PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

TENET HEALTHCARE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

Dollars in Millions

(Unaudited)

	September 30,			December 31,
	2012			2011
ASSETS
Current assets:
Cash and cash equivalents	$	83		$	113
Accounts receivable, less allowance for doubtful accounts ($402 at September 30, 2012 and $397 at December 31, 2011)	1,338			1,278
Inventories of supplies, at cost	154			161
Income tax receivable	13			7
Current portion of deferred income taxes	394			418
Assets held for sale	0			2
Other current assets	502			378
Total current assets	2,484			2,357
Investments and other assets	126			156
Deferred income taxes, net of current portion	338			374
Property and equipment, at cost, less accumulated depreciation and amortization ($3,444 at September 30, 2012 and $3,386 at December 31, 2011)	4,173			4,350
Goodwill	771			736
Other intangible assets, at cost, less accumulated amortization ($405 at September 30, 2012 and $360 at December 31, 2011)	578			489
Total assets	$	8,470		$	8,462

LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt	$	243		$	66
Accounts payable	629			760
Accrued compensation and benefits	379			376
Professional and general liability reserves	72			75
Accrued interest payable	110			112
Accrued legal settlement costs	7			64
Other current liabilities	389			362
Total current liabilities	1,829			1,815
Long-term debt, net of current portion	4,508			4,294
Professional and general liability reserves	322			337
Accrued legal settlement costs	2			2
Other long-term liabilities	524			506
Total liabilities	7,185			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 September 30, 2012 and 345,000 at December 31, 2011	45			334
Common stock, $0.05 par value; authorized 262,500,000 shares; 138,739,064 shares issued at September 30, 2012 and 137,867,138 shares issued at December 31, 2011	7			7
Additional paid-in capital	4,437			4,427
Accumulated other comprehensive loss	(49		)	(52		)
Accumulated deficit	(1,337		)	(1,440		)
Common stock in treasury, at cost, 34,320,438 shares at September 30, 2012 and 34,110,674 shares at December 31, 2011	(1,879		)	(1,853		)
Total shareholders’ equity	1,224			1,423
Noncontrolling interests	45			69
Total equity	1,269			1,492
Total liabilities and equity	$	8,470		$	8,462

See accompanying Notes to Condensed Consolidated Financial Statements.

Table of Contents

TENET HEALTHCARE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Dollars in Millions, Except Per-Share Amounts

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Net operating revenues:
Net operating revenues before provision for doubtful accounts	$	2,427		$	2,289		$	7,373		$	7,018
Less: Provision for doubtful accounts	206			189			585			536
Net operating revenues	2,221			2,100			6,788			6,482
Operating expenses:
Salaries, wages and benefits	1,050			1,002			3,166			3,001
Supplies	376			379			1,164			1,167
Other operating expenses, net	539			527			1,604			1,526
Electronic health record incentives	(13		)	0			(13		)	(50		)
Depreciation and amortization	110			100			314			298
Impairment of long-lived assets and goodwill, and restructuring charges, net	6			8			12			18
Litigation and investigation costs	0			5			3			24
Operating income	153			79			538			498
Interest expense	(103		)	(59		)	(303		)	(275		)
Investment earnings	1			1			2			3
Income from continuing operations, before income taxes	51			21			237			226
Income tax expense	(18		)	(4		)	(90		)	(73		)
Income from continuing operations, before discontinued operations	33			17			147			153
Discontinued operations:
Income (loss) from operations	4			(2		)	7			(17		)
Impairment of long-lived assets and goodwill, and restructuring charges, net	0			0			(100		)	0
Net gains (losses) on sales of facilities	(1		)	0			1			0
Income tax benefit (expense)	(4		)	0			24			24
Income (loss) from discontinued operations	(1		)	(2		)	(68		)	7
Net income	32			15			79			160
Less: Preferred stock dividends	1			6			11			18
Less: Net income (loss) attributable to noncontrolling interests	(9		)	3			(24		)	8
Net income attributable to Tenet Healthcare Corporation common shareholders	$	40		$	6		$	92		$	134
Amounts attributable to Tenet Healthcare Corporation common shareholders
Income from continuing operations, net of tax	$	30		$	8		$	129		$	128
Income (loss) from discontinued operations, net of tax	10			(2		)	(37		)	6
Net income attributable to Tenet Healthcare Corporation common shareholders	$	40		$	6		$	92		$	134
Earnings (loss) per share attributable to Tenet Healthcare Corporation common shareholders
Basic
Continuing operations	$	0.29		$	0.07		$	1.25		$	1.06
Discontinued operations	0.09			(0.02		)	(0.36		)	0.05
	$	0.38		$	0.05		$	0.89		$	1.11
Diluted
Continuing operations	$	0.28		$	0.07		$	1.21		$	1.03
Discontinued operations	0.09			(0.02		)	(0.35		)	0.05
	$	0.37		$	0.05		$	0.86		$	1.08
Weighted average shares and dilutive securities outstanding (in thousands):
Basic	104,244			117,188			103,613			120,204
Diluted	107,311			120,908			106,904			124,466

See accompanying Notes to Condensed Consolidated Financial Statements.

Table of Contents

TENET HEALTHCARE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OTHER COMPREHENSIVE INCOME

Dollars in Millions

(Unaudited)

	Three Months Ended September 30,					Nine Months Ended September 30,
	2012			2011		2012			2011
Net income	$	32		$	15	$	79		$	160
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	32			15		82			160
Less: Preferred stock dividends	1			6		11			18
Less: Comprehensive income attributable to noncontrolling interests	(9		)	3		(24		)	8
Comprehensive income attributable to Tenet Healthcare Corporation common shareholders	$	40		$	6	$	95		$	134

See accompanying Notes to Condensed Consolidated Financial Statements.

Table of Contents

TENET HEALTHCARE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Dollars in Millions

(Unaudited)

	Nine Months Ended September 30,
	2012			2011
Net income	$	79		$	160
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	314			298
Provision for doubtful accounts	585			536
Deferred income tax expense	58			102
Stock-based compensation expense	24			17
Impairment of long-lived assets and goodwill, and restructuring charges, net	12			18
Litigation and investigation costs	3			24
Amortization of debt discount and debt issuance costs	16			23
Pre-tax loss from discontinued operations	92			17
Other items, net	(7		)	(10		)
Changes in cash from operating assets and liabilities:
Accounts receivable	(653		)	(618		)
Inventories and other current assets	(106		)	(32		)
Income taxes	(2		)	(44		)
Accounts payable, accrued expenses and other current liabilities	(23		)	(96		)
Other long-term liabilities	20			(10		)
Payments against reserves for restructuring charges and litigation costs and settlements	(56		)	(27		)
Net cash used in operating activities from discontinued operations, excluding income taxes	(19		)	(34		)
Net cash provided by operating activities	337			324
Cash flows from investing activities:
Purchases of property and equipment — continuing operations	(358		)	(294		)
Purchases of property and equipment — discontinued operations	(2		)	(4		)
Purchases of businesses or joint venture interests	(38		)	(56		)
Proceeds from sales of facilities and other assets — discontinued operations	45			0
Proceeds from sales of marketable securities, long-term investments and other assets	9			31
Other items, net	(2		)	(1		)
Net cash used in investing activities	(346		)	(324		)
Cash flows from financing activities:
Repayments of borrowings under credit facility	(1,458		)	0
Proceeds from borrowings under credit facility	1,553			0
Repayments of other borrowings	(76		)	(4		)
Proceeds from other borrowings	292			0
Repurchases of preferred stock	(292		)	0
Deferred debt issuance costs	(3		)	0
Repurchases of common stock	(26		)	(196		)
Cash dividends on preferred stock	(13		)	(18		)
Distributions paid to noncontrolling interests	(9		)	(8		)
Other items, net	11			6
Net cash used in financing activities	(21		)	(220		)
Net decrease in cash and cash equivalents	(30		)	(220		)
Cash and cash equivalents at beginning of period	113			405
Cash and cash equivalents at end of period	$	83		$	185
Supplemental disclosures:
Interest paid, net of capitalized interest	$	(288	)	$	(255	)
Income tax (payments) refunds, net	$	(9	)	$	9

See accompanying Notes to Condensed Consolidated Financial Statements.

Table of Contents

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 September 30, 2012, our subsidiaries operated 49 hospitals with a total of 13,216 licensed beds, primarily serving urban and suburban communities, as well as 112 free-standing and provider-based outpatient centers. In addition to providing health care services, we also offer revenue cycle management, health care information management and patient communications services, and we own 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.

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. Furthermore, all amounts related to shares, share prices and earnings per share have been restated to give retrospective presentation for the reverse stock split described in Note 8.

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 and are of a normal recurring nature. 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 nine month periods ended September 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 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

Table of Contents

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 September 30,				Nine Months Ended September 30,
	2012		2011		2012		2011
General Hospitals:
Medicare	$	505	$	491	$	1,666	$	1,550
Medicaid	176		174		587		609
Managed care	1,348		1,269		4,002		3,830
Indemnity, self-pay and other	261		244		747		732
Acute care hospitals — other revenue	8		27		45		78
Other:
Other operations	129		84		326		219
Net operating revenues before provision for doubtful accounts	$	2,427	$	2,289	$	7,373	$	7,018

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 $83 million and $113 million at September 30, 2012 and December 31, 2011, respectively. As of September 30, 2012 and December 31, 2011, our book overdrafts were approximately $190 million and $252 million, respectively, which were classified as accounts payable.

At September 30, 2012 and December 31, 2011, approximately $71 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 nine months ended September 30, 2011, we repatriated $21 million of excess cash from our foreign insurance subsidiary to our corporate domestic bank account.

Also at September 30, 2012 and December 31, 2011, we had $48 million and $109 million, respectively, of property and equipment purchases accrued for items received but not yet paid. Of these amounts, $43 million and $104 million, respectively, were included in accounts payable.

During the nine months ended September 30, 2012 and 2011, we entered into non-cancellable capital leases of approximately $54 million and $15 million, respectively, primarily for equipment.

Table of Contents

Other Intangible Assets

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

	Gross Carrying Amount		Accumulated Amortization			Net Book Value
September 30, 2012:
Capitalized software costs	$	887	$	(381	)	$	506
Long-term debt issuance costs	90		(22		)	68
Other	6		(2		)	4
Total	$	983	$	(405	)	$	578

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 September 30, 2012 is as follows:

			Years Ending December 31,										Later
	Total		2012		2013		2014		2015		2016		Years
Amortization of intangible assets	$	578	$	26	$	89	$	82	$	72	$	67	$	242

NOTE 2. ACCOUNTS RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS

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

	September 30,			December 31,
	2012			2011
Continuing operations:
Patient accounts receivable	$	1,670		$	1,605
Allowance for doubtful accounts	(395		)	(382		)
Estimated future recoveries from accounts assigned to our Conifer subsidiary	83			62
Net cost reports and settlements payable and valuation allowances	(38		)	(39		)
	1,320			1,246
Discontinued operations:
Patient accounts receivable	24			46
Allowance for doubtful accounts	(7		)	(15		)
Estimated future recoveries from accounts assigned to our Conifer subsidiary	2			2
Net cost reports and settlements payable and valuation allowances	(1		)	(1		)
	18			32
Accounts receivable, net	$	1,338		$	1,278

Our self-pay collection rate, which is the blended collection rate for uninsured and balance after insurance accounts receivable, was approximately 28.8% and 27.7% as of September 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. Our estimated collection rate from managed care payers was approximately 97.7% and 98.2% at September 30, 2012 and December 31, 2011, respectively. As of September 30, 2012 and December 31, 2011, our allowance for doubtful accounts for self-pay uninsured accounts was 87.9% and 88.4%, respectively, of our self-pay uninsured patient accounts receivable. As of September 30, 2012 and December 31, 2011, our allowance for doubtful accounts for self-pay balance after insurance accounts was 56.6% 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 $49 million from $182 million in the nine months ended September 30, 2011 to $231 million in the nine months ended September 30, 2012 primarily due to an increase in patient account assignments to our Conifer Health Solutions (“Conifer”) subsidiary. The increase in provision for doubtful accounts primarily related to the increase in uninsured patient volumes in the nine months

Table of Contents

ended September 30, 2012 compared to the nine months ended September 30, 2011 and the favorable impact of various settlements of aged managed care accounts in the 2011 period, partially offset by the impact of a 110 basis point improvement in our collection rate on self-pay accounts. As of September 30, 2012 and December 31, 2011, our allowance for doubtful accounts for managed care accounts was 9.2% 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 September 30, 2012 and 2011 were approximately $109 million and $103 million, respectively, and for the nine months ended September 30, 2012 and 2011 were approximately $331 million and $291 million, respectively. Our estimated costs (based on the selected operating expenses described above) of caring for charity care patients for the three months ended September 30, 2012 and 2011 were approximately $41 million and $31 million, respectively, and for the nine months ended September 30, 2012 and 2011 were approximately $105 million and $90 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 September 30, 2012 and 2011 were approximately $56 million and $40 million, respectively, and for the nine months ended September 30, 2012 and 2011 were approximately $210 million and $196 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 hospital (“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.” As a result, 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 completed the sale of CUMC on August 31, 2012 at a transaction price of $40 million, excluding working capital, and recognized a loss on sale of approximately $1 million in discontinued operations. Because we did not sell the accounts receivable of CUMC, net receivables of approximately $18 million are included in our accounts receivable in the accompanying Condensed Consolidated Balance Sheet at September 30, 2012.

In May 2012, we completed the sale of Diagnostic Imaging Services, Inc. (“DIS”), our former diagnostic imaging center business in Louisiana, for net proceeds of approximately $10 million. As a result of the sale, DIS was reclassified into discontinued operations in the six 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 September 30,					Nine Months Ended September 30,
	2012		2011			2012			2011
Net operating revenues	$	38	$	53		$	150		$	158
Income (loss) before income taxes	3		(2		)	(92		)	(17		)

Included in loss before income taxes from discontinued operations in the nine months ended September 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 nine months ended September 30, 2012, we recorded net impairment and restructuring charges in our hospital operations segment of $12 million, consisting of $3 million relating to the impairment of obsolete assets, $4 million of employee severance costs and $5 million of other related costs.

During the nine months ended September 30, 2011, we recorded net impairment and restructuring charges of $18 million in our hospital operation segment. We recorded $4 million for the write-down of buildings and equipment of one of our previously impaired hospitals to their estimated fair values primarily due to a decline in the fair value of real estate in the

Table of Contents

market in which the hospital operates and a decline in the estimated fair value of equipment. We also recorded an impairment charge of $1 million related to a cost basis investment, $7 million of employee severance costs, $3 million of lease termination costs and $3 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 September 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 activities recorded during the nine months ended September 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
Nine Months Ended September 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	$	8	$	(7	)	$	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	$	8	$	(7	)	$	0		$	12
Nine Months Ended September 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	$	13	$	(6	)	$	(1	)	$	10
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	$	13	$	(7	)	$	(1	)	$	15

The above liability balances at September 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 September 30, 2012 are expected to be approximately $2 million in 2012 and $10 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.

Table of Contents

NOTE 5. LONG-TERM DEBT AND LEASE OBLIGATIONS

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

	September 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	175			80
Capital leases and mortgage notes	85			32
Unamortized note discounts and premium	(119		)	(129		)
Total long-term debt	4,751			4,360
Less current portion	243			66
Long-term debt, net of current portion	$	4,508		$	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 September 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 that ended 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 that ended 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 September 30, 2012, we had $175 million of cash borrowings outstanding under the revolving credit facility subject to an interest rate of 2.70%, and we had approximately $154 million of standby letters of credit outstanding. Based on our eligible receivables, approximately $430 million was available for borrowing under the revolving credit facility at September 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

Table of Contents

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 nine months ended September 30, 2011, our interest rate swap agreement generated approximately $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 September 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 September 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 $128 million. We had a liability of $86 million recorded for these guarantees included in other current liabilities at September 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 September 30, 2012 was $5 million. We had a liability of $3 million recorded for these guarantees at September 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 September 30, 2012, approximately four 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 nine months ended September 30, 2012 and 2011 includes $24 million and $17 million, respectively, of pre-tax compensation costs related to our stock-based compensation arrangements.

All amounts related to shares, share prices and earnings per share have been restated to give retrospective presentation for the reverse stock split described in Note 8.

Stock Options

The following table summarizes stock option activity during the nine months ended September 30, 2012:

	Options		Weighted Average Exercise Price Per Share		Aggregate Intrinsic Value		Weighted Average Remaining Life
					(In Millions)
Outstanding as of December 31, 2011	8,498,393		$	25.04
Granted	477,500		22.79
Exercised	(1,350,222	)	5.95
Forfeited/Expired	(240,797	)	44.17
Outstanding as of September 30, 2012	7,384,874		$	27.76	$	63	4.5 years
Vested and expected to vest at September 30, 2012	7,378,691		$	27.76	$	63	4.5 years
Exercisable as of September 30, 2012	6,911,556		$	28.11	$	62	4.2 years

There were 1,350,222 stock options exercised during the nine months ended September 30, 2012 with a $21 million aggregate intrinsic value, and 616,446 stock options exercised during the same period in 2011 with a $14 million aggregate intrinsic value.

Table of Contents

As of September 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 2.3 years.

In the nine months ended September 30, 2012, we granted an aggregate of 477,500 stock options under our 2008 Stock Incentive Plan to certain of our senior officers; 257,500 of these stock options are subject to time-vesting and 220,000 of these stock options 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 nine months ended September 30, 2011, there were no stock options granted.

The weighted average estimated fair value of stock options we granted in the nine months ended September 30, 2012 was $12.05 per share. This fair value was calculated based on the grant date using a binomial lattice model with the following assumptions:

		Nine Months Ended September 30, 2012
Expected volatility		52%
Expected dividend yield		0%
Expected life		6.9 years
Expected forfeiture rate		2%
Risk-free interest rate		1.06%-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 September 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 $4.569	2,736,856	6.4 years	$	4.56	2,736,856	$	4.56
$4.57 to $42.529	2,958,315	4.9 years	28.49		2,484,997	29.63
$42.53 to $55.129	703,097	1.4 years	48.44		703,097	48.44
$55.13 to $70.249	833,606	0.4 years	68.27		833,606	68.27
$70.25 and over	153,000	0.1 years	112.65		153,000	112.65
	7,384,874	4.5 years	$	27.76	6,911,556	$	28.11

Restricted Stock Units

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

	Restricted Stock Units		Weighted Average Grant Date Fair Value Per Unit
Unvested as of December 31, 2011	1,927,307		$	24.52
Granted	1,651,437		22.17
Vested	(985,688	)	23.53
Forfeited	(230,581	)	23.36
Unvested as of September 30, 2012	2,362,475		$	23.39

In the nine months ended September 30, 2012, we granted 1,535,187 restricted stock units subject to time-vesting. In addition, we granted 116,250 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.

Table of Contents

As of September 30, 2012, there were $39 million of total unrecognized compensation costs related to restricted stock units. These costs are expected to be recognized over a weighted average period of 2.3 years.

NOTE 8. EQUITY

On October 11, 2012, our common stock began trading on the New York Stock Exchange on a split-adjusted basis following a one-for-four reverse stock split we announced on October 1, 2012. Every four shares of our issued and outstanding common stock were exchanged for one issued and outstanding share of common stock, without any change in the par value per share, and our authorized shares of common stock were proportionately decreased from 1,050,000,000 shares to 262,500,000 shares. No fractional shares were issued in connection with the stock split. All current and prior period amounts in the accompanying Condensed Consolidated Financial Statements and these notes related to shares, share prices and earnings per share have been restated to give retrospective presentation for the reverse split.

In April 2012, we repurchased and subsequently retired 298,700 shares of our 7% mandatory convertible preferred stock with a carrying value of $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 the preferred stock in the three months ended March 31, 2012 and $1 million in the three months ended June 30, 2012 and September 30, 2012, and paid the dividends in April, July and October 2012, respectively.

In May 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 20,268,466 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	18,942	$	19.75	18,942	$	26
January 1, 2012 through January 31, 2012	1,327	19.74		1,327	0
Total	20,269	$	19.75	20,269	$	0

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

Table of Contents

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

	Tenet Healthcare Corporation Shareholders’ Equity
	Preferred Stock					Common Stock				Additional			Accumulated
	Shares Outstanding		Issued Amount			Shares Outstanding (1)		Issued Par Amount (1)		Paid-in Capital (1)			Other Comprehensive Loss			Accumulated Deficit			Treasury Stock			Noncontrolling Interests			Total Equity
Balances at December 31, 2011	345,000		$	334		103,756		$	7	$	4,427		$	(52	)	$	(1,440	)	$	(1,853	)	$	69		$	1,492
Net income (loss)	0		0			0		0		0			0			103			0			(24		)	79
Distributions paid to noncontrolling interests	0		0			0		0		0			0			0			0			(9		)	(9		)
Contributions 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			7			7
Other comprehensive income	0		0			0		0		0			3			0			0			0			3
Preferred stock dividends	0		0			0		0		(11		)	0			0			0			0			(11		)
Repurchase of common stock	0		0			(1,327	)	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			1,990		0		21			0			0			0			0			21
Balances at September 30, 2012	46,300		$	45		104,419		$	7	$	4,437		$	(49	)	$	(1,337	)	$	(1,879	)	$	45		$	1,269

Balances at December 31, 2010	345,000		$	334		121,446		$	7	$	4,469		$	(43	)	$	(1,522	)	$	(1,479	)	$	53		$	1,819
Net income	0		0			0		0		0			0			152			0			8			160
Distributions paid to noncontrolling interests	0		0			0		0		0			0			0			0			(8		)	(8		)
Purchases of businesses or joint venture interests	0		0			0		0		0			0			0			0			10			10
Preferred stock dividends	0		0			0		0		(18		)	0			0			0			0			(18		)
Repurchase of common stock	0		0			(8,870	)	0		0			0			0			(196		)	0			(196		)
Stock-based compensation expense, including associated deferred tax asset adjustments, and issuance of common stock	0		0			1,174		0		(6		)	0			0			0			0			(6		)
Balances at September 30, 2011	345,000		$	334		113,750		$	7	$	4,445		$	(43	)	$	(1,370	)	$	(1,675	)	$	63		$	1,761

(1) Amounts have been retrospectively adjusted for the one-for-four reverse stock split that became effective on October 11, 2012.

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

Table of Contents

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.

Professional and General Liability Insurance

At September 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 $394 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 1.04% and 1.35% at September 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 $81 million and $92 million for the nine months ended September 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.

· Review of Billing Practices for Kyphoplasty Procedures. 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 nationwide requesting information regarding their billing practices in connection with kyphoplasty procedures. More specifically, the government is investigating the appropriateness of Medicare patients receiving kyphoplasty — which is a surgical procedure used to treat pain and related conditions associated with certain vertebrae injuries — on an inpatient as opposed to an outpatient basis. In March 2009, one of our hospitals received an information request from the DOJ

Table of Contents

regarding these procedures and, in July 2010, we were notified that seven additional hospitals were also under review. As previously reported, in May 2012, we reached a verbal financial agreement with the government to settle this matter with respect to the first hospital to receive an information request for approximately $900,000, subject to negotiation of final settlement terms. In September 2012, we reached agreement with the DOJ on the appropriate methodology to review the billing practices of a second hospital. Because we are only in the preliminary stages of our analysis of hospital billing and other data for that hospital and we have not reached agreement with the DOJ on the appropriate methodology to review the billing practices of the remaining five hospitals under review, we are unable to calculate an estimate of loss or range of loss with respect to those six hospitals.

· Review of Billing Practices for ICD Implantation Procedures. The DOJ has contacted a number of hospitals nationwide requesting information regarding their Medicare billing practices in connection with the implantation of cardiac defibrillators. As previously reported, in March 2010, the DOJ issued a civil investigative demand to one of our hospitals pursuant to the federal False Claims Act seeking information to determine if procedures to implant cardiac defibrillators at that hospital from 2002 to 2010 were performed in accordance with Medicare coverage requirements. Also as previously reported, in September 2010, the DOJ notified us that its review may extend to billing procedures at 32 of our other hospitals in addition to the hospital that received the original information request.

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. Based on currently available information, as of September 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. These reserves have not changed from the amounts reported for the three months ended June 30, 2012; however, 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 governmental reviews that we settled in the three months ended June 30, 2012, both of which were previously reported:

· Review of Florida Medical Center’s Partial Hospitalization Program. In the three months ended June 30, 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. Also in the three months ended June 30, 2012, we entered into a voluntary civil settlement 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 in the Civil District Court for the Parish of Orleans on behalf of persons allegedly injured following Hurricane Katrina at Lindy Boggs Medical Center (one of our former New Orleans area hospitals). The parties executed the final settlement agreement in August 2012, subject to court approval. The settlement, which will be covered in full by our excess insurance carrier, will be apportioned among the claimants in the 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 five individual Hurricane Katrina-related lawsuits filed in Louisiana. As of September 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.

Table of Contents

3. Hospital-Related Tort Claim—As previously reported, in May 2012, the Superior Court in Los Angeles County, California reduced punitive damages awarded in connection with an alleged April 2006 assault at Tarzana Regional Medical Center (a hospital we divested in 2008) from $65 million to $5 million. (The plaintiff was also previously awarded compensatory damages of approximately $2.4 million in the lawsuit — which is captioned Rosenberg v. Encino-Tarzana Regional Medical Center and Tenet Healthcare Corporation.) The plaintiff subsequently filed a motion seeking attorneys’ fees in the amount of $6 million; however, the judge instead awarded attorneys’ fees of $1.5 million. Both parties have filed notices appealing all aspects of the final judgment.

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—On October 4, 2012, the Court of Appeal of the State of California affirmed the judgment of the Superior Court of Los Angeles County denying class certification in two coordinated proposed class action lawsuits, 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). As previously reported, the plaintiffs in both cases alleged that our hospitals violated certain provisions of California’s labor laws and applicable wage and hour regulations. The plaintiffs in both cases were seeking back pay, statutory penalties and attorneys’ fees in unspecified amounts. The plaintiffs may seek further appeals; however, based on available information, we do not believe that the ultimate resolution of these matters will 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

Table of Contents

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 nine months ended September 30, 2012 and 2011:

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

Nine Months Ended September 30, 2011
Continuing operations	$	30	$	24	$	(22	)	$	32
Discontinued operations	0		0		0			0
	$	30	$	24	$	(22	)	$	32

For the nine months ended September 30, 2012 and 2011, we recorded net costs of $3 million and $24 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 nine months ended September 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 September 30, 2012 was $38 million ($37 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 $0.8 million of interest and penalties related to accrued liabilities for uncertain tax positions ($0.7 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 nine months ended September 30, 2012. Total accrued interest and penalties on unrecognized tax benefits as of September 30, 2012 were $10 million ($11 million related to continuing operations, partially offset by a $1 million benefit related to discontinued operations).

As of September 30, 2012, approximately $15 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.

Table of Contents

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 nine months ended September 30, 2012 and 2011. All amounts related to shares, share prices and earnings per share have been restated to give retrospective presentation for the reverse stock split described in Note 8. 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 September 30, 2012
Income available to Tenet Healthcare Corporation common shareholders for basic earnings per share	$	30	104,244	$	0.29
Effect of dilutive stock options and restricted stock units	0		3,067	(0.01		)
Income available to Tenet Healthcare Corporation common shareholders for diluted earnings per share	$	30	107,311	$	0.28

Three Months Ended September 30, 2011
Income available to Tenet Healthcare Corporation common shareholders for basic earnings per share	$	8	117,188	$	0.07
Effect of dilutive stock options and restricted stock units	0		3,720	0.00
Income available to Tenet Healthcare Corporation common shareholders for diluted earnings per share	$	8	120,908	$	0.07
Nine Months Ended September 30, 2012

Income available to Tenet Healthcare Corporation common shareholders for basic earnings per share	$	129	103,613	$	1.25
Effect of dilutive stock options and restricted stock units	0		3,291	(0.04		)
Income available to Tenet Healthcare Corporation common shareholders for diluted earnings per share	$	129	106,904	$	1.21

Nine Months Ended September 30, 2011
Income available to Tenet Healthcare Corporation common shareholders for basic earnings per share	$	128	120,204	$	1.06
Effect of dilutive stock options and restricted stock units	0		4,262	(0.03		)
Income available to Tenet Healthcare Corporation common shareholders for diluted earnings per share	$	128	124,466	$	1.03

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 nine months ended September 30, 2012 were 3,711 shares for both periods and for the three and nine months ended September 30, 2011 were 4,089 and 4,054 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 September 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.

Table of Contents

	September 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	$	4	$	4	$	0	$	0
Investments in Reserve Yield Plus Fund	2		0		2		0
Marketable debt securities — noncurrent	15		1		13		1
	$	21	$	5	$	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 nine months ended September 30, 2012.

At September 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 nine months ended September 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. 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.

The fair value of our long-term debt is based on quoted market prices (Level 1). At September 30, 2012 and December 31, 2011, the estimated fair value of our long-term debt was approximately 108.9% and 104.9%, respectively, of the carrying value of the debt.

NOTE 14. ACQUISITIONS

During the nine months ended September 30, 2012, we acquired a diagnostic imaging center, an oncology center, an urgent care center, a health plan, a cyberknife center in which we previously held a noncontrolling interest, a majority interest in four ambulatory surgery centers (in one of which we had previously held a noncontrolling interest), as well as fifteen physician practice entities. The fair value of the consideration conveyed in the acquisitions (the “purchase price”) was $38 million.

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 nine months ended September 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.

Table of Contents

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

Current assets	$	7
Property and equipment	18
Goodwill	36
Current liabilities	(11		)
Long-term liabilities	(4		)
Noncontrolling interests	(8		)
Net cash paid	$	38

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 $2 million in acquisition costs related to prospective and closed acquisitions were expensed during the nine months ended September 30, 2012.

NOTE 15. SEGMENT INFORMATION

In the three months ended June 30, 2012, we began 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 and outpatient services. We also own various related health care businesses. At September 30, 2012, our subsidiaries operated 49 hospitals with a total of 13,216 licensed beds, primarily serving urban and suburban communities, as well as 112 free-standing and provider-based outpatient centers.

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 September 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.

The following table includes amounts for each of our reportable segments and the reconciling items necessary to agree to amounts reported in the accompanying Condensed Consolidated Balance Sheets and Condensed Consolidated Statements of Operations:

	September 30,		December 31,
	2012		2011
Assets:
Hospital Operations and other	$	8,381	$	8,389
Conifer	89		73
Total	$	8,470	$	8,462

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

o	Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

	for the transition period from to

		Page
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	24

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	54

Item 4.	Controls and Procedures	54

PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings	55

Item 1A.	Risk Factors	55

Item 6.	Exhibits	56