10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2012

or

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from             to            

Commission file number 333-144337

United Surgical Partners International, Inc.

(Exact name of registrant as specified in its charter)

Delaware	75-2749762
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification Number)
15305 Dallas Parkway, Suite 1600 Addison, Texas	75001
(Address of principal executive offices)	(Zip Code)

(972) 713-3500

(Registrant’s telephone number, including area code)

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted 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 and post such files).    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	x  (Do not check if a smaller reporting company)	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes  ¨    No  x

The number of shares of Common Stock of the Registrant outstanding at November 5, 2012 was 100.

UNITED SURGICAL PARTNERS INTERNATIONAL, INC. AND SUBSIDIARIES

INDEX

PART I. Financial Information
Item 1.	Financial Statements:	3
Report of Independent Registered Public Accounting Firm		3
Consolidated Balance Sheets (unaudited)		4
Consolidated Statements of Income (unaudited)		5
Consolidated Statements of Comprehensive Income (unaudited)		7
Consolidated Statements of Changes in Equity (unaudited)		8
Consolidated Statements of Cash Flows (unaudited)		10
Notes to Consolidated Financial Statements (unaudited)		11
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	35
Item 4.	Controls and Procedures	35
PART II. Other Information
Item 1.	Legal Proceedings	36
Item 6.	Exhibits	36
Signatures		37

Note:     Items 1A, 2, 3, 4, and 5 of Part II are omitted because they are not applicable.

2

PART I. FINANCIAL INFORMATION

ITEM 1. Financial Statements

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholder

United Surgical Partners International, Inc.:

We have reviewed the consolidated balance sheet of United Surgical Partners International, Inc. and subsidiaries (the Company) as of September 30, 2012, the related consolidated statements of income, comprehensive income and changes in equity for the three-month and nine-month periods ended September 30, 2012 and 2011, and the related consolidated statements of cash flows for the nine-month periods ended September 30, 2012 and 2011. This interim financial information is the responsibility of the Company’s management.

We conducted our reviews in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States), the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our reviews, we are not aware of any material modifications that should be made to the consolidated financial statements referred to above for them to be in conformity with U.S. generally accepted accounting principles.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of United Surgical Partners International, Inc. and subsidiaries as of December 31, 2011, and the related consolidated statements of operations, comprehensive income (loss), changes in equity, and cash flows for the year then ended not presented herein; and in our report dated March 2, 2012, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet as of December 31, 2011, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

/s/ KPMG LLP

Dallas, Texas

November 5, 2012

3

UNITED SURGICAL PARTNERS INTERNATIONAL, INC.

AND SUBSIDIARIES

Consolidated Balance Sheets

	September 30, 2012			December 31, 2011
	(Unaudited)
	(In thousands — except share data)
ASSETS
Cash and cash equivalents	$	63,086		$	41,822
Available for sale securities (Note 8)		10,591			4,815
Accounts receivable, net of allowance for doubtful accounts of $8,427 and $8,576, respectively		36,868			58,057
Other receivables		14,238			10,499
Inventories of supplies		7,382			10,117
Deferred tax asset, net		12,918			14,704
Prepaids and other current assets		14,719			15,314
Total current assets		159,802			155,328
Property and equipment, net		121,741			235,321
Investments in unconsolidated affiliates		452,778			444,734
Goodwill		1,131,943			1,209,345
Intangible assets, net		343,992			327,140
Other assets		23,973			21,630
Total assets	$	2,234,229		$	2,393,498
LIABILITIES AND EQUITY
Accounts payable	$	16,905		$	28,765
Accrued salaries and benefits		22,343			24,405
Due to affiliates		149,249			139,628
Accrued interest		20,033			6,671
Current portion of long-term debt		18,202			25,487
Other current liabilities		39,595			52,281
Total current liabilities		266,327			277,237
Long-term debt, less current portion		1,312,588			1,042,969
Other long-term liabilities		28,812			30,807
Deferred tax liability, net		161,513			167,946
Total liabilities		1,769,240			1,518,959
Noncontrolling interests — redeemable (Note 4)		139,455			106,668
Commitments and contingencies (Note 11)
Equity (Note 9):
United Surgical Partners International, Inc. (USPI) stockholder’s equity:
Common stock, $0.01 par value; 100 shares authorized; issued and outstanding		—			—
Additional paid-in capital		290,908			778,030
Accumulated other comprehensive income (loss)		90			(63,033	)
Retained earnings (deficit)		(1,510	)		17,691
Total USPI stockholder’s equity		289,488			732,688
Noncontrolling interests — nonredeemable (Note 4)		36,046			35,183
Total equity		325,534			767,871
Total liabilities and equity	$	2,234,229		$	2,393,498

See accompanying notes to consolidated financial statements.

4

UNITED SURGICAL PARTNERS INTERNATIONAL, INC.

AND SUBSIDIARIES

Consolidated Statements of Income

	Three Months Ended September 30, 2012			Three Months Ended September 30, 2011
	(Unaudited — in thousands)
Revenues:
Net patient service revenues	$	106,886		$	102,296
Management and contract service revenues		19,138			17,807
Other revenues		2,281			2,158
Total revenues		128,305			122,261
Equity in earnings of unconsolidated affiliates		22,118			18,890
Operating expenses:
Salaries, benefits, and other employee costs		32,999			31,461
Medical services and supplies		20,184			18,888
Other operating expenses		21,838			19,879
General and administrative expenses		9,326			10,456
Provision for doubtful accounts		2,001			2,758
Net loss (gain) on deconsolidations, disposals and impairments		2,233			(1,271	)
Depreciation and amortization		5,746			5,226
Total operating expenses		94,327			87,397
Operating income		56,096			53,754
Interest income		170			143
Interest expense		(23,260	)		(15,308	)
Loss on early retirement of debt		(23	)		—
Other, net		34			6
Total other expense, net		(23,079	)		(15,159	)
Income from continuing operations before income taxes		33,017			38,595
Income tax expense		(6,394	)		(8,717	)
Income from continuing operations		26,623			29,878
Discontinued operations, net of tax (Note 2):
Income (loss) from discontinued operations		(2	)		2,006
Gain on disposal of discontinued operations		—			—
Total earnings (loss) from discontinued operations		(2	)		2,006
Net income		26,621			31,884
Less: Net income attributable to noncontrolling interests		(16,638	)		(16,598	)
Net income attributable to USPI’s common stockholder	$	9,983		$	15,286
Amounts attributable to USPI’s common stockholder:
Income from continuing operations, net of tax	$	9,984		$	13,355
Earnings (loss) from discontinued operations, net of tax		(1	)		1,931
Net income attributable to USPI’s common stockholder	$	9,983		$	15,286

See accompanying notes to consolidated financial statements.

5

UNITED SURGICAL PARTNERS INTERNATIONAL, INC.

AND SUBSIDIARIES

Consolidated Statements of Income

	Nine Months Ended September 30, 2012			Nine Months Ended September 30, 2011
	(Unaudited — in thousands)
Revenues:
Net patient service revenues	$	320,818		$	305,345
Management and contract service revenues		58,063			52,874
Other revenues		6,839			6,583
Total revenues		385,720			364,802
Equity in earnings of unconsolidated affiliates		66,207			56,923
Operating expenses:
Salaries, benefits, and other employee costs		99,649			92,536
Medical services and supplies		58,882			56,289
Other operating expenses		62,925			58,495
General and administrative expenses		30,008			28,959
Provision for doubtful accounts		6,314			6,743
Net loss (gain) on deconsolidations, disposals and impairments		660			(3,749	)
Depreciation and amortization		17,409			15,946
Total operating expenses		275,847			255,219
Operating income		176,080			166,506
Interest income		472			467
Interest expense		(62,034	)		(48,396	)
Loss on early retirement of debt		(37,981	)		—
Other, net		(748	)		(114	)
Total other expense, net		(100,291	)		(48,043	)
Income from continuing operations before income taxes		75,789			118,463
Income tax expense		(10,343	)		(27,291	)
Income from continuing operations		65,446			91,172
Discontinued operations, net of tax (Note 2):
Income from discontinued operations		3,434			7,742
Loss on disposal of discontinued operations		—			(529	)
Total earnings from discontinued operations		3,434			7,213
Net income		68,880			98,385
Less: Net income attributable to noncontrolling interests		(51,666	)		(49,592	)
Net income attributable to USPI’s common stockholder	$	17,214		$	48,793
Amounts attributable to USPI’s common stockholder:
Income from continuing operations, net of tax	$	13,834		$	41,769
Earnings from discontinued operations, net of tax		3,380			7,024
Net income attributable to USPI’s common stockholder	$	17,214		$	48,793

See accompanying notes to consolidated financial statements.

6

UNITED SURGICAL PARTNERS INTERNATIONAL, INC.

AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income

	Three Months Ended September 30, 2012			Three Months Ended September 30, 2011
	(Unaudited — in thousands)
Net income	$	26,621		$	31,884
Other comprehensive income (loss):
Foreign currency translation adjustments		—			(7,246	)
Unrealized gain on available-for-sale securities, net of tax		37			16
Unrealized gain on interest rate swaps, net of tax		—			342
Total other comprehensive income (loss)		37			(6,888	)
Comprehensive income		26,658			24,996
Less: Comprehensive income attributable to noncontrolling interests		(16,638	)		(16,598	)
Comprehensive income attributable to USPI’s common stockholder	$	10,020		$	8,398
	Nine Months Ended September 30, 2012			Nine Months Ended September 30, 2011
	(Unaudited — in thousands)
Net income	$	68,880		$	98,385
Other comprehensive income:
Foreign currency translation adjustments		4,938			2,831
Unrealized loss on foreign currency contract, net of tax		(560	)		—
Unrealized gain on available-for-sale securities, net of tax		48			36
Unrealized gain on interest rate swaps, net of tax		15			2,523
Reclassification due to spin-off of U.K. subsidiary:
Foreign currency translation adjustments		58,682			—
Total other comprehensive income		63,123			5,390
Comprehensive income		132,003			103,775
Less: Comprehensive income attributable to noncontrolling interests		(51,666	)		(49,592	)
Comprehensive income attributable to USPI’s common stockholder	$	80,337		$	54,183

See accompanying notes to consolidated financial statements.

7

UNITED SURGICAL PARTNERS INTERNATIONAL, INC.

AND SUBSIDIARIES

Consolidated Statement of Changes in Equity

For the Three Months and Nine Months Ended September 30, 2012

	USPI’s Common Stockholder
	Outstanding Shares		Par Value		Additional Paid-in Capital			Accumulated Other Comprehensive Income (Loss)			Retained Earnings (Deficit)			Noncontrolling Interests Non-Redeemable			Total
	(Unaudited — in thousands, except share amounts)
Balance, December 31, 2011		100	$	—	$	778,030		$	(63,033	)	$	17,691		$	35,183		$	767,871
Distributions to noncontrolling interests		—		—		—			—			—			(3,511	)		(3,511	)
Purchases of noncontrolling interests		—		—		(103	)		—			—			(86	)		(189	)
Sales of noncontrolling interests		—		—		(16,064	)		—			—			584			(15,480	)
Contribution related to equity award grants by Parent and other		—		—		366			—			—			—			366
Net income		—		—		—			—			18,724			1,990			20,714
Other comprehensive income		—		—		—			4,404			—			—			4,404
Balance, March 31, 2012		100		—		762,229			(58,629	)		36,415			34,160			774,175
Distributions to noncontrolling interests		—		—		—			—			—			(3,063	)		(3,063	)
Purchases of noncontrolling interests		—		—		713			—			—			(129	)		584
Sales of noncontrolling interests		—		—		(464	)		—			—			403			(61	)
Contribution related to equity award grants by Parent and other		—		—		575			—			—			—			575
Spin-off of U.K. subsidiary (Note 2)		—		—		(193,320	)		—						(523	)		(193,843	)
Dividend to Parent’s equity holders (Note 9)		—		—		(278,043	)		—			(36,415	)		—			(314,458	)
Net income (loss)		—		—		—			—			(11,493	)		1,980			(9,513	)
Other comprehensive income		—		—		—			58,682			—			—			58,682
Balance, June 30, 2012		100		—		291,690			53			(11,493	)		32,828			313,078
Distributions to noncontrolling interests		—		—		—			—			—			(2,155	)		(2,155	)
Purchases of noncontrolling interests		—		—		(372	)		—			—			(29	)		(401	)
Sales of noncontrolling interests		—		—		(276	)		—			—			3,281			3,005
Contribution related to equity award grants by Parent and other		—		—		(134	)		—			—			—			(134	)
Net income		—		—		—			—			9,983			2,121			12,104
Other comprehensive income		—		—		—			37			—			—			37
Balance, September 30, 2012		100	$	—	$	290,908		$	90		$	(1,510	)	$	36,046		$	325,534

See accompanying notes to consolidated financial statements.

8

UNITED SURGICAL PARTNERS INTERNATIONAL, INC.

AND SUBSIDIARIES

Consolidated Statement of Changes in Equity

For the Three Months and Nine Months Ended September 30, 2011

	USPI’s Common Stockholder
	Outstanding Shares		Par Value		Additional Paid-in Capital			Accumulated Other Comprehensive Loss			Retained Earnings		Noncontrolling Interests Non-Redeemable			Total
	(Unaudited — in thousands, except share amounts)
Balance, December 31, 2010		100	$	—	$	784,573		$	(66,351	)	$	68,535	$	34,394		$	821,151
Distributions to noncontrolling interests		—		—		—			—			—		(1,578	)		(1,578	)
Purchases of noncontrolling interests		—		—		4			—			—		(27	)		(23	)
Sales of noncontrolling interests		—		—		(2,324	)		—			—		272			(2,052	)
Contribution related to equity award grants by Parent and other		—		—		450			—			—		—			450
Net income		—		—		—			—			15,721		1,608			17,329
Other comprehensive income		—		—		—			10,760			—		—			10,760
Balance, March 31, 2011		100		—		782,703			(55,591	)		84,256		34,669			846,037
Distributions to noncontrolling interests		—		—		—			—			—		(2,654	)		(2,654	)
Purchases of noncontrolling interests		—		—		(483	)		—			—		(603	)		(1,086	)
Sales of noncontrolling interests		—		—		(10,124	)		—			—		409			(9,715	)
Contribution related to equity award grants by Parent and other		—		—		352			—			—		—			352
Net income		—		—		—			—			17,786		2,241			20,027
Other comprehensive income		—		—		—			1,518			—		—			1,518
Balance, June 30, 2011		100		—		772,448			(54,073	)		102,042		34,062			854,479
Distributions to noncontrolling interests		—		—		—			—			—		(1,624	)		(1,624	)
Purchases of noncontrolling interests		—		—		(517	)		—			—		—			(517	)
Sales of noncontrolling interests		—		—		(813	)		—			—		273			(540	)
Contribution related to equity award grants by Parent and other		—		—		267			—			—		—			267
Net income		—		—		—			—			15,286		1,957			17,243
Other comprehensive income		—		—		—			(6,888	)		—		—			(6,888	)
Balance, September 30, 2011		100	$	—	$	771,385		$	(60,961	)	$	117,328	$	34,668		$	862,420

See accompanying notes to consolidated financial statements.

9

UNITED SURGICAL PARTNERS INTERNATIONAL, INC.

AND SUBSIDIARIES

Consolidated Statements of Cash Flows

	Nine Months Ended September 30, 2012			Nine Months Ended September 30, 2011
	(Unaudited — in thousands)
Cash flows from operating activities:
Net income	$	68,880		$	98,385
Adjustments to reconcile net income to net cash provided by operating activities:
Earnings from discontinued operations		(3,434	)		(7,213	)
Loss on early retirement of debt		37,981			—
Provision for doubtful accounts		6,314			6,743
Depreciation and amortization		17,409			15,946
Net loss (gain) on deconsolidations, disposals and impairments		660			(3,749	)
Amortization of debt issue costs and discount		2,973			2,593
Deferred income tax		(9,252	)		11,331
Equity in earnings of unconsolidated affiliates, net of distributions received		(3,285	)		5,694
Equity-based compensation		1,188			1,008
Increases (decreases) in cash from changes in operating assets and liabilities, net of effects from purchases of new businesses:
Accounts receivable		134			(383	)
Other receivables		(6,537	)		(937	)
Inventories of supplies, prepaids and other current assets		(2,494	)		(2,328	)
Accounts payable and other current liabilities		17,810			(3,292	)
Long-term liabilities		1,516			2,699
Net cash provided by operating activities		129,863			126,497
Cash flows from investing activities:
Purchases of new businesses and equity interests, net of cash received		(38,994	)		(63,996	)
Proceeds from sale of businesses and equity interests		2,341			13,315
Purchases of property and equipment		(14,587	)		(8,291	)
Purchases of marketable securities, net		(5,768	)		(4,820	)
Returns of capital from unconsolidated affiliates		4,347			1,197
Decrease in deposits and notes receivable		2,129			2,324
Net cash used in investing activities		(50,532	)		(60,271	)
Cash flows from financing activities:
Proceeds from long-term debt, net of debt issuance costs		788,764			5,002
Payments on long-term debt		(535,727	)		(37,429	)
Increase in cash held on behalf of unconsolidated affiliates and other		9,336			13,584
Sales of noncontrolling interests, net		5,783			531
Payment of common stock dividend		(314,458	)		—
Distributions to noncontrolling interests		(58,546	)		(50,571	)
Net cash used in financing activities		(104,848	)		(68,883	)
Cash flows from discontinued operations:
Operating cash flows		5,101			13,872
Investing cash flows		(11,383	)		(15,029	)
Financing cash flows		53,142			(454	)
Effect of exchange rate changes on cash and cash equivalents		(79	)		(59	)
Net cash provided by (used in) discontinued operations		46,781			(1,670	)
Net increase (decrease) in cash and cash equivalents		21,264			(4,327	)
Cash and cash equivalents at beginning of period		41,822			60,253
Cash and cash equivalents at end of period	$	63,086		$	55,926
Supplemental information:
Interest paid — continuing operations	$	45,734		$	37,955
Income taxes paid — continuing operations		18,593			26,834
Interest paid — discontinued operations		772			1,430
Income taxes paid — discontinued operations		1,989			2,121
Non-cash transactions:
Spin-off of U.K. subsidiary	$	(193,843	)	$	—
Assets acquired under capital lease obligations		9,073			5,291

See accompanying notes to consolidated financial statements

10

UNITED SURGICAL PARTNERS INTERNATIONAL, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited)

(1) Basis of Presentation

(a) Description of Business

United Surgical Partners International, Inc., a Delaware Corporation, and subsidiaries (USPI or the Company) was formed in February 1998 for the primary purpose of ownership and management of ambulatory surgery centers, surgical hospitals and related businesses. At September 30, 2012, the Company, headquartered in Dallas, Texas, operated 203 short-stay surgical facilities. Of these 203 facilities, the Company consolidates the results of 59 and accounts for 144 under the equity method. The majority of the Company’s facilities are jointly owned with local physicians and a not-for-profit healthcare system that has other healthcare businesses in the region. At September 30, 2012, the Company had agreements with not-for-profit healthcare systems providing for joint ownership of 142 of the Company’s 203 facilities and also providing a framework for the construction or acquisition of additional facilities in the future. All but two of the Company’s facilities include physician owners. Prior to April 3, 2012, the Company operated seven facilities in the United Kingdom. On April 3, 2012, the Company distributed the stock of its U.K. subsidiary to the Company’s parent, USPI Group Holdings, Inc., equity holders. Subsequent to April 3, 2012, the Company has no further ownership in the U.K. operations. The Company’s former U.K. operations have now been classified as “discontinued operations” in its historical results of operations.

The Company is subject to changes in government legislation that could impact Medicare, Medicaid, and other government reimbursement levels and is also subject to increased levels of managed care penetration and changes in payor patterns that may impact the level and timing of payments for services rendered.

The Company maintains its books and records on the accrual basis of accounting, and the accompanying consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States (GAAP). The accompanying consolidated financial statements and notes should be read in conjunction with the Company’s December 31, 2011 Form 10-K. It is management’s opinion that the accompanying consolidated financial statements reflect all adjustments necessary for a fair presentation of the results for the periods presented. The results of operations for any interim period are not necessarily indicative of results for the full year.

The Company operates in one reportable business segment, the ownership and operation of surgical facilities in the United States.

The preparation of financial statements in conformity with GAAP requires management to make a number of estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

(2) Discontinued Operations

The Company classifies formerly consolidated subsidiaries in which it has no continuing involvement and consolidated subsidiaries that are held for sale as discontinued operations. The gains or losses on the disposal of these subsidiaries are classified within discontinued operations in the Company’s consolidated statements of income. The Company has also reclassified the historical financial results of these subsidiaries to remove the operations of these entities from the Company’s revenues and expenses, collapsing the net income or loss from these operations into a single line within discontinued operations.

Discontinued operations consist primarily of the Company’s former U.K. operations. On April 3, 2012, the Company distributed the stock of its U.K. subsidiary to its Parent’s equity holders. Subsequent to April 3, 2012, the Company has no ownership in the U.K. operations. Because GAAP requires spin-off transactions to be accounted for at carrying value, there was no gain or loss recorded on the spin-off of the U.K. operations.

Discontinued operations also include two investments in surgery centers that were designated as held for sale at December 31, 2010 and were sold in February 2011. The estimated net loss on disposal of these operations was recorded in the fourth quarter of 2010 and adjusted in 2011.

11

UNITED SURGICAL PARTNERS INTERNATIONAL, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited) — (Continued)

The table below summarizes certain amounts related to the Company’s discontinued operations for the periods presented (in thousands):

	Three Months Ended September 30, 2012			Nine Months Ended September 30, 2012			Three Months Ended September 30, 2011			Nine Months Ended September 30, 2011
Revenues	$	—		$	36,528		$	27,196		$	83,371
Income (loss) from discontinued operations before income taxes	$	(3	)	$	4,701		$	2,547		$	10,277
Income tax benefit (expense)		1			(1,267	)		(541	)		(2,535	)
Income (loss) from discontinued operations	$	(2	)	$	3,434		$	2,006		$	7,742
Loss on disposal of discontinued operations before income taxes	$	—		$	—		$	—		$	(902	)
Income tax benefit		—			—			—			373
Total loss from disposal of discontinued operations	$	—		$	—		$	—		$	(529	)

(3) Investments in Unconsolidated Affiliates and Business Combination

The Company’s facilities are generally operated through separate legal entities in which the Company holds an equity interest. Other investors generally include physicians who utilize the facility and, in a majority of cases, a local not-for-profit health system.

The Company controls 59 of these entities and therefore consolidates their results. However, the Company accounts for a majority (144 of its 203 facilities at September 30, 2012) as investments in unconsolidated affiliates, i.e., under the equity method, as the Company’s level of influence is significant but does not reach the threshold of controlling the entity. The majority of these investments are partnerships or limited liability companies, which require the associated tax benefit or expense to be recorded by the partners or members. Summarized financial information for the Company’s equity method investees on a combined basis is as follows (amounts are in thousands, except number of facilities, reflect 100% of the investees’ results on an aggregated basis and are unaudited):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Unconsolidated facilities operated at period-end		144			143			144			143
Income statement information:
Revenues	$	416,929		$	378,644		$	1,254,082		$	1,100,997
Operating expenses:
Salaries, benefits, and other employee costs		98,842			89,960			294,750			263,513
Medical services and supplies		106,081			88,194			310,012			256,077
Other operating expenses		97,972			88,021			290,839			256,786
Net gain on asset disposals		(7,026	)		(100	)		(6,496	)		(479	)
Depreciation and amortization		17,944			17,286			54,342			48,743
Total operating expenses		313,813			283,361			943,447			824,640
Operating income		103,116			95,283			310,635			276,357
Interest expense, net		(8,341	)		(8,883	)		(26,165	)		(24,711	)
Other, net		385			(1	)		399			10
Income before income taxes	$	95,160		$	86,399		$	284,869		$	251,656
Balance sheet information:
Current assets	$	313,714		$	307,475		$	313,714		$	307,475
Noncurrent assets		578,332			613,027			578,332			613,027
Current liabilities		196,990			178,421			196,990			178,421
Noncurrent liabilities		407,333			435,795			407,333			435,795

12

UNITED SURGICAL PARTNERS INTERNATIONAL, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited) — (Continued)

The Company regularly engages in the purchase and sale of equity interests with respect to its investments in unconsolidated affiliates that do not result in a change of control. These transactions are primarily the acquisitions and sales of equity interests in unconsolidated surgical facilities and the investment of additional cash in surgical facilities under development. During the nine months ended September 30, 2012, these transactions resulted in a net cash outflow of approximately $19.6 million, which is summarized as follows:

Effective Date	Facility Location	Amount
Investments
February 2012	Midland, Texas(1)	$	3.0 million
March 2012	Chandler, Arizona(1)		0.8 million
September 2012	New Jersey(2)		12.3 million
Various	Various(3)		3.5 million
Total		$	19.6 million

(1) Acquisition of a noncontrolling interest in and right to manage a surgical facility in which the Company previously had no involvement. The facility is jointly owned with a hospital partner and local physicians.

(2) Acquisition of a noncontrolling interest in and right to manage two surgical facilities in Hackensack and Paramus, New Jersey, respectively, in which the Company previously had no involvement. The facilities are jointly owned with a hospital partner and local physicians.

(3) Represents the net payment related to various other purchases and sales of equity interests and contributions of cash to equity method investees.

Effective June 1, 2012, the Company acquired an additional 44% ownership in a surgical facility in New Jersey in which it already had an equity method investment and the right to manage. As a result of the transaction, the Company now controls the facility and began consolidating its operating results effective June 1, 2012. The Company paid cash totaling $17.1 million, which is subject to certain purchase price adjustments set forth in the purchase agreement. The purchase price was allocated to the facility’s tangible assets and liabilities based upon preliminary estimates of fair value, with the remainder to goodwill. The Company funded the purchase using cash on hand. The adjustments to arrive at pro forma operating results for this acquisition are not material. The Company recorded a gain of approximately $0.2 million as a result of adjusting the carrying value of its existing ownership to fair value as required by GAAP. The gain is included in “Net loss (gain) on deconsolidations, disposals and impairments” in the accompanying consolidated statements of income.

(4) Noncontrolling Interests

The Company controls and therefore consolidates the results of 59 of its 203 facilities. Similar to its investments in unconsolidated affiliates, the Company regularly engages in the purchase and sale of equity interests with respect to its consolidated subsidiaries that do not result in a change of control. These transactions are accounted for as equity transactions, as they are undertaken among the Company, its consolidated subsidiaries, and noncontrolling interests, and their cash flow effect is classified within financing activities.

During the nine months ended September 30, 2012, the Company purchased and sold equity interests in various consolidated subsidiaries in the amounts of $1.9 million and $7.7 million, respectively. The basis difference between the Company’s carrying amount and the proceeds received or paid in each transaction is recorded as an adjustment to additional paid-in capital. The impact of these transactions is summarized as follows (in thousands):

	Three Months Ended September 30, 2012			Nine Months Ended September 30, 2012			Three Months Ended September 30, 2011			Nine Months Ended September 30, 2011
Net income attributable to USPI’s common stockholder	$	9,983		$	17,2144		$	15,286		$	48,793
Transfers to the noncontrolling interests:
Decrease in USPI’s additional paid-in capital for sales of subsidiaries’ equity interests		(276	)		(16,804	)		(813	)		(13,261	)
(Decrease) increase in USPI’s additional paid-in capital for purchases of subsidiaries’ equity interests		(372	)		238			(517	)		(996	)
Net transfers to noncontrolling interests		(648	)		(16,566	)		(1,330	)		(14,257	)
Increase in equity from net income attributable to USPI and transfers to noncontrolling interests	$	9,335		$	648		$	13,956		$	34,536

13

UNITED SURGICAL PARTNERS INTERNATIONAL, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited) — (Continued)

Upon the occurrence of certain fundamental regulatory changes, the Company could be obligated, under the terms of its investees’ partnership and operating agreements, to purchase some or all of the noncontrolling interests related to the Company’s consolidated subsidiaries. These repurchase requirements are limited to the portions of its facilities that are owned by physicians who perform surgery at the Company’s facilities and would be triggered by regulatory changes making the existing ownership structure illegal. While the Company is not aware of events that would make the occurrence of such a change probable, regulatory changes are outside the control of the Company. Accordingly, the noncontrolling interests subject to these repurchase provisions have been classified outside of equity and are carried as “noncontrolling interests — redeemable” on the Company’s consolidated balance sheets. The activity for the three and nine months ended September 30, 2012 and 2011 is summarized below (in thousands):

	2012 Noncontrolling Interests — Redeemable
Balance, December 31, 2011	$	106,668
Net income attributable to noncontrolling interests		15,690
Distributions to noncontrolling interests		(17,151	)
Purchases of noncontrolling interests		(349	)
Sales of noncontrolling interests		20,186
Acquisition of new business		3,908
Balance, March 31, 2012		128,952
Net income attributable to noncontrolling interests		15,368
Distributions to noncontrolling interests		(16,155	)
Purchases of noncontrolling interests		(5,909	)
Sales of noncontrolling interests		983
Acquisition of new business		12,387
Balance, June 30, 2012		135,626
Net income attributable to noncontrolling interests		14,517
Distributions to noncontrolling interests		(16,552	)
Purchases of noncontrolling interests		(335	)
Sales of noncontrolling interests		2,015
Acquisition of new business		4,184
Balance, September 30, 2012	$	139,455

	2011 Noncontrolling Interests — Redeemable
Balance, December 31, 2010	$	81,668
Net income attributable to noncontrolling interests		14,104
Distributions to noncontrolling interests		(13,939	)
Purchases of noncontrolling interests		(145	)
Sales of noncontrolling interests		3,187
Balance, March 31, 2011		84,875
Net income attributable to noncontrolling interests		15,041
Distributions to noncontrolling interests		(14,471	)
Purchases of noncontrolling interests		(291	)
Sales of noncontrolling interests		12,510
Acquisition of new business		984
Balance, June 30, 2011		98,648
Net income attributable to noncontrolling interests		14,641
Distributions to noncontrolling interests		(16,425	)
Purchases of noncontrolling interests		(492	)
Sales of noncontrolling interests		1,009
Acquisition of new business		1,457
Balance, September 30, 2011	$	98,838

14

UNITED SURGICAL PARTNERS INTERNATIONAL, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited) — (Continued)

(5) Long-term Debt

On April 3, 2012, the Company amended its senior secured credit facility, issued new senior unsecured notes, redeemed all validly tendered outstanding notes pursuant to the previously announced tender offer and consent solicitation, deposited funds with the trustee to redeem the remaining outstanding notes (which have since all been redeemed), and distributed the stock of its U.K. subsidiary to the equity holders of the Company’s parent, USPI Group Holdings, Inc (Parent).

The amended credit facility provided a new term loan and modified the terms of the Company’s existing term loan. The amended credit facility provided for borrowings up to $958.2 million, consisting of $144.9 million in non-extended term loans maturing in April 2014; $313.3 million in extended term loans maturing in April 2017; $375.0 million in new term loans maturing in April 2019; and $125.0 million under a revolving facility maturing in April 2017. In conjunction with the amendment to the credit facility, the Company repaid $16.0 million that was outstanding on its existing revolver and repaid $45.0 million of its existing term loan. The non-extended, extended and new term loans each require quarterly principal payments of 0.25% of the outstanding balance as of April 3, 2012 with the remaining balances due in 2014 for the non-extended term loans, in 2017 for the extended term loans and in 2019 for the new term loan. No principal payments are required on the revolving credit facility until its maturity in 2017. At September 30, 2012, the Company had $828.4 million outstanding under the amended credit facility at a weighted average interest rate of approximately 5.1%. At September 30, 2012, the Company had $123.4 million available for borrowing under the revolving credit facility, representing the facility’s $125.0 million capacity, net of the $1.6 million of outstanding letters of credit.

Interest rates on the amended credit facility are based on the prime rate or LIBOR plus a margin of 1.00% to 4.75%. Additionally, the Company pays 0.50% per annum on the daily-unused commitment of the new revolving credit facility. The Company also pays a quarterly participation fee of 2.13% per annum related to outstanding letters of credit.

The amended credit facility is guaranteed by USPI Holdings, Inc. and its current and future directly and indirectly 100%-owned domestic subsidiaries, subject to certain exceptions, and borrowings under the credit facility are secured by a first priority security interest in all real and personal property of these subsidiaries, as well as a first priority pledge of USPI’s capital stock, and the capital stock of each of USPI’s wholly owned domestic subsidiaries. Additionally, the credit facility contains various restrictive covenants, including financial covenants that limit the Company’s ability and the ability of the Company’s subsidiaries to borrow money or guarantee other indebtedness, grant liens, make investments, sell assets, pay dividends, enter into sale-leaseback transactions or issue and sell capital stock.

On May 1, 2012, the Company completed the redemption of all of its remaining $240.0 million 8 7/8% senior subordinated notes and $200.0 million 9 1/4%/10% senior subordinated toggle notes, which was funded by the Company’s issuance of $440.0 million 9.0% senior notes due 2020 (the Notes). Interest on the Notes is payable on April 1 and October 1 of each year, and commenced on October 1, 2012. The Notes are unsecured senior obligations of the Company; however, the Notes are guaranteed by all of the Company’s current and future directly and indirectly 100%-owned domestic subsidiaries. Additionally, the Notes contain various restrictive covenants, including financial covenants that limit the Company’s ability and the ability of its subsidiaries to borrow money or guarantee other indebtedness, grant liens, make investments, sells assets, pay dividends, enter into sale-leaseback transactions or issue and sell capital stock. At September 30, 2012, the Company had $440.0 million of Notes outstanding.

(6) Other Investments

The consolidated financial statements include the financial statements of USPI and its wholly-owned and controlled subsidiaries. The Company also determines if it is the primary beneficiary of (and therefore should consolidate) any entity whose operations it does not control with voting rights. At September 30, 2012, the Company consolidated one entity in accordance with this accounting guidance.

This entity operates and manages seven surgical facilities in the Houston, Texas area. Despite not holding a controlling voting interest, the Company is the primary beneficiary because the Company is able to make the decisions that are most significant to the operations of the entity and has provided all of the funding for the entity, which the entity has used to acquire surgical facilities. The Company has no exposure for the entity’s losses beyond this investment. Accordingly, the Company did not provide any financial or other support to the entity that it was not previously contractually required to provide during the nine months ended September 30, 2012 or 2011. At September 30, 2012 and 2011, the total assets of this entity were $78.7 million and $79.6 million, and the total liabilities owed to third parties were $17.2 million and $19.3 million, respectively. Such amounts are included in the accompanying consolidated balance sheets.

(7) Derivatives

In December 2011, one of the Company’s U.S. subsidiaries loaned its U.K. subsidiary £15.0 million to fund the purchase of a hospital in Sheffield, England. In order to protect the Company against foreign currency fluctuations, in January 2012, the Company entered into a foreign currency contract with a bank to lock in the receipt of $21.5 million at the loan’s due date of May 31, 2012. This contract qualified for hedge accounting, and therefore the contract was recorded at fair value on the Company’s consolidated balance sheet, with the offset to other comprehensive income (loss). Due to the spin-off of the Company’s U.K. subsidiary, the contract was settled on April 4, 2012, and resulted in a payment to the bank of approximately $0.9 million.

15

UNITED SURGICAL PARTNERS INTERNATIONAL, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited) — (Continued)

(8) Fair Value of Financial Instruments

The fair value of a financial instrument is the amount at which the instrument could be exchanged in an orderly transaction between market participants to sell the asset or transfer the liability. The Company uses fair value measurements based on quoted prices in active markets for identical assets or liabilities (Level 1), significant other observable inputs (Level 2) or unobservable inputs for assets or liabilities (Level 3), depending on the nature of the item being valued. The estimated fair values may not be representative of actual values that will be realized or settled in the future.

The carrying amounts of cash and cash equivalents, short-term investments, accounts receivable, and accounts payable approximate fair value because of the short maturity of these instruments.

The fair value of the Company’s long-term debt is determined by either (i) estimation of the discounted future cash flows of the debt at rates currently quoted or offered to the Company for similar debt instruments of comparable maturities by its lenders, or (ii) quoted market prices at the reporting date for the traded debt securities. At September 30, 2012, the aggregate carrying amount and estimated fair value of long-term debt were $1.3 billion and $1.4 billion, respectively. At September 30, 2011, the aggregate carrying amount and estimated fair value of long-term debt were each $1.0 billion. The fair value of debt is classified within Level 2 of the valuation hierarchy.

At September 30, 2012 and 2011, the Company had approximately $10.6 million and $4.8 million, respectively, of marketable securities, which are held by the Company’s wholly-owned insurance subsidiary. These investments are used in connection with its retained professional and general liability risks and are not available for general corporate purposes. The marketable securities consist of U.S. Treasury and corporate debt, are classified as available-for-sale and are recorded at fair value on the consolidated balance sheet. The fair value of these securities are classified within Level 2 of the valuation hierarchy, and are based on closing market prices of the investments when applicable, or alternatively, valuations utilizing market data and other observable inputs.

(9) Equity

On April 3, 2012, the Company paid a cash dividend of approximately $314.5 million to its Parent’s equity holders. Also, on April 3, 2012, the Company distributed the stock of its U.K. subsidiary to its Parent’s equity holders.

The Company accounts for equity-based compensation, such as stock options and other stock-based awards to employees and directors, at fair value. The fair value of the compensation is measured at the date of grant and recognized as expense over the recipient’s requisite service period.

The Company’s equity-based compensation consists primarily of stock options and restricted stock granted by parent to certain employees and members of the board of directors. The fair value of stock options was estimated at the date of grant using the Black-Scholes formula based on assumptions derived from historical experience.

Total equity-based compensation, included in the accompanying consolidated statements of income, classified by line item, is as follows (in thousands):

	Three Months Ended September 30, 2012			Nine Months Ended September 30, 2012			Three Months Ended September 30, 2011			Nine Months Ended September 30, 2011
Salaries, benefits and other employee costs	$	131		$	314		$	80		$	326
General and administrative expenses		220			681			163			682
Other operating expenses		—			193			—			—
Expense before income tax benefit		351			1,188			243			1,008
Income tax benefit		(28	)		(190	)		(30	)		(178	)
Total equity-based compensation expense, net of tax	$	323		$	998		$	213		$	830

Total equity-based compensation, included in the accompanying consolidated statements of income, classified by type of award, is as follows (in thousands):

	Three Months Ended September 30, 2012			Nine Months Ended September 30, 2012			Three Months Ended September 30, 2011			Nine Months Ended September 30, 2011
Share awards	$	111		$	409		$	123		$	721
Stock options		240			586			120			287
Warrants		—			193			—			—
Expense before income tax benefit		351			1,188			243			1,008
Income tax benefit		(28	)		(190	)		(30	)		(178	)
Total equity-based compensation expense, net of tax	$	323		$	998		$	213		$	830

16

UNITED SURGICAL PARTNERS INTERNATIONAL, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited) — (Continued)

(10) Related Party Transactions

Included in general and administrative expenses are management fees payable to an affiliate of Welsh Carson, which holds a controlling interest in the Company, in the amount of $0.5 million and $1.5 million in both the three months and nine months ended September 30, 2012 and 2011, respectively. Such amounts accrue at an annual rate of $2.0 million. The Company pays $1.0 million in cash per year with the unpaid balance due and payable upon a change in control. At September 30, 2012, the Company had approximately $6.0 million accrued related to such management fee, of which $0.5 million is included in other current liabilities and $5.5 million is included in other long-term liabilities in the accompanying consolidated balance sheet.

(11) Commitments and Contingencies

As of September 30, 2012, the Company had issued guarantees of the indebtedness and other obligations of its investees to third parties, which could potentially require the Company to make maximum aggregate payments totaling approximately $67.9 million. Of the total, $21.5 million relates to the obligations of consolidated subsidiaries, whose obligations are included in the Company’s consolidated balance sheet and related disclosures, and $38.3 million of the remaining $46.4 million relates to the obligations of unconsolidated affiliated companies, whose obligations are not included in the Company’s consolidated balance sheet and related disclosures. The remaining $8.1 million represents a guarantee of the obligations of four facilities which have been sold. The Company has full recourse to the buyers with respect to these amounts.

The Company has recorded long-term liabilities totaling approximately $0.4 million related to the guarantees the Company has issued to unconsolidated affiliates on or after January 1, 2003, and has not recorded any liabilities related to guarantees issued prior to that date. Generally, these arrangements (a) consist of guarantees of real estate and equipment financing, (b) are secured by the related property and equipment, (c) require payments by the Company, when the collateral is insufficient, in the event of a default by the investee primarily obligated under the financing, (d) expire as the underlying debt matures at various dates through 2022, and (e) provide no recourse for the Company to recover any amounts from third parties. The Company also has $1.6 million of letters of credit outstanding.

(12) Subsequent Events

The Company has entered into letters of intent with various entities regarding possible joint venture, development, or other transactions. These possible joint ventures, developments of new facilities, or other transactions are in various stages of negotiation.

(13) Condensed Consolidating Financial Statements

The following information is presented as required by regulations of the Securities and Exchange Commission (SEC) in connection with the Company’s Notes that have been registered with the SEC. This information is not routinely prepared for use by management. The operating and investing activities of the separate legal entities included in the consolidated financial statements are fully interdependent and integrated. Accordingly, the operating results of the separate legal entities are not representative of what the operating results would be on a stand-alone basis. Revenues and operating expenses of the separate legal entities include intercompany charges for management and other services.

The Notes were issued in a private offering on April 3, 2012 and were subsequently registered as publicly traded securities through a Form S-4 declared effective by the SEC on September 5, 2012. The exchange offer was completed in October 2012. The Notes are unsecured obligations of the Company; however, the Notes are guaranteed by all of its current and future direct and indirect 100%-owned domestic subsidiaries. USPI, which issued the Notes, does not have independent assets or operations. USPI’s investees in which USPI owns less than 100% are not guarantors of the obligation. The financial positions and results of operations (below, in thousands) of the respective guarantors are based upon the guarantor relationship at the end of the period presented. Consolidation adjustments include purchase accounting entries for investments in which the Company’s ownership percentage in non-participating investees is not high enough to permit the application of pushdown accounting.

17

UNITED SURGICAL PARTNERS INTERNATIONAL, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited) — (Continued)

Condensed Consolidating Balance Sheets:

As of September 30, 2012	Guarantors		Non-Participating Investees		Consolidation Adjustments			Consolidated Total
ASSETS
Current assets:
Cash and cash equivalents	$	60,605	$	2,481	$	—		$	63,086
Available for sale securities		10,591		—		—			10,591
Accounts receivable, net		—		36,868		—			36,868
Other receivables		17,615		23,111		(26,488	)		14,238
Inventories of supplies		774		6,608		—			7,382
Prepaids and other current assets		26,286		1,351		—			27,637
Total current assets		115,871		70,419		(26,488	)		159,802
Property and equipment, net		29,446		91,839		456			121,741
Investments in unconsolidated affiliates		877,057		—		(424,279	)		452,778
Goodwill and intangible assets, net		947,419		139,736		388,780			1,475,935
Other assets		23,522		890		(439	)		23,973
Total assets	$	1,993,315	$	302,884	$	(61,970	)	$	2,234,229
LIABILITIES AND EQUITY
Liabilities and Equity
Current liabilities:
Accounts payable	$	6,297	$	10,608	$	—		$	16,905
Accrued expenses and other		241,543		15,594		(25,917	)		231,220
Current portion of long-term debt		8,661		10,630		(1,089	)		18,202
Total current liabilities		256,501		36,832		(27,006	)		266,327
Long-term debt, less current portion		1,261,321		51,474		(207	)		1,312,588
Other long-term liabilities		186,005		4,866		(546	)		190,325
Parent’s equity		289,488		184,871		(184,871	)		289,488
Noncontrolling interests		—		24,841		150,660			175,501
Total liabilities and equity	$	1,993,315	$	302,884	$	(61,970	)	$	2,234,229
As of December 31, 2011	Guarantors		Non-Participating Investees		Consolidation Adjustments			Consolidated Total
ASSETS
Current assets:
Cash and cash equivalents	$	36,198	$	5,624	$	—		$	41,822
Available for sale securities		4,815		—		—			4,815
Accounts receivable, net		—		58,057		—			58,057
Other receivables		44,627		52,122		(86,250	)		10,499
Inventories of supplies		737		9,380		—			10,117
Prepaids and other current assets		27,433		2,585		—			30,018
Total current assets		113,810		127,768		(86,250	)		155,328
Property and equipment, net		23,705		211,296		320			235,321
Investments in unconsolidated affiliates		952,116		—		(507,382	)		444,734
Goodwill and intangible assets, net		930,186		251,882		354,417			1,536,485
Other assets		88,206		511		(67,087	)		21,630
Total assets	$	2,108,023	$	591,457	$	(305,982	)	$	2,393,498
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	1,789	$	26,976	$	—		$	28,765
Accrued expenses and other		227,790		79,603		(84,408	)		222,985
Current portion of long-term debt		5,595		21,193		(1,301	)		25,487
Total current liabilities		235,174		127,772		(85,709	)		277,237
Long-term debt, less current portion		952,717		91,038		(786	)		1,042,969
Other long-term liabilities		187,444		11,618		(309	)		198,753
Parent’s equity		732,688		335,461		(335,461	)		732,688
Noncontrolling interests		—		25,568		116,283			141,851
Total liabilities and equity	$	2,108,023	$	591,457	$	(305,982	)	$	2,393,498

18

UNITED SURGICAL PARTNERS INTERNATIONAL, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited) — (Continued)

Condensed Consolidating Statements of Income:

For the Nine Months Ended September 30, 2012	Guarantors			Non-Participating Investees			Consolidation Adjustments			Consolidated Total
Revenues	$	83,432		$	320,401		$	(18,113	)	$	385,720
Equity in earnings of unconsolidated affiliates		104,768			2,787			(41,348	)		66,207
Operating expenses, excluding depreciation and amortization		63,035			212,975			(17,572	)		258,438
Depreciation and amortization		5,230			12,088			91			17,409
Operating income		119,935			98,125			(41,980	)		176,080
Interest expense, net		(57,856	)		(3,706	)		—			(61,562	)
Loss on early retirement of debt		(37,981	)		—			—			(37,981	)
Other income (expense), net		(760	)		(388	)		400			(748	)
Income from continuing operations before income taxes		23,338			94,031			(41,580	)		75,789
Income tax expense		(9,558	)		(785	)		—			(10,343	)
Income from continuing operations		13,780			93,246			(41,580	)		65,446
Earnings from discontinued operations, net of tax		3,434			3,212			(3,212	)		3,434
Net income		17,214			96,458			(44,792	)		68,880
Less: Net income attributable to noncontrolling interests		—			(12,547	)		(39,119	)		(51,666	)
Net income attributable to Parent	$	17,214		$	83,911		$	(83,911	)	$	17,214

For the Nine Months Ended September 30, 2011	Guarantors			Non-Participating Investees			Consolidation Adjustments			Consolidated Total
Revenues	$	78,097		$	304,032		$	(17,327	)	$	364,802
Equity in earnings of unconsolidated affiliates		96,581			2,489			(42,147	)		56,923
Operating expenses, excluding depreciation and amortization		56,341			198,453			(15,521	)		239,273
Depreciation and amortization		5,071			10,762			113			15,946
Operating income		113,266			97,306			(44,066	)		166,506
Interest expense, net		(44,890	)		(3,039	)		—			(47,929	)
Other income (expense), net		(196	)		265			(183	)		(114	)
Income from continuing operations before income taxes		68,180			94,532			(44,249	)		118,463
Income tax expense		(26,600	)		(691	)		—			(27,291	)
Income from continuing operations		41,580			93,841			(44,249	)		91,172
Earnings from discontinued operations, net of tax		7,213			7,730			(7,730	)		7,213
Net income		48,793			101,571			(51,979	)		98,385
Less: Net income attributable to noncontrolling interests		—			(11,640	)		(37,952	)		(49,592	)
Net income attributable to Parent	$	48,793		$	89,931		$	(89,931	)	$	48,793

19

UNITED SURGICAL PARTNERS INTERNATIONAL, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited) — (Continued)

Condensed Consolidating Statements of Comprehensive Income:

For the Nine Months Ended September 30, 2012	Guarantors			Non-Participating Investees			Consolidation Adjustments			Consolidated Total
Net income	$	17,214		$	96,458		$	(44,792	)	$	68,880
Other comprehensive income:
Foreign currency translation adjustments		4,938			4,938			(4,938	)		4,938
Unrealized gain on available for sale securities, net of tax		48			—			—			48
Unrealized loss on foreign currency contract, net of tax		(560	)		—			—			(560	)
Unrealized gain on interest rate swap, net of tax		15			15			(15	)		15
Reclassification due to spin-off of U.K. subsidiary:
Foreign currency translation adjustments		58,682			58,682			(58,682	)		58,682
Total other comprehensive income		63,123			63,635			(63,635	)		63,123
Comprehensive income		80,337			160,093			(108,427	)		132,003
Comprehensive income attributable to noncontrolling interests		—			(12,547	)		(39,119	)		(51,666	)
Comprehensive income attributable to Parent	$	80,337		$	147,546		$	(147,546	)	$	80,337
For the Nine Months Ended September 30, 2011	Guarantors			Non-Participating Investees			Consolidation Adjustments			Consolidated Total
Net income	$	48,793		$	101,571		$	(51,979	)	$	98,385
Other comprehensive income:
Foreign currency translation adjustments		2,831			2,831			(2,831	)		2,831
Unrealized gain on available for sale securities, net of tax		36			—			—			36
Unrealized gain on interest rate swap, net of tax		2,523			168			(168	)		2,523
Total other comprehensive income		5,390			2,999			(2,999	)		5,390
Comprehensive income		54,183			104,570			(54,978	)		103,775
Comprehensive income attributable to noncontrolling interests		—			(11,640	)		(37,952	)		(49,592	)
Comprehensive income attributable to Parent	$	54,183		$	92,930		$	(92,930	)	$	54,183

20

UNITED SURGICAL PARTNERS INTERNATIONAL, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited) — (Continued)

Condensed Consolidating Statements of Cash Flows:

For the Nine Months Ended September 30, 2012	Guarantors			Non-Participating Investees			Consolidation Adjustments			Consolidated Total
Cash flows from operating activities:
Net income	$	17,214		$	96,458		$	(44,792	)	$	68,880
Earnings on discontinued operations		(3,434	)		(3,212	)		3,212			(3,434	)
Loss on early retirement of debt		37,981			—			--00			37,981
Changes in operating and intercompany assets and liabilities and noncash items included in net income		20,059			8,621			(2,244	)		26,436
Net cash provided by operating activities		71,820			101,867			(43,824	)		129,863
Cash flows from investing activities:
Purchases of property and equipment, net		(9,279	)		(5,308	)		—			(14,587	)
Purchases and sales of new businesses and equity interests, net		(36,428	)		(225	)		—			(36,653	)
Other items, net		1,148			6,322			(6,762	)		708
Net cash (used in) provided by investing activities		(44,559	)		789			(6,762	)		(50,532	)
Cash flows from financing activities:
Long-term borrowings, net		255,312			(3,065	)		790			253,037
Purchases and sales of noncontrolling interests, net		5,783			—			—			5,783
Distributions to noncontrolling interests		—			(102,146	)		43,600			(58,546	)
Payment of common stock dividend		(314,458	)		—			—			(314,458	)
Increase in cash held on behalf of noncontrolling interest holders and other		3,015			349			5,972			9,336
Net cash used in financing activities		(50,348	)		(104,862	)		50,362			(104,848	)
Net cash provided by (used in) discontinued operations		47,494			(937	)		224			46,781
Net increase (decrease) in cash		24,407			(3,143	)		—			21,264
Cash at the beginning of the period		36,198			5,624			—			41,822
Cash at the end of the period	$	60,605		$	2,481		$	—		$	63,086
For the Nine Months Ended September 30, 2011	Guarantors			Non-Participating Investees			Consolidation Adjustments			Consolidated Total
Cash flows from operating activities:
Net income	$	48,793		$	101,571		$	(51,979	)	$	98,385
Earnings on discontinued operations		(7,213	)		(7,730	)		7,730			(7,213	)
Changes in operating and intercompany assets and liabilities and noncash items included in net income		32,994			475			1,856			35,325
Net cash provided by operating activities		74,574			94,316			(42,393	)		126,497
Cash flows from investing activities:
Purchases of property and equipment, net		(2,318	)		(5,973	)		—			(8,291	)
Purchases and sales of new businesses and equity interests, net		(50,681	)		—			—			(50,681	)
Other items, net		1,315			19,334			(21,948	)		(1,299	)
Net cash used in investing activities		(51,684	)		13,361			(21,948	)		(60,271	)
Cash flows from financing activities:
Long-term borrowings, net		(28,949	)		(5,733	)		2,255			(32,427	)
Purchases and sales of noncontrolling interests, net		531			—			—			531
Distributions to noncontrolling interests		—			(92,964	)		42,393			(50,571	)
Increase in cash held on behalf of noncontrolling interest holders and other		(5,748	)		(361	)		19,693			13,584
Net cash used in financing activities		(34,166	)		(99,058	)		64,341			(68,883	)
Net cash provided by (used in) discontinued operations		(1,363	)		(307	)		—			(1,670	)
Net (decrease) increase in cash		(12,639	)		8,312			—			(4,327	)
Cash at the beginning of the period		60,186			67			—			60,253
Cash at the end of the period	$	47,547		$	8,379		$	—		$	55,926

21

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with our unaudited Consolidated Financial Statements and the notes thereto included in Item 1 of this Quarterly Report on Form 10-Q.

Forward-Looking Statements

Certain statements contained in this Quarterly Report on Form 10-Q, including, without limitation, statements containing the words “believes,” “anticipates,” “expects,” “continues,” “will,” “may,” “should,” “estimates,” “intends,” “plans” and similar expressions, and statements regarding the Company’s business strategy and plans, constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based on management’s current expectations and involve known and unknown risks, uncertainties and other factors, many of which the Company is unable to predict or control, that may cause the Company’s actual results, performance or achievements to be materially different from those expressed or implied by such forward-looking statements. Such factors include, among others, the following: our significant indebtedness; general economic and business conditions, including without limitation the condition of the financial markets; demographic changes; changes in, or the failure to comply with, laws and governmental regulations; the ability to enter into or renew managed care provider arrangements on acceptable terms; changes in Medicare, Medicaid and other government funded payments or reimbursement in the United States; the efforts of insurers, healthcare providers and others to contain healthcare costs; the impact of healthcare reform; liability and other claims asserted against us; the highly competitive nature of healthcare; changes in business strategy or development plans of healthcare systems with which we partner; the ability to attract and retain qualified physicians and personnel, including nurses and other healthcare professionals and other personnel; the availability of suitable acquisition and development opportunities and the length of time it takes to complete acquisitions and developments; our ability to integrate new and acquired businesses with our existing operations; the availability and terms of capital to fund the expansion of our business, including the acquisition and development of additional facilities and certain additional factors, risks and uncertainties discussed in this Annual Report on Form 10-K. We disclaim any obligation and make no promise to update any such factors or forward-looking statements or to publicly announce the results of any revisions to any such factors or forward-looking statements, whether as a result of changes in underlying factors, to reflect new information as a result of the occurrence of events or developments or otherwise. Given these uncertainties, investors and prospective investors are cautioned not to rely on such forward-looking statements.

Overview

We operate ambulatory surgery centers and surgical hospitals across the United States. Prior to April 3, 2012, we also owned and operated private healthcare facilities in the United Kingdom. On April 3, 2012, we declared a stock dividend which distributed our investment in our U.K. subsidiary to the equity holders of our parent, USPI Group Holdings, Inc (Parent), and as a result we no longer own or operate facilities in the United Kingdom. Our U.K. operations are now classified as “discontinued operations” in our historical results of operations.

As of September 30, 2012, we operated 203 facilities. All but two of our 203 facilities include local physician owners, and 142 of these facilities are also partially owned by various not-for-profit healthcare systems (hospital partners). In addition to facilitating the joint ownership of the majority of our existing facilities, our agreements with these healthcare systems provide a framework for the construction or acquisition of additional facilities in the future. The two facilities we are currently developing both include hospital partners. During the first nine months of 2012, we acquired equity interests in a surgical facility in Midland, Texas, a surgical facility in Chandler, Arizona, and two facilities in New Jersey, all of which have a hospital partner, as does our newest facility, a surgical center in Pittsburgh, Pennsylvania which opened in March 2012.

Our facilities, consisting of ambulatory surgery centers and surgical hospitals, specialize in non-emergency surgical cases. Due in part to advancements in medical technology, the volume and complexity of surgical cases performed in an outpatient setting has steadily increased over the past three decades. Our facilities earn a fee from patients, insurance companies, or other payors in exchange for providing the facility and related services a surgeon requires in order to perform a surgical case. In addition, we earn a monthly fee from each facility we operate in exchange for managing its operations. In recent years we have focused on partnering our facilities with hospital partners, which we believe improves the long-term profitability and potential of our facilities.

Prior to April 3, 2012, we operated and owned four hospitals, an oncology clinic, a diagnostic and surgery center and an eye clinic in the United Kingdom, which supplement the services provided by the government-sponsored healthcare system. Patients at these facilities choose to receive care at private facilities primarily because of the long wait to receive diagnostic procedures or elective surgery at government-sponsored facilities and pay us either from personal funds or through private insurance, which is offered by some employers as a benefit to their employees. In 2011, we acquired a controlling interest in a diagnostic and surgery center located in Edinburgh, Scotland and a hospital in Sheffield, England. In March 2012, we acquired an eye clinic in Solihull, England. As described above, we have had no ownership in the U.K. operations since April 3, 2012.

Our growth and success depends on our ability to continue to grow volumes at our existing facilities, to successfully open new facilities we develop, to successfully integrate acquired facilities into our operations, and to maintain productive relationships with our physician and hospital partners. We believe we will have significant opportunities to operate more facilities in the future in existing and new markets and that many of these will include hospital partners.

22

Due in large part to our partnerships with physician and hospital partners, we do not consolidate 144 of the 203 facilities in which we have ownership interests. To help analyze our results of operations, we disclose an operating measure we refer to as systemwide revenue growth, which includes both consolidated and unconsolidated facilities. While revenues of our unconsolidated facilities are not recorded as revenues by USPI, we believe the information is important in understanding our financial performance because these revenues are the basis for calculating the Company’s management services revenues and, together with the expenses of our unconsolidated facilities, are the basis for our equity in earnings of unconsolidated affiliates and a significant component of our operating cash flows. In addition, we disclose growth rates and operating margins (both consolidated and unconsolidated) for the facilities that were operational in both the current and prior year periods, a group we refer to as same store facilities.

Critical Accounting Policies and Estimates

Our discussion and analysis of our financial condition, results of operations and liquidity and capital resources are based on our consolidated financial statements which have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). The preparation of consolidated financial statements under GAAP requires our management to make certain estimates and assumptions that impact the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the consolidated financial statements. These estimates and assumptions also impact the reported amount of net earnings during any period. Estimates are based on information available as of the date financial statements are prepared. Accordingly, actual results could differ from those estimates. Critical accounting policies and estimates are defined as those that are both most important to the portrayal of our financial condition and operating results and that require management’s most subjective judgments. Our critical accounting policies and estimates include our policies and estimates regarding consolidation, revenue recognition, income taxes and intangible assets.

Our determination of whether to consolidate an entity in which we hold an investment, account for it under the equity method, or carry it at cost has a significant impact on our consolidated financial statements because of the typical business model under which we operate, where the majority of the facilities we operate are partially owned by hospital partners, physicians, and other parties. These quarterly consolidated financial statements have been prepared using the same consolidation policy as that used in our latest audited consolidated financial statements.

We also consider our accounting policy regarding intangible assets to be a critical accounting policy given the significance of intangible assets as compared to the total assets of our company. There have been no significant changes in our application of GAAP to intangible assets since the preparation of our latest audited consolidated financial statements.

Our revenue recognition and accounts receivable policy and our method of accounting for income taxes involve significant judgments and estimates. There have been no significant changes in assumptions, estimates, and judgments in the preparation of these quarterly consolidated financial statements from the assumptions, estimates, and judgments used in the preparation of our latest audited consolidated financial statements.

Spin-off of United Kingdom Operations

Until April 3, 2012, we operated in two countries, the United States of America and the United Kingdom. On April 3, 2012, we distributed the stock of our U.K. subsidiary to our Parent’s equity holders. Subsequent to April 3, 2012, we have no further ownership in the U.K. operations. Our former U.K. operations have now been classified as “discontinued operations” in our historical results of operations. Because GAAP requires spin-off transactions to be accounted for at carrying value, there was no gain or loss reported as a result of the spin-off.

Equity Investments and Development Projects

Our strategy includes the acquisition of ownership interests in surgical facilities and the development of new facilities. In addition to the initial transaction to acquire a facility, we also engage in transactions to acquire additional ownership in a facility we already operate or to sell a portion of our interest in a facility to a physician or hospital partner. When those transactions involve our investments in unconsolidated affiliates but do not involve a change of control, the cash flow impact is classified within investing activities. During the nine months ended September 30, 2012, these transactions resulted in a net cash outflow of approximately $19.6 million, which is summarized below:

Effective Date	Facility Location	Amount
Investments
February 2012	Midland, Texas(1)	$	3.0 million
March 2012	Chandler, Arizona(1)		0.8 million
September 2012	New Jersey(2)		12.3 million
Various	Various(3)		3.5 million
Total		$	19.6 million

(1) Acquisition of a noncontrolling interest in and right to manage a surgical facility in which the Company previously had no involvement. The facility is jointly owned with a hospital partner and local physicians.

(2) Acquisition of a noncontrolling interest in and right to manage two surgical facilities in Hackensack and Paramus, New Jersey, respectively, in which we previously had no involvement. The facilities are jointly owned with a hospital partner and local physicians.

(3) Represents the net payment related to various other purchases and sales of equity interests and contributions of cash to equity method investees.

23

Effective June 1, 2012, we acquired an additional 44% ownership in a surgical facility in New Jersey in which we already had an equity method investment and the rights to manage. As a result of the transaction, we now control the facility and began consolidating its operating results effective June 1, 2012. We paid cash totaling $17.1 million, which is subject to certain purchase price adjustments set forth in the purchase agreement. We recorded a gain of approximately $0.2 million as a result of adjusting the carrying value of its existing ownership to fair value as required by GAAP. The gain is included in “Net loss (gain) on deconsolidations, disposals and impairments” in the accompanying consolidated statements of income.

We control and therefore consolidate the results of 59 of our 203 facilities. Similar to our investments in unconsolidated affiliates, we regularly engage in the purchase and sale of equity interests in our consolidated subsidiaries that do not result in a change of control. These transactions are accounted for as equity transactions, as they are undertaken among us, our consolidated subsidiaries, and noncontrolling interests. During the nine months ended September 30, 2012, we purchased and sold equity interests in various consolidated subsidiaries in the amounts of $1.9 million and $7.7 million, respectively. The difference between our carrying amount and the proceeds received or paid in each transaction is recorded as an adjustment to our additional paid-in capital. These transactions resulted in a $16.6 million decrease to our additional paid-in capital during the nine months ended September 30, 2012.

Sources of Revenue

Revenues primarily include the following:

• net patient service revenues of the facilities that we consolidate for financial reporting purposes, which are typically those facilities in which we have ownership interests of greater than 50% or otherwise maintain effective control or for which we are otherwise the primary beneficiary;

• management and contract service revenues, consisting of the fees that we earn from managing the facilities that we do not consolidate for financial reporting purposes and the fees we earn from providing contracted services to other healthcare providers. Our consolidated revenues and expenses do not include the management fees we earn from operating the facilities that we consolidate for financial reporting purposes as those fees are charged to subsidiaries and thus eliminate in consolidation.

The following table summarizes our revenues by type and as a percentage of total revenue for the periods presented:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Net patient service revenues		83	%		84	%		83	%		84	%
Management and contract service revenues		15			15			15			14
Other revenues		2			1			2			2
Total revenues		100	%		100	%		100	%		100	%

Net patient service revenues consist of the revenues earned by facilities we consolidate for financial reporting purposes. As a percent of our total revenues, these revenues did not significantly change compared to prior year periods.

Our management and contract service revenues are earned from the following types of activities (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2012		2011		2012		2011
Management of surgical facilities	$	16,461	$	15,212	$	50,154	$	45,083
Contract services provided to other healthcare providers		2,677		2,595		7,909		7,791
Total management and contract service revenues	$	19,138	$	17,807	$	58,063	$	52,874

As described above, our primary business is the operation of surgical facilities.

24

Results of Operations

The following table summarizes certain consolidated statement of income items expressed as a percentage of revenues for the periods indicated:

	Three Months Ended September 30,						Nine Months Ended September 30,
USPI	2012			2011			2012			2011
Total revenues		100.0	%		100.0	%		100.0	%		100.0	%
Equity in earnings of unconsolidated affiliates		17.2			15.5			17.2			15.6
Operating expenses, excluding depreciation and amortization		(69.0	)		(67.2	)		(67.0	)		(65.6	)
Depreciation and amortization		(4.5	)		(4.3	)		(4.5	)		(4.4	)
Operating income		43.7			44.0			45.7			45.6
Interest and other expense, net		(18.0	)		(12.4	)		(26.0	)		(13.1	)
Income from continuing operations before income taxes		25.7			31.6			19.7			32.5
Income tax expense		(5.0	)		(7.2	)		(2.7	)		(7.5	)
Income from continuing operations		20.7			24.4			17.0			25.0
Earnings from discontinued operations, net of tax		—			1.7			0.9			2.0
Net income		20.7			26.1			17.9			27.0
Less: Net income attributable to noncontrolling interests		(12.9	)		(13.6	)		(13.4	)		(13.6	)
Net income attributable to USPI’s common stockholder		7.8	%		12.5	%		4.5	%		13.4	%

Our business model of partnering with not-for-profit hospitals and physicians results in our accounting for 144 of our surgical facilities under the equity method rather than consolidating their results. The following table reflects the summarized results of the unconsolidated facilities that we account for under the equity method of accounting (amounts are expressed as a percentage of unconsolidated affiliates’ revenues, and reflect 100% of the investees’ results on an aggregated basis):

	Three Months Ended September 30,						Nine Months Ended September 30,
USPI’s Unconsolidated Affiliates	2012			2011			2012			2011
Total revenues		100.0	%		100.0	%		100.0	%		100.0	%
Operating expenses, excluding depreciation and amortization		(71.0	)		(70.3	)		(70.9	)		(70.5	)
Depreciation and amortization		(4.3	)		(4.5	)		(4.3	)		(4.4	)
Operating income		24.7			25.2			24.8			25.1
Interest and other expense, net		(1.9	)		(2.4	)		(2.1	)		(2.3	)
Income before income taxes		22.8			22.8			22.7			22.8
Income tax expense		(0.6	)		(0.6	)		(0.5	)		(0.5	)
Net income		22.2	%		22.2	%		22.2	%		22.3	%

Executive Summary

Our strategy continues to include growing the profits of our existing facilities, developing new facilities with hospital partners, and adding other facilities through acquisition. Our operating results for the three and nine months ended September 30, 2012 reflect 5% and 6% same store facility revenue growth as compared to the corresponding periods in 2011. The increases are due in part to a 2% and 3% increase in our same store case volumes for the three months and nine months ended September 30, 2012, respectively, and our overall business also grew as a result of our operating more facilities in 2012, largely as a result of acquisitions made during the second half of 2011. These growth drivers resulted in a 4% and 6% increase in operating income for the three and nine months ended September 30, 2012 as compared to the corresponding periods in 2011. The third quarter of 2012 had one fewer day of operations for our facilities than the third quarter of 2011, which we believe contributed to our case volume and revenues growing more slowly than in earlier quarters of the year and to our facilities’ operating income margins decreasing. In addition to growing our existing facilities, we operated more facilities in 2012. During the first nine months of 2012, we acquired equity interests in a surgical facility in Midland, Texas, a surgical facility in Chandler, Arizona, and two facilities in New Jersey, all of which have a hospital partner, as does our newest facility, a surgical center in Pittsburgh, Pennsylvania which opened in March 2012.

25

Continuing a trend experienced in recent years, our consolidated revenue growth of 5% in the third quarter of 2012 as compared to the corresponding period in 2011 was less than our systemwide revenue growth of 9%, primarily due to our continuing to add more equity method facilities as compared to consolidated facilities. Our systemwide revenues include all facilities that we operate; our revenues only include consolidated facilities, which represent less than one-third of our facilities. Accounting for more of our facilities under the equity method is a direct result of deploying our primary business strategy of jointly owning our facilities with prominent local physicians and often a hospital partner. In carrying out this strategy during the period from January 1, 2011 to September 30, 2012, our number of equity method facilities increased from 130 to 144 while our consolidated facility count increased from 54 to 59, driven by our acquisition and disposal activity.

Our net earnings from a facility, whether consolidated or equity method, are driven by the same factors: the facility’s underlying profits and revenues and our ownership percentage. Accordingly, to assess our overall operating results we often utilize systemwide and same store measures, which include all facilities. These measures were positive in the third quarter of 2012, with same store revenues increasing 5% and systemwide revenues increasing 9% as compared to the corresponding prior year period, a product of same store growth and a net increase of 14 facilities since the beginning of 2011.

As discussed in more detail below, we completed several significant financing and equity transactions on April 3, 2012, including the payment of a $314.5 million cash dividend, the spin-off of our U.K. operations and the refinancing of a substantial portion of our outstanding debt.

Our Business and Key Measures

We operate surgical facilities in partnership with local physicians and, in the majority of facilities, a not-for-profit health system partner. We hold an ownership interest in each facility, each being operated through a separate legal entity owned by physicians, the health systems and us. We operate each facility on a day-to-day basis through a management services contract. Our sources of earnings from each facility consist of:

• our share of each facility’s net income or loss, which is computed by multiplying the facility’s net income or loss times the percentage of each facility’s equity interests owned by us; and

• management services revenues, computed as a percentage of each facility’s net revenues (often net of bad debt expense).

Our role as an owner and day-to-day manager provides us with significant influence over the operations of each facility. In a growing majority of our facilities (currently 144 of our 203 facilities), this influence does not represent control of the facility; we account for our investments in these facilities under the equity method, i.e., as unconsolidated affiliates. We control the remaining 59 of our facilities and account for these investments as consolidated subsidiaries.

Our net earnings from a facility are the same under either method, but the classification of those earnings differs. For consolidated subsidiaries, our financial statements reflect 100% of the revenues and expenses of the subsidiaries, after the elimination of intercompany amounts. The net profit attributable to owners other than us is classified within “net income attributable to noncontrolling interests.”

For unconsolidated affiliates, our consolidated statements of income reflect our earnings in only two line items:

• equity in earnings of unconsolidated affiliates: our share of the net income of each facility, which is based on the facilities’ net income or loss and the percentage of the facility’s outstanding equity interests owned by us; and

• management and administrative services revenues: income we earn in exchange for managing the day-to-day operations of each facility, usually quantified as a percentage of each facility’s net revenues less bad debt expense.

In summary, our operating income is driven by the performance of all facilities we operate and by our ownership interest in those facilities, but our individual revenue and expense line items only contain consolidated businesses, which represent less than one-third of our facilities. This translates to trends in operating income that often do not correspond with changes in revenues and expenses. The divergence in these relationships is particularly significant when our strategy is heavily weighted to unconsolidated affiliates, as it has been in recent years. Accordingly, we review several types of information in order to monitor and analyze our results of operations, including:

• The results of operations of our unconsolidated affiliates

• Our average ownership share in the facilities we operate; and

• Facility operating indicators, such as systemwide revenue growth, same store revenue growth, and same store operating margins.

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Our Consolidated and Unconsolidated Results

The following table shows our results of operations and the results of operations of our unconsolidated affiliates (in thousands).

	Three Months Ended September 30
	2012						2011						Variance to Prior Year
	USPI as Reported Under GAAP			Unconsolidated Affiliates			USPI as Reported Under GAAP			Unconsolidated Affiliates			USPI as Reported Under GAAP			Unconsolidated Affiliates
Revenues:
Net patient service revenues	$	106,886		$	414,572		$	102,296		$	375,568		$	4,590		$	39,004
Management and contract service revenues		19,138			—			17,807			—			1,331			—
Other income		2,281			2,357			2,158			3,076			123			(719	)
Total revenues		128,305			416,929			122,261			378,644			6,044			38,285
Equity in earnings of unconsolidated affiliates		22,118			—			18,890			—			3,228			—
Operating expenses:
Salaries, benefits, and other employee costs		32,999			98,842			31,461			89,960			1,538			8,882
Medical services and supplies		20,184			106,081			18,888			88,194			1,296			17,887
Other operating expenses		21,838			86,170			19,879			79,033			1,959			7,137
General and administrative expenses		9,326			—			10,456			—			(1,130	)		—
Provision for doubtful accounts		2,001			11,802			2,758			8,988			(757	)		2,814
Net (gain) loss on deconsolidations, disposals and impairments		2,233			(7,026	)		(1,271	)		(100	)		3,504			(6,926	)
Depreciation and amortization		5,746			17,944			5,226			17,286			520			658
Total operating expenses		94,327			313,813			87,397			283,361			6,930			30,452
Operating income		56,096			103,116			53,754			95,283			2,342			7,833
Interest income		170			87			143			97			27			(10	)
Interest expense		(23,260	)		(8,428	)		(15,308	)		(8,980	)		(7,952	)		552
Loss on early retirement of debt		(23	)		—			—			—			(23	)		—
Other		34			385			6			(1	)		28			386
Total other expense, net		(23,079	)		(7,956	)		(15,159	)		(8,884	)		(7,920	)		928
Income before income taxes		33,017			95,160			38,595			86,399			(5,578	)		8,761
Income tax expense		(6,394	)		(2,326	)		(8,717	)		(2,219	)		2,323			(107	)
Income from continuing operations		26,623			92,834			29,878			84,180			(3,255	)		8,654
Discontinued operations, net of tax		(2	)		—			2,006			—			(2,008	)		—
Net income		26,621		$	92,834			31,884		$	84,180			(5,263	)	$	8,654
Less: Net income attributable to noncontrolling interests		(16,638	)					(16,598	)					(40	)
Net income attributable to USPI’s common stockholder	$	9,983					$	15,286					$	(5,303	)
USPI’s equity in earnings of unconsolidated affiliates				$	22,118					$	18,890					$	3,228

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	Nine Months Ended September 30
	2012						2011						Variance to Prior Year
	USPI as Reported Under GAAP			Unconsolidated Affiliates			USPI as Reported Under GAAP			Unconsolidated Affiliates			USPI as Reported Under GAAP			Unconsolidated Affiliates
Revenues:
Net patient service revenues	$	320,818		$	1,245,868		$	305,345		$	1,093,113		$	15,473		$	152,755
Management and contract service revenues		58,063			—			52,874			—			5,189			—
Other income		6,839			8,214			6,583			7,884			256			330
Total revenues		385,720			1,254,082			364,802			1,100,997			20,918			153,085
Equity in earnings of unconsolidated affiliates		66,207			—			56,923			—			9,284			—
Operating expenses:
Salaries, benefits, and other employee costs		99,649			294,750			92,536			263,513			7,113			31,237
Medical services and supplies		58,882			310,012			56,289			256,077			2,593			53,935
Other operating expenses		62,925			256,112			58,495			230,608			4,430			25,504
General and administrative expenses		30,008			—			28,959			—			1,049			—
Provision for doubtful accounts		6,314			34,727			6,743			26,178			(429	)		8,549
Net (gain) loss on deconsolidations, disposals and impairments		660			(6,496	)		(3,749	)		(479	)		4,409			(6,017	)
Depreciation and amortization		17,409			54,342			15,946			48,743			1,463			5,599
Total operating expenses		275,847			943,447			255,219			824,640			20,628			118,807
Operating income		176,080			310,635			166,506			276,357			9,574			34,278
Interest income		472			253			467			285			5			(32	)
Interest expense		(62,034	)		(26,418	)		(48,396	)		(24,996	)		(13,638	)		(1,422	)
Loss on early retirement of debt		(37,981	)		—			—			—			(37,981	)		—
Other		(748	)		399			(114	)		10			(634	)		389
Total other expense, net		(100,291	)		(25,766	)		(48,043	)		(24,701	)		(52,248	)		(1,065	)
Income before income taxes		75,789			284,869			118,463			251,656			(42,674	)		33,213
Income tax expense		(10,343	)		(5,940	)		(27,291	)		(5,917	)		16,948			(23	)
Income from continuing operations		65,446			278,929			91,172			245,739			(25,726	)		33,190
Discontinued operations, net of tax		3,434			—			7,213			—			(3,779	)		—
Net income		68,880		$	278,929			98,385		$	245,739			(29,505	)	$	33,190
Less: Net income attributable to noncontrolling interests		(51,666	)					(49,592	)					(2,074	)
Net income attributable to USPI’s common stockholder	$	17,214					$	48,793					$	(31,579	)
USPI’s equity in earnings of unconsolidated affiliates				$	66,207					$	56,923					$	9,284

The following table provides other information regarding our unconsolidated affiliates (dollars in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Long-term debt	$	410,635		$	443,043		$	410,635		$	443,043
USPI’s imputed weighted average ownership percentage based on affiliates’ pre-tax income(1)		23.2	%		21.6	%		23.2	%		22.5	%
USPI’s imputed weighted average ownership percentage based on affiliates’ debt(2)		26.4	%		26.0	%		26.4	%		26.0	%
Unconsolidated facilities operated at period end		144			143			144			143

(1) Our weighted average percentage ownership in our unconsolidated affiliates is calculated as our equity in earnings of unconsolidated affiliates divided by the total pre-tax income of unconsolidated affiliates for each respective period. This is a non-GAAP measure but management believes it provides further useful information about our involvement in equity method investments.

(2) Our weighted average percentage ownership in our unconsolidated affiliates is calculated as the total debt of each unconsolidated affiliate, multiplied by the percentage ownership USPI held in the affiliate as of the end of each respective period, divided by the total debt of all of the unconsolidated affiliates as of the end of each respective period. This is a non-GAAP measure but management believes it provides further useful information about our involvement in equity method investments.

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As shown above, USPI’s net patient service revenues for the three and nine months ended September 30, 2012 increased $4.6 million and $15.5 million, respectively, compared to the corresponding prior year periods. The net patient service revenues of our unconsolidated affiliates increased $39.0 million and $152.8 million for the three and nine months ended September 30, 2012, respectively, as compared to the corresponding prior year periods. These variances are analyzed more extensively below under “Revenues,” but in general they reflect the fact that the revenues of our unconsolidated facilities, which largely represent the facilities we operate under our primary business model of partnering with physicians and a hospital partner, are growing at a faster rate than the revenues of our consolidated facilities. In addition to the underlying growth rates at these facilities, we continue to shift more of our facilities into our primary business model, which frequently results in their moving from the consolidated to the unconsolidated group. Once netted with expenses, these increased revenues at our unconsolidated affiliates resulted in their earning $33.2 million more in net income on year-to-date basis than in the corresponding prior year period. Our share of that increase, based on our ownership levels in these facilities, was $9.3 million.

Our Ownership Interests in the Facilities We Operate

Our earnings are predominantly driven by our investments in the facilities we operate, so we focus on those businesses’ growth rates together with the percentage ownership interest we hold in them to help us understand our results of operations. Our average ownership interest in the surgical facilities we operate is as follows:

	Nine Months Ended September 30, 2012			Year Ended December 31, 2011			Nine Months Ended September 30, 2011
Unconsolidated (equity method)(1)		23.2	%		22.7	%		22.5	%
Consolidated facilities(2)		42.6	%		44.1	%		44.9	%
Total(3)		27.9	%		28.2	%		28.4	%

(1) Computed for unconsolidated facilities by dividing (a) our total equity in earnings of unconsolidated affiliates by (b) the aggregate pre-tax income of surgical facilities we account for under the equity method.

(2) Computed for consolidated facilities by dividing (a) the aggregate net income of surgical facilities we operate less our total noncontrolling interests in income of consolidated subsidiaries by (b) the aggregate net income of our consolidated surgical facilities.

(3) Computed in total by dividing our share of the facilities’ net income, defined as the sum of (a) in footnotes (1) and (2), by the aggregate net income of our surgical facilities, defined as the sum of (b) in footnotes (1) and (2).

Our average ownership interest for each group of facilities is determined by many factors, including the ownership levels we negotiate in our acquisition and development activities, the relative performance of facilities in which we own percentages higher or lower than average, and other factors. As described earlier, our increased focus on partnering our facilities with not-for-profit health systems in addition to physicians generally leads to our accounting for more facilities under the equity method (unconsolidated) as reflected in our number of unconsolidated facilities increasing by 14 from January 1, 2011 to September 30, 2012, while our number of consolidated facilities increased by five. We generally have a lower ownership percentage in an equity method facility as compared to a consolidated facility.

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Revenues

Our consolidated net revenues increased 5% and 6% during the three and nine months ended September 30, 2012, respectively, as compared to the corresponding prior year periods. The table below quantifies several significant items impacting year over year growth.

	Three Months Ended September 30, 2012
	USPI as Reported Under GAAP			Unconsolidated Affiliates
Total revenues, three months ended September 30, 2011	$	122,261		$	378,644
Add: Revenue from acquired facilities		5,929			14,862
Less: Revenue of disposed facilities		—			(706	)
Adjusted base period		128,190			392,800
(Decrease) increase from operations		(1,339	)		24,848
Non-facility based revenue		1,454			(719	)
Total revenues, three months ended September 30, 2012	$	128,305		$	416,929
	Nine Months Ended September 30, 2012
	USPI as Reported Under GAAP			Unconsolidated Affiliates
Total revenues, nine months ended September 30, 2011	$	364,802		$	1,100,997
Add: Revenue from acquired facilities		15,728			53,742
Less: Revenue of disposed facilities		—			(8,695	)
Adjusted base period		380,530			1,146,044
(Decrease) increase from operations		(255	)		107,708
Non-facility based revenue		5,445			330
Total revenues, nine months ended September 30, 2012	$	385,720		$	1,254,082

As shown above, the most significant source of revenue growth for consolidated facilities has been acquisitions. The majority of the growth in the revenues of our unconsolidated affiliates was from operations, with acquisitions comprising the remainder.

Facility Growth

Our systemwide revenues grew 9% and 12% in the three and nine months ended September 30, 2012 as compared to the corresponding prior year period. This growth is comprised of a 5% and 6% increase in the three and nine months ended September 30, 2012, respectively, in the net revenues of our same store facilities, which are those facilities we operated in both periods, and additionally of the revenues of newly acquired facilities.

Same store revenue growth was driven by a 2% and 3% increase in surgical cases in the three months and nine months ended September 30, 2012, respectively. In addition, our same store revenues were higher in the current year due to a favorable shift in types and complexity of cases performed as compared to the prior year period, which increased our net revenue per case. The third quarter of 2012 had one fewer day of operations than the corresponding prior year period, which we believe adversely affected our case volumes.

The following table summarizes our same store facility revenue growth rates, as compared to the three and nine months ended September 30, 2011:

	Three Months Ended September 30, 2012			Nine Months Ended September 30, 2012
Net revenue		5	%		6	%
Surgical cases		2	%		3	%
Net revenue per case		3	%		3	%

Joint Ventures With Not-For-Profit Hospitals

The addition of new facilities continues to be more heavily weighted to surgical facilities with a hospital partner, both as we initiate joint venture agreements with new systems and as we add facilities to our existing arrangements. Facilities have been added to hospital joint ventures through construction of new facilities (de novos), acquisitions of facilities and through our contribution of our equity interests in existing facilities into a hospital joint venture structure, effectively creating three-way joint ventures by sharing our ownership in these facilities with a hospital partner while leaving the existing physician ownership intact.

30

While this strategy has generally led to our adding more facilities with hospital partners than without hospital partners, our acquisition of Titan Health Corporation in September 2011 altered this pattern with respect to the past twelve months. By September 30, 2012, only three of the 14 facilities Titan operated have hospital partners. As with past multi-facility acquisitions we have completed, we believe we will have opportunities to add a hospital partner to more of the Titan facilities in the future, and we also continue to explore affiliating more of our other facilities with hospital partners. Often these affiliations are initiated in markets where we already operate other facilities with a hospital partner, but we also affiliate our facilities with new partners. The following table summarizes the facilities we operated as of September 30, 2012 and 2011:

	September 30,
	2012			2011
United States facilities(1):
With a hospital partner		142			138
Without a hospital partner		61			61
Total U.S. facilities		203			199
United Kingdom facilities(2)		—			5
Total facilities operated		203			204
Change from September 30, 2011:
De novo (newly constructed)		1
Acquisition		9
Disposals/Mergers(2)		(11	)
Total decrease in number of facilities		(1	)

(1) At September 30, 2012, physicians own a portion of all but two of these facilities.

(2) We sold our ownership interests in a facility in Caldwell, Idaho and Franklin, Tennessee. In addition, we merged two facilities into existing facilities in Redding, California and Houston, Texas. On April 3, 2012, we distributed the stock of our U.K. subsidiary to our Parent’s equity holders. As a result, we no longer have any ownership in the U.K. operations.

Facility Operating Margins

Same store facility operating margins decreased 220 basis points and 100 basis points for the three and nine months ended September 30, 2012, respectively, as compared to the corresponding prior year period. As noted in earlier sections, the third quarter of 2012 had one fewer day of operations than the third quarter of 2011, which we believe had an adverse effect on our case volume, causing revenues to grow at a slower rate than our facilities’ operating expenses, some of which do not fluctuate based on case volumes.

Continuing a trend we have experienced in recent years, the year-over-year change in the operating margins of facilities partnered with a not-for-profit healthcare system was more favorable than the change experienced by the facilities that do not have a hospital partner. The facilities partnered with a health system are, on average, younger than our other facilities. Younger facilities’ margins grow more rapidly on average than more mature facilities, which generally have higher margins but with less growth. The pattern of our acquisition and development activity can also affect this relationship over time.

The following table summarizes the year-over-year changes in our same store facility operating margins (see footnote 1 below), comparing the three and nine months ended September 30, 2012 to the three and nine months ended September 30, 2011:

	Three Months Ended September 30, 2012			(Decrease)			Nine Months Ended September 30, 2012			(Decrease)
Facilities:
With a hospital partner		23.5	%		(170	) bps		24.9	%		(50	) bps
Without a hospital partner		27.4	%		(460	) bps		29.7	%		(330	) bps
Total facilities		24.2	%		(220	) bps		25.8	%		(100	) bps

(1) Operating margin is calculated as operating income divided by total revenues. This table aggregates all of the same store facilities we operate using 100% of their results. This does not represent the overall margin for USPI’s operations because we have a variety of ownership levels in the facilities we operate, and facilities open for less than a year are excluded from same store calculations.

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Three Months Ended September 30, 2012 Compared to Three Months Ended September 30, 2011

As more fully discussed in “Revenues,” our consolidated revenues increased by $6.0 million, or 4.9%, to $128.3 million for the three months ended September 30, 2012 from $122.3 million for the three months ended September 30, 2011. Most of the increase, approximately $5.9 million, was due to acquisitions.

Equity in earnings of unconsolidated affiliates increased by $3.2 million, or 17.1%, to $22.1 million for the three months ended September 30, 2012 from $18.9 million for the three months ended September 30, 2011. The increase in equity in earnings includes our share of an investee’s gain on the sale of real estate ($2.4 million) and was additionally driven by our acquisitions of equity method investments in facilities, which increased equity in earnings by approximately $0.6 million. The growth in our existing facilities increased equity in earnings by $0.2 million. The number of facilities we account for under the equity method increased by two from September 30, 2011 to September 30, 2012.

Depreciation and amortization increased $0.5 million or 10.0%, to $5.7 million for the three months ended September 30, 2012 from $5.2 million for the three months ended September 30, 2011. Depreciation and amortization, as a percentage of revenues, increased slightly to 4.5% for the three months ended September 30, 2012 from 4.3% for the three months ended September 30, 2011.

Operating income increased $2.3 million, or 4.4%, to $56.1 million for the three months ended September 30, 2012 from $53.8 million for the three months ended September 30, 2011. These increases were driven by the increases in revenues of our facilities and equity in earnings of unconsolidated affiliates described above, but decreases in operating margins at our facilities resulted in our operating income decreasing as a percentage of revenues to 43.7% from 44.0% for the three months ended September 30, 2012 and 2011, respectively

Interest expense, net of interest income, increased $7.9 million to $23.1 million for the three months ended September 30, 2012 as compared to $15.2 million for the three months ended September 30, 2011. The increase is due to higher overall debt balances and interest rates at September 30, 2012 due to the refinancing we completed on April 3, 2012.

Provision for income taxes was $6.4 million for the three months ended September 30, 2012 compared to $8.7 million for the three months ended September 30, 2011. Our effective tax rates (based on pretax earnings attributable to USPI’s stockholder) were 39.0% and 39.6% for the three months ended September 30, 2012 and 2011, respectively.

The increase in revenues of our consolidated facilities, as described above, drove an increase in our consolidated subsidiaries’ net income. As most of our consolidated businesses include owners besides us, an increase in the earnings of these businesses resulted in an increase in net income attributable to noncontrolling interests.

Overall, while our revenues and operating income increased for the three months ended September 30, 2012 compared to the three months ended September 30, 2011, the additional interest expense resulting from our refinancing in April 2012 caused our overall net income to decrease.

Nine Months Ended September 30, 2012 Compared to Nine Months Ended September 30, 2011

As more fully discussed in “Revenues,” our consolidated revenues increased by $20.9 million, or 5.7%, to $385.7 million for the nine months ended September 30, 2012 from $364.8 million for the nine months ended September 30, 2011. The majority of the increase, approximately $15.7 million, was due to acquisitions.

Equity in earnings of unconsolidated affiliates increased by $9.3 million, or 16.3% to $66.2 million for the nine months ended September 30, 2012 from $56.9 million for the nine months ended September 30, 2012. The increase in equity in earnings was driven by growth in our existing facilities of $4.9 million. In addition, our acquisitions of equity method investments in facilities increased equity in earnings by approximately $2.0 million and equity in earnings was also positively affected by $2.4 million, our portion of a gain on the sale of real estate by one of our investees.

Depreciation and amortization increased $1.5 million, or 9.2%, to $17.4 million for the nine months ended September 30, 2012 from $15.9 million for the nine months ended September 30, 2011. Depreciation and amortization, as a percentage of revenues, increased slightly to 4.5% for the nine months ended September 30, 2012 from 4.4% for the nine months ended September 30, 2011.

Operating income increased $9.6 million, or 5.7%, to $176.1 million for the nine months ended September 30, 2012 from $166.5 million for the nine months ended September 30, 2012, and increased as a percentage of revenues to 45.7% from 45.6%, respectively. These increases were driven by the increases in revenues of our facilities and equity in earnings of unconsolidated affiliates described above, which was partially offset by fees paid in conjunction with our refinancing and dividend payment in April 2012, and by the effect of our facilities’ operating margins being lower in the current year period.

Interest expense, net of interest income, increased $13.6 million, or 28.4% to $61.6 million for the nine months ended September 30, 2012 from $47.9 million for the nine months ended September 30, 2011. The increase is due to higher overall debt balances and interest rates at September 30, 2012 due to the refinancing we completed on April 3, 2012.

32

We incurred a loss on the early retirement of debt of $38.0 million during the nine months ended September 30, 2012 as a result of the refinancing we completed on April 3, 2012. The amount is the result of a premium paid to retire our previously outstanding bonds, finance and legal fees and the write-off of debt issuance costs.

Provision for income taxes was $10.3 million for the nine months ended September 30, 2012 compared to $27.3 million for the nine months ended September 30, 2011. Our effective tax rates (based on pretax earnings attributable to USPI’s stockholder) were 42.9% and 39.6% for the nine months ended September 30, 2012 and 2011, respectively. The higher effective rate for the current year has resulted from discrete items including refinancing costs incurred during the nine months ended September 30, 2012. Over the full year 2012, our effective tax rate is expected to be closer to statutory rates. This expectation could change if we undertake other transactions whose tax effects differ from our existing activities.

The increase in revenues of our consolidated facilities, as described above, drove an increase in our consolidated subsidiaries’ net income. As most of our consolidated businesses include owners besides us, an increase in the earnings of these businesses resulted in an increase in net income attributable to noncontrolling interests.

Overall, while our revenues and operating income increased for the nine months ended September 30, 2012 compared to the nine months ended September 30, 2011, the expenses related to our refinancing and the higher interest expense resulting from our increased indebtedness caused a decrease in our net income as compared to the prior year period.

Liquidity and Capital Resources

Cash Flows

During the nine months ended September 30, 2012, the Company generated $129.9 million of cash flows from operating activities as compared to $126.5 million during the nine months ended September 30, 2011. Cash flows from operating activities increased $3.4 million, or 2.7%, from the prior year period, primarily as a result of our increased operating income. The higher debt balance that resulted from our April 2012 refinancing transactions led to $13.6 million more interest expense during the nine months ended September 30, 2012 compared to the prior year period, but due to the payment schedules we only paid $7.8 million more interest in the current year period, and this increase in cash payments was offset by a decrease in federal tax payments, primarily due to a significant payment we made in 2011 as a result of a gain on our December 2010 disposal of an endoscopy business.

During the nine months ended September 30, 2012, the Company’s net cash used in investing activities was $50.5 million, consisting of $36.7 million for net purchases of new businesses and equity interests, $5.8 million for the purchase of marketable securities and $14.6 million used for purchases of property and equipment, which excludes $9.1 million of property and equipment acquired under capital lease arrangements. Approximately $14.2 million of property and equipment purchases were related to ongoing development projects, and the remaining $9.5 million represented purchases of equipment at existing facilities. Net cash used in financing activities for the nine months ended September 30, 2012 totaled $104.8 million, which is comprised of a cash dividend paid of approximately $314.5 million to our Parent’s equity holders on April 3, 2012, offset by net proceeds on long-term debt of $253.0 million due to our debt refinancing on April 3, 2012, distributions to noncontrolling interests of $58.5 million and a net increase in cash held on behalf of noncontrolling interests of $9.3 million.

Cash and cash equivalents were $63.1 million at September 30, 2012 as compared to $41.8 million at December 31, 2011, and the net working capital deficit was $106.5 million at September 30, 2012 as compared to $121.9 million at December 31, 2011. The overall negative working capital position at September 30, 2012 and December 31, 2011 is primarily the result of $149.2 million and $139.6 million due to affiliates, respectively, associated with our practice of holding our unconsolidated facilities’ cash. As discussed below, we have sufficient availability under our credit facility, together with our operating cash flows, to service our obligations.

Debt

We intend to fund our ongoing capital and working capital requirements through a combination of cash flows from operations and borrowings under our $125.0 million revolving credit facility. We believe that funds generated by operations and funds available under the revolving credit facility will be sufficient to meet working capital requirements over at least the next 12 months. However, in the future, we may have to incur additional debt or issue additional debt or equity securities from time to time. We may be unable to obtain sufficient financing on satisfactory terms or at all.

On April 3, 2012, we amended our existing credit facility, issued new senior unsecured notes, redeemed all validly tendered outstanding notes pursuant to the previously announced tender offer and consent solicitation, and deposited funds with the trustee to redeem the remaining outstanding notes (which have since all been redeemed). In addition, we distributed the stock of our U.K. subsidiary to our Parent’s equity holders. As a result of the spin-off, we no longer have any ownership in the U.K operations.

The amended credit facility provides a new term loan and modifies the terms of our existing term loan. The amended credit facility provides borrowings up to $958.2 million, consisting of $144.9 million in non-extended term loans maturing in April 2014; $313.3 million in extended term loans maturing in April 2017; $375.0 million in a new term loan maturing in April 2019; and $125.0

33

million under the new revolving facility maturing in April 2017. In conjunction with the amendment to the credit facility, we repaid $16.0 million that was outstanding on our existing revolver and also repaid $45.0 million of our existing term loan. The non-extended, extended and new term loans each require quarterly principal payments of 0.25% of the outstanding balance as of April 3, 2012 with the remaining balances due in 2014 for the non-extended term loans, in 2017 for the extended term loans and in 2019 for the new term loan. No principal payments are required on the revolving credit facility until its maturity in 2017. At September 30, 2012, we had $123.4 million available for borrowing under the revolving credit facility, representing the facility’s $125.0 million capacity, net of the $1.6 million of outstanding letters of credit.

Interest rates on the amended credit facility are based on the prime rate or LIBOR plus a margin of 1.00% to 4.75%. Additionally, we pay 0.50% per annum on the daily-unused commitment of the new revolving credit facility. We also pay a quarterly participation fee of 2.13% per annum related to outstanding letters of credit.

The amended credit facility is guaranteed by USPI Holdings, Inc. and its current and future direct and indirect 100%-owned domestic subsidiaries, subject to certain exceptions, and borrowings under the credit facility are secured by a first priority security interest in all real and personal property of these subsidiaries, as well as a first priority pledge of our capital stock and the capital stock of each of our wholly owned domestic subsidiaries. Additionally, the credit facility contains various restrictive covenants, including financial covenants that limit our ability and the ability of our subsidiaries to borrow money or guarantee other indebtedness, grant liens, make investments, sell assets, pay dividends, enter into sale-leaseback transactions or issue and sell capital stock. We believe we were in compliance with these covenants at September 30, 2012.

On May 1, 2012, we completed the redemption of all our remaining $240.0 million 8 7/8% senior subordinated notes and $200.0 million 9 1/4%/10% senior subordinated toggle notes, which was funded by our issuance of $440.0 million 9.0% senior notes due 2020 (the Notes). Interest on the Notes is payable on April 1 and October 1 of each year, and commenced on October 1, 2012. The Notes are unsecured senior obligations of our company; however, the Notes are guaranteed by all of our current and future direct and indirect 100%-owned domestic subsidiaries. Additionally, the Notes contain various restrictive covenants, including financial covenants that limit our ability and the ability of our subsidiaries to borrow money or guarantee other indebtedness, grant liens, make investments, sells assets, pay dividends, enter into sale-leaseback transactions or issue and sell capital stock. We believe we were in compliance with these covenants at September 30, 2012.

Contractual Cash Obligations

Our contractual cash obligations as of September 30, 2012 are summarized as follows:

	Payments Due by Period
Contractual Cash Obligations	Total		Within 1 Year		Years 2 and 3		Years 4 and 5		Beyond 5 Years
	(In thousands)
Long-term debt obligations:
Amended senior secured credit facility – new term loan(1)	$	373,125	$	3,750	$	7,500	$	7,500	$	354,375
Amended senior secured credit facility — non-extended term loan(1)		144,428		1,444		142,984		—		—
Amended senior secured credit facility — extended term loan(1)		310,874		3,124		6,249		301,501		—
Senior unsecured notes(1)		440,000		—		—		—		440,000
Other debt at operating subsidiaries(1)		36,326		7,096		9,246		5,970		14,014
Interest on long-term debt obligations(2)		531,776		83,243		159,870		153,207		135,456
Capitalized lease obligations(3)		44,546		5,380		8,739		6,928		23,499
Operating lease obligations		73,716		13,889		22,263		16,618		20,946
Total contractual cash obligations	$	1,954,791	$	117,926	$	356,851	$	491,724	$	988,290

(1) Scheduled principal payments

(2) Represents interest due on long-term debt obligations. For variable rate debt, the interest is calculated using the September 30, 2012 rates applicable to each debt instrument.

(3) Includes principal and interest.

Debt at Operating Subsidiaries

Our operating subsidiaries, many of which have noncontrolling investors who share in the cash flow of these entities, have debt consisting primarily of capitalized lease obligations. This debt is generally non-recourse to USPI, the parent company, and is generally secured by the assets of those operating entities. The total amount of these obligations, which was approximately $62.4 million at

34

September 30, 2012, is included in our consolidated balance sheet because the borrower or obligated entity meets the requirements for consolidated financial reporting. Our average percentage ownership, weighted based on the individual subsidiary’s amount of debt and capitalized lease obligations, of these consolidated subsidiaries was approximately 45% at September 30, 2012. Similar to our consolidated facilities, our unconsolidated facilities have debts, including capitalized lease obligations, that are generally non-recourse to USPI. With respect to our unconsolidated facilities, these debts are not included in our consolidated financial statements. At September 30, 2012, the total debt on the balance sheets of our unconsolidated affiliates was approximately $410.2 million. Our average percentage ownership, weighted based on the individual affiliate’s amount of debt, of these unconsolidated affiliates was approximately 26% at September 30, 2012. USPI or one of its wholly owned subsidiaries had collectively guaranteed $31.4 million of the $410.2 million in total debt of our unconsolidated affiliates as of September 30, 2012. In addition, our unconsolidated affiliates have obligations under operating leases, of which USPI or a wholly owned subsidiary had guaranteed $15.0 million as of September 30, 2012. Of the total $46.4 million of guarantees related to unconsolidated affiliates, approximately $8.1 million represents guarantees of obligations of four facilities which have been sold. We have full recourse to the buyers with respect to the $8.1 million related to the sold facilities. Some of the facilities we are currently developing will be accounted for under the equity method. As these facilities become operational, they will have debt and lease obligations.

Related Party Transactions

Included in general and administrative expenses are management fees payable to an affiliate of Welsh Carson, which holds a controlling interest in our company, in the amount of $0.5 million and $1.5 million for both the three month and nine months ended September 30, 2012 and 2011, respectively. Such amounts accrue at an annual rate of $2.0 million. We pay $1.0 million in cash per year with the unpaid balance due and payable upon a change in control. At September 30, 2012, we had approximately $6.0 million accrued related to such management fee, of which $0.5 million is included in other current liabilities and $5.5 million is included in other long-term liabilities in the accompanying consolidated balance sheet.

ITEM 3. Quantitative and Qualitative Disclosures About Market Risk

Market risk represents the risk of loss that may impact our financial position, results of operations or cash flows due to adverse changes in interest rates and other relevant market risks. Our primary market risk is a change in interest rates associated with variable-rate borrowings. Historically, we have not held or issued derivative financial instruments other than the use of variable-to-fixed interest rate swaps for portions of our borrowings under credit facilities with commercial lenders as required by credit agreements. We do not use derivative instruments for speculative purposes. The interest rate swaps serve to stabilize our cash flow and expense but ultimately may cost more or less in interest than if we had carried all of our debt at a variable rate over the swap term.

Our financing arrangements with many commercial lenders are based on the spread over Prime or LIBOR. At September 30, 2012, $476.3 million of our outstanding debt was in fixed rate instruments and the remaining $828.4 million was in variable rate instruments. Accordingly, a hypothetical 100 basis point increase in market interest rates would result in additional annual expense of approximately $8.3 million.

Until April 3, 2012, our United Kingdom revenues were a significant portion of our total revenues. As discussed previously, on April 3, 2012, we distributed the stock of our U.K. subsidiary to our parent company’s preferred stockholders. We were exposed to risks associated with operating internationally, including foreign currency exchange risk and taxes and regulatory changes. Our United Kingdom facilities operated in a natural hedge to a large extent because both expenses and revenues were denominated in the local currency. Additionally, our borrowings in the United Kingdom were denominated in the local currency. Historically, the cash generated from our operations in the United Kingdom was utilized within that country to finance development and acquisition activity as well as for repayment of debt denominated in the local currency. Accordingly, we have not generally utilized financial instruments to hedge our foreign currency exchange risk, except as described below.

In December 2011, one of our U.S. subsidiaries loaned our former U.K. subsidiary £15.0 million to fund the purchase of a hospital in Sheffield, England. In order to protect us against foreign currency fluctuations, in January 2012, we entered into a forward contract with a bank to lock in the receipt of $21.5 million when the loan was due on May 31, 2012. In conjunction with the spin-off noted above, our U.K. subsidiary fully repaid the £15.0 million loan on April 3, 2012. As a result, we settled the forward contract on April 4, 2012 which resulted in a payment to the bank for approximately $0.9 million.

ITEM 4. Controls and Procedures

The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, have evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined by applicable SEC rules) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based upon that evaluation, the Chief Executive Officer and the Chief Financial Officer have concluded that, as of the end of such period, the Company’s disclosure controls and procedures are effective in bringing to their attention on a timely basis material information relating to the Company (including its consolidated subsidiaries) required to be included in the Company’s periodic filings with the SEC. There have been no significant changes in the Company’s internal controls over financial reporting (as defined by applicable SEC rules) that occurred during the Company’s fiscal quarter ended September 30, 2012 that have materially affected or are reasonably likely to materially affect the Company’s internal controls over financial reporting.

35

PART II — OTHER INFORMATION

ITEM 1. Legal Proceedings

From time to time the Company may be named as a party to legal claims and proceedings in the ordinary course of business. The Company’s management is not aware of any claims or proceedings that might have a material adverse impact on the Company.

ITEM 6. Exhibits

3.1	Amended and Restated Certificate of Incorporation (previously filed as an exhibit to the Company’s Registration Statement on Form S-4 (No. 333-144337) and incorporated herein by reference).
3.2	Amended and Restated Bylaws (previously filed as an exhibit to the Company’s Registration Statement on Form S-4 (No. 333-144337) and incorporated herein by reference).
31.1*	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*	Certification of Chief Executive Officer pursuant Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*	Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101**	The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2012, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets at September 30, 2012 and December 31, 2011, (ii) Consolidated Statements of Income for the three and nine months ended September 30, 2012 and 2011, (iii) Consolidated Statements of Cash Flows for the nine months ended September 30, 2012 and 2011, (iv) Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2012 and 2011, (v) Consolidated Statement of Changes in Equity for the three and nine months ended September 30, 2012 and 2011 and (iv) Notes to Consolidated Financial Statements.

* Filed herewith

** Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

36

SIGNATURES

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

	United Surgical Partners International, Inc.
By:	/s/    Mark A. Kopser
	Mark A. Kopser
	Executive Vice President
	and Chief Financial Officer
	(Principal Financial Officer)

Date: November 5, 2012

By:	/s/    J. Anthony Martin
	J. Anthony Martin
	Vice President, Corporate Controller,
	and Chief Accounting Officer
	(Principal Accounting Officer)

37

Exhibit Index

3.1	Amended and Restated Certificate of Incorporation (previously filed as an exhibit to the Company’s Registration Statement on Form S-4 (No. 333-144337) and incorporated herein by reference).
3.2	Amended and Restated Bylaws (previously filed as an exhibit to the Company’s Registration Statement on Form S-4 (No. 333-144337) and incorporated herein by reference).
31.1*	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*	Certification of Chief Executive Officer pursuant Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*	Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101**	The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2012, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets at September 30, 2012 and December 31, 2011, (ii) Consolidated Statements of Income for the three and nine months ended September 30, 2012 and 2011, (iii) Consolidated Statements of Cash Flows for the nine months ended September 30, 2012 and 2011, (iv) Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2012 and 2011, (v) Consolidated Statement of Changes in Equity for the three and nine months ended September 30, 2012 and 2011 and (iv) Notes to Consolidated Financial Statements.

* Filed herewith.

** Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

38

EX-31.1

EXHIBIT 31.1

SARBANES-OXLEY SECTION 302 CERTIFICATION

I, William H. Wilcox, certify that:

1. I have reviewed this quarterly report on Form 10-Q of United Surgical Partners International, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;

4. The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

5. The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

/s/ William H. Wilcox

William H. Wilcox

Chief Executive Officer

November 5, 2012

EX-31.2

EXHIBIT 31.2

SARBANES-OXLEY SECTION 302 CERTIFICATION

I, Mark A. Kopser, certify that:

1. I have reviewed this quarterly report on Form 10-Q of United Surgical Partners International, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;

4. The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

5. The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

/s/ Mark A. Kopser

Mark A. Kopser

Chief Financial Officer

November 5, 2012

EX-32.1

EXHIBIT 32.1

SARBANES-OXLEY SECTION 906 CERTIFICATION

In connection with the Quarterly Report of United Surgical Partners International, Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2012 as filed with the Securities and Exchange Commission (the “Report”), I, William H. Wilcox, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ William H. Wilcox

William H. Wilcox

Chief Executive Officer

November 5, 2012

EX-32.2

EXHIBIT 32.2

SARBANES-OXLEY SECTION 906 CERTIFICATION

In connection with the Quarterly Report of United Surgical Partners International, Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2012 as filed with the Securities and Exchange Commission (the “Report”), I, Mark A. Kopser, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Mark A. Kopser

Mark A. Kopser

Chief Financial Officer

November 5, 2012

XML

Equity (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Equity-based compensation included in Statements of Income, classified by line item
Expense before income tax benefit	$ 351	$ 243	$ 1,188	$ 1,008
Income tax benefit	(28)	(30)	(190)	(178)
Total equity-based compensation expense, net of tax	323	213	998	830
Salaries, benefits and other employee costs [Member]
Equity-based compensation included in Statements of Income, classified by line item
Expense before income tax benefit	131	80	314	326
General and administrative expenses [Member]
Equity-based compensation included in Statements of Income, classified by line item
Expense before income tax benefit	220	163	681	682
Other operating expenses [Member]
Equity-based compensation included in Statements of Income, classified by line item
Expense before income tax benefit			$ 193

XML

Condensed Consolidating Financial Statements (Details Textual)	9 Months Ended
	Sep. 30, 2012
Condensed Consolidating Financial Statements (Textual) [Abstract]
Guarantors obligation percentage	100.00%

XML

Condensed Consolidating Financial Statements (Details 2) (USD $) In Thousands, unless otherwise specified	3 Months Ended						9 Months Ended
	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Sep. 30, 2011	Jun. 30, 2011	Mar. 31, 2011	Sep. 30, 2012	Sep. 30, 2011
Condensed Consolidating Statements of Comprehensive Income:
Net income	$ 26,621			$ 31,884			$ 68,880	$ 98,385
Other comprehensive income:
Foreign currency translation adjustments				(7,246)			4,938	2,831
Unrealized gain on available-for-sale securities, net of tax							48	36
Unrealized loss on foreign currency contract, net of tax							(560)
Unrealized gain on interest rate swap, net of tax				342			15	2,523
Reclassification due to spin-off of U.K. subsidiary:
Foreign currency translation adjustments							58,682
Total other comprehensive income	37	58,682	4,404	(6,888)	1,518	10,760	63,123	5,390
Comprehensive income	10,020			8,398			80,337	54,183
Less: Comprehensive income attributable to noncontrolling interests	(16,638)			(16,598)			(51,666)	(49,592)
Comprehensive income attributable to USPI's common stockholder							80,337	54,183
Guarantors [Member]
Condensed Consolidating Statements of Comprehensive Income:
Net income							17,214	48,793
Other comprehensive income:
Foreign currency translation adjustments							4,938	2,831
Unrealized gain on available-for-sale securities, net of tax							48	36
Unrealized loss on foreign currency contract, net of tax							(560)
Unrealized gain on interest rate swap, net of tax							15	2,523
Reclassification due to spin-off of U.K. subsidiary:
Foreign currency translation adjustments							58,682
Total other comprehensive income							63,123	5,390
Comprehensive income							80,337	54,183
Less: Comprehensive income attributable to noncontrolling interests
Comprehensive income attributable to USPI's common stockholder							80,337	54,183
Non-Participating Investees [Member]
Condensed Consolidating Statements of Comprehensive Income:
Net income							96,458	101,571
Other comprehensive income:
Foreign currency translation adjustments							4,938	2,831
Unrealized gain on available-for-sale securities, net of tax
Unrealized loss on foreign currency contract, net of tax
Unrealized gain on interest rate swap, net of tax							15	168
Reclassification due to spin-off of U.K. subsidiary:
Foreign currency translation adjustments							58,682
Total other comprehensive income							63,635	2,999
Comprehensive income							160,093	104,570
Less: Comprehensive income attributable to noncontrolling interests							(12,547)	(11,640)
Comprehensive income attributable to USPI's common stockholder							147,546	92,930
Consolidation Adjustments [Member]
Condensed Consolidating Statements of Comprehensive Income:
Net income							(44,792)	(51,979)
Other comprehensive income:
Foreign currency translation adjustments							(4,938)	(2,831)
Unrealized gain on available-for-sale securities, net of tax
Unrealized loss on foreign currency contract, net of tax
Unrealized gain on interest rate swap, net of tax							(15)	(168)
Reclassification due to spin-off of U.K. subsidiary:
Foreign currency translation adjustments							(58,682)
Total other comprehensive income							(63,635)	(2,999)
Comprehensive income							(108,427)	(54,978)
Less: Comprehensive income attributable to noncontrolling interests							(39,119)	(37,952)
Comprehensive income attributable to USPI's common stockholder							$ (147,546)	$ (92,930)

XML

Noncontrolling Interests (Details 1) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Sep. 30, 2011	Jun. 30, 2011	Mar. 31, 2011
Schedule of redeemable noncontrolling interests
Distributions to noncontrolling interests	$ (2,155)	$ (3,063)	$ (3,511)	$ (1,624)	$ (2,654)	$ (1,578)
Purchases of noncontrolling interests	(401)	584	(189)	(517)	(1,086)	(23)
Sales of noncontrolling interests	3,005	(61)	(15,480)	(540)	(9,715)	(2,052)
Noncontrolling Interests - Redeemable [Member]
Schedule of redeemable noncontrolling interests
Balance, Beginning	135,626	128,952	106,668	98,648	84,875	81,668
Net income attributable to noncontrolling interests	14,517	15,368	15,690	14,641	15,041	14,104
Distributions to noncontrolling interests	(16,552)	(16,155)	(17,151)	(16,425)	(14,471)	(13,939)
Purchases of noncontrolling interests	(335)	(5,909)	(349)	(492)	(291)	(145)
Sales of noncontrolling interests	2,015	983	20,186	1,009	12,510	3,187
Acquisition of new business	4,184	12,387	3,908	1,457	984
Balance, Ending	$ 139,455	$ 135,626	$ 128,952	$ 98,838	$ 98,648	$ 84,875

XML

Condensed Consolidating Financial Statements (Tables)

9 Months Ended

Sep. 30, 2012

Condensed Consolidating Financial Statements [Abstract]

Condensed Consolidating Balance Sheets

Condensed Consolidating Balance Sheets:

As of September 30, 2012	Guarantors		Non-Participating Investees		Consolidation Adjustments			Consolidated Total
ASSETS
Current assets:
Cash and cash equivalents	$	60,605	$	2,481	$	—		$	63,086
Available for sale securities		10,591		—		—			10,591
Accounts receivable, net		—		36,868		—			36,868
Other receivables		17,615		23,111		(26,488	)		14,238
Inventories of supplies		774		6,608		—			7,382
Prepaids and other current assets		26,286		1,351		—			27,637
Total current assets		115,871		70,419		(26,488	)		159,802
Property and equipment, net		29,446		91,839		456			121,741
Investments in unconsolidated affiliates		877,057		—		(424,279	)		452,778
Goodwill and intangible assets, net		947,419		139,736		388,780			1,475,935
Other assets		23,522		890		(439	)		23,973
Total assets	$	1,993,315	$	302,884	$	(61,970	)	$	2,234,229
LIABILITIES AND EQUITY
Liabilities and Equity
Current liabilities:
Accounts payable	$	6,297	$	10,608	$	—		$	16,905
Accrued expenses and other		241,543		15,594		(25,917	)		231,220
Current portion of long-term debt		8,661		10,630		(1,089	)		18,202
Total current liabilities		256,501		36,832		(27,006	)		266,327
Long-term debt, less current portion		1,261,321		51,474		(207	)		1,312,588
Other long-term liabilities		186,005		4,866		(546	)		190,325
Parent’s equity		289,488		184,871		(184,871	)		289,488
Noncontrolling interests		—		24,841		150,660			175,501
Total liabilities and equity	$	1,993,315	$	302,884	$	(61,970	)	$	2,234,229
As of December 31, 2011	Guarantors		Non-Participating Investees		Consolidation Adjustments			Consolidated Total
ASSETS
Current assets:
Cash and cash equivalents	$	36,198	$	5,624	$	—		$	41,822
Available for sale securities		4,815		—		—			4,815
Accounts receivable, net		—		58,057		—			58,057
Other receivables		44,627		52,122		(86,250	)		10,499
Inventories of supplies		737		9,380		—			10,117
Prepaids and other current assets		27,433		2,585		—			30,018
Total current assets		113,810		127,768		(86,250	)		155,328
Property and equipment, net		23,705		211,296		320			235,321
Investments in unconsolidated affiliates		952,116		—		(507,382	)		444,734
Goodwill and intangible assets, net		930,186		251,882		354,417			1,536,485
Other assets		88,206		511		(67,087	)		21,630
Total assets	$	2,108,023	$	591,457	$	(305,982	)	$	2,393,498
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	1,789	$	26,976	$	—		$	28,765
Accrued expenses and other		227,790		79,603		(84,408	)		222,985
Current portion of long-term debt		5,595		21,193		(1,301	)		25,487
Total current liabilities		235,174		127,772		(85,709	)		277,237
Long-term debt, less current portion		952,717		91,038		(786	)		1,042,969
Other long-term liabilities		187,444		11,618		(309	)		198,753
Parent’s equity		732,688		335,461		(335,461	)		732,688
Noncontrolling interests		—		25,568		116,283			141,851
Total liabilities and equity	$	2,108,023	$	591,457	$	(305,982	)	$	2,393,498

Condensed Consolidating Statements of Income

Condensed Consolidating Statements of Income:

For the Nine Months Ended September 30, 2012	Guarantors			Non-Participating Investees			Consolidation Adjustments			Consolidated Total
Revenues	$	83,432		$	320,401		$	(18,113	)	$	385,720
Equity in earnings of unconsolidated affiliates		104,768			2,787			(41,348	)		66,207
Operating expenses, excluding depreciation and amortization		63,035			212,975			(17,572	)		258,438
Depreciation and amortization		5,230			12,088			91			17,409
Operating income		119,935			98,125			(41,980	)		176,080
Interest expense, net		(57,856	)		(3,706	)		—			(61,562	)
Loss on early retirement of debt		(37,981	)		—			—			(37,981	)
Other income (expense), net		(760	)		(388	)		400			(748	)
Income from continuing operations before income taxes		23,338			94,031			(41,580	)		75,789
Income tax expense		(9,558	)		(785	)		—			(10,343	)
Income from continuing operations		13,780			93,246			(41,580	)		65,446
Earnings from discontinued operations, net of tax		3,434			3,212			(3,212	)		3,434
Net income		17,214			96,458			(44,792	)		68,880
Less: Net income attributable to noncontrolling interests		—			(12,547	)		(39,119	)		(51,666	)
Net income attributable to Parent	$	17,214		$	83,911		$	(83,911	)	$	17,214

For the Nine Months Ended September 30, 2011	Guarantors			Non-Participating Investees			Consolidation Adjustments			Consolidated Total
Revenues	$	78,097		$	304,032		$	(17,327	)	$	364,802
Equity in earnings of unconsolidated affiliates		96,581			2,489			(42,147	)		56,923
Operating expenses, excluding depreciation and amortization		56,341			198,453			(15,521	)		239,273
Depreciation and amortization		5,071			10,762			113			15,946
Operating income		113,266			97,306			(44,066	)		166,506
Interest expense, net		(44,890	)		(3,039	)		—			(47,929	)
Other income (expense), net		(196	)		265			(183	)		(114	)
Income from continuing operations before income taxes		68,180			94,532			(44,249	)		118,463
Income tax expense		(26,600	)		(691	)		—			(27,291	)
Income from continuing operations		41,580			93,841			(44,249	)		91,172
Earnings from discontinued operations, net of tax		7,213			7,730			(7,730	)		7,213
Net income		48,793			101,571			(51,979	)		98,385
Less: Net income attributable to noncontrolling interests		—			(11,640	)		(37,952	)		(49,592	)
Net income attributable to Parent	$	48,793		$	89,931		$	(89,931	)	$	48,793

Condensed Consolidating Statements of Comprehensive Income

Condensed Consolidating Statements of Comprehensive Income:

For the Nine Months Ended September 30, 2012	Guarantors			Non-Participating Investees			Consolidation Adjustments			Consolidated Total
Net income	$	17,214		$	96,458		$	(44,792	)	$	68,880
Other comprehensive income:
Foreign currency translation adjustments		4,938			4,938			(4,938	)		4,938
Unrealized gain on available for sale securities, net of tax		48			—			—			48
Unrealized loss on foreign currency contract, net of tax		(560	)		—			—			(560	)
Unrealized gain on interest rate swap, net of tax		15			15			(15	)		15
Reclassification due to spin-off of U.K. subsidiary:
Foreign currency translation adjustments		58,682			58,682			(58,682	)		58,682
Total other comprehensive income		63,123			63,635			(63,635	)		63,123
Comprehensive income		80,337			160,093			(108,427	)		132,003
Comprehensive income attributable to noncontrolling interests		—			(12,547	)		(39,119	)		(51,666	)
Comprehensive income attributable to Parent	$	80,337		$	147,546		$	(147,546	)	$	80,337
For the Nine Months Ended September 30, 2011	Guarantors			Non-Participating Investees			Consolidation Adjustments			Consolidated Total
Net income	$	48,793		$	101,571		$	(51,979	)	$	98,385
Other comprehensive income:
Foreign currency translation adjustments		2,831			2,831			(2,831	)		2,831
Unrealized gain on available for sale securities, net of tax		36			—			—			36
Unrealized gain on interest rate swap, net of tax		2,523			168			(168	)		2,523
Total other comprehensive income		5,390			2,999			(2,999	)		5,390
Comprehensive income		54,183			104,570			(54,978	)		103,775
Comprehensive income attributable to noncontrolling interests		—			(11,640	)		(37,952	)		(49,592	)
Comprehensive income attributable to Parent	$	54,183		$	92,930		$	(92,930	)	$	54,183

Condensed Consolidating Statements of Cash Flows

Condensed Consolidating Statements of Cash Flows:

For the Nine Months Ended September 30, 2012	Guarantors			Non-Participating Investees			Consolidation Adjustments			Consolidated Total
Cash flows from operating activities:
Net income	$	17,214		$	96,458		$	(44,792	)	$	68,880
Earnings on discontinued operations		(3,434	)		(3,212	)		3,212			(3,434	)
Loss on early retirement of debt		37,981			—			--00			37,981
Changes in operating and intercompany assets and liabilities and noncash items included in net income		20,059			8,621			(2,244	)		26,436
Net cash provided by operating activities		71,820			101,867			(43,824	)		129,863
Cash flows from investing activities:
Purchases of property and equipment, net		(9,279	)		(5,308	)		—			(14,587	)
Purchases and sales of new businesses and equity interests, net		(36,428	)		(225	)		—			(36,653	)
Other items, net		1,148			6,322			(6,762	)		708
Net cash (used in) provided by investing activities		(44,559	)		789			(6,762	)		(50,532	)
Cash flows from financing activities:
Long-term borrowings, net		255,312			(3,065	)		790			253,037
Purchases and sales of noncontrolling interests, net		5,783			—			—			5,783
Distributions to noncontrolling interests		—			(102,146	)		43,600			(58,546	)
Payment of common stock dividend		(314,458	)		—			—			(314,458	)
Increase in cash held on behalf of noncontrolling interest holders and other		3,015			349			5,972			9,336
Net cash used in financing activities		(50,348	)		(104,862	)		50,362			(104,848	)
Net cash provided by (used in) discontinued operations		47,494			(937	)		224			46,781
Net increase (decrease) in cash		24,407			(3,143	)		—			21,264
Cash at the beginning of the period		36,198			5,624			—			41,822
Cash at the end of the period	$	60,605		$	2,481		$	—		$	63,086
For the Nine Months Ended September 30, 2011	Guarantors			Non-Participating Investees			Consolidation Adjustments			Consolidated Total
Cash flows from operating activities:
Net income	$	48,793		$	101,571		$	(51,979	)	$	98,385
Earnings on discontinued operations		(7,213	)		(7,730	)		7,730			(7,213	)
Changes in operating and intercompany assets and liabilities and noncash items included in net income		32,994			475			1,856			35,325
Net cash provided by operating activities		74,574			94,316			(42,393	)		126,497
Cash flows from investing activities:
Purchases of property and equipment, net		(2,318	)		(5,973	)		—			(8,291	)
Purchases and sales of new businesses and equity interests, net		(50,681	)		—			—			(50,681	)
Other items, net		1,315			19,334			(21,948	)		(1,299	)
Net cash used in investing activities		(51,684	)		13,361			(21,948	)		(60,271	)
Cash flows from financing activities:
Long-term borrowings, net		(28,949	)		(5,733	)		2,255			(32,427	)
Purchases and sales of noncontrolling interests, net		531			—			—			531
Distributions to noncontrolling interests		—			(92,964	)		42,393			(50,571	)
Increase in cash held on behalf of noncontrolling interest holders and other		(5,748	)		(361	)		19,693			13,584
Net cash used in financing activities		(34,166	)		(99,058	)		64,341			(68,883	)
Net cash provided by (used in) discontinued operations		(1,363	)		(307	)		—			(1,670	)
Net (decrease) increase in cash		(12,639	)		8,312			—			(4,327	)
Cash at the beginning of the period		60,186			67			—			60,253
Cash at the end of the period	$	47,547		$	8,379		$	—		$	55,926

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Related Party Transactions (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Related Party Transactions (Textual) [Abstract]
Accrued management fee	$ 6.0		$ 6.0
Related Party Transactions (Additional Textual) [Abstract]
General and administrative expenses	0.5	0.5	1.5	1.5
Management fees accrual at annual rate			2.0
Cash paid to related party			1.0
Other current liabilities [Member]
Related Party Transactions (Textual) [Abstract]
Accrued management fee	0.5		0.5
Other long-term liabilities [Member]
Related Party Transactions (Textual) [Abstract]
Accrued management fee	$ 5.5		$ 5.5

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Derivatives (Details) In Millions, unless otherwise specified	1 Months Ended	9 Months Ended
	Dec. 31, 2011 GBP (£)	Sep. 30, 2012	Apr. 04, 2012 USD ($)	Jan. 31, 2012 USD ($)
Derivatives (Textual) [Abstract]
Loan to U.K. subsidiary	£ 15.0
Foreign currency contract				21.5
Loan, due date		May 31, 2012
Settlement of Foreign currency contract due to spin-off of U.K. subsidiary			$ 0.9

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Condensed Consolidating Financial Statements (Details 3) (USD $) In Thousands, unless otherwise specified	3 Months Ended			9 Months Ended
	Sep. 30, 2012	Jun. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Cash flows from operating activities:
Net income	$ 26,621		$ 31,884	$ 68,880	$ 98,385
Earnings from discontinued operations	2		(2,006)	(3,434)	(7,213)
Loss on early retirement of debt				(37,981)
Changes in operating and intercompany assets and liabilities and noncash items included in net income				26,436	35,325
Net cash provided by operating activities				129,863	126,497
Cash flows from investing activities:
Purchases of property and equipment				(14,587)	(8,291)
Purchases and sales of new businesses and equity interests, net				(36,653)	(50,681)
Other items, net				708	(1,299)
Net cash provided by investing activities				(50,532)	(60,271)
Cash flows from financing activities:
Long-term borrowings, net				788,764	5,002
Purchases and sales of noncontrolling interests, net				5,783	531
Distributions to noncontrolling interests				(58,546)	(50,571)
Payment of common stock dividend		314,458		(314,458)
Increase in cash held on behalf of unconsolidated affiliates and other				9,336	13,584
Net cash used in financing activities				(104,848)	(68,883)
Net cash provided by (used in) discontinued operations				46,781	(1,670)
Net increase (decrease) in cash				21,264	(4,327)
Cash and cash equivalents at beginning of period				41,822	60,253
Cash and cash equivalents at end of period	63,086		55,926	63,086	55,926
Guarantors [Member]
Cash flows from operating activities:
Net income				17,214	48,793
Earnings from discontinued operations				(3,434)	(7,213)
Loss on early retirement of debt				(37,981)
Changes in operating and intercompany assets and liabilities and noncash items included in net income				20,059	32,994
Net cash provided by operating activities				71,820	74,574
Cash flows from investing activities:
Purchases of property and equipment				(9,279)	(2,318)
Purchases and sales of new businesses and equity interests, net				(36,428)	(50,681)
Other items, net				1,148	1,315
Net cash provided by investing activities				(44,559)	(51,684)
Cash flows from financing activities:
Long-term borrowings, net				255,312	(28,949)
Purchases and sales of noncontrolling interests, net				5,783	531
Distributions to noncontrolling interests
Payment of common stock dividend				(314,458)
Increase in cash held on behalf of unconsolidated affiliates and other				3,015	(5,748)
Net cash used in financing activities				(50,348)	(34,166)
Net cash provided by (used in) discontinued operations				47,494	(1,363)
Net increase (decrease) in cash				24,407	(12,639)
Cash and cash equivalents at beginning of period				36,198	60,186
Cash and cash equivalents at end of period	60,605		47,547	60,605	47,547
Non-Participating Investees [Member]
Cash flows from operating activities:
Net income				96,458	101,571
Earnings from discontinued operations				(3,212)	(7,730)
Loss on early retirement of debt
Changes in operating and intercompany assets and liabilities and noncash items included in net income				8,621	475
Net cash provided by operating activities				101,867	94,316
Cash flows from investing activities:
Purchases of property and equipment				(5,308)	(5,973)
Purchases and sales of new businesses and equity interests, net				(225)
Other items, net				6,322	19,334
Net cash provided by investing activities				789	13,361
Cash flows from financing activities:
Long-term borrowings, net				(3,065)	(5,733)
Purchases and sales of noncontrolling interests, net
Distributions to noncontrolling interests				102,146	(92,964)
Payment of common stock dividend
Increase in cash held on behalf of unconsolidated affiliates and other				349	(361)
Net cash used in financing activities				(104,862)	(99,058)
Net cash provided by (used in) discontinued operations				(937)	(307)
Net increase (decrease) in cash				(3,143)	8,312
Cash and cash equivalents at beginning of period				5,624	67
Cash and cash equivalents at end of period	2,481		8,379	2,481	8,379
Consolidation Adjustments [Member]
Cash flows from operating activities:
Net income				(44,792)	(51,979)
Earnings from discontinued operations				3,212	7,730
Loss on early retirement of debt
Changes in operating and intercompany assets and liabilities and noncash items included in net income				(2,244)	1,856
Net cash provided by operating activities				(43,824)	(42,393)
Cash flows from investing activities:
Purchases of property and equipment
Purchases and sales of new businesses and equity interests, net
Other items, net				(6,762)	(21,948)
Net cash provided by investing activities				(6,762)	(21,948)
Cash flows from financing activities:
Long-term borrowings, net				790	2,255
Purchases and sales of noncontrolling interests, net
Distributions to noncontrolling interests				(43,600)	42,393
Payment of common stock dividend
Increase in cash held on behalf of unconsolidated affiliates and other				5,972	19,693
Net cash used in financing activities				50,362	64,341
Net cash provided by (used in) discontinued operations				224
Net increase (decrease) in cash
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period

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Discontinued Operations

9 Months Ended

Sep. 30, 2012

Discontinued Operations [Abstract]

Discontinued Operations

(2) Discontinued Operations

The Company classifies formerly consolidated subsidiaries in which it has no continuing involvement and consolidated subsidiaries that are held for sale as discontinued operations. The gains or losses on the disposal of these subsidiaries are classified within discontinued operations in the Company’s consolidated statements of income. The Company has also reclassified the historical financial results of these subsidiaries to remove the operations of these entities from the Company’s revenues and expenses, collapsing the net income or loss from these operations into a single line within discontinued operations.

Discontinued operations consist primarily of the Company’s former U.K. operations. On April 3, 2012, the Company distributed the stock of its U.K. subsidiary to its Parent’s equity holders. Subsequent to April 3, 2012, the Company has no ownership in the U.K. operations. Because GAAP requires spin-off transactions to be accounted for at carrying value, there was no gain or loss recorded on the spin-off of the U.K. operations.

Discontinued operations also include two investments in surgery centers that were designated as held for sale at December 31, 2010 and were sold in February 2011. The estimated net loss on disposal of these operations was recorded in the fourth quarter of 2010 and adjusted in 2011.

The table below summarizes certain amounts related to the Company’s discontinued operations for the periods presented (in thousands):

	Three Months Ended September 30, 2012			Nine Months Ended September 30, 2012			Three Months Ended September 30, 2011			Nine Months Ended September 30, 2011
Revenues	$	—		$	36,528		$	27,196		$	83,371
Income (loss) from discontinued operations before income taxes	$	(3	)	$	4,701		$	2,547		$	10,277
Income tax benefit (expense)		1			(1,267	)		(541	)		(2,535	)
Income (loss) from discontinued operations	$	(2	)	$	3,434		$	2,006		$	7,742
Loss on disposal of discontinued operations before income taxes	$	—		$	—		$	—		$	(902	)
Income tax benefit		—			—			—			373
Total loss from disposal of discontinued operations	$	—		$	—		$	—		$	(529	)

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Commitments and Contingencies (Details) (USD $) In Millions, unless otherwise specified	9 Months Ended
	Sep. 30, 2012 Facility	Sep. 30, 2012 Consolidated subsidiaries [Member]	Sep. 30, 2012 Unconsolidated affiliated companies [Member]	Jan. 01, 2003 Unconsolidated affiliated companies [Member]	Sep. 30, 2012 Non Affiliated Entity [Member]	Sep. 30, 2012 Obligation of sale of facilities [Member]
Commitments and Contingencies (Textual) [Abstract]
Maximum aggregate payments for guarantees of indebtedness and other obligations	$ 67.9	$ 21.5	$ 38.3		$ 46.4	$ 8.1
Long-term liabilities related to guarantees				0.4
Commitments and Contingencies (Additional Textual) [Abstract]
Number of facilities sold	4
Debt Instrument Year	2022
Letters of credit outstanding	$ 1.6

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Investments in Unconsolidated Affiliates and Business Combination (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012 Facility	Sep. 30, 2011 Facility	Sep. 30, 2012 Facility	Sep. 30, 2011 Facility
Summarized financial information equity method investees
Unconsolidated facilities operated at period-end	144	143	144	143
Income statement information:
Revenues	$ 416,929	$ 378,644	$ 1,254,082	$ 1,100,997
Operating expenses:
Salaries, benefits, and other employee costs	98,842	89,960	294,750	263,513
Medical services and supplies	106,081	88,194	310,012	256,077
Other operating expenses	97,972	88,021	290,839	256,786
Net gain on asset disposals	(7,026)	(100)	(6,496)	(479)
Depreciation and amortization	17,944	17,286	54,342	48,743
Total operating expenses	313,813	283,361	943,447	824,640
Operating income	103,116	95,283	310,635	276,357
Interest expense, net	(8,341)	(8,883)	(26,165)	(24,711)
Other, net	385	(1)	399	10
Income before income taxes	95,160	86,399	284,869	251,656
Balance sheet information:
Current assets	313,714	307,475	313,714	307,475
Noncurrent assets	578,332	613,027	578,332	613,027
Current liabilities	196,990	178,421	196,990	178,421
Noncurrent liabilities	$ 407,333	$ 435,795	$ 407,333	$ 435,795

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Discontinued Operations (Details Textual) (USD $)	9 Months Ended
	Sep. 30, 2012 Investment
Discontinued Operations (Textual) [Abstract]
Gain or loss recorded on the spin-off of the U.K. operations	$ 0
Investments in surgery centers	2

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Condensed Consolidating Financial Statements (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011	Sep. 30, 2011	Dec. 31, 2010
Current assets:
Cash and cash equivalents	$ 63,086	$ 41,822	$ 55,926	$ 60,253
Available for sale securities	10,591	4,815
Accounts receivable, net	36,868	58,057
Other receivables	14,238	10,499
Inventories of supplies	7,382	10,117
Prepaids and other current assets	14,719	15,314
Total current assets	159,802	155,328
Property and equipment, net	121,741	235,321
Investments in unconsolidated affiliates	452,778	444,734
Goodwill and intangible assets, net	1,475,935	1,536,485
Other assets	23,973	21,630
Total assets	2,234,229	2,393,498
Current liabilities:
Accounts payable	16,905	28,765
Accrued expenses and other	231,220	222,985
Current portion of long-term debt	18,202	25,487
Total current liabilities	266,327	277,237
Long-term debt, less current portion	1,312,588	1,042,969
Other long-term liabilities	28,812	30,807
Parent's equity	289,488	732,688
Noncontrolling interests	36,046	35,183
Total liabilities and equity	2,234,229	2,393,498
Guarantors [Member]
Current assets:
Cash and cash equivalents	60,605	36,198	47,547	60,186
Available for sale securities	10,591	4,815
Accounts receivable, net
Other receivables	17,615	44,627
Inventories of supplies	774	737
Prepaids and other current assets	26,286	27,433
Total current assets	115,871	113,810
Property and equipment, net	29,446	23,705
Investments in unconsolidated affiliates	877,057	952,116
Goodwill and intangible assets, net	947,419	930,186
Other assets	23,522	88,206
Total assets	1,993,315	2,108,023
Current liabilities:
Accounts payable	6,297	1,789
Accrued expenses and other	241,543	227,790
Current portion of long-term debt	8,661	5,595
Total current liabilities	256,501	235,174
Long-term debt, less current portion	1,261,321	952,717
Other long-term liabilities	186,005	187,444
Parent's equity	289,488	732,688
Noncontrolling interests
Total liabilities and equity	1,993,315	2,108,023
Non-Participating Investees [Member]
Current assets:
Cash and cash equivalents	2,481	5,624	8,379	67
Available for sale securities
Accounts receivable, net	36,868	58,057
Other receivables	23,111	52,122
Inventories of supplies	6,608	9,380
Prepaids and other current assets	1,351	2,585
Total current assets	70,419	127,768
Property and equipment, net	91,839	211,296
Investments in unconsolidated affiliates
Goodwill and intangible assets, net	139,736	251,882
Other assets	890	511
Total assets	302,884	591,457
Current liabilities:
Accounts payable	10,608	26,976
Accrued expenses and other	15,594	79,603
Current portion of long-term debt	10,630	21,193
Total current liabilities	36,832	127,772
Long-term debt, less current portion	51,474	91,038
Other long-term liabilities	4,866	11,618
Parent's equity	184,871	335,461
Noncontrolling interests	24,841	25,568
Total liabilities and equity	302,884	591,457
Consolidation Adjustments [Member]
Current assets:
Cash and cash equivalents
Available for sale securities
Accounts receivable, net
Other receivables	(26,488)	(86,250)
Inventories of supplies
Prepaids and other current assets
Total current assets	(26,488)	(86,250)
Property and equipment, net	456	320
Investments in unconsolidated affiliates	(424,279)	(507,382)
Goodwill and intangible assets, net	388,780	354,417
Other assets	(439)	(67,087)
Total assets	(61,970)	(305,982)
Current liabilities:
Accounts payable
Accrued expenses and other	(25,917)	(84,408)
Current portion of long-term debt	(1,089)	(1,301)
Total current liabilities	(27,006)	(85,709)
Long-term debt, less current portion	(207)	(786)
Other long-term liabilities	(546)	(309)
Parent's equity	(184,871)	(335,461)
Noncontrolling interests	150,660	116,283
Total liabilities and equity	$ (61,970)	$ (305,982)

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Investments in Unconsolidated Affiliates and Business Combination (Details 1) (USD $) In Millions, unless otherwise specified	9 Months Ended
	Sep. 30, 2012
Summary of cash outflow by acquisitions and sale of equity interests
Net cash outflow by acquisitions and sale of equity interests	$ 19.6
Feb-2012 [Member] | Midland, Texas [Member]
Summary of cash outflow by acquisitions and sale of equity interests
Net cash outflow by acquisitions and sale of equity interests	3.0
Mar-2012 [Member] | Chandler, Arizona [Member]
Summary of cash outflow by acquisitions and sale of equity interests
Net cash outflow by acquisitions and sale of equity interests	0.8
Sep-2012 [Member] | New Jersey [Member]
Summary of cash outflow by acquisitions and sale of equity interests
Net cash outflow by acquisitions and sale of equity interests	12.3
Various [Member] | Various [Member]
Summary of cash outflow by acquisitions and sale of equity interests
Net cash outflow by acquisitions and sale of equity interests	$ 3.5

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Investments in Unconsolidated Affiliates and Business Combination (Details Textual) (USD $) In Millions, unless otherwise specified	9 Months Ended
	Sep. 30, 2012 Facility
Investments in Unconsolidated Affiliates and Business Combination (Textual) [Abstract]
Consolidated facilities by the company	59
Number of increased consolidated facilities	144
Number of facilities	203
Net cash outflow by acquisitions and sale of equity interests	$ 19.6
Additional ownership percentage in New Jersey	44.00%
Purchase price adjustments, cash paid	17.1
Gain on adjusting the carrying value of existing ownership to fair value	$ 0.2
Number of surgical facilities	2

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Basis of Presentation

9 Months Ended

Sep. 30, 2012

Basis of Presentation [Abstract]

Basis of Presentation

(1) Basis of Presentation

(a) Description of Business

United Surgical Partners International, Inc., a Delaware Corporation, and subsidiaries (USPI or the Company) was formed in February 1998 for the primary purpose of ownership and management of ambulatory surgery centers, surgical hospitals and related businesses. At September 30, 2012, the Company, headquartered in Dallas, Texas, operated 203 short-stay surgical facilities. Of these 203 facilities, the Company consolidates the results of 59 and accounts for 144 under the equity method. The majority of the Company’s facilities are jointly owned with local physicians and a not-for-profit healthcare system that has other healthcare businesses in the region. At September 30, 2012, the Company had agreements with not-for-profit healthcare systems providing for joint ownership of 142 of the Company’s 203 facilities and also providing a framework for the construction or acquisition of additional facilities in the future. All but two of the Company’s facilities include physician owners. Prior to April 3, 2012, the Company operated seven facilities in the United Kingdom. On April 3, 2012, the Company distributed the stock of its U.K. subsidiary to the Company’s parent, USPI Group Holdings, Inc., equity holders. Subsequent to April 3, 2012, the Company has no further ownership in the U.K. operations. The Company’s former U.K. operations have now been classified as “discontinued operations” in its historical results of operations.

The Company is subject to changes in government legislation that could impact Medicare, Medicaid, and other government reimbursement levels and is also subject to increased levels of managed care penetration and changes in payor patterns that may impact the level and timing of payments for services rendered.

The Company maintains its books and records on the accrual basis of accounting, and the accompanying consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States (GAAP). The accompanying consolidated financial statements and notes should be read in conjunction with the Company’s December 31, 2011 Form 10-K. It is management’s opinion that the accompanying consolidated financial statements reflect all adjustments necessary for a fair presentation of the results for the periods presented. The results of operations for any interim period are not necessarily indicative of results for the full year.

The Company operates in one reportable business segment, the ownership and operation of surgical facilities in the United States.

The preparation of financial statements in conformity with GAAP requires management to make a number of estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

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Noncontrolling Interests (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Noncontrolling Interests
Net income attributable to USPI's common stockholder	$ 9,983	$ 15,286	$ 17,214	$ 48,793
Transfers to the noncontrolling interests:
Decrease in USPI's additional paid-in capital for sales of subsidiaries' equity interests	(276)	(813)	(16,804)	(13,261)
(Decrease) increase in USPI's additional paid-in capital for purchases of subsidiaries equity interests	(372)	(517)	238	(996)
Net transfers to noncontrolling interests	(648)	(1,330)	(16,566)	(14,257)
Increase in equity from net income attributable to USPI and transfers to noncontrolling interests	$ 9,335	$ 13,956	$ 648	$ 34,536

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Equity (Details 1) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Equity-based compensation included in Statements of Income, classified by type of award
Expense before income tax benefit	$ 351	$ 243	$ 1,188	$ 1,008
Income tax benefit	(28)	(30)	(190)	(178)
Total equity-based compensation expense, net of tax	323	213	998	830
Share awards [Member]
Equity-based compensation included in Statements of Income, classified by type of award
Expense before income tax benefit	111	123	409	721
Stock options [Member]
Equity-based compensation included in Statements of Income, classified by type of award
Expense before income tax benefit	240	120	586	287
Warrants [Member]
Equity-based compensation included in Statements of Income, classified by type of award
Expense before income tax benefit			$ 193

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Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
ASSETS
Cash and cash equivalents	$ 63,086	$ 41,822
Available for sale securities (Note 8)	10,591	4,815
Accounts receivable, net of allowance for doubtful accounts of $8,427 and $8,576, respectively	36,868	58,057
Other receivables	14,238	10,499
Inventories of supplies	7,382	10,117
Deferred tax asset, net	12,918	14,704
Prepaids and other current assets	14,719	15,314
Total current assets	159,802	155,328
Property and equipment, net	121,741	235,321
Investments in unconsolidated affiliates	452,778	444,734
Goodwill	1,131,943	1,209,345
Intangible assets, net	343,992	327,140
Other assets	23,973	21,630
Total assets	2,234,229	2,393,498
LIABILITIES AND EQUITY
Accounts payable	16,905	28,765
Accrued salaries and benefits	22,343	24,405
Due to affiliates	149,249	139,628
Accrued interest	20,033	6,671
Current portion of long-term debt	18,202	25,487
Other current liabilities	39,595	52,281
Total current liabilities	266,327	277,237
Long-term debt, less current portion	1,312,588	1,042,969
Other long-term liabilities	28,812	30,807
Deferred tax liability, net	161,513	167,946
Total liabilities	1,769,240	1,518,959
Noncontrolling interests - redeemable (Note 4)	139,455	106,668
Commitments and contingencies (Note 11)
United Surgical Partners International, Inc. (USPI) stockholder's equity:
Common stock, $0.01 par value; 100 shares authorized; issued and outstanding
Additional paid-in capital	290,908	778,030
Accumulated other comprehensive income (loss)	90	(63,033)
Retained earnings (deficit)	(1,510)	17,691
Total USPI stockholder's equity	289,488	732,688
Noncontrolling interests - nonredeemable (Note 4)	36,046	35,183
Total equity	325,534	767,871
Total liabilities and equity	$ 2,234,229	$ 2,393,498

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Condensed Consolidating Financial Statements (Details 1) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Condensed Consolidating Statements of Income:
Revenues	$ 128,305	$ 122,261	$ 385,720	$ 364,802
Equity in earnings of unconsolidated affiliates	22,118	18,890	66,207	56,923
Operating expenses, excluding depreciation and amortization			258,438	239,273
Depreciation and amortization	5,746	5,226	17,409	15,946
Operating income	56,096	53,754	176,080	166,506
Interest expense, net	(23,260)	(15,308)	(62,034)	(48,396)
Loss on early retirement of debt	(23)		(37,981)
Other income (expense), net	34	6	(748)	(114)
Income from continuing operations before income taxes			75,789	118,463
Income tax expense	(6,394)	(8,717)	(10,343)	(27,291)
Income from continuing operations	26,623	29,878	65,446	91,172
Earnings from discontinued operations, net of tax	(2)	2,006	3,434	7,213
Net income	26,621	31,884	68,880	98,385
Less: Net income attributable to noncontrolling interests	(16,638)	(16,598)	(51,666)	(49,592)
Net income attributable to Parent	9,983	15,286	17,214	48,793
Guarantors [Member]
Condensed Consolidating Statements of Income:
Revenues			83,432	78,097
Equity in earnings of unconsolidated affiliates			104,768	96,581
Operating expenses, excluding depreciation and amortization			63,035	56,341
Depreciation and amortization			5,230	5,071
Operating income			119,935	113,266
Interest expense, net			(57,856)	(44,890)
Loss on early retirement of debt			(37,981)
Other income (expense), net			(760)	(196)
Income from continuing operations before income taxes			23,338	68,180
Income tax expense			(9,558)	(26,600)
Income from continuing operations			13,780	41,580
Earnings from discontinued operations, net of tax			3,434	7,213
Net income			17,214	48,793
Less: Net income attributable to noncontrolling interests
Net income attributable to Parent			17,214	48,793
Non-Participating Investees [Member]
Condensed Consolidating Statements of Income:
Revenues			320,401	304,032
Equity in earnings of unconsolidated affiliates			2,787	2,489
Operating expenses, excluding depreciation and amortization			212,975	198,453
Depreciation and amortization			12,088	10,762
Operating income			98,125	97,306
Interest expense, net			(3,706)	(3,039)
Loss on early retirement of debt
Other income (expense), net			(388)	265
Income from continuing operations before income taxes			94,031	94,532
Income tax expense			(785)	(691)
Income from continuing operations			93,246	93,841
Earnings from discontinued operations, net of tax			3,212	7,730
Net income			96,458	101,571
Less: Net income attributable to noncontrolling interests			(12,547)	(11,640)
Net income attributable to Parent			83,911	89,931
Consolidation Adjustments [Member]
Condensed Consolidating Statements of Income:
Revenues			(18,113)	(17,327)
Equity in earnings of unconsolidated affiliates			(41,348)	(42,147)
Operating expenses, excluding depreciation and amortization			(17,572)	(15,521)
Depreciation and amortization			91	113
Operating income			(41,980)	(44,066)
Interest expense, net
Loss on early retirement of debt
Other income (expense), net			400	(183)
Income from continuing operations before income taxes			(41,580)	(44,249)
Income tax expense
Income from continuing operations			(41,580)	(44,249)
Earnings from discontinued operations, net of tax			(3,212)	(7,730)
Net income			(44,792)	(51,979)
Less: Net income attributable to noncontrolling interests			(39,119)	(37,952)
Net income attributable to Parent			$ (83,911)	$ (89,931)

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Consolidated Statements of Changes in Equity (USD $) In Thousands, except Share data	Total USD ($)	Outstanding Shares	Par Value USD ($)	Additional Paid-in Capital USD ($)	Accumulated Other Comprehensive Income (Loss) USD ($)	Retained Earnings (Deficit) USD ($)	Noncontrolling Interests Non-Redeemable USD ($)
Beginning balance at Dec. 31, 2010	$ 821,151			$ 784,573	$ (66,351)	$ 68,535	$ 34,394
Beginning balance, shares at Dec. 31, 2010		100
Distributions to noncontrolling interests	(1,578)						(1,578)
Purchases of noncontrolling interests	(23)			4			(27)
Sales of noncontrolling interests	(2,052)			(2,324)			272
Contribution related to equity award grants by Parent and other	450			450
Net income (Loss)	17,329					15,721	1,608
Other comprehensive income	10,760				10,760
Ending balance at Mar. 31, 2011	846,037			782,703	(55,591)	84,256	34,669
Ending balance, shares at Mar. 31, 2011		100
Distributions to noncontrolling interests	(2,654)						(2,654)
Purchases of noncontrolling interests	(1,086)			(483)			(603)
Sales of noncontrolling interests	(9,715)			(10,124)			409
Contribution related to equity award grants by Parent and other	352			352
Net income (Loss)	20,027					17,786	2,241
Other comprehensive income	1,518				1,518
Ending balance at Jun. 30, 2011	854,479			772,448	(54,073)	102,042	34,062
Ending balance, shares at Jun. 30, 2011		100
Distributions to noncontrolling interests	(1,624)						(1,624)
Purchases of noncontrolling interests	(517)			(517)
Sales of noncontrolling interests	(540)			(813)			273
Contribution related to equity award grants by Parent and other	267			267
Net income (Loss)	17,243					15,286	1,957
Other comprehensive income	(6,888)				(6,888)
Ending balance at Sep. 30, 2011	862,420			771,385	(60,961)	117,328	34,668
Ending balance, shares at Sep. 30, 2011		100
Beginning balance at Dec. 31, 2011	767,871			778,030	(63,033)	17,691	35,183
Beginning balance, shares at Dec. 31, 2011		100
Distributions to noncontrolling interests	(3,511)						(3,511)
Purchases of noncontrolling interests	(189)			(103)			(86)
Sales of noncontrolling interests	(15,480)			(16,064)			584
Contribution related to equity award grants by Parent and other	366			366
Net income (Loss)	20,714					18,724	1,990
Other comprehensive income	4,404				4,404
Ending balance at Mar. 31, 2012	774,175			762,229	(58,629)	36,415	34,160
Ending balance, shares at Mar. 31, 2012		100
Distributions to noncontrolling interests	(3,063)						(3,063)
Purchases of noncontrolling interests	584			713			(129)
Sales of noncontrolling interests	(61)			(464)			403
Contribution related to equity award grants by Parent and other	575			575
Spin-off of U.K. subsidiaries (Note 2)	(193,843)			(193,320)			(523)
Dividend to Parent's equity holders (Note 9)	(314,458)			(278,043)		(36,415)
Net income (Loss)	(9,513)					(11,493)	1,980
Other comprehensive income	58,682				58,682
Ending balance at Jun. 30, 2012	313,078			291,690	53	(11,493)	32,828
Ending balance, shares at Jun. 30, 2012		100
Distributions to noncontrolling interests	(2,155)						(2,155)
Purchases of noncontrolling interests	(401)			(372)			(29)
Sales of noncontrolling interests	3,005			(276)			3,281
Contribution related to equity award grants by Parent and other	(134)			(134)
Net income (Loss)	12,104					9,983	2,121
Other comprehensive income	37				37
Ending balance at Sep. 30, 2012	$ 325,534			$ 290,908	$ 90	$ (1,510)	$ 36,046
Ending balance, shares at Sep. 30, 2012		100

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Long-term Debt (Details) (USD $) In Millions, unless otherwise specified	9 Months Ended
	Sep. 30, 2012	Apr. 03, 2012
Long-term Debt (Textual) [Abstract]
Maximum value of new debt arrangement		$ 958.2
Outstanding notes	440.0
Long Term Debt (Additional Textual) [Abstract]
Outstanding amount of amended credit facility	828.4
Weighted average interest rate of credit facility	5.10%
Percentage of ownership in domestic subsidiaries	100.00%
8 7/8% senior subordinated notes [Member]
Long-term Debt (Textual) [Abstract]
Senior notes	240.0
Senior notes, interest rate	8.875%
9 1/4%/10% senior subordinated toggle notes [Member]
Long-term Debt (Textual) [Abstract]
Senior notes	200.0
9 1/4%/10% senior subordinated toggle notes [Member] | Numerator [Member]
Long-term Debt (Textual) [Abstract]
Senior notes, interest rate	9.25%
9 1/4%/10% senior subordinated toggle notes [Member] | Denominator [Member]
Long-term Debt (Textual) [Abstract]
Senior notes, interest rate	10.00%
9.0% senior notes due 2020 [Member]
Long-term Debt (Textual) [Abstract]
Outstanding notes	440.0
Senior notes, interest rate	9.00%
Senior notes, maturity date	Apr. 01, 2020
Notes payable interest rate commencing date	Oct. 01, 2012
Minimum [Member]
Long-term Debt (Textual) [Abstract]
Interest rates of amended credit facility	1.00%
Maximum [Member]
Long-term Debt (Textual) [Abstract]
Interest rates of amended credit facility	4.75%
Non-extended term loans [Member]
Long-term Debt (Textual) [Abstract]
Credit facility maximum borrowings capacity		144.9
Credit facility expiration date	Apr. 03, 2014
Quarterly principal payments percentage	0.25%
Extended term loans [Member]
Long-term Debt (Textual) [Abstract]
Credit facility maximum borrowings capacity		313.3
Credit facility expiration date	Apr. 03, 2017
Quarterly principal payments percentage	0.25%
New term loans [Member]
Long-term Debt (Textual) [Abstract]
Credit facility maximum borrowings capacity		375.0
Credit facility expiration date	Apr. 03, 2019
Repayment of debt	45.0
Quarterly principal payments percentage	0.25%
New revolving facility [Member]
Long-term Debt (Textual) [Abstract]
Credit facility maximum borrowings capacity		125.0
Credit facility expiration date	Apr. 03, 2017
Repayment of debt	16.0
Quarterly principal payments percentage	0.00%
Daily-unused commitment fee percentage	0.50%
Amount available for borrowing	123.4
Letter of Credit [Member]
Long-term Debt (Textual) [Abstract]
Quarterly participation fee percentage	2.13%
Net amount on outstanding letters of credit	$ 1.6

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Investments in Unconsolidated Affiliates and Business Combination (Tables)

9 Months Ended

Sep. 30, 2012

Investments in Unconsolidated Affiliates and Business Combination [Abstract]

Summarized financial information equity method investees

Summarized financial information for the Company’s equity method investees on a combined basis is as follows (amounts are in thousands, except number of facilities, reflect 100% of the investees’ results on an aggregated basis and are unaudited):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Unconsolidated facilities operated at period-end		144			143			144			143
Income statement information:
Revenues	$	416,929		$	378,644		$	1,254,082		$	1,100,997
Operating expenses:
Salaries, benefits, and other employee costs		98,842			89,960			294,750			263,513
Medical services and supplies		106,081			88,194			310,012			256,077
Other operating expenses		97,972			88,021			290,839			256,786
Net gain on asset disposals		(7,026	)		(100	)		(6,496	)		(479	)
Depreciation and amortization		17,944			17,286			54,342			48,743
Total operating expenses		313,813			283,361			943,447			824,640
Operating income		103,116			95,283			310,635			276,357
Interest expense, net		(8,341	)		(8,883	)		(26,165	)		(24,711	)
Other, net		385			(1	)		399			10
Income before income taxes	$	95,160		$	86,399		$	284,869		$	251,656
Balance sheet information:
Current assets	$	313,714		$	307,475		$	313,714		$	307,475
Noncurrent assets		578,332			613,027			578,332			613,027
Current liabilities		196,990			178,421			196,990			178,421
Noncurrent liabilities		407,333			435,795			407,333			435,795

Summary of cash outflow by acquisitions and sale of equity interests

During the nine months ended September 30, 2012, these transactions resulted in a net cash outflow of approximately $19.6 million, which is summarized as follows:

Effective Date	Facility Location	Amount
Investments
February 2012	Midland, Texas(1)	$	3.0 million
March 2012	Chandler, Arizona(1)		0.8 million
September 2012	New Jersey(2)		12.3 million
Various	Various(3)		3.5 million
Total		$	19.6 million

(1) Acquisition of a noncontrolling interest in and right to manage a surgical facility in which the Company previously had no involvement. The facility is jointly owned with a hospital partner and local physicians.

(2) Acquisition of a noncontrolling interest in and right to manage two surgical facilities in Hackensack and Paramus, New Jersey, respectively, in which the Company previously had no involvement. The facilities are jointly owned with a hospital partner and local physicians.

(3) Represents the net payment related to various other purchases and sales of equity interests and contributions of cash to equity method investees.

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Other Investments (Details) (Entity operations not control with voting rights [Member], USD $) In Millions, unless otherwise specified	9 Months Ended
	Sep. 30, 2012 Facility	Sep. 30, 2011
Entity operations not control with voting rights [Member]
Other Investments (Textual) [Abstract]
Operations not control with voting rights entities	1
Number of surgical facilities operates and manages	7
Total assets	$ 78.7	$ 79.6
Total liabilities owed to third parties	$ 17.2	$ 19.3

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Equity (Tables)

9 Months Ended

Sep. 30, 2012

Equity [Abstract]

Equity-based compensation included in statements of income, classified by line item

Total equity-based compensation, included in the accompanying consolidated statements of income, classified by line item, is as follows (in thousands):

	Three Months Ended September 30, 2012			Nine Months Ended September 30, 2012			Three Months Ended September 30, 2011			Nine Months Ended September 30, 2011
Salaries, benefits and other employee costs	$	131		$	314		$	80		$	326
General and administrative expenses		220			681			163			682
Other operating expenses		—			193			—			—
Expense before income tax benefit		351			1,188			243			1,008
Income tax benefit		(28	)		(190	)		(30	)		(178	)
Total equity-based compensation expense, net of tax	$	323		$	998		$	213		$	830

Equity-based compensation included in statements of income, classified by type of award

Total equity-based compensation, included in the accompanying consolidated statements of income, classified by type of award, is as follows (in thousands):

	Three Months Ended September 30, 2012			Nine Months Ended September 30, 2012			Three Months Ended September 30, 2011			Nine Months Ended September 30, 2011
Share awards	$	111		$	409		$	123		$	721
Stock options		240			586			120			287
Warrants		—			193			—			—
Expense before income tax benefit		351			1,188			243			1,008
Income tax benefit		(28	)		(190	)		(30	)		(178	)
Total equity-based compensation expense, net of tax	$	323		$	998		$	213		$	830

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Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
Cash flows from operating activities:
Net income	$ 68,880	$ 98,385
Adjustments to reconcile net income to net cash provided by operating activities:
Earnings from discontinued operations	(3,434)	(7,213)
Loss on early retirement of debt	37,981
Provision for doubtful accounts	6,314	6,743
Depreciation and amortization	17,409	15,946
Net loss (gain) on deconsolidations, disposals and impairments	660	(3,749)
Amortization of debt issue costs and discount	2,973	2,593
Deferred income tax	(9,252)	11,331
Equity in earnings of unconsolidated affiliates, net of distributions received	(3,285)	5,694
Equity-based compensation	1,188	1,008
Increases (decreases) in cash from changes in operating assets and liabilities, net of effects from purchases of new businesses:
Accounts receivable	134	(383)
Other receivables	(6,537)	(937)
Inventories of supplies, prepaids and other current assets	(2,494)	(2,328)
Accounts payable and other current liabilities	17,810	(3,292)
Long-term liabilities	1,516	2,699
Net cash provided by operating activities	129,863	126,497
Cash flows from investing activities:
Purchases of new businesses and equity interests, net of cash received	(38,994)	(63,996)
Proceeds from sale of businesses and equity interests	2,341	13,315
Purchases of property and equipment	(14,587)	(8,291)
Purchases of marketable securities, net	(5,768)	(4,820)
Returns of capital from unconsolidated affiliates	4,347	1,197
Decrease in deposits and notes receivable	2,129	2,324
Net cash used in investing activities	(50,532)	(60,271)
Cash flows from financing activities:
Proceeds from long-term debt, net of debt issuance costs	788,764	5,002
Payments on long-term debt	(535,727)	(37,429)
Increase in cash held on behalf of unconsolidated affiliates and other	9,336	13,584
Sales of noncontrolling interests, net	5,783	531
Payment of common stock dividend	(314,458)
Distributions to noncontrolling interests	(58,546)	(50,571)
Net cash used in financing activities	(104,848)	(68,883)
Cash flows from discontinued operations:
Operating cash flows	5,101	13,872
Investing cash flows	(11,383)	(15,029)
Financing cash flows	53,142	(454)
Effect of exchange rate changes on cash and cash equivalents	(79)	(59)
Net cash provided by (used in) discontinued operations	46,781	(1,670)
Net increase (decrease) in cash and cash equivalents	21,264	(4,327)
Cash and cash equivalents at beginning of period	41,822	60,253
Cash and cash equivalents at end of period	63,086	55,926
Supplemental information:
Interest paid - continuing operations	45,734	37,955
Income taxes paid - continuing operations	18,593	26,834
Interest paid - discontinued operations	772	1,430
Income taxes paid - discontinued operations	1,989	2,121
Non-cash transactions:
Spin Off of U.K. subsidiary	(193,843)
Assets acquired under capital lease obligations	$ 9,073	$ 5,291

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Consolidated Balance Sheets (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Consolidated Balance Sheets [Abstract]
Allowance for doubtful accounts receivable	$ 8,427	$ 8,576
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	100	100
Common stock, shares issued	100	100
Common stock, shares outstanding	100	100

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Related Party Transactions

9 Months Ended

Sep. 30, 2012

Related Party Transactions [Abstract]

Related Party Transactions

(10) Related Party Transactions

Included in general and administrative expenses are management fees payable to an affiliate of Welsh Carson, which holds a controlling interest in the Company, in the amount of $0.5 million and $1.5 million in both the three months and nine months ended September 30, 2012 and 2011, respectively. Such amounts accrue at an annual rate of $2.0 million. The Company pays $1.0 million in cash per year with the unpaid balance due and payable upon a change in control. At September 30, 2012, the Company had approximately $6.0 million accrued related to such management fee, of which $0.5 million is included in other current liabilities and $5.5 million is included in other long-term liabilities in the accompanying consolidated balance sheet.

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Document and Entity Information	9 Months Ended
	Sep. 30, 2012	Nov. 05, 2012
Document and Entity Information [Abstract]
Entity Registrant Name	UNITED SURGICAL PARTNERS INTERNATIONAL INC
Entity Central Index Key	0001101723
Document Type	10-Q
Document Period End Date	Sep. 30, 2012
Amendment Flag	false
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q3
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Entity Common Stock, Shares Outstanding		100

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Commitments and Contingencies

9 Months Ended

Sep. 30, 2012

Commitments and Contingencies [Abstract]

Commitments and Contingencies

(11) Commitments and Contingencies

As of September 30, 2012, the Company had issued guarantees of the indebtedness and other obligations of its investees to third parties, which could potentially require the Company to make maximum aggregate payments totaling approximately $67.9 million. Of the total, $21.5 million relates to the obligations of consolidated subsidiaries, whose obligations are included in the Company’s consolidated balance sheet and related disclosures, and $38.3 million of the remaining $46.4 million relates to the obligations of unconsolidated affiliated companies, whose obligations are not included in the Company’s consolidated balance sheet and related disclosures. The remaining $8.1 million represents a guarantee of the obligations of four facilities which have been sold. The Company has full recourse to the buyers with respect to these amounts.

The Company has recorded long-term liabilities totaling approximately $0.4 million related to the guarantees the Company has issued to unconsolidated affiliates on or after January 1, 2003, and has not recorded any liabilities related to guarantees issued prior to that date. Generally, these arrangements (a) consist of guarantees of real estate and equipment financing, (b) are secured by the related property and equipment, (c) require payments by the Company, when the collateral is insufficient, in the event of a default by the investee primarily obligated under the financing, (d) expire as the underlying debt matures at various dates through 2022, and (e) provide no recourse for the Company to recover any amounts from third parties. The Company also has $1.6 million of letters of credit outstanding.

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Consolidated Statements of Income (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Revenues:
Net patient service revenues	$ 106,886	$ 102,296	$ 320,818	$ 305,345
Management and contract service revenues	19,138	17,807	58,063	52,874
Other revenues	2,281	2,158	6,839	6,583
Total revenues	128,305	122,261	385,720	364,802
Equity in earnings of unconsolidated affiliates	22,118	18,890	66,207	56,923
Operating expenses:
Salaries, benefits, and other employee costs	32,999	31,461	99,649	92,536
Medical services and supplies	20,184	18,888	58,882	56,289
Other operating expenses	21,838	19,879	62,925	58,495
General and administrative expenses	9,326	10,456	30,008	28,959
Provision for doubtful accounts	2,001	2,758	6,314	6,743
Net loss (gain) on deconsolidations, disposals and impairments	2,233	(1,271)	660	(3,749)
Depreciation and amortization	5,746	5,226	17,409	15,946
Total operating expenses	94,327	87,397	275,847	255,219
Operating income	56,096	53,754	176,080	166,506
Interest income	170	143	472	467
Interest expense, net	(23,260)	(15,308)	(62,034)	(48,396)
Loss on early retirement of debt	(23)		(37,981)
Other, net	34	6	(748)	(114)
Total other expense, net	(23,079)	(15,159)	(100,291)	(48,043)
Income from continuing operations before income taxes	33,017	38,595	75,789	118,463
Income tax expense	(6,394)	(8,717)	(10,343)	(27,291)
Income from continuing operations	26,623	29,878	65,446	91,172
Discontinued operations, net of tax (Note 2):
Income (loss) from discontinued operations	(2)	2,006	3,434	7,742
Gain on disposal of discontinued operations				(529)
Total earnings (loss) from discontinued operations	(2)	2,006	3,434	7,213
Net income	26,621	31,884	68,880	98,385
Less: Net income attributable to noncontrolling interests	(16,638)	(16,598)	(51,666)	(49,592)
Net income attributable to USPI's common stockholder	9,983	15,286	17,214	48,793
Amounts attributable to USPI's common stockholder:
Income from continuing operations, net of tax	9,984	13,355	13,834	41,769
Earnings (loss) from discontinued operations, net of tax	(1)	1,931	3,380	7,024
Net income attributable to USPI's common stockholder	$ 9,983	$ 15,286	$ 17,214	$ 48,793

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Long-term Debt

9 Months Ended

Sep. 30, 2012

Long-term Debt [Abstract]

Long-term Debt

(5) Long-term Debt

On April 3, 2012, the Company amended its senior secured credit facility, issued new senior unsecured notes, redeemed all validly tendered outstanding notes pursuant to the previously announced tender offer and consent solicitation, deposited funds with the trustee to redeem the remaining outstanding notes (which have since all been redeemed), and distributed the stock of its U.K. subsidiary to the equity holders of the Company’s parent, USPI Group Holdings, Inc (Parent).

The amended credit facility provided a new term loan and modified the terms of the Company’s existing term loan. The amended credit facility provided for borrowings up to $958.2 million, consisting of $144.9 million in non-extended term loans maturing in April 2014; $313.3 million in extended term loans maturing in April 2017; $375.0 million in new term loans maturing in April 2019; and $125.0 million under a revolving facility maturing in April 2017. In conjunction with the amendment to the credit facility, the Company repaid $16.0 million that was outstanding on its existing revolver and repaid $45.0 million of its existing term loan. The non-extended, extended and new term loans each require quarterly principal payments of 0.25% of the outstanding balance as of April 3, 2012 with the remaining balances due in 2014 for the non-extended term loans, in 2017 for the extended term loans and in 2019 for the new term loan. No principal payments are required on the revolving credit facility until its maturity in 2017. At September 30, 2012, the Company had $828.4 million outstanding under the amended credit facility at a weighted average interest rate of approximately 5.1%. At September 30, 2012, the Company had $123.4 million available for borrowing under the revolving credit facility, representing the facility’s $125.0 million capacity, net of the $1.6 million of outstanding letters of credit.

Interest rates on the amended credit facility are based on the prime rate or LIBOR plus a margin of 1.00% to 4.75%. Additionally, the Company pays 0.50% per annum on the daily-unused commitment of the new revolving credit facility. The Company also pays a quarterly participation fee of 2.13% per annum related to outstanding letters of credit.

The amended credit facility is guaranteed by USPI Holdings, Inc. and its current and future directly and indirectly 100%-owned domestic subsidiaries, subject to certain exceptions, and borrowings under the credit facility are secured by a first priority security interest in all real and personal property of these subsidiaries, as well as a first priority pledge of USPI’s capital stock, and the capital stock of each of USPI’s wholly owned domestic subsidiaries. Additionally, the credit facility contains various restrictive covenants, including financial covenants that limit the Company’s ability and the ability of the Company’s subsidiaries to borrow money or guarantee other indebtedness, grant liens, make investments, sell assets, pay dividends, enter into sale-leaseback transactions or issue and sell capital stock.

On May 1, 2012, the Company completed the redemption of all of its remaining $240.0 million 8 7/8% senior subordinated notes and $200.0 million 9 1/4%/10% senior subordinated toggle notes, which was funded by the Company’s issuance of $440.0 million 9.0% senior notes due 2020 (the Notes). Interest on the Notes is payable on April 1 and October 1 of each year, and commenced on October 1, 2012. The Notes are unsecured senior obligations of the Company; however, the Notes are guaranteed by all of the Company’s current and future directly and indirectly 100%-owned domestic subsidiaries. Additionally, the Notes contain various restrictive covenants, including financial covenants that limit the Company’s ability and the ability of its subsidiaries to borrow money or guarantee other indebtedness, grant liens, make investments, sells assets, pay dividends, enter into sale-leaseback transactions or issue and sell capital stock. At September 30, 2012, the Company had $440.0 million of Notes outstanding.

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Noncontrolling Interests

9 Months Ended

Sep. 30, 2012

Noncontrolling Interests [Abstract]

Noncontrolling Interests

(4) Noncontrolling Interests

The Company controls and therefore consolidates the results of 59 of its 203 facilities. Similar to its investments in unconsolidated affiliates, the Company regularly engages in the purchase and sale of equity interests with respect to its consolidated subsidiaries that do not result in a change of control. These transactions are accounted for as equity transactions, as they are undertaken among the Company, its consolidated subsidiaries, and noncontrolling interests, and their cash flow effect is classified within financing activities.

During the nine months ended September 30, 2012, the Company purchased and sold equity interests in various consolidated subsidiaries in the amounts of $1.9 million and $7.7 million, respectively. The basis difference between the Company’s carrying amount and the proceeds received or paid in each transaction is recorded as an adjustment to additional paid-in capital. The impact of these transactions is summarized as follows (in thousands):

	Three Months Ended September 30, 2012			Nine Months Ended September 30, 2012			Three Months Ended September 30, 2011			Nine Months Ended September 30, 2011
Net income attributable to USPI’s common stockholder	$	9,983		$	17,2144		$	15,286		$	48,793
Transfers to the noncontrolling interests:
Decrease in USPI’s additional paid-in capital for sales of subsidiaries’ equity interests		(276	)		(16,804	)		(813	)		(13,261	)
(Decrease) increase in USPI’s additional paid-in capital for purchases of subsidiaries’ equity interests		(372	)		238			(517	)		(996	)
Net transfers to noncontrolling interests		(648	)		(16,566	)		(1,330	)		(14,257	)
Increase in equity from net income attributable to USPI and transfers to noncontrolling interests	$	9,335		$	648		$	13,956		$	34,536

Upon the occurrence of certain fundamental regulatory changes, the Company could be obligated, under the terms of its investees’ partnership and operating agreements, to purchase some or all of the noncontrolling interests related to the Company’s consolidated subsidiaries. These repurchase requirements are limited to the portions of its facilities that are owned by physicians who perform surgery at the Company’s facilities and would be triggered by regulatory changes making the existing ownership structure illegal. While the Company is not aware of events that would make the occurrence of such a change probable, regulatory changes are outside the control of the Company. Accordingly, the noncontrolling interests subject to these repurchase provisions have been classified outside of equity and are carried as “noncontrolling interests — redeemable” on the Company’s consolidated balance sheets. The activity for the three and nine months ended September 30, 2012 and 2011 is summarized below (in thousands):

	2012 Noncontrolling Interests — Redeemable
Balance, December 31, 2011	$	106,668
Net income attributable to noncontrolling interests		15,690
Distributions to noncontrolling interests		(17,151	)
Purchases of noncontrolling interests		(349	)
Sales of noncontrolling interests		20,186
Acquisition of new business		3,908
Balance, March 31, 2012		128,952
Net income attributable to noncontrolling interests		15,368
Distributions to noncontrolling interests		(16,155	)
Purchases of noncontrolling interests		(5,909	)
Sales of noncontrolling interests		983
Acquisition of new business		12,387
Balance, June 30, 2012		135,626
Net income attributable to noncontrolling interests		14,517
Distributions to noncontrolling interests		(16,552	)
Purchases of noncontrolling interests		(335	)
Sales of noncontrolling interests		2,015
Acquisition of new business		4,184
Balance, September 30, 2012	$	139,455

	2011 Noncontrolling Interests — Redeemable
Balance, December 31, 2010	$	81,668
Net income attributable to noncontrolling interests		14,104
Distributions to noncontrolling interests		(13,939	)
Purchases of noncontrolling interests		(145	)
Sales of noncontrolling interests		3,187
Balance, March 31, 2011		84,875
Net income attributable to noncontrolling interests		15,041
Distributions to noncontrolling interests		(14,471	)
Purchases of noncontrolling interests		(291	)
Sales of noncontrolling interests		12,510
Acquisition of new business		984
Balance, June 30, 2011		98,648
Net income attributable to noncontrolling interests		14,641
Distributions to noncontrolling interests		(16,425	)
Purchases of noncontrolling interests		(492	)
Sales of noncontrolling interests		1,009
Acquisition of new business		1,457
Balance, September 30, 2011	$	98,838

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Noncontrolling Interests (Tables)

9 Months Ended

Sep. 30, 2012

Noncontrolling Interests [Abstract]

Schedule of changes in equity from net income loss attributable to USPI and transfers to noncotrolling interests

The impact of these transactions is summarized as follows (in thousands):

	Three Months Ended September 30, 2012			Nine Months Ended September 30, 2012			Three Months Ended September 30, 2011			Nine Months Ended September 30, 2011
Net income attributable to USPI’s common stockholder	$	9,983		$	17,2144		$	15,286		$	48,793
Transfers to the noncontrolling interests:
Decrease in USPI’s additional paid-in capital for sales of subsidiaries’ equity interests		(276	)		(16,804	)		(813	)		(13,261	)
(Decrease) increase in USPI’s additional paid-in capital for purchases of subsidiaries’ equity interests		(372	)		238			(517	)		(996	)
Net transfers to noncontrolling interests		(648	)		(16,566	)		(1,330	)		(14,257	)
Increase in equity from net income attributable to USPI and transfers to noncontrolling interests	$	9,335		$	648		$	13,956		$	34,536

Schedule of redeemable noncontrolling interests

The activity for the three and nine months ended September 30, 2012 and 2011 is summarized below (in thousands):

	2012 Noncontrolling Interests — Redeemable
Balance, December 31, 2011	$	106,668
Net income attributable to noncontrolling interests		15,690
Distributions to noncontrolling interests		(17,151	)
Purchases of noncontrolling interests		(349	)
Sales of noncontrolling interests		20,186
Acquisition of new business		3,908
Balance, March 31, 2012		128,952
Net income attributable to noncontrolling interests		15,368
Distributions to noncontrolling interests		(16,155	)
Purchases of noncontrolling interests		(5,909	)
Sales of noncontrolling interests		983
Acquisition of new business		12,387
Balance, June 30, 2012		135,626
Net income attributable to noncontrolling interests		14,517
Distributions to noncontrolling interests		(16,552	)
Purchases of noncontrolling interests		(335	)
Sales of noncontrolling interests		2,015
Acquisition of new business		4,184
Balance, September 30, 2012	$	139,455

	2011 Noncontrolling Interests — Redeemable
Balance, December 31, 2010	$	81,668
Net income attributable to noncontrolling interests		14,104
Distributions to noncontrolling interests		(13,939	)
Purchases of noncontrolling interests		(145	)
Sales of noncontrolling interests		3,187
Balance, March 31, 2011		84,875
Net income attributable to noncontrolling interests		15,041
Distributions to noncontrolling interests		(14,471	)
Purchases of noncontrolling interests		(291	)
Sales of noncontrolling interests		12,510
Acquisition of new business		984
Balance, June 30, 2011		98,648
Net income attributable to noncontrolling interests		14,641
Distributions to noncontrolling interests		(16,425	)
Purchases of noncontrolling interests		(492	)
Sales of noncontrolling interests		1,009
Acquisition of new business		1,457
Balance, September 30, 2011	$	98,838

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Subsequent Events

9 Months Ended

Sep. 30, 2012

Subsequent Events [Abstract]

Subsequent Events

(12) Subsequent Events

The Company has entered into letters of intent with various entities regarding possible joint venture, development, or other transactions. These possible joint ventures, developments of new facilities, or other transactions are in various stages of negotiation.

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Fair Value of Financial Instruments

9 Months Ended

Sep. 30, 2012

Fair Value of Financial Instruments [Abstract]

Fair Value of Financial Instruments

(8) Fair Value of Financial Instruments

The fair value of a financial instrument is the amount at which the instrument could be exchanged in an orderly transaction between market participants to sell the asset or transfer the liability. The Company uses fair value measurements based on quoted prices in active markets for identical assets or liabilities (Level 1), significant other observable inputs (Level 2) or unobservable inputs for assets or liabilities (Level 3), depending on the nature of the item being valued. The estimated fair values may not be representative of actual values that will be realized or settled in the future.

The carrying amounts of cash and cash equivalents, short-term investments, accounts receivable, and accounts payable approximate fair value because of the short maturity of these instruments.

The fair value of the Company’s long-term debt is determined by either (i) estimation of the discounted future cash flows of the debt at rates currently quoted or offered to the Company for similar debt instruments of comparable maturities by its lenders, or (ii) quoted market prices at the reporting date for the traded debt securities. At September 30, 2012, the aggregate carrying amount and estimated fair value of long-term debt were $1.3 billion and $1.4 billion, respectively. At September 30, 2011, the aggregate carrying amount and estimated fair value of long-term debt were each $1.0 billion. The fair value of debt is classified within Level 2 of the valuation hierarchy.

At September 30, 2012 and 2011, the Company had approximately $10.6 million and $4.8 million, respectively, of marketable securities, which are held by the Company’s wholly-owned insurance subsidiary. These investments are used in connection with its retained professional and general liability risks and are not available for general corporate purposes. The marketable securities consist of U.S. Treasury and corporate debt, are classified as available-for-sale and are recorded at fair value on the consolidated balance sheet. The fair value of these securities are classified within Level 2 of the valuation hierarchy, and are based on closing market prices of the investments when applicable, or alternatively, valuations utilizing market data and other observable inputs.

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Other Investments

9 Months Ended

Sep. 30, 2012

Other Investments [Abstract]

Other Investments

(6) Other Investments

The consolidated financial statements include the financial statements of USPI and its wholly-owned and controlled subsidiaries. The Company also determines if it is the primary beneficiary of (and therefore should consolidate) any entity whose operations it does not control with voting rights. At September 30, 2012, the Company consolidated one entity in accordance with this accounting guidance.

This entity operates and manages seven surgical facilities in the Houston, Texas area. Despite not holding a controlling voting interest, the Company is the primary beneficiary because the Company is able to make the decisions that are most significant to the operations of the entity and has provided all of the funding for the entity, which the entity has used to acquire surgical facilities. The Company has no exposure for the entity’s losses beyond this investment. Accordingly, the Company did not provide any financial or other support to the entity that it was not previously contractually required to provide during the nine months ended September 30, 2012 or 2011. At September 30, 2012 and 2011, the total assets of this entity were $78.7 million and $79.6 million, and the total liabilities owed to third parties were $17.2 million and $19.3 million, respectively. Such amounts are included in the accompanying consolidated balance sheets.

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Derivatives

9 Months Ended

Sep. 30, 2012

Derivatives [Abstract]

Derivatives

(7) Derivatives

In December 2011, one of the Company’s U.S. subsidiaries loaned its U.K. subsidiary £15.0 million to fund the purchase of a hospital in Sheffield, England. In order to protect the Company against foreign currency fluctuations, in January 2012, the Company entered into a foreign currency contract with a bank to lock in the receipt of $21.5 million at the loan’s due date of May 31, 2012. This contract qualified for hedge accounting, and therefore the contract was recorded at fair value on the Company’s consolidated balance sheet, with the offset to other comprehensive income (loss). Due to the spin-off of the Company’s U.K. subsidiary, the contract was settled on April 4, 2012, and resulted in a payment to the bank of approximately $0.9 million.

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Equity

9 Months Ended

Sep. 30, 2012

Equity [Abstract]

Equity

(9) Equity

On April 3, 2012, the Company paid a cash dividend of approximately $314.5 million to its Parent’s equity holders. Also, on April 3, 2012, the Company distributed the stock of its U.K. subsidiary to its Parent’s equity holders.

The Company accounts for equity-based compensation, such as stock options and other stock-based awards to employees and directors, at fair value. The fair value of the compensation is measured at the date of grant and recognized as expense over the recipient’s requisite service period.

The Company’s equity-based compensation consists primarily of stock options and restricted stock granted by parent to certain employees and members of the board of directors. The fair value of stock options was estimated at the date of grant using the Black-Scholes formula based on assumptions derived from historical experience.

Total equity-based compensation, included in the accompanying consolidated statements of income, classified by line item, is as follows (in thousands):

	Three Months Ended September 30, 2012			Nine Months Ended September 30, 2012			Three Months Ended September 30, 2011			Nine Months Ended September 30, 2011
Salaries, benefits and other employee costs	$	131		$	314		$	80		$	326
General and administrative expenses		220			681			163			682
Other operating expenses		—			193			—			—
Expense before income tax benefit		351			1,188			243			1,008
Income tax benefit		(28	)		(190	)		(30	)		(178	)
Total equity-based compensation expense, net of tax	$	323		$	998		$	213		$	830

Total equity-based compensation, included in the accompanying consolidated statements of income, classified by type of award, is as follows (in thousands):

	Three Months Ended September 30, 2012			Nine Months Ended September 30, 2012			Three Months Ended September 30, 2011			Nine Months Ended September 30, 2011
Share awards	$	111		$	409		$	123		$	721
Stock options		240			586			120			287
Warrants		—			193			—			—
Expense before income tax benefit		351			1,188			243			1,008
Income tax benefit		(28	)		(190	)		(30	)		(178	)
Total equity-based compensation expense, net of tax	$	323		$	998		$	213		$	830

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Noncontrolling Interests (Details Textual) (USD $) In Millions, unless otherwise specified	9 Months Ended
	Sep. 30, 2012 Facility
Noncontrolling Interests (Textual) [Abstract]
Consolidated facilities by the company	59
Number of facilities	203
Sale of equity interests in various consolidated subsidiaries	$ 1.9
Purchase of equity interest in various consolidated subsidiaries	$ 7.7

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Discontinued Operations (Tables)

9 Months Ended

Sep. 30, 2012

Discontinued Operations [Abstract]

Summary of certain amounts of Company's discontinued operations

The table below summarizes certain amounts related to the Company’s discontinued operations for the periods presented (in thousands):

	Three Months Ended September 30, 2012			Nine Months Ended September 30, 2012			Three Months Ended September 30, 2011			Nine Months Ended September 30, 2011
Revenues	$	—		$	36,528		$	27,196		$	83,371
Income (loss) from discontinued operations before income taxes	$	(3	)	$	4,701		$	2,547		$	10,277
Income tax benefit (expense)		1			(1,267	)		(541	)		(2,535	)
Income (loss) from discontinued operations	$	(2	)	$	3,434		$	2,006		$	7,742
Loss on disposal of discontinued operations before income taxes	$	—		$	—		$	—		$	(902	)
Income tax benefit		—			—			—			373
Total loss from disposal of discontinued operations	$	—		$	—		$	—		$	(529	)

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Basis of Presentation (Details)	9 Months Ended
	Sep. 30, 2012 Facility
Basis of Presentation (Textual) [Abstract]
Number of facilities	203
U.S. facilities [Member]
Basis of Presentation (Textual) [Abstract]
Number of facilities	1
U.K. facilities [Member]
Basis of Presentation (Textual) [Abstract]
Number of facilities	7
Short-stay surgical facilities [Member]
Basis of Presentation (Textual) [Abstract]
Number of facilities	203
Consolidated results [Member]
Basis of Presentation (Textual) [Abstract]
Number of facilities	59
Equity method [Member]
Basis of Presentation (Textual) [Abstract]
Number of facilities	144
Joint ownership [Member] | U.S. facilities [Member]
Basis of Presentation (Textual) [Abstract]
Number of facilities	142
Physician owners [Member] | U.S. facilities [Member]
Basis of Presentation (Textual) [Abstract]
Number of facilities	2

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Equity (Details Textual) (USD $) In Thousands, unless otherwise specified	3 Months Ended	9 Months Ended
	Jun. 30, 2012	Sep. 30, 2012
Equity (Textual) [Abstract]
Cash dividend paid	$ (314,458)	$ 314,458

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Consolidated Statements of Comprehensive Income (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Consolidated Statements of Comprehensive Income [Abstract]
Net income	$ 26,621	$ 31,884	$ 68,880	$ 98,385
Other comprehensive income (loss):
Foreign currency translation adjustments		(7,246)	4,938	2,831
Unrealized loss on foreign currency contract, net of tax			(560)
Unrealized gain on available-for-sale securities, net of tax	37	16	48	36
Unrealized gain on interest rate swap, net of tax		342	15	2,523
Reclassification due to spin-off of U.K. subsidiary:
Foreign currency translation adjustments			58,682
Total other comprehensive income (loss)	37	(6,888)	63,123	5,390
Comprehensive income	26,658	24,996	132,003	103,775
Less: Comprehensive income attributable to noncontrolling interests	(16,638)	(16,598)	(51,666)	(49,592)
Comprehensive income attributable to USPI's common stockholder	$ 10,020	$ 8,398	$ 80,337	$ 54,183

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Investments in Unconsolidated Affiliates and Business Combination

9 Months Ended

Sep. 30, 2012

Investments in Unconsolidated Affiliates and Business Combination [Abstract]

Investments in Unconsolidated Affiliates and Business Combination

(3) Investments in Unconsolidated Affiliates and Business Combination

The Company’s facilities are generally operated through separate legal entities in which the Company holds an equity interest. Other investors generally include physicians who utilize the facility and, in a majority of cases, a local not-for-profit health system.

The Company controls 59 of these entities and therefore consolidates their results. However, the Company accounts for a majority (144 of its 203 facilities at September 30, 2012) as investments in unconsolidated affiliates, i.e., under the equity method, as the Company’s level of influence is significant but does not reach the threshold of controlling the entity. The majority of these investments are partnerships or limited liability companies, which require the associated tax benefit or expense to be recorded by the partners or members. Summarized financial information for the Company’s equity method investees on a combined basis is as follows (amounts are in thousands, except number of facilities, reflect 100% of the investees’ results on an aggregated basis and are unaudited):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Unconsolidated facilities operated at period-end		144			143			144			143
Income statement information:
Revenues	$	416,929		$	378,644		$	1,254,082		$	1,100,997
Operating expenses:
Salaries, benefits, and other employee costs		98,842			89,960			294,750			263,513
Medical services and supplies		106,081			88,194			310,012			256,077
Other operating expenses		97,972			88,021			290,839			256,786
Net gain on asset disposals		(7,026	)		(100	)		(6,496	)		(479	)
Depreciation and amortization		17,944			17,286			54,342			48,743
Total operating expenses		313,813			283,361			943,447			824,640
Operating income		103,116			95,283			310,635			276,357
Interest expense, net		(8,341	)		(8,883	)		(26,165	)		(24,711	)
Other, net		385			(1	)		399			10
Income before income taxes	$	95,160		$	86,399		$	284,869		$	251,656
Balance sheet information:
Current assets	$	313,714		$	307,475		$	313,714		$	307,475
Noncurrent assets		578,332			613,027			578,332			613,027
Current liabilities		196,990			178,421			196,990			178,421
Noncurrent liabilities		407,333			435,795			407,333			435,795

The Company regularly engages in the purchase and sale of equity interests with respect to its investments in unconsolidated affiliates that do not result in a change of control. These transactions are primarily the acquisitions and sales of equity interests in unconsolidated surgical facilities and the investment of additional cash in surgical facilities under development. During the nine months ended September 30, 2012, these transactions resulted in a net cash outflow of approximately $19.6 million, which is summarized as follows:

Effective Date	Facility Location	Amount
Investments
February 2012	Midland, Texas(1)	$	3.0 million
March 2012	Chandler, Arizona(1)		0.8 million
September 2012	New Jersey(2)		12.3 million
Various	Various(3)		3.5 million
Total		$	19.6 million

(1) Acquisition of a noncontrolling interest in and right to manage a surgical facility in which the Company previously had no involvement. The facility is jointly owned with a hospital partner and local physicians.

(2) Acquisition of a noncontrolling interest in and right to manage two surgical facilities in Hackensack and Paramus, New Jersey, respectively, in which the Company previously had no involvement. The facilities are jointly owned with a hospital partner and local physicians.

(3) Represents the net payment related to various other purchases and sales of equity interests and contributions of cash to equity method investees.

Effective June 1, 2012, the Company acquired an additional 44% ownership in a surgical facility in New Jersey in which it already had an equity method investment and the right to manage. As a result of the transaction, the Company now controls the facility and began consolidating its operating results effective June 1, 2012. The Company paid cash totaling $17.1 million, which is subject to certain purchase price adjustments set forth in the purchase agreement. The purchase price was allocated to the facility’s tangible assets and liabilities based upon preliminary estimates of fair value, with the remainder to goodwill. The Company funded the purchase using cash on hand. The adjustments to arrive at pro forma operating results for this acquisition are not material. The Company recorded a gain of approximately $0.2 million as a result of adjusting the carrying value of its existing ownership to fair value as required by GAAP. The gain is included in “Net loss (gain) on deconsolidations, disposals and impairments” in the accompanying consolidated statements of income.

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Discontinued Operations (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Summary of certain amounts of Company's discontinued operations
Revenues		$ 27,196	$ 36,528	$ 83,371
Income (loss) from discontinued operations before income taxes	(3)	2,547	4,701	10,277
Income tax Benefit (expense)	1	(541)	(1,267)	(2,535)
Income (loss) from discontinued operations	(2)	2,006	3,434	7,742
Loss on disposal of discontinued operations before income taxes				(902)
Income tax benefit				373
Total loss from disposal of discontinued operations				$ (529)

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Fair Value of Financial Instruments (Details) (USD $)	Sep. 30, 2012	Sep. 30, 2011
Fair Value of Financial Instruments (Additional Textual) [Abstract]
Aggregate carrying amount of long-term debt	$ 1,300,000,000	$ 1,000,000,000
Estimated fair value of long-term debt	1,400,000,000	1,000,000,000
Level 2 [Member] | Other current assets [Member]
Fair Value of Financial Instruments (Textual) [Abstract]
Marketable securities held by wholly-owned insurance subsidiary	$ 10,600,000	$ 4,800,000

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Condensed Consolidating Financial Statements

9 Months Ended

Sep. 30, 2012

Condensed Consolidating Financial Statements [Abstract]

Condensed Consolidating Financial Statements

(13) Condensed Consolidating Financial Statements

The following information is presented as required by regulations of the Securities and Exchange Commission (SEC) in connection with the Company’s Notes that have been registered with the SEC. This information is not routinely prepared for use by management. The operating and investing activities of the separate legal entities included in the consolidated financial statements are fully interdependent and integrated. Accordingly, the operating results of the separate legal entities are not representative of what the operating results would be on a stand-alone basis. Revenues and operating expenses of the separate legal entities include intercompany charges for management and other services.

The Notes were issued in a private offering on April 3, 2012 and were subsequently registered as publicly traded securities through a Form S-4 declared effective by the SEC on September 5, 2012. The exchange offer was completed in October 2012. The Notes are unsecured obligations of the Company; however, the Notes are guaranteed by all of its current and future direct and indirect 100%-owned domestic subsidiaries. USPI, which issued the Notes, does not have independent assets or operations. USPI’s investees in which USPI owns less than 100% are not guarantors of the obligation. The financial positions and results of operations (below, in thousands) of the respective guarantors are based upon the guarantor relationship at the end of the period presented. Consolidation adjustments include purchase accounting entries for investments in which the Company’s ownership percentage in non-participating investees is not high enough to permit the application of pushdown accounting.

Condensed Consolidating Balance Sheets:

As of September 30, 2012	Guarantors		Non-Participating Investees		Consolidation Adjustments			Consolidated Total
ASSETS
Current assets:
Cash and cash equivalents	$	60,605	$	2,481	$	—		$	63,086
Available for sale securities		10,591		—		—			10,591
Accounts receivable, net		—		36,868		—			36,868
Other receivables		17,615		23,111		(26,488	)		14,238
Inventories of supplies		774		6,608		—			7,382
Prepaids and other current assets		26,286		1,351		—			27,637
Total current assets		115,871		70,419		(26,488	)		159,802
Property and equipment, net		29,446		91,839		456			121,741
Investments in unconsolidated affiliates		877,057		—		(424,279	)		452,778
Goodwill and intangible assets, net		947,419		139,736		388,780			1,475,935
Other assets		23,522		890		(439	)		23,973
Total assets	$	1,993,315	$	302,884	$	(61,970	)	$	2,234,229
LIABILITIES AND EQUITY
Liabilities and Equity
Current liabilities:
Accounts payable	$	6,297	$	10,608	$	—		$	16,905
Accrued expenses and other		241,543		15,594		(25,917	)		231,220
Current portion of long-term debt		8,661		10,630		(1,089	)		18,202
Total current liabilities		256,501		36,832		(27,006	)		266,327
Long-term debt, less current portion		1,261,321		51,474		(207	)		1,312,588
Other long-term liabilities		186,005		4,866		(546	)		190,325
Parent’s equity		289,488		184,871		(184,871	)		289,488
Noncontrolling interests		—		24,841		150,660			175,501
Total liabilities and equity	$	1,993,315	$	302,884	$	(61,970	)	$	2,234,229
As of December 31, 2011	Guarantors		Non-Participating Investees		Consolidation Adjustments			Consolidated Total
ASSETS
Current assets:
Cash and cash equivalents	$	36,198	$	5,624	$	—		$	41,822
Available for sale securities		4,815		—		—			4,815
Accounts receivable, net		—		58,057		—			58,057
Other receivables		44,627		52,122		(86,250	)		10,499
Inventories of supplies		737		9,380		—			10,117
Prepaids and other current assets		27,433		2,585		—			30,018
Total current assets		113,810		127,768		(86,250	)		155,328
Property and equipment, net		23,705		211,296		320			235,321
Investments in unconsolidated affiliates		952,116		—		(507,382	)		444,734
Goodwill and intangible assets, net		930,186		251,882		354,417			1,536,485
Other assets		88,206		511		(67,087	)		21,630
Total assets	$	2,108,023	$	591,457	$	(305,982	)	$	2,393,498
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	1,789	$	26,976	$	—		$	28,765
Accrued expenses and other		227,790		79,603		(84,408	)		222,985
Current portion of long-term debt		5,595		21,193		(1,301	)		25,487
Total current liabilities		235,174		127,772		(85,709	)		277,237
Long-term debt, less current portion		952,717		91,038		(786	)		1,042,969
Other long-term liabilities		187,444		11,618		(309	)		198,753
Parent’s equity		732,688		335,461		(335,461	)		732,688
Noncontrolling interests		—		25,568		116,283			141,851
Total liabilities and equity	$	2,108,023	$	591,457	$	(305,982	)	$	2,393,498

Condensed Consolidating Statements of Income:

For the Nine Months Ended September 30, 2012	Guarantors			Non-Participating Investees			Consolidation Adjustments			Consolidated Total
Revenues	$	83,432		$	320,401		$	(18,113	)	$	385,720
Equity in earnings of unconsolidated affiliates		104,768			2,787			(41,348	)		66,207
Operating expenses, excluding depreciation and amortization		63,035			212,975			(17,572	)		258,438
Depreciation and amortization		5,230			12,088			91			17,409
Operating income		119,935			98,125			(41,980	)		176,080
Interest expense, net		(57,856	)		(3,706	)		—			(61,562	)
Loss on early retirement of debt		(37,981	)		—			—			(37,981	)
Other income (expense), net		(760	)		(388	)		400			(748	)
Income from continuing operations before income taxes		23,338			94,031			(41,580	)		75,789
Income tax expense		(9,558	)		(785	)		—			(10,343	)
Income from continuing operations		13,780			93,246			(41,580	)		65,446
Earnings from discontinued operations, net of tax		3,434			3,212			(3,212	)		3,434
Net income		17,214			96,458			(44,792	)		68,880
Less: Net income attributable to noncontrolling interests		—			(12,547	)		(39,119	)		(51,666	)
Net income attributable to Parent	$	17,214		$	83,911		$	(83,911	)	$	17,214

For the Nine Months Ended September 30, 2011	Guarantors			Non-Participating Investees			Consolidation Adjustments			Consolidated Total
Revenues	$	78,097		$	304,032		$	(17,327	)	$	364,802
Equity in earnings of unconsolidated affiliates		96,581			2,489			(42,147	)		56,923
Operating expenses, excluding depreciation and amortization		56,341			198,453			(15,521	)		239,273
Depreciation and amortization		5,071			10,762			113			15,946
Operating income		113,266			97,306			(44,066	)		166,506
Interest expense, net		(44,890	)		(3,039	)		—			(47,929	)
Other income (expense), net		(196	)		265			(183	)		(114	)
Income from continuing operations before income taxes		68,180			94,532			(44,249	)		118,463
Income tax expense		(26,600	)		(691	)		—			(27,291	)
Income from continuing operations		41,580			93,841			(44,249	)		91,172
Earnings from discontinued operations, net of tax		7,213			7,730			(7,730	)		7,213
Net income		48,793			101,571			(51,979	)		98,385
Less: Net income attributable to noncontrolling interests		—			(11,640	)		(37,952	)		(49,592	)
Net income attributable to Parent	$	48,793		$	89,931		$	(89,931	)	$	48,793

Condensed Consolidating Statements of Comprehensive Income:

For the Nine Months Ended September 30, 2012	Guarantors			Non-Participating Investees			Consolidation Adjustments			Consolidated Total
Net income	$	17,214		$	96,458		$	(44,792	)	$	68,880
Other comprehensive income:
Foreign currency translation adjustments		4,938			4,938			(4,938	)		4,938
Unrealized gain on available for sale securities, net of tax		48			—			—			48
Unrealized loss on foreign currency contract, net of tax		(560	)		—			—			(560	)
Unrealized gain on interest rate swap, net of tax		15			15			(15	)		15
Reclassification due to spin-off of U.K. subsidiary:
Foreign currency translation adjustments		58,682			58,682			(58,682	)		58,682
Total other comprehensive income		63,123			63,635			(63,635	)		63,123
Comprehensive income		80,337			160,093			(108,427	)		132,003
Comprehensive income attributable to noncontrolling interests		—			(12,547	)		(39,119	)		(51,666	)
Comprehensive income attributable to Parent	$	80,337		$	147,546		$	(147,546	)	$	80,337
For the Nine Months Ended September 30, 2011	Guarantors			Non-Participating Investees			Consolidation Adjustments			Consolidated Total
Net income	$	48,793		$	101,571		$	(51,979	)	$	98,385
Other comprehensive income:
Foreign currency translation adjustments		2,831			2,831			(2,831	)		2,831
Unrealized gain on available for sale securities, net of tax		36			—			—			36
Unrealized gain on interest rate swap, net of tax		2,523			168			(168	)		2,523
Total other comprehensive income		5,390			2,999			(2,999	)		5,390
Comprehensive income		54,183			104,570			(54,978	)		103,775
Comprehensive income attributable to noncontrolling interests		—			(11,640	)		(37,952	)		(49,592	)
Comprehensive income attributable to Parent	$	54,183		$	92,930		$	(92,930	)	$	54,183

Condensed Consolidating Statements of Cash Flows:

For the Nine Months Ended September 30, 2012	Guarantors			Non-Participating Investees			Consolidation Adjustments			Consolidated Total
Cash flows from operating activities:
Net income	$	17,214		$	96,458		$	(44,792	)	$	68,880
Earnings on discontinued operations		(3,434	)		(3,212	)		3,212			(3,434	)
Loss on early retirement of debt		37,981			—			--00			37,981
Changes in operating and intercompany assets and liabilities and noncash items included in net income		20,059			8,621			(2,244	)		26,436
Net cash provided by operating activities		71,820			101,867			(43,824	)		129,863
Cash flows from investing activities:
Purchases of property and equipment, net		(9,279	)		(5,308	)		—			(14,587	)
Purchases and sales of new businesses and equity interests, net		(36,428	)		(225	)		—			(36,653	)
Other items, net		1,148			6,322			(6,762	)		708
Net cash (used in) provided by investing activities		(44,559	)		789			(6,762	)		(50,532	)
Cash flows from financing activities:
Long-term borrowings, net		255,312			(3,065	)		790			253,037
Purchases and sales of noncontrolling interests, net		5,783			—			—			5,783
Distributions to noncontrolling interests		—			(102,146	)		43,600			(58,546	)
Payment of common stock dividend		(314,458	)		—			—			(314,458	)
Increase in cash held on behalf of noncontrolling interest holders and other		3,015			349			5,972			9,336
Net cash used in financing activities		(50,348	)		(104,862	)		50,362			(104,848	)
Net cash provided by (used in) discontinued operations		47,494			(937	)		224			46,781
Net increase (decrease) in cash		24,407			(3,143	)		—			21,264
Cash at the beginning of the period		36,198			5,624			—			41,822
Cash at the end of the period	$	60,605		$	2,481		$	—		$	63,086
For the Nine Months Ended September 30, 2011	Guarantors			Non-Participating Investees			Consolidation Adjustments			Consolidated Total
Cash flows from operating activities:
Net income	$	48,793		$	101,571		$	(51,979	)	$	98,385
Earnings on discontinued operations		(7,213	)		(7,730	)		7,730			(7,213	)
Changes in operating and intercompany assets and liabilities and noncash items included in net income		32,994			475			1,856			35,325
Net cash provided by operating activities		74,574			94,316			(42,393	)		126,497
Cash flows from investing activities:
Purchases of property and equipment, net		(2,318	)		(5,973	)		—			(8,291	)
Purchases and sales of new businesses and equity interests, net		(50,681	)		—			—			(50,681	)
Other items, net		1,315			19,334			(21,948	)		(1,299	)
Net cash used in investing activities		(51,684	)		13,361			(21,948	)		(60,271	)
Cash flows from financing activities:
Long-term borrowings, net		(28,949	)		(5,733	)		2,255			(32,427	)
Purchases and sales of noncontrolling interests, net		531			—			—			531
Distributions to noncontrolling interests		—			(92,964	)		42,393			(50,571	)
Increase in cash held on behalf of noncontrolling interest holders and other		(5,748	)		(361	)		19,693			13,584
Net cash used in financing activities		(34,166	)		(99,058	)		64,341			(68,883	)
Net cash provided by (used in) discontinued operations		(1,363	)		(307	)		—			(1,670	)
Net (decrease) increase in cash		(12,639	)		8,312			—			(4,327	)
Cash at the beginning of the period		60,186			67			—			60,253
Cash at the end of the period	$	47,547		$	8,379		$	—		$	55,926