revenues represented 30% of our net patient revenues during 2017, 32% during 2016 and 34% during 2015.

Revenues from managed care entities, including health maintenance organizations and managed Medicare and Medicaid programs accounted for 56% of our net patient revenues during each of 2017 and 2016 and 54% during 2015.

regulatory changes.

We provide care to patients who meet certain financial or economic criteria without charge or at amounts substantially less than our established rates.

See additional disclosure below in Charity Care, Uninsured Discounts and Provision for Doubtful Accounts for our estimated uncompensated care provided and estimated cost of providing uncompensated care.

The federal poverty guidelines are established by the federal government and are based on income and family size.

Effective January 1, 2016, our hospitals in certain states in which we operate reduced the charity care eligibility threshold to less than the federal poverty guidelines.

Because we do not pursue collection of amounts that qualify as charity care, they are not reported in our net revenues or in our accounts receivable, net.

Our accounts receivable are recorded net of allowance for doubtful accounts of $480 million and $410 million at December 31, 2017 and 2016, respectively.

Approximately 87% during 2017 and 85% during 2016 of our consolidated provision for doubtful accounts, was incurred by our acute care hospitals.

Shown below is our payor mix concentrations and related aging of our billed accounts receivable, net of contractual allowances, for our acute care hospitals as of December 31, 2017 and 2016:

| | | Days | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Payor | | 0-60 | | | | 61-120 | | | | 121-180 | | | | over 180 | | |

| Medicare | | $ | 86,024 | | | $ | 5,884 | | | $ | 1,776 | | | $ | 5,632 | |

| Medicaid | | | 15,951 | | | | 5,746 | | | | 2,858 | | | | 7,108 | |

| Commercial insurance and other | | | 373,386 | | | | 120,497 | | | | 60,637 | | | | 135,917 | |

| Private pay | | | 136,473 | | | | 86,375 | | | | 29,399 | | | | 63,664 | |

| Total | | $ | 611,834 | | | $ | 218,502 | | | $ | 94,670 | | | $ | 212,321 | |

As of December 31, 2016:

| Medicare | | $ | 71,213 | | | $ | 4,519 | | | $ | 1,385 | | | $ | 4,225 | |

| Medicaid | | | 15,659 | | | | 6,654 | | | | 4,256 | | | | 8,966 | |

| Commercial insurance and other | | | 336,346 | | | | 117,919 | | | | 62,806 | | | | 164,143 | |

| Private pay | | | 114,382 | | | | 67,316 | | | | 16,689 | | | | 26,881 | |

| Total | | $ | 537,600 | | | $ | 196,408 | | | $ | 85,136 | | | $ | 204,215 | |

During 2015, we changed our annual goodwill and indefinite-lived intangibles testing date from September 1st to October 1st.

Management believes that this voluntary change in accounting method is preferable as it aligns the annual impairment testing date with our annual budgeting process.

The 2015 change in annual testing date did not delay, accelerate or avoid an impairment charge.

Future changes in the

We were able to make reasonable estimates of the effects of elements for which our analysis is not yet complete.

We recorded the following provisional adjustments:

While we are able to make a reasonable estimate of the impact of the reduction in corporate rate, it may be affected by other analyses related to the TCJA-17, including, but not limited to, our calculation of deemed repatriation of deferred foreign income and the state tax effect of adjustments made to federal temporary differences.

However, we are continuing to gather additional information to more precisely compute the amount of the Transition Tax.

Valuation allowances: We must assess whether valuation allowance analyses are affected by various aspects of the TCJA-17 (e.g., deemed repatriation of deferred foreign income).

Since, as discussed herein, we have recorded provisional amounts related to certain portions of the TCJA-17, any corresponding determination of the need for or change in valuation allowances is also provisional.

We performed periodic assessments of the cash flow hedge instruments during [removed: 2017] [added: 2018] and [removed: 2016] [added: 2017] and determined the hedges to be highly effective.

At December 31, [removed: 2016,] [added: 2018,] the fair value of our interest rate swaps was [removed: de minimis] [added: a net asset of $4 million which is included in net accounts receivable] on [added: the accompanying balance sheet.]

The table below presents information about our long-term financial instruments that are sensitive to changes in interest rates as of December 31, [removed: 2017.][added: 2018.]

| | | [removed: 2018 | | | |] 2019 | | | | 2020 | | | | 2021 | | | | 2022 | | | | [added: 2023 | | | |] Thereafter | | | | Total | | |

| Average interest rates | | | [removed: 4.7] [added: 5.0] | % | | | [removed: 4.7] [added: 5.0] | % | | | [removed: 5.0] [added: 4.9] | % | | | [removed: 5.0] [added: 4.9] | % | | | [removed: 4.9] [added: 5.2] | % | | | [removed: 4.0] [added: 3.7] | % | | | [removed: 4.7] [added: 4.8] | % |

| Average interest rates | | | [removed: 2.9] [added: 1.3] | % | | | [removed: 3.0] | [removed: %] | | | | | | | | | | | | | | | | | | | [removed: 2.2] [added: 1.3] | % |

| Notional amount | | [added: $] | [added: 1,000,000] | | | [removed: $] | [removed: 1,000,000] | | | | | | | | | | | | | | | | | | | $ | 1,000,000 | |

As calculated based upon our variable rate debt outstanding as of December 31, [removed: 2017] [added: 2018] that is subject to interest rate fluctuations, each 1% change in interest rates would impact our pre-tax income by approximately [removed: $16] [added: $19] million.

On or before the April 15, 2019 expiration of the $1.0 billion of interest rate swaps, as outlined above, we intend to enter into new interest rate swap agreements on a similar total notional amount.

| Debt | | $ | 2,146 | | | $ | 1,650 | | | $ | 1,696 | | | $ | 699,550 | | | $ | 2,476 | | | $ | 405,613 | | | $ | 1,113,131 | |

| Debt | | $ | 61,300 | | | $ | 55,000 | | | | 494,400 | | | | 105,000 | | | | 1,700,079 | | | | 469,727 | | | $ | 2,885,506 | |

| Average interest rates | | | 3.9 | % | | | 3.9 | % | | | 3.9 | % | | | 4.0 | % | | | 4.0 | % | | | 2.7 | % | | | 3.7 | % |

Seven interest rate swaps on a total notional amount of $825 million matured in May, 2015.

Four of these swaps, with a total notional amount of $600 million, became effective in December, 2011 and provided that we receive three-month LIBOR while the average fixed rate payable was 2.38%.

The remaining three swaps, with a total notional amount of $225 million, became effective in March, 2011 and provided that we receive three-month LIBOR while the average fixed rate payable was 1.91%.

a net basis comprised of a $4 million asset which is included in other assets offset by a $4 million liability which in included in other current liabilities on the accompanying consolidated balance sheet.

| Debt | | $ | 2,636 | | | $ | 300,286 | | | $ | 1,650 | | | $ | 1,696 | | | $ | 698,835 | | | $ | 407,491 | | | $ | 1,412,594 | |

| Debt | | $ | 542,983 | | | $ | 2,084,432 | | | | | | | | | | | | | | | | | | | $ | 2,627,415 | |

| Average interest rates | | | | | | | 1.3 | % | | | | | | | | | | | | | | | | | | | 1.3 | % |

As of February [removed: 28, 2018,] [added: 27, 2019,] we owned and/or operated [removed: 326] [added: 350] inpatient facilities and [removed: 32] [added: 37] outpatient and other facilities including the following located in 37 states, Washington, D.C., the United [removed: Kingdom, Puerto Rico] [added: Kingdom] and [removed: the U.S. Virgin Islands:][added: Puerto Rico:]

| | • | [removed: 4] [added: 9] free-standing emergency departments, and; |

| | • | [removed: 4] [added: 6] outpatient [removed: surgery/cancer care] centers & 1 surgical hospital. |

Behavioral health care facilities [removed: (300] [added: (324] inpatient facilities and [removed: 23] [added: 21] outpatient facilities):

| | • | [removed: 20] [added: 19] outpatient behavioral health care facilities. |

| | • | [removed: 108] [added: 133] inpatient behavioral health care facilities, and; |

| | • | [removed: 4] [added: 3] inpatient behavioral health care [removed: facilities, and;] [added: facilities.] |

As a percentage of our consolidated net revenues, net revenues from our acute care hospitals, outpatient facilities and commercial health insurer accounted for 53% during [removed: 2017, 52% during 2016] [added: each of 2018] and [removed: 51%] [added: 2017 and 52%] during [removed: 2015.][added: 2016.]

Net revenues from our behavioral health care facilities and commercial health insurer accounted for 47% of our consolidated net revenues during [removed: 2017, 48% during 2016] [added: each of 2018] and [removed: 49%] [added: 2017 and 48%] during [removed: 2015.][added: 2016.]

Our behavioral health care facilities located in the U.K. generated net revenues [removed: amounting to] [added: of] approximately [removed: $429] [added: $505] million in [removed: 2017, $241] [added: 2018, $429] million in [removed: 2016] [added: 2017] and [removed: $203] [added: $241] million in [removed: 2015.][added: 2016.]

Total assets at our U.K. behavioral health care facilities were approximately [removed: $1.098] [added: $1.224] billion as of December 31, [removed: 2017, $965 million] [added: 2018, $1.098 billion] as of December 31, [removed: 2016] [added: 2017] and [removed: $521] [added: $965] million as of December 31, [removed: 2015.][added: 2016.]

[removed: 2017 and] 2018 Acquisitions of Assets and Businesses:

[removed: In January, 2018, we acquired Gulfport Behavioral Health System, a] [added: | | • | A] 109-bed behavioral health care facility located in Gulfport, [removed: Mississippi.][added: Mississippi (acquired during the first quarter of 2018). |]

[removed: Our] Board of Directors’ committee charters (Audit Committee, Compensation Committee and Nominating & Governance Committee), Code of Business Conduct and Corporate Standards applicable to all employees, Code of Ethics for Senior Financial Officers, Corporate Governance Guidelines and our Code of Conduct, Corporate Compliance Manual and Compliance Policies and Procedures are available free of charge on our website.

In accordance with Section 303A.12(a) of the New York Stock Exchange Listed Company Manual, we submitted our CEO’s certification to the New York Stock Exchange in [removed: 2016.][added: 2018.]

Pressures to contain healthcare costs and technological developments allowing more procedures to be performed on an outpatient basis have led [removed: payors] [added: payers] to demand a shift to ambulatory or outpatient care wherever possible.

Current industry trends in utilization and occupancy have been significantly affected by changes in reimbursement policies of third party [removed: payors.][added: payers.]

| | | [removed: 2017] [added: 2018] | | | | [removed: 2016] [added: 2017] | | | | [removed: 2015] [added: 2016] | | | | [removed: 2014] [added: 2015] | | | | [removed: 2013] [added: 2014] | | |

| Acute Care Hospitals | | | [removed: 6,127] [added: 6,232] | | | | [removed: 5,934] [added: 6,127] | | | | [removed: 5,832] [added: 5,934] | | | | [removed: 5,776] [added: 5,832] | | | | [removed: 5,652] [added: 5,776] | |

| Behavioral Health Centers | | | [removed: 23,151] [added: 23,509] | | | | [removed: 21,829] [added: 23,151] | | | | [removed: 21,202] [added: 21,829] | | | | [removed: 20,231] [added: 21,202] | | | | [removed: 19,975] [added: 20,231] | |

| Acute Care Hospitals | | | [removed: 5,954] [added: 6,056] | | | | [removed: 5,759] [added: 5,954] | | | | [removed: 5,656] [added: 5,759] | | | | [removed: 5,571] [added: 5,656] | | | | [removed: 5,429] [added: 5,571] | |

| Behavioral Health Centers | | | [removed: 23,068] [added: 23,425] | | | | [removed: 21,744] [added: 23,068] | | | | [removed: 21,116] [added: 21,744] | | | | [removed: 20,131] [added: 21,116] | | | | [removed: 19,876] [added: 20,131] | |

| Acute Care Hospitals | | | [removed: 297,390] [added: 303,985] | | | | [removed: 274,074] [added: 297,390] | | | | [removed: 261,727] [added: 274,074] | | | | [removed: 251,165] [added: 261,727] | | | | [removed: 246,160] [added: 251,165] | |

| Behavioral Health Centers | | | [removed: 467,822] [added: 482,658] | | | | [removed: 456,052] [added: 467,822] | | | | [removed: 447,007] [added: 456,052] | | | | [removed: 426,510] [added: 447,007] | | | | [removed: 402,088] [added: 426,510] | |

| Acute Care Hospitals | | | [removed: 4.4] [added: 4.5] | | | | [removed: 4.6] [added: 4.4] | | | | [removed: 4.7] [added: 4.6] | | | | [removed: 4.6] [added: 4.7] | | | | [removed: 4.5] [added: 4.6] | |

| Behavioral Health Centers | | | [removed: 13.6] [added: 13.3] | | | | [removed: 13.2] [added: 13.6] | | | | [removed: 13.1] [added: 13.2] | | | | [removed: 12.9] [added: 13.1] | | | | [removed: 13.3] [added: 12.9] | |

| Acute Care Hospitals (1) | | | [removed: 1,312,265] [added: 1,376,988] | | | | [removed: 1,251,511] [added: 1,312,265] | | | | [removed: 1,218,991] [added: 1,251,511] | | | | [removed: 1,167,726] [added: 1,218,969] | | | | [removed: 1,112,541] [added: 1,167,726] | |

| Behavioral Health Centers | | | [removed: 6,381,756] [added: 6,418,334] | | | | [removed: 6,004,066] [added: 6,381,756] | | | | [removed: 5,835,134] [added: 6,004,066] | | | | [removed: 5,518,660] [added: 5,835,134] | | | | [removed: 5,365,734] [added: 5,518,660] | |

| Acute Care Hospitals | | | [removed: 59] [added: 61] | % | | | [removed: 58] [added: 59] | % | | | [removed: 57] [added: 58] | % | | | [removed: 55] [added: 57] | % | | | [removed: 54] [added: 55] | % |

| Behavioral Health Centers | | | [removed: 76] [added: 75] | % | | | [removed: 75] [added: 76] | % | | | 75 | % | | | 75 | % | | | [removed: 74] [added: 75] | % |

| Acute Care Hospitals | | | [removed: 60] [added: 62] | % | | | [removed: 59] [added: 60] | % | | | 59 | % | | | [removed: 57] [added: 59] | % | | | [removed: 56] [added: 57] | % |

| Behavioral Health Centers | | | [removed: 76] [added: 75] | % | | | [removed: 75] [added: 76] | % | | | [removed: 76] [added: 75] | % | | | [removed: 75] [added: 76] | % | | | [removed: 74] [added: 75] | % |

Other information related to our revenues, income and other operating information for each reporting segment of our business is provided in Note [removed: 11] [added: 12] to our Consolidated Financial Statements, Segment Reporting.

Overview: The healthcare industry is subject to numerous laws, regulations and rules including, among others, those related to government healthcare participation requirements, various licensure and accreditations, reimbursement for patient services, health information privacy and security rules, and Medicare and Medicaid fraud and abuse provisions (including, but not limited to, federal statutes and regulations prohibiting kickbacks and other illegal inducements to potential referral sources, false claims submitted to federal [added: or state] health care programs and self-referrals by physicians).

If any of our facilities were to lose its Joint Commission accreditation or otherwise lose its certification under the Medicare and Medicaid programs, the facility may be unable to receive reimbursement from the Medicare and Medicaid programs and other [removed: payors.][added: payers.]

The Centers for Medicare and Medicaid Services (“CMS”) announced its intent to consolidate many of these Medicare and Medicaid program integrity functions into new unified program integrity contractors (“UPICs”), though it remains unclear what effect, if any, this [removed: proposed] consolidation may have.

These types of referrals are known as “self-referrals.” Sanctions for violating the Stark Law include civil penalties up to [removed: $24,253] [added: $24,748] for each violation, and up to [removed: $161,692] [added: $164,992] for sham arrangements.

Violations of the anti-kickback statute may be punished by a criminal fine of up to [removed: $25,000] [added: $100,000] for each violation or imprisonment, however, under 18 U.S.C. Section 3571, this fine may be increased to $250,000 for individuals and $500,000 for organizations.

Civil money penalties may include fines of up to [removed: $50,000] [added: $100,000] per violation and damages of up to three times the total amount of the remuneration and/or exclusion from participation in Medicare and Medicaid.

This federal law generally requires hospitals [added: with an emergency department] that are certified providers under Medicare to conduct a medical screening examination of every person who visits the hospital’s emergency room for treatment and, if the patient is suffering from a medical emergency, to either stabilize the patient’s condition or transfer the patient to a facility that can better handle the condition.

Located in Puerto Rico:

During 2018 we spent $110 million to acquire businesses and property consisting primarily of:

| | • | The Danshell Group, consisting of 25 behavioral health facilities located in the U.K. (acquired during the third quarter of 2018), and; |

Our filings are also available to the public at the website maintained by the SEC, www.sec.gov.

Our

In recent years our behavioral health services segment has been focused on efforts to partner with non-UHS acute care hospitals to help operate their behavioral health services.

These arrangements include hospital purchases, leased beds and joint venture operating agreements.

treatment.

The advisory agreement was Amended and Restated effective January 1, 2019.

Among other things, the Amended and Restated Advisory Agreement (the “Agreement”) eliminated the 20% annual incentive fee clause which we were previously entitled to under certain conditions (the incentive fee requirements have never been achieved).

Our pre-tax share of income from the Trust was $1.4 million during 2018 which is included in other income, net, on the accompanying consolidated statements of income.

Included in our share of the Trust’s income for 2018, is income realized by the Trust in connection with hurricane-related insurance proceeds received in connection with the damage sustained from Hurricane Harvey in August, 2017.

additional or bonus rental, as discussed below.

During the second quarter of 2018, we exercised our 5-year renewal option on McAllen Medical Center which extended the lease term on this facility, at the existing lease rate, through December, 2026.

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| --- | --- | --- |

He was formerly employed

Located in Puerto Rico and the U.S. Virgin Islands:

| | • | 1 outpatient behavioral health care facility. |

2017 Acquisitions:

During 2017 we spent $23 million to acquire various property assets.

There are severe penalties

At The George Washington University Hospital, dietary and housekeeping employees are represented by the Service Employees International Union (“SEIU”).

facilities.

During 2015, our share of the Trust’s income included $500,000 related to our share of a gain on an exchange transaction recorded by the Trust.

quarterly basis, based upon a computation that compares current quarter revenue to a corresponding quarter in the base year.

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

During the first quarter of 2015, wholly-owned subsidiaries of ours sold to and leased back from the Trust, two newly constructed FEDs located in Texas which were completed and opened during the first quarter of 2015.

In conjunction with these transactions, ten-year lease agreements with six, five-year renewal options have been executed with the Trust.

We have the option to purchase the properties upon the expiration of the fixed terms and each five-year renewal terms at the fair market value of the property.

The aggregate construction cost/sales proceeds of these facilities was approximately $13 million, and the aggregate rent expense paid to the Trust at the commencement of the leases was approximately $900,000 annually.

| Marvin G. Pember (64) | | Executive Vice President, President of Acute Care Division |

Ms. Osteen was elected Executive Vice President in 2017 and continues to serve as President of our Behavioral Health Care Division since her appointment in 2009.

She has served as Senior Vice President since 2005, as Vice President since 2000, and in various capacities related to our Behavioral Health Care Division since 1984.

In addition, health care facilities are subject to monitoring by [added: state and federal surveyors to ensure compliance with program Conditions of Participation.]

In addition to the OIG, the DOJ and various U.S. Attorneys’ and state [removed: Attorneys’ General Offices are also involved in this matter.]

Those facilities include: National Deaf Academy, Arbour-HRI Hospital, Behavioral Hospital of Bellaire, St. Simons By the Sea, Turning Point Care Center, Salt Lake Behavioral Health, Central Florida Behavioral Hospital, University Behavioral Center, Arbour Hospital, Arbour-Fuller Hospital, Pembroke Hospital, Westwood Lodge, Coastal Harbor Health System, Shadow Mountain Behavioral Health, Cedar Hills Hospital, Mayhill Hospital, Southern Crescent Behavioral Health (Anchor Hospital and Crescent Pines campuses), Valley Hospital (AZ), Peachford Behavioral Health System of Atlanta, University Behavioral Health of Denton, [removed: and] El Paso Behavioral Health [removed: System.][added: System, Newport News Behavioral Health Center and The Hughes Center.]

From inception through December 31, [removed: 2017,] [added: 2018,] the aggregate funds withheld from us in connection with the River Point Behavioral Health payment suspension amounted to approximately [removed: $10] [added: $9] million.

Although the operating results of River Point Behavioral Health did not have a material impact on our consolidated results of operations during [removed: 2017, 2016] [added: 2018, 2017] or [removed: 2015,] [added: 2016,] the payment suspension has had a material adverse effect on the facility’s results of operations and financial condition.

[removed: However, changes] [added: Changes] in the reserve may be required in future periods as discussions [added: with the DOJ] continue and additional information becomes available.

We cannot predict the ultimate resolution of these matters and therefore can provide no assurance that final amounts paid in settlement or otherwise, if any, or associated costs, [added: as well as the income tax deductibility of payments,] will not differ materially from our established [removed: reserve.][added: reserve and assumptions related to income tax deductibility.]

[removed: The U.S. Attorney’s Office and the] Massachusetts Attorney General’s Office initially declined to intervene.

In December 2016 a purported shareholder class action lawsuit was filed in U.S. District Court for the Central District of California against [removed: UHS,] [added: UHS] and certain UHS officers alleging violations of the federal securities laws.

[removed: Plaintiff] [added: The amended class action complaint] alleges [removed: that defendants violated] [added: violations of] federal securities laws relating to [removed: the] disclosures made in public filings associated with [added: alleged] practices [added: and operations] at our behavioral health facilities.

UHS has [added: also] been named as a nominal defendant in [removed: the case.][added: these cases.]

This is a lawsuit filed in 1999 in state court in Hidalgo County, Texas by a physician and his professional associations alleging tortious interference with contractual relationships and retaliation against McAllen Medical Center in McAllen, Texas as well as Universal Health Services, Inc. The state court [removed: has] [added: had] entered a summary judgment order awarding plaintiff $3.85 million in damages.

With prejudgment interest, the total amount of the order [removed: amounts] [added: amounted] to approximately $9 million, for which a [added: corresponding] reserve [removed: is] [added: had previously been] included in our financial [removed: statements as of December 31, 2017.][added: statements.]

The case [removed: has been] [added: was] removed to federal court.

In late September, 2015, many hospitals in Pennsylvania, including seven of our behavioral health care hospitals located in the state, received letters from the Pennsylvania Department of Human Services (the “Department”) demanding repayment of allegedly excess Medicaid Disproportionate Share Hospital payments (“DSH”) for the federal fiscal year [added: (“FFY”)] 2011 [removed: (“FFY2011”)] amounting to approximately $4 million in the aggregate.

Since that time, we have received similar requests for repayment for alleged DSH overpayments for FFYs [removed: 2012 and] [added: 2012,] 2013 [removed: aggregating to approximately $11 million.][added: and 2014.]

We filed administrative appeals for all of our facilities contesting the recoupment efforts for FFYs 2011 through [removed: 2013] [added: 2014] as we believe the Department’s calculation methodology is inaccurate and conflicts with applicable federal and state laws and regulations.

Due to a change in the Pennsylvania Medicaid State Plan and implementation of a CMS-approved Medicaid Section 1115 Waiver, we do not believe the methodology applied by the Department to FFYs 2011 through [removed: 2013] [added: 2014] is applicable to reimbursements received for Medicaid services provided after January 1, 2015 by our behavioral health care facilities located in Pennsylvania.

Attorneys’ General Offices are also involved in this matter.

While there have been various matters raised by DOJ during the pendency of this investigation, DOJ Civil has advised that the focus of their investigation is on medical necessity issues and billing for services not eligible for payment due to non-compliance with regulatory requirements relating to, among other things, admission eligibility, discharge decisions, length of stay and patient care issues.

It is our understanding that the DOJ Criminal Fraud Section is investigating issues similar to those focused on by the DOJ Civil Division and the other related agencies involved in this matter.

UHS denies any fraudulent billings were submitted to government payers; however, we are involved in settlement discussions with the DOJ Civil Division in an attempt to resolve this matter.

During 2018, we recorded pre-tax increases to the reserve established in connection with the civil aspects of these matters amounting to $102 million increasing the aggregate pre-tax reserve to $123 million as of December 31, 2018 from $22 million as of December 31, 2017.

DOJ investigation of Turning Point Hospital.

During the fourth quarter of 2018, we were notified that the DOJ Civil Division in conjunction with the U.S. Attorney’s Office for the Northern District of Georgia and the Georgia Attorney General’s Office have opened an investigation of Turning Point Hospital in Moultrie, GA.

The DOJ Civil Division has advised us that they are primarily investigating transportation and housing financial assistance provided to patients receiving treatment at the facility.

The DOJ issued a civil investigative demand to the facility requesting various documents and other information.

At this time, we are unable to assess potential liability or damages, if any.

The U.S. Attorney’s Office and the

Plaintiffs seek monetary damages for shareholders during the defined class period as a result of the decrease in share price following various public disclosures or reports.

The federal court has consolidated all of the cases pending in the Eastern District of Pennsylvania and has appointed co-lead plaintiffs and co-lead counsel.

Lead Plaintiffs have filed a consolidated, amended complaint.

We have filed a motion to dismiss the amended complaint.

Each of these cases have named certain current and former members of the Board of Directors individually and certain officers of Universal Health Services, Inc. as defendants.

The derivative cases make substantially similar allegations and claims as the shareholder class action relating to practices at our behavioral health facilities and board and corporate oversight of these facilities as well as claims relating to the stock trading by the individual defendants and company repurchase of shares during the relevant time period.

The cases make claims of breaches of fiduciary duties by the named board members and officers; alleged violations of federal securities laws; and common law causes of action against the individual defendants including unjust enrichment, corporate waste, abuse of control, constructive fraud and gross mismanagement.

The cases seek monetary damages allegedly incurred by the company; restitution and disgorgement of profits, benefits and other compensation from the individual defendants and various forms of equitable relief relating to corporate governance matters.

During the first quarter of 2019, the federal court entered an order vacating the state court’s summary judgment.

The parties have reached a preliminary settlement of this matter, pending finalization of settlement documentation, for an amount that did not have a material impact on our consolidated financial statements.

For FFY 2012, the claimed overpayment amounts to approximately $4 million.

For FFY 2013, the claimed overpayments were initially approximately $7 million but have since been reduced to approximately $2 million due to a change in the Department’s calculations of the hospital specific DSH upper payment limit.

For FFY 2014, the claimed overpayments were approximately $7 million.

We have recently been notified by the DOJ that there is no longer an investigation pending against Riveredge Hospital that is separate from the UHS Behavioral Health matter referenced above.

We have recently been notified by the DOJ that there is no longer an investigation pending against Friends Hospital that is separate from the UHS Behavioral Health matter referenced above.

state and federal surveyors to ensure compliance with program Conditions of Participation.

Based upon our initial discussions with the DOJ, our financial statements as of December 31, 2017 include a $22 million reserve established in

connection with the civil aspects of these matters.

The suit alleges breaches of fiduciary duties and other allegedly wrongful conduct by the members of the Board of Directors and certain officers of Universal Health Services, Inc. relating to practices at our behavioral health facilities.

These additional cases make substantially similar allegations and claims based upon alleged violations of federal securities laws as well common law causes of action against the individual defendants.

All of these additional cases have also named all members of the UHS Board of Directors as well as certain officers of the Company.

A trial on punitive damages, emotional distress and attorneys’ fees remains to be conducted if the summary judgment order is not vacated.

Plaintiffs filed a motion to

remand.

In February 2018, the federal court denied plaintiffs’ motion to remand and retained the case in federal court.

Plaintiffs have filed a writ of mandamus with the 5th Circuit Court of Appeals seeking to overturn the federal court’s decision denying remand.

We have filed a motion for reconsideration of state court’s summary judgment order in the federal court proceeding.

The Department will likely make similar repayment demand for FFY 2014.

At present, we are uncertain as to the focus, scope or extent of the investigation, liability of the facility and/or potential financial exposure, if any, in connection with this matter.

10-K 1 [removed: uhs-10k_20171231.htm] [added: uhs-10k_20181231.htm] 10-K

For the fiscal year ended December 31, [removed: 2017][added: 2018]

Indicate by check mark whether the registrant has submitted electronically [removed: and posted on its corporate Web site, if any,] every Interactive Data File required to be submitted [removed: and posted] pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit [removed: and post] such files).

See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange [removed: Act (check one):][added: Act.]

The aggregate market value of voting stock held by non-affiliates at June 30, [removed: 2017] [added: 2018] was [removed: $10.6] [added: $9.4] billion.

The number of shares of the registrant’s Class A Common Stock, $.01 par value, Class B Common Stock, $.01 par value, Class C Common Stock, $.01 par value, and Class D Common Stock, $.01 par value, outstanding as of January 31, [removed: 2018,] [added: 2019,] were [removed: 6,595,308; 86,990,759; 663,940] [added: 6,577,100; 83,527,315; 661,688] and [removed: 20,616,] [added: 18,653,] respectively.

Portions of the registrant’s definitive proxy statement for our [removed: 2018] [added: 2019] Annual Meeting of Stockholders, which will be filed with the Securities and Exchange Commission within 120 days after December 31, [removed: 2017] [added: 2018] (incorporated by reference under Part III).

[removed: 2017] [added: 2018] FORM 10-K ANNUAL REPORT

| Item 2 | | [Properties](#ITEM_2_PROPERTIES) | [removed: 24] [added: 25] |

| Item 3 | | [Legal Proceedings](#ITEM_3_LEGAL_PROCEEDINGS) | [removed: 33] [added: 34] |

| Item 4 | | [Mine Safety Disclosure](#ITEM_4_MINE_SAFETY_DISCLOSURES) | [removed: 36] [added: 37] |

| Item 5 | | [Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](#ITEM_5_MARKET_FOR_REGISTRANTS_COMMON_EQU) | [removed: 37] [added: 38] |

| Item 6 | | [Selected Financial Data](#ITEM_6_SELECTED_FINANCIAL_DATA) | [removed: 40] [added: 41] |

| Item 7 | | [Management’s Discussion and Analysis of Financial Condition and Results of Operations](#ITEM_7_MANAGEMENTS_DISCUSSION_ANALYSIS_F) | [removed: 41] [added: 42] |

| Item 7A | | [Quantitative and Qualitative Disclosures About Market Risk](#ITEM_7A_QUANTITATIVE_QUALITATIVE_DISCLOS) | [removed: 76] [added: 79] |

| Item 8 | | [Financial Statements and Supplementary Data](#ITEM_8_FINANCIAL_STATEMENTS_SUPPLEMENTAR) | [removed: 77] [added: 80] |

| Item 9 | | [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](#ITEM_9_CHANGES_IN_DISAGREEMENTS_WITH_ACC) | [removed: 77] [added: 80] |

| Item 9A | | [Controls and Procedures](#ITEM_9A_CONTROLS_PROCEDURES) | [removed: 77] [added: 80] |

| Item 9B | | [Other Information](#ITEM_9B_OR_INFORMATION) | [removed: 78] [added: 81] |

| Item 10 | | [Directors, Executive Officers and Corporate Governance](#ITEM_10_DIRECTORS_EXECUTIVE_FICERS_CORPO) | [removed: 79] [added: 82] |

| Item 11 | | [Executive Compensation](#ITEM_11_EXECUTIVE_COMPENSATION) | [removed: 79] [added: 82] |

| Item 12 | | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](#ITEM_12_SECURITY_OWNERSHIP_CERTAIN_BENEF) | [removed: 79] [added: 82] |

| Item 13 | | [Certain Relationships and Related Transactions, and Director Independence](#ITEM_13_CERTAIN_RELATIONSHIPS_RELATED_TR) | [removed: 79] [added: 82] |

| Item 14 | | [Principal Accountant Fees and Services](#ITEM_14_PRINCIPAL_ACCOUNTANT_FEES_SERVIC) | [removed: 79] [added: 82] |

| Item 15 | | [Exhibits and Financial Statement Schedules](#ITEM_15_EXHIBITS_FINANCIAL_STATEMENT_SCH) | [removed: 80] [added: 83] |

| Item 16 | | [Form 10-K Summary](#ITEM_16_FORM_10_K_SUMMARY) | [removed: 84] [added: 87] |

| [SIGNATURES](#SIGNATURES) | | | [removed: 85] [added: 88] |

This Annual Report on Form 10-K is for the year ended December 31, [removed: 2017.][added: 2018.]

| Aiken Regional Medical Centers | Aiken, South Carolina | [removed: 197] [added: 211] | Owned |

| Henderson Hospital | Henderson, Nevada | [removed: 130] [added: 166] | Owned |

| STHS ER at Mission [added: (2)] | Mission, Texas | — | Leased |

| STHS ER at Weslaco [added: (2)] | Weslaco, Texas | — | Leased |

| Spring Valley Hospital Medical Center | Las Vegas, Nevada | [removed: 292] [added: 364] | Owned |

| Summerlin Hospital Medical Center | Las Vegas, Nevada | [removed: 454] [added: 485] | Owned |

| Valley Hospital Medical Center | Las Vegas, Nevada | [removed: 301] [added: 306] | Owned |

| United States: | | | [removed: |]

| The Carolina Center for Behavioral Health | Greer, South Carolina | [removed: 130] [added: 138] | Owned |

| Centennial Peaks [removed: (8)] | Louisville, Colorado | 104 | Owned |

| Central Florida Behavioral Hospital | Orlando, Florida | [removed: 126] [added: 174] | Owned |

| Clarion Psychiatric Center | Clarion, Pennsylvania | [removed: 76] [added: 112] | Owned |

| Coastal Harbor Treatment Center | Savannah, Georgia | [removed: 145] [added: 147] | Owned |

| Cumberland Hospital | New Kent, Virginia | [removed: 118] [added: 110] | Owned |

| Dover Behavioral Health | Dover, Delaware | [removed: 88] [added: 104] | Owned |

| El Paso Behavioral Health System | El Paso, Texas | [removed: 163] [added: 166] | Owned |

| Fort Lauderdale Hospital | Fort Lauderdale, Florida | [removed: 100] [added: 182] | Leased |

| Hermitage Hall | Nashville, Tennessee | [removed: 100] [added: 111] | Owned |

| Holly Hill Hospital | Raleigh, North Carolina | [removed: 228] [added: 285] | Owned |

| Hughes Center | Danville, Virginia | [removed: 56] [added: 64] | Owned |

| Laurel Heights Hospital | Atlanta, Georgia | [removed: 108] [added: 112] | Owned |

| Lighthouse Care Center of Augusta | Augusta, Georgia | [removed: 115] [added: 68] | Owned |

| Lighthouse Care Center of Conway | Conway, South Carolina | [removed: 87] [added: 96] | Owned |

| Mesilla Valley Hospital | Las Cruces, New Mexico | [removed: 120] [added: 104] | Owned |

| Michael’s House | Palm Springs, California | [removed: 87] [added: 120] | Owned |

| Millwood Hospital | Arlington, Texas | [removed: 128] [added: 134] | Leased |

| Oak Plains Academy | Ashland City, Tennessee | [removed: 90] [added: 98] | Owned |

| Pinnacle Pointe Hospital | Little Rock, Arkansas | [removed: 124] [added: 127] | Owned |

| Rockford Center | Newark, Delaware | [removed: 128] [added: 138] | Owned |

| Sandy Pines Hospital | Tequesta, Florida | [removed: 140] [added: 149] | Owned |

| Schick Shadel Hospital | [removed: Burin,] [added: Burien,] Washington | 60 | Owned |

| Stonington Institute | North Stonington, Connecticut | [removed: 68] [added: 64] | Owned |

| Wyoming Behavioral Institute | Casper, Wyoming | [removed: 129] [added: 146] | Owned |

| Cygnet Hospital—Taunton | Taunton, UK | [removed: 46] [added: 49] | Owned |

| Cygnet Hospital—Wyke | Wyke, UK | [removed: 56] [added: 52] | Owned |

| Cygnet Lodge – Woking | Knaphill, UK | [removed: 29] [added: 31] | Owned |

| Sherwood Lodge (9) | Mansfield, UK | [removed: 18] [added: 17] | Owned |

| Sherwood Lodge Step Down (9) | Mansfield, UK | [removed: 8] [added: 9] | Owned |

| Tupwood Gate Nursing Home | Caterham, UK | [removed: 30] [added: 32] | Owned |

| Victoria House [removed: (9)] [added: (10)] | [added: County] Durham, UK | [removed: 32] [added: 6] | Owned |

| ER at Green Valley Ranch | Henderson, Nevada | — | Owned |

| STHS ER at Alamo | Alamo, Texas | — | Owned |

| STHS ER at McColl | Edinburg, Texas | — | Owned |

| STHS ER at Monte Cristo | Edinburg, Texas | — | Owned |

| STHS ER at Ware Road | McAllen, Texas | — | Owned |

| Inland Northwest Behavioral Health (12) | Spokane, Washington | 100 | Owned |

| Lancaster Behavioral Health Hospital (11) | Lancaster, Pennsylvania | 126 | Owned |

| Palm Point Behavioral | Titusville, FL | 74 | Owned |

| Albert Ward (9) | Darlington, UK | 8 | Owned |

| Bostall House (10) | London, UK | 6 | Owned |

| Cedar Vale (10) | Nottinghamshire, UK | 14 | Owned |

| Chesterholme (10) | Northumberland, UK | 16 | Owned |

| Coulby Lodge (10) | North Yorkshire, UK | 8 | Owned |

| Ducks Halt (10) | Essex, UK | 5 | Owned |

| Ellen Mhor (10) | Dundee, UK | 12 | Owned |

| Flower Adams (9) | Colchester, UK | 20 | Owned |

| Hollyhurst (10) | County Durham, UK | 19 | Owned |

| Hope House (10) | County Durham, UK | 11 | Owned |

| Maidstone | Maidstone, UK | 65 | Owned |

| Marion House (9) | Derby, UK | 5 | Owned |

| Newbus Grange (10) | County Durham, UK | 17 | Owned |

| Oaklands (10) | Northumberland, UK | 19 | Owned |

| Old Leigh House (10) | Essex, UK | 7 | Leased |

| The Orchards (10) | Essex, UK | 5 | Owned |

| Ramsey (9) | Colchester, UK | 21 | Owned |

| Ranaich House (10) | Stirling, UK | 14 | Owned |

| Redlands (10) | County Durham, UK | 5 | Owned |

| Rufford Lodge (9) | Mansfield, UK | 2 | Owned |

| United Kingdom: | | | |

| The Sycamores No 4 & 5 (9) | Derbyshire, UK | 4 | Owned |

| Thistle Care Home (10) | Dundee, UK | 10 | Owned |

| Thornfield Grange (10) | County Durham, UK | 9 | Owned |

| Thors Park (10) | Essex, UK | 14 | Owned |

| Toller Road (10) | Leicestershire, UK | 8 | Owned |

| Trinity House (10) | Galloway, UK | 13 | Owned |

| Wallace Hospital (10) | Dundee, UK | 10 | Owned |

| Wast Hills (10) | West Midlands, UK | 26 | Owned |

| Whorlton Hall (10) | County Durham, UK | 17 | Owned |

| Willow House (10) | West Midlands, UK | 8 | Owned |

| Yew Trees (10) | Essex, UK | 10 | Owned |

| The Canyon at Peace Park | Malibu, California | 16 | Leased |

| Northwest Academy | Bonners Perry, Idaho | 102 | Owned |

| Two Rivers Psychiatric Hospital | Kansas City, Missouri | 105 | Owned |

| Cherry Court (9) | Essex, UK | 11 | Owned |

| Elm Court (9) | Essex, UK | 10 | Owned |

| Laurel Court (9) | Essex, UK | 11 | Owned |

| The Limes (9) | Nottinghamshire, UK | 18 | Owned |

| Redwood Court (9) | Essex, UK | 9 | Owned |

| Sycamore Court (9) | Essex, UK | 6 | Owned |

| Virgin Islands Behavioral Services | St. Croix, Virgin Islands | 30 | Owned |

| --- | --- | --- |

| First Home Care (PA) | Philadelphia, PA | Leased |

| Puerto Rico and Virgin Islands: | | |

| Community Cornerstones | Rio Piedras, Puerto Rico | Leased |

| Surgical Hospitals, Ambulatory Surgery Centers and Radiation Oncology Centers | | |

| (9) | These facilities were acquired in late December, 2016, upon our completion of the acquisition of Cambian Group, PLC’s adult services’ division (the “Cambian Adult Services”). At the time of acquisition, the Cambian Adult Services consisted of 79 inpatient and 2 outpatient behavioral health facilities located in the U.K. The Competition and Markets Authority (“CMA”) in the U.K. reviewed our acquisition of the Cambian Adult Services. In April, 2017, the CMA notified us that they identified potential competition concerns in certain markets and announced its decision to refer our acquisition of Cambian Group, PLC’s Adult Services division for a Phase 2 investigation. In October, 2017, the CMA provided the final ruling regarding the Phase 2 investigation requiring us to divest a facility which was subsequently designated to be The Limes, an 18-bed facility which generates less than $1 million in annual income before income taxes. |

Our Class B Common Stock is traded on the New York Stock [removed: Exchange.][added: Exchange under the symbol UHS.]

The table below sets forth, for the quarters indicated, the high and low reported closing sales prices per share reported on the New York Stock Exchange for our Class B Common Stock for the years ended December 31, [removed: 2017] [added: 2018] and [removed: 2016:][added: 2017:]

| 1st | | [removed: $126.65-$106.71] [added: $127.27-$110.15] | | [removed: $125.33-$101.65] [added: $126.65-$106.71] |

| 2nd | | [removed: $125.07-$112.33] [added: $122.04-$111.44] | | [removed: $138.74-$121.74] [added: $125.07-$112.33] |

| 3rd | | [removed: $125.00-$105.37] [added: $130.16-$110.98] | | [removed: $138.28-$118.82] [added: $125.00-$105.37] |

| 4th | | [removed: $115.06-$95.77] [added: $137.99-$113.42] | | [removed: $128.06-$101.55] [added: $115.06-$95.77] |

The number of stockholders of record as of January 31, [removed: 2017,] [added: 2019,] were as follows:

| Class A Common | | | [removed: 16] [added: 14] | |

| Class [removed: B] [added: C] Common | | | [removed: 222] [added: 1] | |

| Class [removed: C] [added: D] Common | | | [removed: 3] [added: 98] | |

| Class [removed: D] [added: B] Common | | | [removed: 102] [added: 806] | |

[removed: In July, 2014, our Board of Directors authorized a stock repurchase program whereby, from time] [added: Pursuant] to [removed: time as conditions allow,] [added: this program,] we may [removed: spend up to $400 million to] purchase shares of our Class B Common [removed: Stock] [added: Stock, from time to time as conditions allow,] on the open market [removed: at prevailing market prices] or in negotiated private transactions.

In [removed: February, 2016,] [added: December of 2018,] our Board of Directors authorized a [removed: $400] [added: $500] million increase to our stock repurchase program, which increased the aggregate authorization to [removed: $800 million] [added: $1.7 billion] from the previous [removed: $400 million mentioned above.][added: $1.2 billion authorization approved during 2017, 2016 and 2014.]

As reflected below, during the three-month period ended December 31, [removed: 2017,] [added: 2018,] we have repurchased approximately [removed: 1.0] [added: 1.2] million shares at an aggregate cost of approximately [removed: $100.8] [added: $149.3] million pursuant to the terms of our stock repurchase program.

In addition, [removed: 193,806] [added: 26,198] shares were repurchased in connection with income tax withholding obligations resulting from the exercise of stock options and the vesting of restricted stock grants.

During the period of October 1, [removed: 2017] [added: 2018] through December 31, [removed: 2017,] [added: 2018,] we repurchased the following shares:

During the two years ending December 31, [removed: 2017,] [added: 2018,] dividends per share were declared and paid as follows:

The following graph compares the cumulative total stockholder return on our common stock with the cumulative total return on the stock included in the Standard & Poor’s 500 Index and a Peer Group Index during the five year period ended December 31, [removed: 2017.][added: 2018.]

The graph assumes an investment of $100 made in our common stock and each Index as of January 1, [removed: 2013] [added: 2014] and has been weighted based on market capitalization.

Companies in the peer group, which consist of companies in the S&P 500 Index or S&P MidCap 400 Index are as follows: [added: Acadia Healthcare Co., Inc.,] Community Health Systems, Inc., [added: HCA Healthcare, Inc.,] Health Management Associates, Inc. (included [removed: until] [added: in] January, 2014 when it was acquired by Community Health Systems, Inc.), LifePoint Health, [removed: Inc., Tenet Healthcare Corporation, Acadia Healthcare Company,] Inc. [added: (included until November, 2018, when it was acquired by Apollo Management)] and [removed: HCA Healthcare, Inc.][added: Tenet Healthcare Corporation.]

[removed: ][added: ]

| Company Name / Index | | [removed: 2012 Base | | | |] 2013 [added: Base] | | | | 2014 | | | | 2015 | | | | 2016 | | | | 2017 | | | [added: | 2018 | | |]

| | | 2018 | | 2017 |

| October, 2018 | | | — | | | | 1,006 | | | | 795 | | | $ | 0.01 | | | | — | | | N/A | | | | | — | | | $ | 111,618 | |

| November, 2018 | | | — | | | | 21,561 | | | | 796 | | | $ | 0.01 | | | | — | | | N/A | | | | | — | | | $ | 111,618 | |

| December, 2018 | | $ | 500,000 | | | | 1,224,852 | | | | 1,458 | | | $ | 0.01 | | | | 1,221,221 | | | $ | 122.23 | | | $ | 149,274 | | | $ | 462,344 | |

| Total October through December | | $ | 500,000 | | | | 1,247,419 | | | | 3,049 | | | $ | 0.01 | | | | 1,221,221 | | | $ | 122.23 | | | $ | 149,274 | | | | | |

| | | 2018 | | | | 2017 | | |

| Universal Health Services, Inc. | | $ | 100.00 | | | $ | 137.33 | | | $ | 147.96 | | | $ | 132.16 | | | $ | 141.32 | | | $ | 145.79 | |

| S&P 500 Index | | $ | 100.00 | | | $ | 113.69 | | | $ | 115.26 | | | $ | 129.05 | | | $ | 157.22 | | | $ | 150.33 | |

| Peer Group | | $ | 100.00 | | | $ | 140.92 | | | $ | 119.66 | | | $ | 107.88 | | | $ | 122.47 | | | $ | 166.09 | |

| | | 2017 | | 2016 |

In November, 2017, our Board of Directors authorized an additional $400 million increase to our stock repurchase program, which increased the aggregate authorization to $1.2 billion from the previous $800 million authorization approved in 2016 and 2014 as mentioned above.

| October, 2017 | | | — | | | | 63,009 | | | | — | | | N/A | | | | | 60,000 | | | $ | 102.27 | | | $ | 6,136 | | | $ | 58,305 | |

| November, 2017 | | $ | 400,000 | | | | 877,923 | | | | — | | | N/A | | | | | 778,482 | | | $ | 99.10 | | | $ | 77,147 | | | $ | 381,158 | |

| December, 2017 | | | — | | | | 255,869 | | | | 4,666 | | | $ | 0.01 | | | | 164,513 | | | $ | 106.36 | | | $ | 17,498 | | | $ | 363,660 | |

| Total October through December | | $ | 400,000 | | | | 1,196,801 | | | | 4,666 | | | $ | 0.01 | | | | 1,002,995 | | | $ | 100.48 | | | $ | 100,781 | | | | | |

| | | 2017 | | | | 2016 | | |

| Universal Health Services, Inc. | | $ | 100.00 | | | $ | 168.56 | | | $ | 231.48 | | | $ | 249.41 | | | $ | 222.77 | | | $ | 238.21 | |

| S&P 500 Index | | $ | 100.00 | | | $ | 132.39 | | | $ | 150.51 | | | $ | 152.59 | | | $ | 170.84 | | | $ | 208.14 | |

| Peer Group | | $ | 100.00 | | | $ | 149.80 | | | $ | 211.11 | | | $ | 179.26 | | | $ | 161.61 | | | $ | 183.46 | |

The following table contains our selected financial data for, or as of the end of, each of the five years ended December 31, [removed: 2017.][added: 2018.]

| | | [removed: 2017] [added: 2018] | | | | [removed: 2016] [added: 2017] | | | | [removed: 2015] [added: 2016] | | | | [removed: 2014] [added: 2015] | | | | [removed: 2013] [added: 2014] | | |

| Net revenues | | $ | [removed: 10,409,865] [added: 10,772,278] | | | $ | [removed: 9,766,210] [added: 10,409,865] | | | $ | [removed: 9,043,451] [added: 9,766,210] | | | $ | [removed: 8,205,088] [added: 9,043,451] | | | $ | [removed: 7,367,873] [added: 8,205,088] | |

| Income before income taxes | | $ | [removed: 1,135,009] [added: 1,034,525] | | | $ | [removed: 1,156,358] [added: 1,135,009] | | | $ | [removed: 1,145,901] [added: 1,156,358] | | | $ | [removed: 929,667] [added: 1,145,901] | | | $ | [removed: 869,332] [added: 929,667] | |

| Net income attributable to UHS | | $ | [removed: 752,303] [added: 779,705] | | | $ | [removed: 702,409] [added: 752,303] | | | $ | [removed: 680,528] [added: 702,409] | | | $ | [removed: 545,343] [added: 680,528] | | | $ | [removed: 510,733] [added: 545,343] | |

| Net margin | | | 7.2 | % | | | 7.2 | % | | | [removed: 7.5] [added: 7.2] | % | | | [removed: 6.6] [added: 7.5] | % | | | [removed: 6.9] [added: 6.6] | % |

| Return on average equity | | | [removed: 15.5] [added: 14.7] | % | | | [removed: 16.0] [added: 15.5] | % | | | [removed: 16.6] [added: 16.0] | % | | | [removed: 15.3] [added: 16.6] | % | | | [removed: 16.8] [added: 15.3] | % |

| Cash provided by operating activities | | $ | [removed: 1,182,581] [added: 1,340,893] | | | $ | [removed: 1,333,693] [added: 1,183,252] | | | $ | [removed: 1,068,262] [added: 1,333,842] | | | $ | [removed: 1,069,788] [added: 1,068,262] | | | $ | [removed: 904,362] [added: 1,069,788] | |

| Capital expenditures, net (1) | | $ | [removed: 557,506] [added: 664,962] | | | $ | [removed: 519,939] [added: 557,506] | | | $ | [removed: 379,321] [added: 519,939] | | | $ | [removed: 391,150] [added: 379,321] | | | $ | [removed: 358,493] [added: 391,150] | |

| Total assets | | $ | [removed: 10,761,828] [added: 11,265,480] | | | $ | [removed: 10,317,802] [added: 10,761,828] | | | $ | [removed: 9,615,444] [added: 10,317,802] | | | $ | [removed: 8,974,443] [added: 9,615,444] | | | $ | [removed: 8,311,723] [added: 8,974,443] | |

| Current maturities of long-term debt | | $ | [removed: 545,619] [added: 63,446] | | | $ | [removed: 105,895] [added: 545,619] | | | $ | [removed: 62,722] [added: 105,895] | | | $ | [removed: 68,319] [added: 62,722] | | | $ | [removed: 99,312] [added: 68,319] | |

| Long-term debt | | $ | [removed: 3,494,390] [added: 3,935,187] | | | $ | [removed: 4,030,230] [added: 3,494,390] | | | $ | [removed: 3,368,634] [added: 4,030,230] | | | $ | [removed: 3,210,215] [added: 3,368,634] | | | $ | [removed: 3,209,762] [added: 3,210,215] | |

| UHS’s common stockholders’ equity | | $ | [removed: 4,989,514] [added: 5,389,262] | | | $ | [removed: 4,533,220] [added: 4,989,514] | | | $ | [removed: 4,249,647] [added: 4,533,220] | | | $ | [removed: 3,735,946] [added: 4,249,647] | | | $ | [removed: 3,249,979] [added: 3,735,946] | |

| Percentage of total debt to total capitalization | | | [removed: 45] [added: 43] | % | | | [removed: 48] [added: 45] | % | | | [removed: 45] [added: 48] | % | | | [removed: 47] [added: 45] | % | | | [removed: 51] [added: 47] | % |

| Average licensed beds | | | [removed: 6,127] [added: 6,232] | | | | [removed: 5,934] [added: 6,127] | | | | [removed: 5,832] [added: 5,934] | | | | [removed: 5,776] [added: 5,832] | | | | [removed: 5,652] [added: 5,776] | |

| Average available beds | | | [removed: 5,954] [added: 6,056] | | | | [removed: 5,759] [added: 5,954] | | | | [removed: 5,656] [added: 5,759] | | | | [removed: 5,571] [added: 5,656] | | | | [removed: 5,429] [added: 5,571] | |

| Inpatient admissions | | | [removed: 297,390] [added: 303,985] | | | | [removed: 274,074] [added: 297,390] | | | | [removed: 261,727] [added: 274,074] | | | | [removed: 251,165] [added: 261,727] | | | | [removed: 246,160] [added: 251,165] | |

| Average length of patient stay | | | [removed: 4.4] [added: 4.5] | | | | [removed: 4.6] [added: 4.4] | | | | [removed: 4.7] [added: 4.6] | | | | [removed: 4.6] [added: 4.7] | | | | [removed: 4.5] [added: 4.6] | |

| Patient days | | | [removed: 1,312,265] [added: 1,376,988] | | | | [removed: 1,251,511] [added: 1,312,265] | | | | [removed: 1,218,969] [added: 1,251,511] | | | | [removed: 1,167,726] [added: 1,218,969] | | | | [removed: 1,112,541] [added: 1,167,726] | |

| Occupancy rate for licensed beds | | | [removed: 59] [added: 61] | % | | | [removed: 58] [added: 59] | % | | | [removed: 57] [added: 58] | % | | | [removed: 55] [added: 57] | % | | | [removed: 54] [added: 55] | % |

| Occupancy rate for available beds | | | [removed: 60] [added: 62] | % | | | [removed: 59] [added: 60] | % | | | 59 | % | | | [removed: 57] [added: 59] | % | | | [removed: 56] [added: 57] | % |

| Average licensed beds | | | [removed: 23,151] [added: 23,509] | | | | [removed: 21,829] [added: 23,151] | | | | [removed: 21,202] [added: 21,829] | | | | [removed: 20,231] [added: 21,202] | | | | [removed: 19,940] [added: 20,231] | |

| Average available beds | | | [removed: 23,068] [added: 23,425] | | | | [removed: 21,744] [added: 23,068] | | | | [removed: 21,116] [added: 21,744] | | | | [removed: 20,131] [added: 21,116] | | | | [removed: 19,841] [added: 20,131] | |

| Inpatient admissions | | | [removed: 467,822] [added: 482,658] | | | | [removed: 456,052] [added: 467,822] | | | | [removed: 447,007] [added: 456,052] | | | | [removed: 426,510] [added: 447,007] | | | | [removed: 401,565] [added: 426,510] | |

| Average length of patient stay | | | [removed: 13.6] [added: 13.3] | | | | [removed: 13.2] [added: 13.6] | | | | [removed: 13.1] [added: 13.2] | | | | [removed: 12.9] [added: 13.1] | | | | [removed: 13.3] [added: 12.9] | |

| Patient days | | | [removed: 6,381,756] [added: 6,418,334] | | | | [removed: 6,004,066] [added: 6,381,756] | | | | [removed: 5,835,134] [added: 6,004,066] | | | | [removed: 5,518,660] [added: 5,835,134] | | | | [removed: 5,354,334] [added: 5,518,660] | |

| Occupancy rate for licensed beds | | | [removed: 76] [added: 75] | % | | | [removed: 75] [added: 76] | % | | | 75 | % | | | 75 | % | | | [removed: 74] [added: 75] | % |

| Occupancy rate for available beds | | | [removed: 76] [added: 75] | % | | | [removed: 75] [added: 76] | % | | | [removed: 76] [added: 75] | % | | | [removed: 75] [added: 76] | % | | | [removed: 74] [added: 75] | % |

| Net income attributable to UHS—basic | | $ | [removed: 7.86] [added: 8.35] | | | $ | [removed: 7.22] [added: 7.86] | | | $ | [removed: 6.89] [added: 7.22] | | | $ | [removed: 5.52] [added: 6.89] | | | $ | [removed: 5.21] [added: 5.52] | |

| Net income attributable to UHS—diluted | | $ | [removed: 7.81] [added: 8.31] | | | $ | [removed: 7.14] [added: 7.81] | | | $ | [removed: 6.76] [added: 7.14] | | | $ | [removed: 5.42] [added: 6.76] | | | $ | [removed: 5.14] [added: 5.42] | |

| Dividends declared | | $ | 0.40 | | | $ | 0.40 | | | $ | 0.40 | | | $ | [removed: 0.30] [added: 0.40] | | | $ | [removed: 0.20] [added: 0.30] | |

| Weighted average number of shares outstanding—basic | | | [removed: 95,652] [added: 93,276] | | | | [removed: 97,208] [added: 95,652] | | | | [removed: 98,797] [added: 97,208] | | | | [removed: 98,826] [added: 98,797] | | | | [removed: 98,033] [added: 98,826] | |

| Weighted average number of shares and share equivalents outstanding—diluted | | | [removed: 96,325] [added: 93,750] | | | | [removed: 98,380] [added: 96,325] | | | | [removed: 100,694] [added: 98,380] | | | | [removed: 100,544] [added: 100,694] | | | | [removed: 99,361] [added: 100,544] | |

Our Consolidated Balance Sheets, Consolidated Statements of Income, Consolidated Statements of Changes in [removed: Equity and] [added: Equity,] Consolidated Statements of Cash [removed: Flows,] [added: Flows and Consolidated Statements of Comprehensive Income,] together with the reports of PricewaterhouseCoopers LLP, independent registered public accounting firm, are included elsewhere herein.

As of December 31, [removed: 2017,] [added: 2018,] under the supervision and with the participation of our management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), we performed an evaluation of the effectiveness of our disclosure controls and procedures as defined in Rule 13a-15(e) or Rule 15d-15(e) of the Securities Exchange Act of 1934, as amended.

There have been no changes in our internal control over financial reporting or in other factors during the fourth quarter of [removed: 2017] [added: 2018] that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

In order to evaluate the effectiveness of internal control over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act, management has conducted an assessment, including testing, using the criteria on Internal Control—Integrated Framework [removed: (2013), issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).]

[added: Also, projections] of any evaluation of effectiveness of internal control over financial reporting to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Based on its assessment, management has concluded that we maintained effective internal control over financial reporting as of December 31, [removed: 2017,] [added: 2018,] based on criteria in Internal Control—Integrated Framework (2013), issued by the COSO.

The effectiveness of the Company’s internal control over financial reporting as of December 31, [removed: 2017] [added: 2018] has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm as stated in its report which appears herein.

(2013), issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

Also, projections

There is hereby incorporated by reference the information to appear under the captions “Election of Directors”, “Section 16(a) Beneficial Ownership Reporting Compliance” and “Corporate Governance” in our Proxy Statement, to be filed with the Securities and Exchange Commission within 120 days after December 31, [removed: 2017.][added: 2018.]

There is hereby incorporated by reference the information to appear under the caption “Executive Compensation” in our Proxy Statement to be filed with the Securities and Exchange Commission within 120 days after December 31, [removed: 2017.][added: 2018.]

There is hereby incorporated by reference the information to appear under the caption “Security Ownership of Certain Beneficial Owners and Management” and “Executive Compensation” in our Proxy Statement, to be filed with the Securities and Exchange Commission within 120 days after December 31, [removed: 2017.][added: 2018.]

There is hereby incorporated by reference the information to appear under the captions “Certain Relationships and Related Transactions” and “Corporate Governance” in our Proxy Statement, to be filed with the Securities and Exchange Commission within 120 days after December 31, [removed: 2017.][added: 2018.]

There is hereby incorporated by reference the information to appear under the caption “Relationship with Independent Auditors” in our Proxy Statement, to be filed with the Securities and Exchange Commission within 120 days after December 31, [removed: 2017.][added: 2018.]

| [removed: 10.2] [added: 10.37*] | | [removed: Advisory Agreement, dated as] [added: [Form] of [added: Supplemental Life Insurance Plan and Agreement Part B: Alan B. Miller 2002 Trust (effective] December [removed: 24, 1986,] [added: 9, 2010, by and] between Universal Health [removed: Realty Income Trust and UHS of Delaware,] [added: Services,] Inc., [added: a Delaware corporation (the “Company”), and Anthony Pantaleoni as Trustee),] previously filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K dated December [removed: 24, 1986,] [added: 10, 2010,] is incorporated herein by [removed: reference (P).] [added: reference.](http://www.sec.gov/Archives/edgar/data/0000352915/000119312510278167/dex102.htm)] |

| 10.3 | | [removed: [Agreement, dated December 6, 2017, to renew Advisory Agreement,] [added: [Advisory Agreement] dated as of December 24, 1986, [added: and amended and restated effective as of January 1, 2019] between Universal Health Realty Income Trust and UHS of Delaware, [removed: Inc.](https://www.sec.gov/Archives/edgar/data/352915/000156459018003808/uhs-ex103_12.htm)] [added: Inc.](https://www.sec.gov/Archives/edgar/data/352915/000156459019004919/uhs-ex103_37.htm)] |

| [removed: 10.24] [added: 10.25] | | [Assignment and Assumption Agreement, dated as of October 27, 2010, previously filed as Exhibit 10.3 to the Company’s Current Report on Form 8-K dated November 2, 2010, is incorporated herein by reference.](http://www.sec.gov/Archives/edgar/data/0000352915/000119312510243987/dex103.htm) |

| [removed: 10.25] [added: 10.26] | | [Credit Agreement, dated as of November 15, 2010, by and among Universal Health Services, Inc., JPMorgan Chase Bank, N.A. and the various financial institutions as are or may become parties thereto, as Lenders, SunTrust Bank, The Royal Bank of Scotland, Plc, Bank of Tokyo-Mitsubishi UFJ Trust Company and Credit Agricole Corporate and Investment Bank, as co-documentation agents, Deutsche Bank Securities Inc. and Bank of America N.A. as co-syndication agents, and JPMorgan Chase Bank, N.A., as administrative agent for the Lenders and as collateral agent for the secured parties, previously filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K dated November 17, 2010, is incorporated herein by reference.](http://www.sec.gov/Archives/edgar/data/0000352915/000095015710002042/ex10-1.htm) |

| [removed: 10.26] [added: 10.27] | | [First Amendment, dated as of March 15, 2011, to the Credit Agreement, dated as of November 15, 2010, by and among Universal Health Services, Inc., JPMorgan Chase Bank, N.A. and the various financial institutions as are or may become parties thereto, as Lenders, certain banks as co-documentation agents, and as co-syndication agents, and JPMorgan Chase Bank, N.A., as administrative agent for the Lenders and as collateral agent for the secured parties, previously filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K dated March 15, 2011, is incorporated herein by reference.](http://www.sec.gov/Archives/edgar/data/0000352915/000119312511067583/dex101.htm) |

| [removed: 10.27] [added: 10.28] | | [Credit Agreement, dated as of November 15, 2010 and amended and restated as of September 21, 2012, by and among Universal Health Services, Inc. (the borrower), the several lenders from time to time parties thereto, Credit Agricole Corporate and Investment Bank, Mizuho Corporate Bank LTD., Royal Bank of Canada and The Royal Bank of Scotland PLC (as co-documentation agents), Bank of Tokyo-Mitsubishi UFJ Trust Company, Bank of America N.A. and SunTrust Bank (as co-syndication agents), and JPMorgan Chase Bank, N.A. (as administrative agent), previously filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K dated September 26, 2012, is incorporated herein by reference.](http://www.sec.gov/Archives/edgar/data/0000352915/000119312512404549/d415922dex101.htm) |

| [removed: 10.28] [added: 10.29] | | [Second Amendment, dated as of September 21, 2012, to the Credit Agreement, dated as of November 15, 2010 (as amended from time to time), among Universal Health Services, Inc., a Delaware corporation, the several banks and other financial institutions from time to time parties thereto, JPMorgan Chase Bank, N.A., as administrative agent and the other agents party thereto, previously filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K dated September 26, 2012, is incorporated herein by reference.](http://www.sec.gov/Archives/edgar/data/0000352915/000119312512404549/d415922dex102.htm) |

| [removed: 10.29] [added: 10.30] | | [Third Amendment, dated as of May 16, 2013, to the Credit Agreement, dated as of November 15, 2010, as amended from time to time, among Universal Health Services, Inc., a Delaware corporation, the several banks and other financial institutions from time to time parties thereto, JPMorgan Chase Bank, N.A., as administrative agent and the other agents party thereto, previously filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K dated May 17, 2013, is incorporated herein by reference.](http://www.sec.gov/Archives/edgar/data/0000352915/000119312513225260/d540638dex101.htm) |

| [removed: 10.30] [added: 10.31] | | [Fourth Amendment, dated as of August 7, 2014, to the Credit Agreement, dated as of November 15, 2010, as previously amended from time to time, by and among Universal Health Services, Inc., the several banks and other financial institutions from time to time parties thereto, JPMorgan Chase Bank, N.A., as administrative agent and the other agents party thereto, previously filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K dated August 12, 2014, is incorporated herein by reference.](http://www.sec.gov/Archives/edgar/data/0000352915/000119312514306618/d773872dex101.htm) |

| [removed: 10.31] [added: 10.32] | | [Fifth Amendment to the Credit Agreement, dated as of November 15, 2010, as amended on March 15, 2011, September 21, 2012, May 16, 2013 and August 7, 2014, among the Company, as borrower, the several banks and other [removed: financial](http://www.sec.gov/Archives/edgar/data/0000352915/000119312516616699/d200774dex101.htm)] [added: financial] institutions from time to time parties thereto, as lenders, JPMorgan Chase Bank, N.A., as administrative agent, and the other agents party thereto, previously filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K dated June 8, 2016, is incorporated herein by [removed: reference.] [added: reference.](http://www.sec.gov/Archives/edgar/data/0000352915/000119312516616699/d200774dex101.htm)] |

| [removed: 10.32] [added: 10.35] | | [Credit Agreement, dated as of November 15, 2010 and amended and restated as of August 7, 2014, by and among Universal Health Services, Inc., the several banks and other financial institutions from time to time parties thereto, JPMorgan Chase Bank, N.A., as administrative agent and the other agents party thereto, previously filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K dated August 12, 2014, is incorporated herein by reference.](http://www.sec.gov/Archives/edgar/data/0000352915/000119312514306618/d773872dex102.htm) |

| [removed: 10.33*] [added: 10.36*] | | [Form of Supplemental Life Insurance Plan and Agreement Part A: Alan B. Miller 1998 Dual Life Insurance Trust (effective December 9, 2010, by and between Universal Health Services, Inc., a Delaware corporation (the “Company”), and Anthony Pantaleoni as Trustee), previously filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K dated December 10, 2010, is incorporated herein by reference.](http://www.sec.gov/Archives/edgar/data/0000352915/000119312510278167/dex101.htm) |

| [removed: 10.34*] [added: 10.39*] | | [removed: [Form of Supplemental Life Insurance Plan] [added: [Universal Health Services, Inc. Termination, Assignment] and [added: Release] Agreement [removed: Part B: Alan B. Miller 2002 Trust] (effective December 9, 2010, by and between Universal Health Services, Inc., a Delaware corporation (the “Company”), [removed: and] Anthony Pantaleoni as [removed: Trustee),] [added: Trustee of the Alan B. Miller 2002 Trust, and Alan B. Miller, Executive),] previously filed as Exhibit [removed: 10.2] [added: 10.4] to the Company’s Current Report on Form 8-K dated December 10, 2010, is incorporated herein by [removed: reference.](http://www.sec.gov/Archives/edgar/data/0000352915/000119312510278167/dex102.htm)] [added: reference.](http://www.sec.gov/Archives/edgar/data/0000352915/000119312510278167/dex104.htm)] |

| [removed: 10.35*] [added: 10.38*] | | [Universal Health Services, Inc. Termination, Assignment and Release Agreement (effective December 9, 2010, by and between Universal Health Services, Inc., a Delaware corporation (the “Company”), Anthony Pantaleoni as Trustee of the Alan B. Miller 1998 Dual Life Insurance Trust, and Alan B. Miller, Executive), previously filed as Exhibit 10.3 to the Company’s Current Report on Form 8-K dated December 10, 2010, is incorporated herein by reference.](http://www.sec.gov/Archives/edgar/data/0000352915/000119312510278167/dex103.htm) |

| [removed: 10.36*] [added: 10.2*] | | [removed: [Universal Health Services, Inc. Termination, Assignment and Release Agreement (effective December 9, 2010,] [added: [Amendment dated as of November 5, 2018 to the Employment Agreement, dated as July 24, 2013,] by and between Universal Health Services, [removed: Inc., a Delaware corporation (the “Company”), Anthony Pantaleoni as Trustee of the Alan B. Miller 2002 Trust,] [added: Inc.] and Alan B. Miller, [removed: Executive),] previously filed as Exhibit [removed: 10.4] [added: 10.1] to the Company’s [removed: Current] [added: Quarterly] Report on Form [removed: 8-K dated December 10, 2010,] [added: 10-Q for the quarter ended September 30, 2018,] is incorporated herein by [removed: reference.](http://www.sec.gov/Archives/edgar/data/0000352915/000119312510278167/dex104.htm)] [added: reference.](http://www.sec.gov/Archives/edgar/data/0000352915/000156459018028566/uhs-ex101_123.htm)] |

| [removed: 10.37] [added: 10.40] | | [Collateral Agreement, dated as of August 7, 2014, among Universal Health Services, Inc., the subsidiary guarantors party thereto, MUFG Union Bank, N.A., as 2014 Trustee, The Bank of New York Mellon Trust Company, N.A., as 2006 Trustee, and JPMorgan Chase Bank, N.A., as collateral agent, previously filed as Exhibit 10.4 to the Company’s Current Report on Form 8-K dated August 12, 2014, is incorporated herein by reference.](http://www.sec.gov/Archives/edgar/data/0000352915/000119312514306618/d773872dex104.htm) |

| 21 | | [Subsidiaries of [removed: Registrant.](https://www.sec.gov/Archives/edgar/data/352915/000156459018003808/uhs-ex21_11.htm)] [added: Registrant.](https://www.sec.gov/Archives/edgar/data/352915/000156459019004919/uhs-ex21_6.htm)] |

| 23.1 | | [Consent of Independent Registered Public Accounting Firm-PricewaterhouseCoopers [removed: LLP.](https://www.sec.gov/Archives/edgar/data/352915/000156459018003808/uhs-ex231_469.htm)] [added: LLP.](https://www.sec.gov/Archives/edgar/data/352915/000156459019004919/uhs-ex231_9.htm)] |

| 31.1 | | [Certification from the Company’s Chief Executive Officer Pursuant to Rule 13a-14(a)/15(d)-14(a) of the Securities Exchange Act of [removed: 1934.](https://www.sec.gov/Archives/edgar/data/352915/000156459018003808/uhs-ex311_6.htm)] [added: 1934.](https://www.sec.gov/Archives/edgar/data/352915/000156459019004919/uhs-ex311_8.htm)] |

| 31.2 | | [Certification from the Company’s Chief Financial Officer Pursuant to Rule 13a-14(a)/15(d)-14(a) of the Securities Exchange Act of [removed: 1934.](https://www.sec.gov/Archives/edgar/data/352915/000156459018003808/uhs-ex312_8.htm)] [added: 1934.](https://www.sec.gov/Archives/edgar/data/352915/000156459019004919/uhs-ex312_7.htm)] |

| 32.1 | | [Certification from the Company’s Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of [removed: 2002.](https://www.sec.gov/Archives/edgar/data/352915/000156459018003808/uhs-ex321_7.htm)] [added: 2002.](https://www.sec.gov/Archives/edgar/data/352915/000156459019004919/uhs-ex321_10.htm)] |

| 32.2 | | [Certification from the Company’s Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of [removed: 2002.](https://www.sec.gov/Archives/edgar/data/352915/000156459018003808/uhs-ex322_10.htm)] [added: 2002.](https://www.sec.gov/Archives/edgar/data/352915/000156459019004919/uhs-ex322_12.htm)] |

| 10.24 | | [Sixth Amendment to Amended and Restated Credit and Security Agreement, dated as of April 26, 2018, previously filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K dated April 27, 2018, is incorporated herein by reference.](http://www.sec.gov/Archives/edgar/data/0000352915/000156459018009467/uhs-ex101_6.htm) |

| 10.33 | | [Sixth Amendment, dated as of October 23, 2018, to the Credit Agreement, dated as of November 15, 2010, as amended on March 15, 2011, September 21, 2012, May 16, 2013, August 7, 2014 and June 7, 2016, among the Company, as borrower, the several banks and other financial institutions from time to time parties thereto, as lenders, JPMorgan Chase Bank, N.A., as administrative agent, and the other agents party thereto, previously filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K dated October 24, 2018, is incorporated herein by reference.](http://www.sec.gov/Archives/edgar/data/0000352915/000156459018024906/uhs-ex101_7.htm) |

| 10.34 | | [Increased Facility Activation Notice – Incremental Term Loans, dated as of October 31, 2018, to the Credit Agreement, dated as of November 15, 2010, as amended on March 15, 2011, September 21, 2012, May 16, 2013, August 7, 2014, June 7, 2016 and October 23, 2018, among the Company, as borrower, the several banks and other financial institutions from time to time parties thereto, as lenders, JPMorgan Chase Bank, N.A., as administrative agent, and the other agents party thereto, previously filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K dated November 2, 2018, is incorporated herein by reference.](http://www.sec.gov/Archives/edgar/data/0000352915/000156459018026508/uhs-ex101_7.htm) |

| | | |

| | | |

| /s/ ALAN B. MILLER Alan B. Miller | | | | Chairman of the Board and Chief Executive Officer (Principal Executive Officer) | | | | February [removed: 28, 2018] [added: 27, 2019] | | | |

| /s/ MARC D. MILLER Marc D. Miller | | | | Director and President | | | | February [removed: 28, 2018] [added: 27, 2019] | | | |