PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

TENET HEALTHCARE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

Dollars in Millions

(Unaudited)

	June 30,			December 31,
	2012			2011
ASSETS
Current assets:
Cash and cash equivalents	$	82		$	113
Accounts receivable, less allowance for doubtful accounts ($401 at June 30, 2012 and $397 at December 31, 2011)	1,356			1,278
Inventories of supplies, at cost	154			161
Income tax receivable	13			7
Current portion of deferred income taxes	409			418
Assets held for sale	41			2
Other current assets	509			378
Total current assets	2,564			2,357
Investments and other assets	120			156
Deferred income taxes, net of current portion	345			374
Property and equipment, at cost, less accumulated depreciation and amortization ($3,367 at June 30, 2012 and $3,386 at December 31, 2011)	4,181			4,350
Goodwill	749			736
Other intangible assets, at cost, less accumulated amortization ($386 at June 30, 2012 and $360 at December 31, 2011)	526			489
Total assets	$	8,485		$	8,462

LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt	$	237		$	66
Accounts payable	644			760
Accrued compensation and benefits	363			376
Professional and general liability reserves	73			75
Accrued interest payable	121			112
Accrued legal settlement costs	7			64
Other current liabilities	427			362
Total current liabilities	1,872			1,815
Long-term debt, net of current portion	4,511			4,294
Professional and general liability reserves	336			337
Accrued legal settlement costs	2			2
Other long-term liabilities	519			506
Total liabilities	7,240			6,954
Commitments and contingencies
Redeemable noncontrolling interests in equity of consolidated subsidiaries	16			16
Equity:
Shareholders’ equity:
Preferred stock, $0.15 par value; authorized 2,500,000 shares; 46,300 of 7% mandatory convertible shares with a liquidation preference of $1,000 per share issued at June 30, 2012 and 345,000 at December 31, 2011	45			334
Common stock, $0.05 par value; authorized 1,050,000,000 shares; 553,789,249 shares issued at June 30, 2012 and 551,468,550 shares issued at December 31, 2011	27			27
Additional paid-in capital	4,410			4,407
Accumulated other comprehensive loss	(49		)	(52		)
Accumulated deficit	(1,378		)	(1,440		)
Common stock in treasury, at cost, 137,295,241 shares at June 30, 2012 and 136,442,696 shares at December 31, 2011	(1,879		)	(1,853		)
Total shareholders’ equity	1,176			1,423
Noncontrolling interests	53			69
Total equity	1,229			1,492
Total liabilities and equity	$	8,485		$	8,462

See accompanying Notes to Condensed Consolidated Financial Statements.

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TENET HEALTHCARE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Dollars in Millions, Except Per-Share Amounts

(Unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2012			2011			2012			2011
Net operating revenues:
Net operating revenues before provision for doubtful accounts	$	2,455		$	2,300		$	4,946		$	4,729
Less: Provision for doubtful accounts	190			168			379			347
Net operating revenues	2,265			2,132			4,567			4,382
Operating expenses:
Salaries, wages and benefits	1,054			982			2,116			1,999
Supplies	389			392			788			788
Other operating expenses, net	534			508			1,065			999
Electronic health record incentives	0			(25		)	(0		)	(50		)
Depreciation and amortization	104			100			204			198
Impairment of long-lived assets and goodwill, and restructuring charges, net	3			2			6			10
Litigation and investigation costs	1			8			3			19
Operating income	180			165			385			419
Interest expense	(102		)	(98		)	(200		)	(216		)
Investment earnings	0			1			1			2
Income from continuing operations, before income taxes	78			68			186			205
Income tax expense	(30		)	(19		)	(72		)	(69		)
Income from continuing operations, before discontinued operations	48			49			114			136
Discontinued operations:
Income (loss) from operations	1			(5		)	3			(15		)
Impairment of long-lived assets and goodwill, and restructuring charges, net	(100		)	0			(100		)	0
Net gains on sales of facilities	2			0			2			0
Income tax benefit	29			19			28			24
Income (loss) from discontinued operations	(68		)	14			(67		)	9
Net income (loss)	(20		)	63			47			145
Less: Preferred stock dividends	4			6			10			12
Less: Net income (loss) attributable to noncontrolling interests	(18		)	2			(15		)	5
Net income (loss) attributable to Tenet Healthcare Corporation common shareholders	$	(6	)	$	55		$	52		$	128
Amounts attributable to Tenet Healthcare Corporation common shareholders
Income from continuing operations, net of tax	$	42		$	40		$	99		$	120
Income (loss) from discontinued operations, net of tax	(48		)	15			(47		)	8
Net income (loss) attributable to Tenet Healthcare Corporation common shareholders	$	(6	)	$	55		$	52		$	128
Earnings (loss) per share attributable to Tenet Healthcare Corporation common shareholders
Basic
Continuing operations	$	0.10		$	0.08		$	0.24		$	0.24
Discontinued operations	(0.11		)	0.03			(0.11		)	0.02
	$	(0.01	)	$	0.11		$	0.13		$	0.26
Diluted
Continuing operations	$	0.10		$	0.08		$	0.23		$	0.23
Discontinued operations	(0.11		)	0.03			(0.11		)	0.02
	$	(0.01	)	$	0.11		$	0.12		$	0.25
Weighted average shares and dilutive securities outstanding (in thousands):
Basic	415,011			486,794			413,192			486,848
Diluted	427,708			503,748			434,718			563,951

See accompanying Notes to Condensed Consolidated Financial Statements.

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TENET HEALTHCARE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OTHER COMPREHENSIVE INCOME

Dollars in Millions

(Unaudited)

	Three Months Ended June 30,					Six Months Ended June 30,
	2012			2011		2012			2011
Net income (loss)	$	(20	)	$	63	$	47		$	145
Other comprehensive income:
Adjustments for supplemental executive retirement plans	0			0		3			0
Other comprehensive income before income taxes	0			0		3			0
Income tax expense related to items of other comprehensive income	0			0		0			0
Total other comprehensive income, net of tax	0			0		3			0
Comprehensive income (loss)	(20		)	63		50			145
Less: Preferred stock dividends	4			6		10			12
Less: Comprehensive income (loss) attributable to noncontrolling interests	(18		)	2		(15		)	5
Comprehensive income (loss) attributable to Tenet Healthcare Corporation common shareholders	$	(6	)	$	55	$	55		$	128

See accompanying Notes to Condensed Consolidated Financial Statements.

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TENET HEALTHCARE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Dollars in Millions

(Unaudited)

	Six Months Ended June 30,
	2012			2011
Net income	$	47		$	145
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	204			198
Provision for doubtful accounts	379			347
Deferred income tax expense	37			91
Stock-based compensation expense	17			12
Impairment of long-lived assets and goodwill, and restructuring charges, net	6			10
Litigation and investigation costs	3			19
Fair market value adjustments related to interest rate swap and LIBOR cap agreements	0			17
Amortization of debt discount and debt issuance costs	11			15
Pre-tax loss from discontinued operations	95			15
Other items, net	(4		)	(3		)
Changes in cash from operating assets and liabilities:
Accounts receivable	(450		)	(468		)
Inventories and other current assets	(116		)	(54		)
Income taxes	(5		)	(26		)
Accounts payable, accrued expenses and other current liabilities	23			(117		)
Other long-term liabilities	26			8
Payments against reserves for restructuring charges and litigation costs and settlements	(50		)	(22		)
Net cash used in operating activities from discontinued operations, excluding income taxes	(22		)	(11		)
Net cash provided by operating activities	201			176
Cash flows from investing activities:
Purchases of property and equipment — continuing operations	(251		)	(197		)
Purchases of property and equipment — discontinued operations	(1		)	(1		)
Purchases of businesses or joint venture interests	(13		)	(42		)
Proceeds from sales of facilities and other assets — discontinued operations	10			0
Proceeds from sales of marketable securities, long-term investments and other assets	5			10
Other items, net	2			(1		)
Net cash used in investing activities	(248		)	(231		)
Cash flows from financing activities:
Repayments of borrowings under credit facility	(973		)	0
Proceeds from borrowings under credit facility	1,093			0
Repayments of other borrowings	(67		)	(2		)
Proceeds from other borrowings	292			0
Repurchases of preferred stock	(292		)	0
Deferred debt issuance costs	(2		)	0
Repurchases of common stock	(26		)	(72		)
Cash dividends on preferred stock	(12		)	(12		)
Distributions paid to noncontrolling interests	(6		)	(4		)
Other items, net	9			4
Net cash provided by (used in) financing activities	16			(86		)
Net decrease in cash and cash equivalents	(31		)	(141		)
Cash and cash equivalents at beginning of period	113			405
Cash and cash equivalents at end of period	$	82		$	264
Supplemental disclosures:
Interest paid, net of capitalized interest	$	(181	)	$	(182	)
Income tax (payments) refunds, net	$	(11	)	$	20

See accompanying Notes to Condensed Consolidated Financial Statements.

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TENET HEALTHCARE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. BASIS OF PRESENTATION

Description of Business

Tenet Healthcare Corporation (together with our subsidiaries, referred to as “Tenet,” the “Company,” “we” or “us”) is an investor-owned health care services company whose subsidiaries and affiliates own and operate acute care hospitals and related health care facilities. At June 30, 2012, our subsidiaries operated 50 hospitals, including four academic medical centers (one of which was classified in discontinued operations at that date) and one critical access hospital, with a combined total of 13,510 licensed beds, primarily serving urban and suburban communities in 11 states. Our subsidiaries also operated 102 free-standing and provider-based diagnostic imaging centers, ambulatory surgery centers, urgent care centers and free-standing emergency departments in 12 states at June 30, 2012. We also own an interest in a health maintenance organization (“HMO”) and operate: various related health care facilities, including a long-term acute care hospital and a number of medical office buildings (all of which are located on, or nearby, our hospital campuses); revenue cycle management, health care information management and patient communications services businesses; physician practices; captive insurance companies; a management services business that provides network development, utilization management, claims processing and contract negotiation services to physician organizations and hospitals that assume managed care risk; and occupational and rural health care clinics.

Basis of Presentation

This quarterly report supplements our Annual Report on Form 10-K for the year ended December 31, 2011 (“Annual Report”). As permitted by the Securities and Exchange Commission (“SEC”) for interim reporting, we have omitted certain notes and disclosures that substantially duplicate those in our Annual Report. For further information, refer to the audited Consolidated Financial Statements and notes included in our Annual Report. Unless otherwise indicated, all financial and statistical data included in these notes to our Condensed Consolidated Financial Statements relate to our continuing operations, with dollar amounts expressed in millions (except per-share amounts). Certain balances in the accompanying Condensed Consolidated Financial Statements and these notes have been reclassified to give retrospective presentation for the discontinued operations described in Note 3. In addition, certain prior-year amounts have been reclassified to conform to the current-year presentation.

Effective December 31, 2011, we adopted Accounting Standards Update (“ASU”) 2011-07, “Health Care Entities (Topic 954): Presentation and Disclosure of Patient Service Revenue, Provision for Bad Debts, and the Allowance for Doubtful Accounts for Certain Health Care Entities,” which requires health care entities to present the provision for doubtful accounts relating to patient service revenue as a deduction from patient service revenue in the statement of operations rather than as an operating expense. All periods presented have been reclassified in accordance with the provisions of ASU 2011-07. Also effective December 31, 2011, we reclassified the electronic health record incentives previously recorded as net operating revenues to the operating expenses section of our consolidated statements of operations.

Although the Condensed Consolidated Financial Statements and related notes within this document are unaudited, we believe all adjustments considered necessary for a fair presentation have been included. In preparing our financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”), we must use estimates and assumptions that affect the amounts reported in our Condensed Consolidated Financial Statements and these accompanying notes. We regularly evaluate the accounting policies and estimates we use. In general, we base the estimates on historical experience and on assumptions that we believe to be reasonable given the particular circumstances in which we operate. Actual results may vary from those estimates. Financial and statistical information we report to other regulatory agencies may be prepared on a basis other than GAAP or using different assumptions or reporting periods and, therefore, may vary from amounts presented herein. Although we make every effort to ensure that the information we report to those agencies is accurate, complete and consistent with applicable reporting guidelines, we cannot be responsible for the accuracy of the information they make available to the public.

Operating results for the three and six month periods ended June 30, 2012 are not necessarily indicative of the results that may be expected for the full year. Reasons for this include, but are not limited to: overall revenue and cost trends, particularly the timing and magnitude of price changes; fluctuations in contractual allowances and cost report settlements and valuation allowances; managed care contract negotiations, settlements or terminations and payer consolidations; changes in Medicare and Medicaid regulations; Medicaid funding levels set by the states in which we operate; the timing of approval by the Centers for Medicare and Medicaid Services (“CMS”) of Medicaid provider fee revenue programs; trends in patient accounts receivable collectability and associated provisions for doubtful accounts; fluctuations in interest rates; levels of malpractice

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insurance expense and settlement trends; the timing of when we meet the criteria to recognize electronic health record incentives; impairment of long-lived assets and goodwill; restructuring charges; losses, costs and insurance recoveries related to natural disasters; litigation and investigation costs; acquisitions and dispositions of facilities and other assets; income tax rates and deferred tax asset valuation allowance activity; changes in estimates of accruals for annual incentive compensation; the timing and amounts of stock option and restricted stock unit grants to employees and directors; gains or losses from early extinguishment of debt; and changes in occupancy levels and patient volumes. Factors that affect patient volumes and, thereby, the results of operations at our hospitals and related health care facilities include, but are not limited to: the business environment, economic conditions and demographics of local communities; the number of uninsured and underinsured individuals in local communities treated at our hospitals; seasonal cycles of illness; climate and weather conditions; physician recruitment, retention and attrition; advances in technology and treatments that reduce length of stay; local health care competitors; managed care contract negotiations or terminations; any unfavorable publicity about us, which impacts our relationships with physicians and patients; changes in health care regulations; and the timing of elective procedures. These considerations apply to year-to-year comparisons as well.

Net Operating Revenues Before Provision for Doubtful Accounts

We recognize net operating revenues before provision for doubtful accounts in the period in which our services are performed. Net operating revenues before provision for doubtful accounts primarily consist of net patient service revenues that are recorded based on established billing rates (i.e., gross charges), less estimated discounts for contractual and other allowances, principally for patients covered by Medicare, Medicaid, managed care and other health plans, as well as certain uninsured patients under our Compact with Uninsured Patients (“Compact”).

The table below shows the sources of net operating revenues before provision for doubtful accounts:

	Three Months Ended June 30,				Six Months Ended June 30,
	2012		2011		2012		2011
General Hospitals:
Medicare	$	532	$	517	$	1,161	$	1,059
Medicaid	234		166		411		435
Managed care	1,328		1,282		2,654		2,561
Indemnity, self-pay and other	245		239		486		488
Acute care hospitals – other revenue	13		26		37		51
Other:
Other operations	103		70		197		135
Net operating revenues before provision for doubtful accounts	$	2,455	$	2,300	$	4,946	$	4,729

Cash and Cash Equivalents

We treat highly liquid investments with original maturities of three months or less as cash equivalents. Cash and cash equivalents were approximately $82 million and $113 million at June 30, 2012 and December 31, 2011, respectively. As of June 30, 2012 and December 31, 2011, our book overdrafts were approximately $198 million and $252 million, respectively, which were classified as accounts payable.

At June 30, 2012 and December 31, 2011, approximately $63 million and $92 million, respectively, of total cash and cash equivalents in the accompanying Condensed Consolidated Balance Sheets were intended for the operations of our captive insurance subsidiaries. During the six months ended June 30, 2011, we repatriated $21 million of excess cash from our foreign insurance subsidiary to our corporate domestic bank account.

Also at June 30, 2012 and December 31, 2011, we had $41 million and $109 million, respectively, of property and equipment purchases accrued for items received but not yet paid. Of these amounts, $36 million and $104 million, respectively, were included in accounts payable.

During the six months ended June 30, 2012 and 2011, we entered into non-cancellable capital leases of approximately $29 million and $11 million, respectively, primarily for equipment.

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Other Intangible Assets

The following table provides information regarding other intangible assets, which are included in the accompanying Condensed Consolidated Balance Sheets as of June 30, 2012 and December 31, 2011:

	Gross Carrying Amount		Accumulated Amortization			Net Book Value
June 30, 2012:
Capitalized software costs	$	816	$	(364	)	$	452
Long-term debt issuance costs	90		(20		)	70
Other	6		(2		)	4
Total	$	912	$	(386	)	$	526

December 31, 2011:
Capitalized software costs	$	756	$	(344	)	$	412
Long-term debt issuance costs	88		(15		)	73
Other	5		(1		)	4
Total	$	849	$	(360	)	$	489

Estimated future amortization of intangibles with finite useful lives as of June 30, 2012 is as follows:

			Years Ending December 31,										Later
	Total		2012		2013		2014		2015		2016		Years
Amortization of intangible assets	$	526	$	66	$	81	$	73	$	62	$	58	$	186

NOTE 2. ACCOUNTS RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS

The principal components of accounts receivable are shown in the table below:

	June 30,			December 31,
	2012			2011
Continuing operations:
Patient accounts receivable	$	1,680		$	1,605
Allowance for doubtful accounts	(390		)	(382		)
Estimated future recoveries from accounts assigned to our Conifer subsidiary	73			62
Net cost reports and settlements payable and valuation allowances	(42		)	(39		)
	1,321			1,246
Discontinued operations:
Patient accounts receivable	38			46
Allowance for doubtful accounts	(11		)	(15		)
Estimated future recoveries from accounts assigned to our Conifer subsidiary	2			2
Net cost reports and settlements receivable (payable) and valuation allowances	6			(1		)
	35			32
Accounts receivable, net	$	1,356		$	1,278

Our self-pay collection rate, which is the blended collection rate for uninsured and balance after insurance accounts receivable, was approximately 28.5% and 27.7% as of June 30, 2012 and December 31, 2011, respectively. These self-pay collection rates include payments made by patients, including co-payments and deductibles paid by patients with insurance, prior to an account being assigned to our Conifer Health Solutions (“Conifer”) revenue cycle management services subsidiary. Our estimated collection rate from managed care payers was approximately 98.4% and 98.2% at June 30, 2012 and December 31, 2011, respectively, which includes collections from point-of-service through collections by our Conifer subsidiary. As of June 30, 2012 and December 31, 2011, our allowance for doubtful accounts for self-pay uninsured was 87.7% and 88.4%, respectively, of our self-pay uninsured patient accounts receivable. As of June 30, 2012 and December 31, 2011, our allowance for doubtful accounts for self-pay balance after insurance was 57.7% and 57.5%, respectively, of our self-pay balance after insurance patient accounts receivable, consisting primarily of co-pays and deductibles owed by patients with insurance. Our self-pay write-offs, including uninsured and balance after insurance accounts, increased approximately $4 million from $180 million in the six months ended June 30, 2011 to $184 million in the six months ended June 30, 2012 primarily due to an increase in patient account assignments to our Conifer subsidiary. This increase was not a result of negative trends experienced in the collection of amounts from self-pay patients, but was the result of an increase in revenues from the uninsured. As of

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June 30, 2012 and December 31, 2011, our allowance for doubtful accounts for managed care was 8.9% and 8.8%, respectively, of our managed care patient accounts receivable.

The estimated costs (based on selected operating expenses, which include salaries, wages and benefits, supplies and other operating expenses) of caring for our self-pay patients for the three months ended June 30, 2012 and 2011 were approximately $114 million and $94 million, respectively, and for the six months ended June 30, 2012 and 2011 were approximately $222 million and $188 million, respectively. Our estimated costs (based on the selected operating expenses described above) of caring for charity care patients for the three months ended June 30, 2012 and 2011 were approximately $32 million and $31 million, respectively, and for the six months ended June 30, 2012 and 2011 were approximately $64 million and $59 million, respectively. Most states include an estimate of the cost of charity care in the determination of a hospital’s eligibility for Medicaid disproportionate share hospital (“DSH”) payments. Revenues attributable to DSH payments and other state-funded subsidy payments for the three months ended June 30, 2012 and 2011 were approximately $109 million and $28 million, respectively, and for the six months ended June 30, 2012 and 2011 were approximately $154 million and $156 million, respectively. These payments are intended to mitigate our cost of uncompensated care, as well as reduced Medicaid funding levels.

NOTE 3. DISCONTINUED OPERATIONS

In the three months ended June 30, 2012, our Creighton University Medical Center (“CUMC”) in Nebraska was reclassified into discontinued operations based on the guidance in the Financial Accounting Standards Board’s Accounting Standards Codification (“ASC”) 360, “Property, Plant and Equipment.” In July 2012, we entered into a definitive agreement to sell our interest in CUMC. The sales transaction price, including working capital, is expected to be approximately $63 million. The transaction is scheduled to close on August 31, 2012, subject to customary closing conditions, including regulatory approvals. As a result of this anticipated sales transaction, we recorded an impairment charge in discontinued operations of $100 million, consisting of $98 million for the write-down of long-lived assets to their estimated fair values, less estimated costs to sell, and a $2 million charge for the write-down of goodwill related to CUMC in the three months ended June 30, 2012.

We classified $39 million of assets of CUMC as “assets held for sale” in current assets in the accompanying Condensed Consolidated Balance Sheet at June 30, 2012. These assets primarily consist of property and equipment and were recorded at the lower of the assets’ carrying amount or their fair value less estimated costs to sell. The fair value estimates were based on estimated net proceeds under the definitive sales agreement. Because we do not intend to sell the accounts receivable of CUMC, the net receivables of approximately $30 million are included in our accounts receivable in the accompanying Condensed Consolidated Balance Sheet at June 30, 2012.

In May 2012, we completed the sale of Diagnostic Imaging Services, Inc. (“DIS”) in Louisiana for net proceeds of approximately $10 million. As a result of the sale, DIS was reclassified into discontinued operations in the three months ended June 30, 2012, and a gain on sale of approximately $2 million was recognized in discontinued operations.

Net operating revenues and loss before income taxes reported in discontinued operations are as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2012			2011			2012			2011
Net operating revenues	$	56		$	51		$	112		$	105
Loss before income taxes	(97		)	(5		)	(95		)	(15		)

Included in loss before income taxes from discontinued operations in the six months ended June 30, 2011 is approximately $10 million of expense related to the settlement of two Hurricane Katrina-related class action lawsuits, which amount is net of approximately $10 million of expected recoveries from our reinsurance carriers in connection with the settlement. We had previously recorded a $5 million reserve for this matter as of December 31, 2010.

Should we dispose of additional hospitals or other assets in the future, we may incur additional asset impairment and restructuring charges in future periods.

NOTE 4. IMPAIRMENT AND RESTRUCTURING CHARGES

During the six months ended June 30, 2012, we recorded net impairment and restructuring charges of $6 million, consisting of $3 million relating to the impairment of obsolete assets, $2 million of employee severance costs and $1 million of other related costs.

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During the six months ended June 30, 2011, we recorded net impairment and restructuring charges of $10 million, consisting of an impairment charge of $1 million related to a cost basis investment, $4 million of employee severance costs, $3 million of lease termination costs and $2 million of other related costs.

Our impairment tests presume stable, improving or, in some cases, declining results in our hospitals, which are based on programs and initiatives being implemented that are designed to achieve the hospital’s most recent projections. If these projections are not met, or if in the future negative trends occur that impact our future outlook, impairments of long-lived assets and goodwill may occur, and we may incur additional restructuring charges, which could be material.

As of June 30, 2012, our continuing hospital operations were structured as follows:

· Our California region included all of our hospitals in California;

· Our Central region included all of our hospitals in Missouri, Tennessee and Texas;

· Our Florida region included all of our hospitals in Florida; and

· Our Southern States region included all of our hospitals in Alabama, Georgia, North Carolina, Pennsylvania and South Carolina.

These regions are reporting units used to perform our goodwill impairment analysis and are one level below our Hospital Operations reportable business segment level.

The tables below are reconciliations of beginning and ending liability balances in connection with restructuring charges recorded during the six months ended June 30, 2012 and 2011 in continuing and discontinued operations:

	Balances at Beginning of Period		Restructuring Charges, Net		Cash Payments			Other			Balances at End of Period
Six Months Ended June 30, 2012
Continuing operations:
Lease and other costs, and employee severance-related costs in connection with hospital cost-control programs and general overhead-reduction plans	$	6	$	3	$	(2	)	$	0		$	7
Discontinued operations:
Employee severance-related costs, and other estimated costs associated with the sale or closure of hospitals and other facilities	5		0		0			0			5
	$	11	$	3	$	(2	)	$	0		$	12
Six Months Ended June 30, 2011
Continuing operations:
Lease and other costs, and employee severance-related costs in connection with hospital cost-control programs and general overhead-reduction plans	$	4	$	9	$	(4	)	$	(1	)	$	8
Discontinued operations:
Employee severance-related costs, and other estimated costs associated with the sale or closure of hospitals and other facilities	6		0		(1		)	0			5
	$	10	$	9	$	(5	)	$	(1	)	$	13

The above liability balances at June 30, 2012 are included in other current liabilities and other long-term liabilities in the accompanying Condensed Consolidated Balance Sheets. Cash payments to be applied against these accruals at June 30, 2012 are expected to be approximately $4 million in 2012 and $8 million thereafter. The column labeled “Other” above represents charges recorded in restructuring expense that are not recorded in the liability account, such as the acceleration of stock-based compensation expense related to severance agreements.

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NOTE 5. LONG-TERM DEBT AND LEASE OBLIGATIONS

The table below shows our long-term debt as of June 30, 2012 and December 31, 2011:

	June 30,			December 31,
	2012			2011
Senior notes:
61¤2%, due 2012	$	0		$	57
73¤8%, due 2013	216			216
97¤8%, due 2014	60			60
91¤4%, due 2015	474			474
8%, due 2020	750			600
67¤8%, due 2031	430			430
Senior secured notes:
9%, due 2015	0			1
61¤4%, due 2018	1,041			900
10%, due 2018	714			714
87/8%, due 2019	925			925
Credit facility due 2016	200			80
Capital leases and mortgage notes	60			32
Unamortized note discounts and premium	(122		)	(129		)
Total long-term debt	4,748			4,360
Less current portion	237			66
Long-term debt, net of current portion	$	4,511		$	4,294

Credit Agreement

We have a senior secured revolving credit facility, as amended November 29, 2011 (“Credit Agreement”), that provides, subject to borrowing availability, for revolving loans in an aggregate principal amount of up to $800 million, with a $300 million subfacility for standby letters of credit. The Credit Agreement has a scheduled maturity date of November 29, 2016, subject to our repayment or refinancing on or before December 3, 2014 of approximately $238 million of the aggregate outstanding principal amount of our 91/4% senior notes due 2015 (approximately $474 million of which was outstanding at June 30, 2012). If such repayment or refinancing does not occur, borrowings under the Credit Agreement will be due December 3, 2014. The revolving credit facility is collateralized by patient accounts receivable of all of our wholly owned acute care and specialty hospitals. In addition, borrowings under the Credit Agreement are guaranteed by our wholly owned hospital subsidiaries. Outstanding revolving loans accrued interest during a six-month initial period ending in May 2012 at the rate of either (i) a base rate plus a margin of 1.25% or (ii) the London Interbank Offered Rate (“LIBOR”) plus a margin of 2.25% per annum. Outstanding revolving loans now accrue interest at a base rate plus a margin ranging from 1.00% to 1.50% or LIBOR plus a margin ranging from 2.00% to 2.50% per annum based on available credit. An unused commitment fee was payable on the undrawn portion of the revolving loans at a six-month initial rate ending in May 2012 of 0.438% per annum. The unused commitment fee now ranges from 0.375% to 0.500% per annum based on available credit. Our borrowing availability is based on a specified percentage of eligible accounts receivable, including self-pay accounts. At June 30, 2012, we had $200 million of cash borrowings outstanding under the revolving credit facility subject to an interest rate of 2.70%, and we had approximately $155 million of standby letters of credit outstanding. Based on our eligible receivables, approximately $445 million was available for borrowing under the revolving credit facility at June 30, 2012.

Senior Notes and Senior Secured Notes

In April 2012, we issued an additional $141 million aggregate principal amount of our 61¤4% senior secured notes due 2018 at a premium for $142 million of cash proceeds and an additional $150 million aggregate principal amount of our 8% senior notes due 2020 in a private financing related to our repurchase and subsequent retirement of 298,700 shares of our 7% mandatory convertible preferred stock. A description of these notes is set forth in our Annual Report.

Interest Rate Swap and LIBOR Cap Agreements

We were party to an interest rate swap agreement for an aggregate notional amount of $600 million from February 14, 2011 through August 2, 2011. The interest rate swap agreement was designated as a fair value hedge and was being used to manage our exposure to future changes in interest rates. It had the effect of converting our 10% senior secured notes due

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2018 from a fixed interest rate paid semi-annually to a variable interest rate paid semi-annually based on the six-month LIBOR plus a floating rate spread of 6.60%. During the term of the interest rate swap agreement, changes in the fair value of the interest rate swap agreement and changes in the fair value of the 10% senior secured notes, which we expected to substantially offset each other, were recorded in interest expense.

During the six months ended June 30, 2011, $9 million in gains from mark-to-market adjustments on the interest rate swap agreement and $28 million in losses from mark-to-market adjustments on the hedged senior secured notes were included in net interest expense in the accompanying Condensed Consolidated Statements of Operations. As mentioned above, we subsequently terminated the interest rate swap agreement in August 2011; this agreement generated $8 million of cash interest savings and a $22 million gain on the settlement of the agreement.

The fair value of the LIBOR cap agreement included in investments and other assets in the accompanying Condensed Consolidated Balance Sheets totaled less than $1 million at both June 30, 2012 and December 31, 2011. In addition, see Note 13 for the disclosure of the fair value of the LIBOR cap agreement.

NOTE 6. GUARANTEES

At June 30, 2012, the maximum potential amount of future payments under our income guarantees to certain physicians who agree to relocate and revenue collection guarantees to hospital-based physician groups providing certain services at our hospitals was $126 million. We had a liability of $90 million recorded for these guarantees included in other current liabilities at June 30, 2012.

We have also guaranteed minimum rent revenue to certain landlords who built medical office buildings on or near our hospital campuses. The maximum potential amount of future payments under these guarantees at June 30, 2012 was $5 million. We had a liability of $3 million recorded for these guarantees at June 30, 2012, of which $1 million was included in other current liabilities and $2 million was included in other long-term liabilities.

NOTE 7. EMPLOYEE BENEFIT PLANS

At June 30, 2012, approximately 15 million shares of common stock were available under our 2008 Stock Incentive Plan for future stock option grants and other incentive awards, including restricted stock units. Options have an exercise price equal to the fair market value of the shares on the date of grant and generally expire 10 years from the date of grant. A restricted stock unit is a contractual right to receive one share of our common stock or the equivalent value in cash in the future. Options and restricted stock units typically vest one-third on each of the first three anniversary dates of the grant; however, from time to time, we grant performance-based options and restricted stock units that vest subject to the achievement of specified performance goals within a specified timeframe.

Our income from continuing operations for the six months ended June 30, 2012 and 2011 includes $17 million and $12 million, respectively, of pre-tax compensation costs related to our stock-based compensation arrangements.

Stock Options

The following table summarizes stock option activity during the six months ended June 30, 2012:

	Options		Weighted Average Exercise Price Per Share		Aggregate Intrinsic Value		Weighted Average Remaining Life
					(In Millions)
Outstanding as of December 31, 2011	33,993,572		$	6.26
Granted	1,760,000		5.65
Exercised	(4,477,660	)	1.55
Forfeited/Expired	(887,632	)	9.70
Outstanding as of June 30, 2012	30,388,280		$	6.82	$	50	4.8 years
Vested and expected to vest at June 30, 2012	30,362,577		$	6.82	$	50	4.8 years
Exercisable as of June 30, 2012	28,632,510		$	6.89	$	50	4.5 years

There were 4,477,660 stock options exercised during the six months ended June 30, 2012 with a $17 million aggregate intrinsic value, and 2,334,358 stock options exercised during the same period in 2011 with a $13 million aggregate intrinsic value.

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As of June 30, 2012, there were $4 million of total unrecognized compensation costs related to stock options. These costs are expected to be recognized over a weighted average period of 2.4 years.

In the six months ended June 30, 2012, we granted an aggregate of 1,760,000 stock options under our 2008 Stock Incentive Plan to certain of our senior officers. Half of these stock options are subject to time-vesting and the remainder were granted subject to performance-based vesting. If all conditions are met, the performance-based options will vest and be settled ratably over a three-year period from the date of the grant. In the six months ended June 30, 2011, there were no stock options granted.

The weighted average estimated fair value of stock options we granted in the six months ended June 30, 2012 was $2.99 per share. This fair value was calculated based on the grant date using a binomial lattice model with the following assumptions:

		Six Months Ended June 30, 2012
Expected volatility		52%
Expected dividend yield		0%
Expected life		6.9 years
Expected forfeiture rate		2%
Risk-free interest rate		1.41%
Early exercise threshold		70% gain
Early exercise rate		20% per year

The expected volatility used in the binomial lattice model incorporated historical and implied share-price volatility and was based on an analysis of historical prices of our stock and open-market exchanged options. The expected volatility reflects the historical volatility for a duration consistent with the contractual life of the options, and the volatility implied by the trading of options to purchase our stock on open-market exchanges. The historical share-price volatility excludes the movements in our stock price during the period October 1, 2002 through December 31, 2002 due to unique events occurring during that time, which caused extreme volatility in our stock price, and two dates with unusual volatility due to an unsolicited acquisition proposal. The expected life of options granted is derived from the output of the binomial lattice model and represents the period of time that the options are expected to be outstanding. This model incorporates an early exercise assumption in the event of a significant increase in stock price. The risk-free interest rates are based on zero-coupon United States Treasury yields in effect at the date of grant consistent with the expected exercise timeframes.

The following table summarizes information about our outstanding stock options at June 30, 2012:

	Options Outstanding				Options Exercisable
Range of Exercise Prices	Number of Options	Weighted Average Remaining Contractual Life	Weighted Average Exercise Price		Number of Options	Weighted Average Exercise Price
$0.00 to $1.149	11,871,321	6.6 years	$	1.14	11,871,321	$	1.14
$1.15 to $10.639	11,713,401	5.1 years	7.14		9,957,631	7.42
$10.64 to $13.959	2,817,136	1.7 years	12.11		2,817,136	12.11
$13.96 to $17.589	3,338,422	0.6 years	17.07		3,338,422	17.07
$17.59 to $28.759	612,000	0.4 years	28.16		612,000	28.16
$28.76 and over	36,000	0.1 years	45.14		36,000	45.14
	30,388,280	4.8 years	$	6.82	28,632,510	$	6.89

Restricted Stock Units

The following table summarizes restricted stock unit activity during the six months ended June 30, 2012:

	Restricted Stock Units		Weighted Average Grant Date Fair Value Per Unit
Unvested as of December 31, 2011	7,709,226		$	6.13
Granted	6,380,748		5.53
Vested	(3,833,940	)	5.88
Forfeited	(503,150	)	6.00
Unvested as of June 30, 2012	9,752,884		$	5.84

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In the six months ended June 30, 2012, we granted 5,915,748 restricted stock units subject to time-vesting. In addition, we granted 465,000 performance-based restricted stock units to certain of our senior officers. If all conditions are met, the performance-based restricted stock units will vest and be settled ratably over a three-year period from the date of the grant.

As of June 30, 2012, there were $47 million of total unrecognized compensation costs related to restricted stock units. These costs are expected to be recognized over a weighted average period of 2.5 years.

NOTE 8. EQUITY

In April 2012, we repurchased and subsequently retired 298,700 shares of our 7% mandatory convertible preferred stock for $289 million. In a related private financing, we issued an additional $141 million aggregate principal amount of our 61¤4% senior secured notes due 2018 at a premium for $142 million of cash proceeds and an additional $150 million aggregate principal amount of our 8% senior notes due 2020. We recorded the difference between the carrying value and the amount paid to redeem the preferred stock in April 2012 as preferred stock dividends in the accompanying Condensed Consolidated Statements of Operations. We accrued approximately $6 million, or $17.50 per share, for dividends on our 7% mandatory convertible preferred stock in the three months ended March 31, 2012 and $1 million in the three months ended June 30, 2012, and paid the dividends in April and July 2012, respectively.

On May 9, 2011, we announced that our board of directors had authorized the repurchase of up to $400 million of our common stock through a share repurchase program. Under the program, shares could be purchased in the open market or through privately negotiated transactions in a manner consistent with applicable securities laws and regulations, including pursuant to a Rule 10b5-1 plan maintained by the Company, at times and in amounts based on market conditions and other factors. The share repurchase program, which was scheduled to expire on May 9, 2012, was completed in January 2012. Pursuant to the program, we repurchased a total of 81,073,764 shares for approximately $400 million.

Period	Total Number of Shares Purchased	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Program	Maximum Dollar Value of Shares That May Yet Be Purchased Under the Program
	(In Thousands)			(In Thousands)	(In Millions)
May 12, 2011 through December 31, 2011	75,766	$	4.94	75,766	$	26
January 1, 2012 through January 31, 2012	5,308	4.93		5,308	0
Total	81,074	$	4.94	81,074	$	0

Repurchased shares are recorded based on settlement date and are held as treasury stock.

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The following table shows the changes in consolidated equity during the six months ended June 30, 2012 and 2011 (dollars in millions, share amounts in thousands):

	Tenet Healthcare Corporation Shareholders’ Equity
	Preferred Stock					Common Stock				Additional			Accumulated Other
	Shares Outstanding		Issued Amount			Shares Outstanding		Issued Par Amount		Paid-in Capital			Comprehensive Loss			Accumulated Deficit			Treasury Stock			Noncontrolling Interests			Total Equity
Balances at December 31, 2011	345,000		$	334		415,026		$	27	$	4,407		$	(52	)	$	(1,440	)	$	(1,853	)	$	69		$	1,492
Net income (loss)	0		0			0		0		0			0			62			0			(15		)	47
Distributions paid to noncontrolling interests	0		0			0		0		0			0			0			0			(6		)	(6		)
Contribution from noncontrolling interests	0		0			0		0		0			0			0			0			2			2
Purchase of businesses or joint venture interests	0		0			0		0		0			0			0			0			3			3
Other comprehensive income	0		0			0		0		0			3			0			0			0			3
Preferred stock dividends	0		0			0		0		(10		)	0			0			0			0			(10		)
Repurchase of common stock	0		0			(5,308	)	0		0			0			0			(26		)	0			(26		)
Repurchase of preferred stock	(298,700	)	(289		)	0		0		0			0			0			0			0			(289		)
Stock-based compensation expense, including associated deferred tax asset adjustments, and issuance of common stock	0		0			6,776		0		13			0			0			0			0			13
Balances at June 30, 2012	46,300		$	45		416,494		$	27	$	4,410		$	(49	)	$	(1,378	)	$	(1,879	)	$	53		$	1,229

Balances at December 31, 2010	345,000		$	334		485,783		$	27	$	4,449		$	(43	)	$	(1,522	)	$	(1,479	)	$	53		$	1,819
Net income	0		0			0		0		0			0			140			0			5			145
Distributions paid to noncontrolling interests	0		0			0		0		0			0			0			0			(4		)	(4		)
Purchases of businesses or joint venture interests	0		0			0		0		0			0			0			0			10			10
Preferred stock dividends	0		0			0		0		(12		)	0			0			0			0			(12		)
Repurchase of common stock	0		0			(11,464	)	0		0			0			0			(72		)	0			(72		)
Stock-based compensation expense, including associated deferred tax asset adjustments, and issuance of common stock	0		0			4,413		0		(12		)	0			0			0			0			(12		)
Balances at June 30, 2011	345,000		$	334		478,732		$	27	$	4,425		$	(43	)	$	(1,382	)	$	(1,551	)	$	64		$	1,874

NOTE 9. PROPERTY AND PROFESSIONAL AND GENERAL LIABILITY INSURANCE

Property Insurance

We have property, business interruption and related insurance coverage to mitigate the financial impact of catastrophic events or perils that is subject to deductible provisions based on the terms of the policies. These policies are on an occurrence basis. For the annual policy periods April 1, 2010 through March 31, 2013, we have coverage totaling $600 million per occurrence, after deductibles and exclusions, with annual aggregate sub-limits of $100 million each for floods and earthquakes and a per-occurrence sub-limit of $100 million for windstorms with no annual aggregate. With respect to fires and other perils, excluding floods, earthquakes and windstorms, the total $600 million limit of coverage per occurrence applies. Deductibles are 5% of insured values up to a maximum of $25 million for floods, California earthquakes and wind-related claims, and 2% of insured values for New Madrid fault earthquakes, with a maximum per claim deductible of $25 million. Other covered losses, including fires and other perils, have a minimum deductible of $1 million.

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Professional and General Liability Insurance

At June 30, 2012 and December 31, 2011, the aggregate current and long-term professional and general liability reserves in our accompanying Condensed Consolidated Balance Sheets were approximately $409 million and $412 million, respectively. These reserves include the reserves recorded by our captive insurance subsidiaries and our self-insured retention reserves recorded based on actuarial estimates for the portion of our professional and general liability risks, including incurred but not reported claims, for which we do not have insurance coverage. We estimated the reserves for losses and related expenses using expected loss-reporting patterns discounted to their present value under a risk-free rate approach using a Federal Reserve seven-year maturity rate of 1.11% and 1.35% at June 30, 2012 and December 31, 2011, respectively.

For the policy period June 1, 2012 through May 31, 2013, our hospitals generally have a self-insurance retention of $5 million per occurrence for all claims incurred. Our captive insurance company, The Healthcare Insurance Corporation (“THINC”), retains $10 million per occurrence coverage above our hospitals’ $5 million self-insurance retention level. The next $10 million of claims in excess of these aggregate self-insurance retentions of $15 million per occurrence are 80% reinsured by THINC with independent reinsurance companies, with THINC retaining 20% or a maximum of $2 million. Claims in excess of $25 million are covered by our excess professional and general liability insurance policies with major independent insurance companies, on a claims-made basis, subject to an aggregate limit of $175 million.

For the policy period June 1, 2011 through May 31, 2012, our hospitals generally have a self-insurance retention of $5 million per occurrence for all claims incurred. THINC retains $10 million per occurrence coverage above our hospitals’ $5 million self-insurance retention level. The next $10 million of claims in excess of these aggregate self-insurance retentions of $15 million per occurrence are 65% reinsured by THINC with independent reinsurance companies, with THINC retaining 35% or a maximum of $3.5 million. Claims in excess of $25 million are covered by our excess professional and general liability insurance policies with major independent insurance companies, on a claims-made basis, subject to an aggregate limit of $175 million.

Included in other operating expenses, net, in the accompanying Condensed Consolidated Statements of Operations is malpractice expense of $57 million and $59 million for the six months ended June 30, 2012 and 2011, respectively.

NOTE 10. CLAIMS AND LAWSUITS

We operate in a highly regulated and litigious industry. As a result, various lawsuits, claims, and legal and regulatory proceedings have been and can be expected to continue to be instituted or asserted against us. The resolution of any of these matters could have a material adverse effect on our results of operations, financial condition or cash flows in a given period.

In accordance with ASC 450, “Contingencies,” and related guidance, we record accruals for estimated losses relating to claims and lawsuits when available information indicates that a loss is probable and the amount of the loss, or range of loss, can be reasonably estimated. Where a loss on a material matter is reasonably possible and estimable, we disclose an estimate of the loss or a range of loss. In cases where we have not disclosed an estimate, we have concluded that the loss is either not reasonably possible or the loss, or a range of loss, is not reasonably estimable, based on available information.

1. Governmental Reviews—Health care companies are subject to numerous investigations by various governmental agencies. Further, private parties have the right to bring qui tam or “whistleblower” lawsuits against companies that allegedly submit false claims for payments to, or improperly retain overpayments from, the government and, in some states, private payers. Certain of our individual facilities have received inquiries from government agencies, and our facilities may receive such inquiries in future periods.

Pending Matters. The following is an update of material pending governmental reviews, all of which have been previously reported.

· Kyphoplasty Review. The U.S. Department of Justice (“DOJ”), in coordination with the Office of Inspector General (“OIG”) of the U.S. Department of Health and Human Services (“HHS”), has contacted a number of hospitals requesting information regarding their billing practices for kyphoplasty procedures. Kyphoplasty is a surgical procedure used to treat pain and related conditions associated with certain vertebrae injuries. As of June 30, 2012, seven of our hospitals had received information requests from the DOJ regarding these procedures. The government requested the information in connection with its review of the appropriateness of Medicare patients receiving kyphoplasty procedures on an inpatient as opposed to an outpatient basis. The review of this matter is ongoing, but the parties have been engaged in informal, non-binding and exploratory discussions about a potential non-judicial resolution of this matter with respect to one of our hospitals. Subject

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to negotiation of final settlement terms, we have reached a verbal financial agreement with the government to settle this matter with respect to one hospital for approximately $900,000. Because we have not yet reached agreement with the DOJ on the appropriate methodology to review the claims from the other hospitals that received information requests, we are unable to calculate an estimate of loss or range of loss with respect to those hospitals.

· Review of ICD Implantation Procedures. As previously reported, in March 2010, the DOJ issued a civil investigative demand (“CID”) pursuant to the federal False Claims Act to one of our hospitals. The CID requested information regarding Medicare claims submitted by our hospital in connection with the implantation of cardiac defibrillators (“ICDs”) during the period 2002 to the date of the letter. The government is seeking this information to determine if ICD implantation procedures were performed in accordance with Medicare coverage requirements. The DOJ has since notified us that it also intends to review records and documents from 32 of our other hospitals in addition to the hospital that originally received the CID. We understand that the DOJ has submitted similar requests to other hospital companies as well.

Our analysis of these pending reviews is still ongoing, and we are unable to predict with any certainty the progress or final outcome of any discussions with government agencies at this time. However, based on currently available information, as of June 30, 2012, we had recorded reserves of approximately $2 million in the aggregate with respect to two hospitals under review in the foregoing governmental proceedings. Changes in the reserves may be required in the future as additional information becomes available. We cannot predict the ultimate resolution of any governmental review, and the final amounts paid in settlement or otherwise, if any, could differ materially from our currently recorded reserves.

Settled Matters. The following is a summary of recently settled governmental reviews:

· Review of Florida Medical Center’s Partial Hospitalization Program. On May 22, 2012, we entered into a voluntary civil settlement with the DOJ and OIG for a cash payment of $3.5 million (which was fully reserved at December 31, 2009 and paid in May 2012). The settlement relates to a previously disclosed matter involving Florida Medical Center’s partial hospitalization program, a now-closed psychiatric treatment program that had the capacity to treat 15 patients on an outpatient basis.

· Inpatient Rehabilitation Facilities Review. As previously reported in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2012, we entered into a voluntary civil settlement on April 10, 2012 with the DOJ and HHS for a cash payment of $42.75 million (which was fully reserved at December 31, 2011 and paid in April 2012). The settlement relates to a previously disclosed matter, which we initially reported to the OIG in October 2007, involving inpatient rehabilitation admissions at 25 active and divested inpatient hospitals and units from 2005 through 2007.

2. Lawsuits Resulting from Hurricane Katrina—In January 2012, we reached an agreement in principle to settle for approximately $12 million a purported class action lawsuit filed on behalf of persons allegedly injured following Hurricane Katrina at Lindy Boggs Medical Center (one of our former New Orleans area hospitals). We expect to enter into a final settlement agreement in August 2012 and submit the agreement to the court for preliminary approval in September 2012. The settlement, which will be covered in full by our excess insurance carrier, will be apportioned among the eligible class members who file a proof of claim once the Civil District Court for the Parish of Orleans certifies the class in that case — which is captioned Dunn, et al. v. Tenet Mid-City Medical, L.L.C. (formerly d/b/a Lindy Boggs Medical Center), et al.

In addition, we are defendants in eight individual Hurricane Katrina-related lawsuits filed in Louisiana. As of June 30, 2012, trial dates had not been set in these individual cases. (Other previously pending individual cases have been resolved or abandoned.) In general, the plaintiffs allege that the hospitals were negligent in failing to properly prepare for Hurricane Katrina by, among other things, failing to evacuate patients ahead of the storm and failing to have properly configured emergency generator systems. The plaintiffs seek unspecified damages for the alleged wrongful death of some patients, aggravation of pre-existing illnesses or injuries to other patients, and additional claims. Although we are unable to predict the ultimate resolution of the pending lawsuits, we do not believe the outcome of these matters, either individually or collectively, will have a material adverse effect on our business, financial condition, results of operations or cash flows.

3. Hospital-Related Tort Claim—On May 3, 2012, the Superior Court in Los Angeles County, California issued an order reducing a previously reported punitive damage award from $65 million to $5 million. The lawsuit — which is captioned Rosenberg v. Encino-Tarzana Regional Medical Center and Tenet Healthcare Corporation — relates to an alleged assault occurring in April 2006 at Tarzana Regional Medical Center (a hospital we have since divested). The

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plaintiff has accepted the reduced damage award, but has filed a motion seeking attorneys’ fees in the amount of $6 million. The court is expected to consider that motion on August 20, 2012. The plaintiff was also previously awarded compensatory damages of approximately $2.4 million.

In the three months ended December 31, 2011, the Company recorded a reserve of approximately $6 million in discontinued operations for this matter. For purposes of computing the reserve, management estimated that the probable range of loss would be between approximately $6 million and $25 million (including approximately $1 million in attorneys’ fees) based on our expectation, after analysis of relevant case law, that a California court would apply U.S. Supreme Court opinions that generally limit, as a matter of constitutional law, the amount of a punitive award to be no more than a multiple of nine times the compensatory award and, in the case of a substantial compensatory award, to be no more than a multiple of one times that award. At that time, management concluded that no amount within this range is any more likely than any other; therefore, in accordance with ASC 450, the accrual was recorded at the low end of the estimated range.

Although we are unable to predict the ultimate resolution of this lawsuit at this time, we continue to believe that the current reserve, recorded at the low end of the estimated range, reflects our probable liability. We intend to continue to vigorously defend ourselves in this matter.

4. Ordinary Course Matters—As previously reported, we are defendants in two coordinated lawsuits in Los Angeles Superior Court alleging that our hospitals violated certain provisions of California’s labor laws and applicable wage and hour regulations. The cases are: McDonough, et al. v. Tenet Healthcare Corporation (which was filed in June 2003) and Tien, et al. v. Tenet Healthcare Corporation (which was filed in May 2004). The plaintiffs seek back pay, statutory penalties, interest and attorneys’ fees. The plaintiffs’ requests for class certification were denied in the lower court, and the appellate court affirmed the lower court’s ruling. The California Supreme Court granted the plaintiffs’ petition for review of the lower court’s ruling, but deferred further action in the matter pending its decision in a similar case, which was subsequently issued in April 2012. In light of its ruling in that case, on June 20, 2012, the California Supreme Court transferred the Tien/McDonough cases back to the court of appeal with directions to vacate its decision and reconsider the cause. We have filed a supplemental brief arguing that the court of appeal should reaffirm its decision upholding the lower court’s denial of class certification. Based on available information, we continue to believe at this time that the ultimate resolution of these matters will not have a material adverse effect on our business, financial condition, results of operations or cash flows.

Also, as previously reported, we are defendants in a class action lawsuit in which the plaintiffs claim that in April 1996 patient identifying records from a psychiatric hospital that we closed in 1995 were temporarily placed in an unsecure location while the hospital was undergoing renovations. The lawsuit, Doe, et al. v. Jo Ellen Smith Medical Foundation, was filed in the Civil District Court for the Parish of Orleans in Louisiana in March 1997 and is currently pending. The plaintiffs’ claims include allegations of tortious invasion of privacy and negligent infliction of emotional distress. The plaintiffs contend that the class consists of approximately 5,000 persons; however, only 8 individuals have been identified to date in the class certification process. The plaintiffs have asserted each member of the class is entitled to common damages under a theory of presumed “common damage” regardless of whether or not any members of the class were actually harmed or even aware of the incident. We believe there is no authority for an award of common damages under Louisiana law. In addition, we believe that there is no basis for the certification of this proceeding as a class action under applicable federal and Louisiana law precedents. However, the trial court has denied our motions for summary judgment and our motion to decertify the class. In March 2012, the Louisiana Supreme Court denied our interlocutory appeal of the trial court’s decision on summary judgment based on procedural grounds, noting that we retain an adequate remedy to appeal any adverse judgment that might be rendered by the trial court. In April 2012, we filed a notice of appeal of the trial court’s denial of our motion to decertify the proceeding as a class action. The notice of appeal was granted, and the trial has been stayed pending the outcome of the appeal. At this time, we are not able to estimate the reasonably possible loss or reasonably possible range of loss given: the small number of class members that have been identified or otherwise responded to the class certification process; the novel theories asserted by plaintiffs, including their assertion that a theory of presumed common damage exists under Louisiana law; uncertainties as to the timing and outcome of the appeals process; and the failure of the plaintiffs to provide any evidence of damages. We intend to vigorously contest the plaintiffs’ claims.

In addition to the matters described above, our hospitals are subject to investigations, claims and legal proceedings in the ordinary course of our business. Most of these matters involve allegations of medical malpractice or other injuries suffered at our hospitals. We are also party in the normal course of business to regulatory proceedings and private litigation concerning the terms of our union agreements and the application of various federal and state labor laws, rules and regulations governing, among other things, a variety of workplace wage and hour issues. Furthermore, our hospitals are routinely subject to sales and use tax audits and personal property tax audits by the state and local government jurisdictions in which they do business. The results of the audits are frequently disputed, and such disputes

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are ordinarily resolved by administrative appeals or litigation. It is management’s opinion that the ultimate resolution of these ordinary course investigations, claims and legal proceedings will not have a material adverse effect on our business, financial condition, results of operations or cash flows.

New claims or inquiries may be initiated against us from time to time. These matters could (1) require us to pay substantial damages or amounts in judgments or settlements, which individually or in the aggregate could exceed amounts, if any, that may be recovered under our insurance policies where coverage applies and is available, (2) cause us to incur substantial expenses, (3) require significant time and attention from our management, and (4) cause us to close or sell hospitals or otherwise modify the way we conduct business.

The table below presents reconciliations of the beginning and ending liability balances in connection with legal settlements and related costs recorded during the six months ended June 30, 2012 and 2011:

	Balances at Beginning of Period		Litigation and Investigation Costs		Cash Payments			Balances at End of Period
Six Months Ended June 30, 2012
Continuing operations	$	49	$	3	$	(48	)	$	4
Discontinued operations	17		0		(12		)	5
	$	66	$	3	$	(60	)	$	9

Six Months Ended June 30, 2011
Continuing operations	$	30	$	19	$	(17	)	$	32
Discontinued operations	0		0		0			0
	$	30	$	19	$	(17	)	$	32

For the six months ended June 30, 2012 and 2011, we recorded net costs of $3 million and $19 million, respectively. The 2012 amount primarily related to costs associated with the legal proceedings and governmental reviews described above. The 2011 amount primarily related to costs associated with our evaluation of an unsolicited acquisition proposal received in November 2010 (which was subsequently withdrawn), the settlement of a union arbitration claim and costs to defend the Company in various matters.

NOTE 11. INCOME TAXES

Income tax expense in the six months ended June 30, 2012 included expense of $1 million related to continuing operations attributable to an increase in our estimated liabilities for uncertain tax positions, net of related deferred tax effects. The total amount of unrecognized tax benefits as of June 30, 2012 was $37 million ($36 million related to continuing operations and $1 million related to discontinued operations), which, if recognized, would impact our effective tax rate and income tax expense (benefit) from continuing and discontinued operations.

Our practice is to recognize interest and penalties related to income tax matters in income tax expense in our consolidated statements of operations. Approximately $0.6 million of interest and penalties related to accrued liabilities for uncertain tax positions ($0.5 million related to continuing operations and $0.1 million related to discontinued operations) are included in the accompanying Condensed Consolidated Statement of Operations for the six months ended June 30, 2012. Total accrued interest and penalties on unrecognized tax benefits as of June 30, 2012 were $10 million ($11 million related to continuing operations, partially offset by a $1 million benefit related to discontinued operations).

As of June 30, 2012, approximately $14 million of unrecognized federal and state tax benefits, as well as reserves for interest and penalties, may decrease in the next 12 months as a result of the settlement of audits, the filing of amended tax returns or the expiration of statutes of limitations.

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NOTE 12. EARNINGS PER COMMON SHARE

The table below is a reconciliation of the numerators and denominators of our basic and diluted earnings per common share calculations for income from continuing operations for the three and six months ended June 30, 2012 and 2011. Income is expressed in millions and weighted average shares are expressed in thousands.

	Income (Numerator)		Weighted Average Shares (Denominator)	Per-Share Amount
Three Months Ended June 30, 2012
Income available to Tenet Healthcare Corporation common shareholders for basic earnings per share	$	42	415,011	$	0.10
Effect of dilutive stock options and restricted stock units	0		12,697	(0.00		)
Income available to Tenet Healthcare Corporation common shareholders for diluted earnings per share	$	42	427,708	$	0.10

Three Months Ended June 30, 2011
Income available to Tenet Healthcare Corporation common shareholders for basic earnings per share	$	40	486,794	$	0.08
Effect of dilutive stock options and restricted stock units	0		16,954	0.00
Income available to Tenet Healthcare Corporation common shareholders for diluted earnings per share	$	40	503,748	$	0.08

Six Months Ended June 30, 2012
Income available to Tenet Healthcare Corporation common shareholders for basic earnings per share	$	99	413,192	$	0.24
Effect of dilutive stock options, restricted stock units and mandatory convertible preferred stock	2		21,526	(0.01		)
Income available to Tenet Healthcare Corporation common shareholders for diluted earnings per share	$	101	434,718	$	0.23

Six Months Ended June 30, 2011
Income available to Tenet Healthcare Corporation common shareholders for basic earnings per share	$	120	486,848	$	0.24
Effect of dilutive stock options, restricted stock units and mandatory convertible preferred stock	12		77,103	(0.01		)
Income available to Tenet Healthcare Corporation common shareholders for diluted earnings per share	$	132	563,951	$	0.23

Stock options (in thousands) whose exercise price exceeded the average market price of our common stock and, therefore, were not included in the computation of diluted shares for the three and six months ended June 30, 2012 were 15,554 and 14,765 shares, respectively, and for the three and six months ended June 30, 2011 were 16,280 and 15,022 shares, respectively.

NOTE 13. FAIR VALUE MEASUREMENTS

Our financial assets and liabilities recorded at fair value on a recurring basis primarily relate to investments in available-for-sale securities held by our captive insurance subsidiaries and our derivative contract. The following tables present information about our assets and liabilities that are measured at fair value on a recurring basis as of June 30, 2012 and December 31, 2011. The following tables also indicate the fair value hierarchy of the valuation techniques we utilized to determine such fair values. In general, fair values determined by Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities. We consider a security that trades at least weekly to have an active market. Fair values determined by Level 2 inputs utilize data points that are observable, such as quoted prices, interest rates and yield curves. Fair values determined by Level 3 inputs are unobservable data points for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability.

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	June 30, 2012		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Investments:
Marketable securities – current	$	3	$	3	$	0	$	0
Investments in Reserve Yield Plus Fund	2		0		2		0
Marketable debt securities – noncurrent	19		5		13		1
	$	24	$	8	$	15	$	1
Derivative Contract (see Note 5):
LIBOR cap agreement asset	$	0	$	0	$	0	$	0

	December 31, 2011		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Investments:
Investments in Reserve Yield Plus Fund	$	2	$	0	$	2	$	0
Marketable debt securities – noncurrent	22		6		15		1
	$	24	$	6	$	17	$	1
Derivative Contract (see Note 5):
LIBOR cap agreement asset	$	0	$	0	$	0	$	0

There was no change in the fair value of our auction rate securities valued using significant unobservable inputs during the six months ended June 30, 2012.

At June 30, 2012, one of our captive insurance subsidiaries held $1 million of preferred stock and other securities that were distributed from auction rate securities whose auctions have failed due to sell orders exceeding buy orders. We were not required to record an other-than-temporary impairment of these securities during the six months ended June 30, 2012 or 2011.

Our non-financial assets and liabilities not permitted or required to be measured at fair value on a recurring basis typically relate to long-lived assets held and used, long-lived assets held for sale and goodwill. We are required to provide additional disclosures about fair value measurements as part of our financial statements for each major category of assets and liabilities measured at fair value on a non-recurring basis. The following table presents this information as of June 30, 2012 and indicates the fair value hierarchy of the valuation techniques we utilized to determine such fair values. In general, fair values determined by Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities, which generally are not applicable to non-financial assets and liabilities. Fair values determined by Level 2 inputs utilize data points that are observable, such as definitive sales agreements, appraisals or established market values of comparable assets. Fair values determined by Level 3 inputs are unobservable data points for the asset or liability and include situations where there is little, if any, market activity for the asset or liability, such as internal estimates of future cash flows.

	June 30, 2012		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Long-lived assets held for sale	$	39	$	0	$	39	$	0

As a result of the fair values determined above for our assets held for sale, we recorded impairment charges in discontinued operations in the six months ended June 30, 2012 of $100 million, consisting of $98 million for the write-down of long-lived assets to their estimated fair values, less estimated costs to sell, and a $2 million charge for the write-down of goodwill related to Creighton University Medical Center, as further described in Note 3.

The fair value of our long-term debt is based on quoted market prices (Level 1). At June 30, 2012 and December 31, 2011, the estimated fair value of our long-term debt was approximately 106.8% and 104.9%, respectively, of the carrying value of the debt.

NOTE 14. ACQUISITIONS

During the six months ended June 30, 2012, we acquired a diagnostic imaging center and a majority interest in two ambulatory surgery centers (in one of which we had previously held a noncontrolling interest), as well as ten physician practice entities. The fair value of the consideration conveyed in the acquisitions (the “purchase price”) was $13 million.

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We are required to allocate the purchase prices of the acquired businesses to assets acquired or liabilities assumed and, if applicable, noncontrolling interests based on their fair values. The excess of the purchase price allocation over those fair values is recorded as goodwill. We are in process of finalizing the purchase price allocations, including valuations of the acquired property and equipment, for several recently acquired outpatient centers; therefore, the purchase price allocations for those centers are subject to adjustment once the valuations are completed. During the six months ended June 30, 2012, we finalized the purchase price allocations for various centers acquired in 2011, which resulted in an increase in goodwill of $1 million with a corresponding decrease in property and equipment.

Purchase price allocations for the acquisitions made during the six months ended June 30, 2012 are as follows:

Current assets	$	3
Property and equipment	6
Goodwill	14
Current liabilities	(2		)
Long-term liabilities	(4		)
Noncontrolling interests	(4		)
Net cash paid	$	13

The goodwill generated from these transactions, which we anticipate will be fully deductible for income tax purposes, can be attributed to the benefits that we expect to realize from operating efficiencies and increased reimbursement. Approximately $1 million in acquisition costs related to prospective and closed acquisitions were expensed during the six months ended June 30, 2012.

NOTE 15. SEGMENT INFORMATION

Beginning in the three months ended June 30, 2012, we are now reporting Conifer as a separate reportable business segment. Our other segment is Hospital Operations. Historically, our business has consisted of one reportable segment. However, during the three months ended June 30, 2012, our Hospital Operations segment and our Conifer segment entered into formal agreements, effective January 1, 2012, pursuant to which it was agreed that services provided by both parties to each other would be billed based on estimated third-party pricing terms. The factors for determining the reportable segments include the manner in which management evaluates operating performance combined with the nature of the individual business activities.

Our core business is Hospital Operations, which is focused on providing acute care treatment, including inpatient care, intensive care, cardiac care, radiology services, emergency medical treatment and outpatient services. At June 30, 2012, our subsidiaries operated 49 hospitals in continuing operations, including three academic medical centers and one critical access hospital, with a combined total of 13,176 licensed beds, primarily serving urban and suburban communities in 10 states. Our subsidiaries also operated 102 free-standing and provider-based diagnostic imaging centers, ambulatory surgery centers, urgent care centers and free-standing emergency departments in 12 states at June 30, 2012. We also own an interest in an HMO and operate: various related health care facilities, including a long-term acute care hospital and a number of medical office buildings (all of which are located on, or nearby, our hospital campuses); physician practices; captive insurance companies; and occupational and rural health care clinics.

We also operate revenue cycle management, health care information management and patient communications services businesses under our Conifer subsidiary. In addition, Conifer operates a management services business that provides network development, utilization management, claims processing and contract negotiation services to physician organizations and hospitals that assume managed care risk. At June 30, 2012, Conifer provided these services to approximately 400 Tenet and non-Tenet hospitals and other health care organizations.

As mentioned above, in 2012, our Conifer segment and our Hospital Operations segment entered into formal agreements documenting terms and conditions of various services provided by Conifer to Tenet hospitals, as well as certain administrative services provided by our Hospital Operations segment to Conifer. The services provided by both parties under these agreements are charged to the other party based on estimated third-party pricing terms. In 2011, the services provided by both parties were charged to the other party based on an estimate of the internal costs to provide such services. The amounts in the tables directly below reflect the services being charged based on estimated third-party terms in 2012, but not in 2011.

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PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)

	Condensed Consolidated Financial Statements	1

	Notes to Condensed Consolidated Financial Statements	5

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	53

Item 4.	Controls and Procedures	53

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	54

Item 1A.	Risk Factors	54

Item 6.	Exhibits	54

x	Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
	for the quarterly period ended June 30, 2012

¨	Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
	for the transition period from to