HCA-THE HEALTHCARE CO, 424B5, 2000-08-09

HCA-THE HEALTHCARE CO
424B5, 2000-08-09
GENERAL MEDICAL & SURGICAL HOSPITALS, NEC

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<PAGE> 1

THE INFORMATION IN THIS PROSPECTUS SUPPLEMENT AND THE ATTACHED PROSPECTUS
IS NOT COMPLETE AND MAY BE CHANGED. A REGISTRATION STATEMENT RELATING TO
THESE SECURITIES HAS BEEN DECLARED EFFECTIVE BY THE SECURITIES AND EXCHANGE
COMMISSION. WE ARE NOT USING THIS PROSPECTUS SUPPLEMENT AND THE ATTACHED
PROSPECTUS TO OFFER TO SELL THESE SECURITIES OR TO SOLICIT OFFERS TO BUY
THESE SECURITIES IN ANY PLACE WHERE THE OFFER OR SALE IS NOT PERMITTED.

Filed Pursuant to Rule 424(b)(5)
Registration No. 333-82219
SUBJECT TO COMPLETION, DATED AUGUST 9, 2000

Prospectus Supplement (to Prospectus Dated August 5, 1999)
$

HCA - THE HEALTHCARE COMPANY

% NOTES DUE 20

MATURITY

- The Notes will mature on , 20 .

INTEREST

- Interest on the Notes is payable on , and , of each year,
beginning , 2001.

- Interest will accrue from , 2000.

REDEMPTION

- We may at our option redeem the Notes at any time at the price described under
"Description of the Notes" at page S-34 of this prospectus supplement.

- There is no sinking fund.

RANKING

- The Notes are senior unsecured obligations. The Notes rank equally with all of
our existing and future unsecured senior debt and senior to all of our
existing and future subordinated debt.

LISTING

- We do not intend to list the Notes on any securities exchange.
THE COMPANY

- Our principal office is located at One Park Plaza, Nashville, Tennessee 37203.
Our telephone number is (615) 344-9551.

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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THE NOTES OR DETERMINED THAT THIS
PROSPECTUS SUPPLEMENT OR THE ATTACHED PROSPECTUS IS ACCURATE OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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<TABLE>
<CAPTION>
----------------------------------------------------------------------------------
PER NOTE TOTAL
----------------------------------------------------------------------------------
<S> <C> <C>
Initial Price to Public % $
Underwriting Discount % $
Proceeds to Us (Before Expenses) % $
----------------------------------------------------------------------------------
</TABLE>

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<TABLE>
<S> <C> <C> <C>
- The Notes will be delivered to you in global - The Underwriters listed below will purchase
form through the book-entry delivery system the Notes from us on a firm commitment basis
of The Depository Trust Company on or about and offer them to you, subject to certain
, 2000. conditions.
</TABLE>

Joint Book-Running Managers

CHASE SECURITIES INC. GOLDMAN, SACHS & CO.

Senior Co-Managers

BANC OF AMERICA SECURITIES LLC DEUTSCHE BANK ALEX. BROWN
MERRILL LYNCH & CO.
SALOMON SMITH BARNEY SCOTIA CAPITAL MARKETS

Co-Managers

BANC ONE CAPITAL MARKETS, INC. BNY CAPITAL MARKETS, INC.
FLEETBOSTON ROBERTSON STEPHENS
SUNTRUST EQUITABLE SECURITIES TD SECURITIES
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The date of this Prospectus Supplement is August 9, 2000.
<PAGE> 2

You should read this prospectus supplement along with the prospectus that
follows. Both documents contain information that you should consider when making
your investment decision. You should rely only on the information contained or
incorporated by reference in this prospectus supplement and the attached
prospectus. We have not, and the Underwriters have not, authorized any other
person to provide you with different information. If anyone provides you with
different or inconsistent information, you should not rely on it. We are not,
and the Underwriters are not, making an offer to sell these securities in any
jurisdiction where the offer or sale is not permitted. You should assume that
the information appearing in this prospectus supplement and the attached
prospectus is accurate as of the date on the front cover of this prospectus
supplement only. Our business, financial condition, results of operations and
prospects may have changed since that date.

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TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROSPECTUS SUPPLEMENT

Forward-Looking Statements............. S-3
Prospectus Supplement Summary.......... S-4
Ratio of Earnings to Fixed Charges..... S-11
Use of Proceeds........................ S-11
Capitalization......................... S-12
Selected Consolidated Financial Data... S-13
Management's Discussion and Analysis of
Financial Condition and Results of
Operations........................... S-15
Description of Business................ S-27
Management............................. S-33
Description of the Notes............... S-34
Underwriting........................... S-37
</TABLE>

PROSPECTUS

Where You Can Find More Information.... 2
The Company............................ 3
Ratio of Earnings to Fixed Charges..... 3
Use of Proceeds........................ 3
Description of the Debt Securities..... 4
Plan of Distribution................... 11
Legal Opinions......................... 11
Experts................................ 11
</TABLE>

S-2
<PAGE> 3

FORWARD-LOOKING STATEMENTS

This prospectus supplement and the attached prospectus contain, or will
contain, disclosures which are "forward-looking statements." Forward-looking
statements include all statements that do not relate solely to historical or
current facts, and can be identified by the use of words such as "may,"
"believe," "will," "expect," "project," "estimate," "anticipate," "plan" or
"continue." These forward-looking statements address, among other things,
strategic objectives and the anticipated effects of the offering. See
"Prospectus Supplement Summary," "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and "Description of
Business -- Our Business Strategy" and "-- Investigations and Litigation." These
forward-looking statements are based on our current plans and expectations and
are subject to a number of uncertainties and risks that could significantly
affect our current plans and expectations and future financial condition and
results. These factors include, but are not limited to,

- the highly competitive nature of the health care business,

- the efforts of insurers, health care providers and others to contain
health care costs,

- possible changes in the Medicare program that may further limit
reimbursements to health care providers and insurers,

- changes in federal, state or local regulation affecting the health care
industry,

- the ability to increase patient volumes and control the costs of
providing services,

- the ability to attract and retain qualified management and personnel,
including physicians,

- liabilities and other claims asserted against us,

- changes in accounting practices,

- changes in general economic conditions,

- future divestitures which may result in additional charges,

- the ability to enter into managed care provider arrangements on
acceptable terms,

- the availability and terms of capital to fund the expansion of our
business,

- changes in business strategy or development plans,

- slowness of reimbursement,

- the ability to implement our shared services and e-health initiatives,

- the outcome of the known and unknown governmental investigations and
litigation involving our business practices, including the ability to
negotiate and execute definitive settlement agreements in the
government's civil cases and judicial approval thereof,

- the outcome of pending and any future tax audits and litigation
associated with our tax positions, and

- other risk factors described in this prospectus supplement, the attached
prospectus or the documents incorporated by reference in this prospectus
supplement and the attached prospectus.

As a consequence, current plans, anticipated actions and future financial
conditions and results may differ from those expressed in any forward-looking
statements we make. You should not unduly rely on these forward-looking
statements when evaluating the information presented in this prospectus
supplement, the attached prospectus or the documents incorporated by reference
in this prospectus supplement and the attached prospectus.

S-3
<PAGE> 4

PROSPECTUS SUPPLEMENT SUMMARY

You should read the following summary information together with the
detailed information included in this prospectus supplement, the attached
prospectus and the documents incorporated by reference in this prospectus
supplement and the attached prospectus. On May 25, 2000, Columbia/HCA Healthcare
Corporation changed its name to "HCA - The Healthcare Company." As used in this
prospectus supplement and the attached prospectus, the terms "HCA" and "we"
refer to HCA - The Healthcare Company and its affiliates. The term "affiliates"
includes our direct and indirect subsidiaries and partnerships and joint
ventures in which our subsidiaries are partners.

HCA
OVERVIEW

We operate the largest chain of general acute care hospitals in the United
States along with an expansive network of outpatient surgery centers and other
related health care operations. At June 30, 2000, our affiliates owned and
operated 195 hospitals and 80 outpatient surgery centers. Our affiliates are
also partners in several 50/50 joint ventures that own and operate nine
hospitals and three outpatient surgery centers, which are accounted for using
the equity method. Our facilities are located in 24 states, England and
Switzerland.

Our hospitals provide a comprehensive array of services including internal
medicine, cardiology, oncology, obstetrics, general surgery, neurosurgery and
orthopedics, as well as diagnostic and emergency services. We also provide
outpatient and ancillary services through our acute care hospitals and
outpatient facilities, including outpatient surgery and diagnostic centers,
rehabilitation and other facilities. We operate preferred provider organizations
in 47 states and the District of Columbia.

RESTRUCTURING AND REORGANIZATION

In 1997 we encountered significant challenges and changes. The hospital
industry was adversely affected by Medicare reimbursement reductions resulting
from the Balanced Budget Act of 1997 (which became effective October 1, 1997),
increased managed care penetration and increased government scrutiny of hospital
operations. In addition, we learned that we were the subject of a federal
investigation related to government reimbursement programs. The investigation
was subsequently expanded in July 1997 to include outpatient laboratory billing
issues, home health issues, relationships with physicians, diagnosis related
group, or DRG, coding and Medicare cost report issues.

In response to these industry and governmental challenges, we installed new
senior management, redefined our objectives and business practices and initiated
a substantial restructuring plan designed to properly align HCA in this new
environment. Dr. Thomas F. Frist, Jr., who was serving as our Vice Chairman, was
named Chairman of the Board and Chief Executive Officer. Dr. Frist implemented a
new corporate strategy emphasizing a renewed focus on a values-based corporate
culture, operations rather than acquisitions, local communities and the highest
quality care.

Based on a comprehensive review of our business portfolio, we developed a
restructuring plan in which we identified non-strategic segments and assets for
divestiture. Since 1997, we have reduced the number of our hospitals by more
than 40%, or 141 hospitals, and the number of surgery centers by 70, and sold
substantially all of our home health operations and various other non-core
assets, for total proceeds of approximately $5.0 billion. We used the proceeds
to repay a portion of our outstanding indebtedness and to repurchase shares of
our common stock.

S-4
<PAGE> 5

OUR BUSINESS STRATEGY

Our primary objective is to provide the communities we serve with a
comprehensive array of quality health care services in the most cost-effective
manner. We also seek to enhance financial performance by increasing utilization
of, and improving operating efficiencies in, our facilities, consistent with our
ethics and compliance program and governmental regulations. To achieve these
objectives, we pursue the following strategies:

- focus on strong assets in select, core communities;

- develop comprehensive local health care networks with a broad range of
health care services;

- grow through increased patient volume, expansion of specialty and
outpatient services and selective acquisitions;

- improve operating efficiencies through enhanced cost management, shared
services and resource utilization;

- recruit and develop strong relationships with physicians;

- streamline and decentralize management consistent with our local focus;

- effectively allocate capital in order to maximize return; and

- reinforce our "patients first" philosophy and our commitment to ethics
and compliance.

RECENT FINANCIAL RESULTS

Historical revenues for the six months ended June 30, 2000 totaled $8.4
billion, compared to $8.8 billion for the prior year period. This decline
reflects the reduction in the number of hospitals operated by HCA since last
year. Net income before gains on sales of facilities, impairment of long-lived
assets, restructuring of operations and investigation and settlement-related
costs totaled $529 million ($0.93 diluted earnings per share) for the six months
ended June 30, 2000, compared to $453 million ($0.74 diluted earnings per share)
for the prior year period. During the six months ended June 30, 2000, we
recorded a $498 million after-tax charge for the estimated settlement of certain
government civil claims. Including all such gains, impairments and charges for
both periods, we reported net income of $24 million ($0.04 diluted earnings per
share) for the six months ended June 30, 2000, compared to net income of $428
million ($0.70 diluted earnings per share) for the prior year period. See
"Summary Consolidated Financial Data -- Historical Financial Data."

On a same facility basis, which excludes the operations of hospitals and
related facilities that we either acquired or divested during the current or
prior period, revenues for the six months ended June 30, 2000 increased 5.8% to
$8.2 billion from $7.8 billion in the prior year period. Same facility EBITDA
(income before depreciation, amortization, interest expense, settlement with
federal government, gains on sales of facilities, impairment of long-lived
assets, restructuring of operations, investigation-related costs, minority
interests and income taxes) was $1.7 billion for a margin of 20.1% for the six
months ended June 30, 2000, compared to EBITDA of $1.5 billion for a margin of
19.6% during the prior year period. Same facility EBITDA, equivalent admissions
and revenue per equivalent admission increased 8.7%, 2.6% and 3.1%,
respectively, during the first six months of 2000 compared to the prior year
period. See "Summary Consolidated Financial Data -- Same Facility Financial
Data."

INVESTIGATIONS AND LITIGATION

We are currently the subject of several federal investigations into some of
our business practices, as well as governmental investigations by various
states. We are cooperating in these investigations and understand, through
written notice and other means, that we are a target in these investigations.
Given the breadth of the ongoing investigations, we expect additional
investigative and prosecutorial activity to occur in these and other
jurisdictions in the future.

S-5
<PAGE> 6

In May 2000, we reached an understanding with attorneys of the Civil
Division of the Department of Justice to recommend an agreement to settle,
subject to certain conditions, civil claims actions against us relating to DRG
coding, outpatient laboratory billing and home health issues. The understanding
provides that we will compensate the government $745 million with respect to the
issues covered by the agreement, with interest accruing commencing May 18, 2000
at a rate of 6.5%. The settlement is subject to approval by additional officials
at the Department of Justice and other federal agencies, as well as state
officials; execution of a corporate integrity agreement; execution of definitive
settlement documents for the three issues included in the understanding;
execution of agreements to resolve all pending criminal investigations; and
court approval. The civil issues that are not included as part of the
understanding are claims related to cost reports and physician relations issues.

We are also a defendant in several qui tam actions brought by private
parties on behalf of the United States of America, which have been unsealed. The
actions allege, in general, that we violated the False Claims Act by submitting
improper claims to the government for reimbursement. To our knowledge, the
government has intervened in six unsealed qui tam actions. We are aware of
additional qui tam actions that remain under seal and believe that there may be
other sealed qui tam cases of which we are unaware. We are also a defendant in a
number of other suits which allege, in general, improper and fraudulent billing,
overcharging, coding and physician referrals, as well as other violations of
law. Some of the suits have been conditionally certified as class actions.

We remain the subject of a formal order of investigation by the Securities
and Exchange Commission. We understand that the SEC investigation relates to the
anti-fraud, insider trading, periodic reporting and internal accounting control
provisions of the federal securities laws.

We are not able to predict the outcome or quantify the effects that the
ongoing investigations or the initiation of additional investigations, if any,
will have on our financial condition or results of operations in future periods.
The amounts claimed in the qui tam and other actions are substantial, and we
could be subject to substantial costs resulting from an adverse outcome of one
or more of these actions. Any sanctions or losses arising from these
investigations or actions could have a material adverse effect on our financial
position and results of operations. See "Description of
Business -- Investigations and Litigation" as well as our Annual Report on Form
10-K for the year ended December 31, 1999 and our Quarterly Report on Form 10-Q
for the quarter ended June 30, 2000 for a more detailed discussion of the risks
and potential impact of the investigations and litigation.

S-6
<PAGE> 7

THE OFFERING

TERMS OF THE NOTES:

Notes offered............... $ aggregate principal amount of
% Notes due 20 .

Maturity date............... The Notes will mature on ,
20 .

Interest payment dates...... and of each
year, beginning 2001.

Interest calculations....... Based on a 360-day year of twelve 30-day
months.

Ranking..................... The Notes are senior unsecured obligations.
The Notes rank equally with all of our
existing and future unsecured senior debt
and are senior to all of our existing and
future subordinated debt.

Redemption and sinking
fund........................ We may at our option redeem the Notes at
any time at the price described under
"Description of the Notes" at page S-34 of
this prospectus supplement. There is no
sinking fund.

Form of Notes............... One or more global securities, held in the
name of Cede & Co., the nominee of The
Depository Trust Company.

Settlement and payment...... Same-day -- immediately available funds.

Use of proceeds............. We estimate that the net proceeds from the
offering will be $ million. We intend to
use all or substantially all of the net
proceeds to reduce the balance outstanding
on our revolving credit facility, which
amounts will then become available to us
for reborrowing and the remainder, if any,
for general corporate purposes. See "Use of
Proceeds."

For additional information with respect to the Notes, see "Description of the
Notes."

S-7
<PAGE> 8

SUMMARY CONSOLIDATED FINANCIAL DATA

You should read the following summary consolidated financial data together
with "Selected Consolidated Financial Data" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" included elsewhere in
this prospectus supplement, the consolidated financial statements and the
related notes included in our Annual Report on Form 10-K for the year ended
December 31, 1999 and the condensed consolidated financial statements and the
related notes included in our Quarterly Report on Form 10-Q for the quarter
ended June 30, 2000.

SAME FACILITY FINANCIAL DATA

The following table sets forth our same facility financial information and
operating data for the twelve months ended June 30, 2000, the six-month periods
ended June 30, 2000 and 1999 and the year ended December 31, 1999. Same facility
information excludes the operations of hospitals and their related facilities
which we either acquired or divested during the current or prior period.

<TABLE>
<CAPTION>
TWELVE
MONTHS
ENDED SIX MONTHS YEAR ENDED
JUNE 30, ENDED JUNE 30, DECEMBER 31,
---------- ----------------------- ------------
2000 2000 1999 1999
---------- ---------- ---------- ------------
(UNAUDITED; DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues..................................... $ 15,816 $ 8,207 $ 7,756 $ 15,032
OPERATING DATA:
EBITDA (a)................................... $ 2,958 $ 1,652 $ 1,520 $ 2,782
Number of hospitals at end of period (b)..... 186 186 186 192
Number of licensed beds at end of period
(c)........................................ 41,253 41,253 41,253 42,053
Admissions (d)............................... 1,506,400 774,100 754,600 1,463,300
Equivalent admissions (e).................... 2,233,900 1,141,700 1,112,300 2,170,000
Revenue per equivalent admission............. $ 7,080 $ 7,188 $ 6,973 $ 6,927
PERCENTAGE CHANGE FROM PRIOR YEAR PERIOD:
Revenues..................................... 6.4% 5.8% 6.5% 5.3%
Admissions (d)............................... 3.4 2.6 4.4 2.7
Equivalent admissions (e).................... 3.2 2.6 4.4 2.5
Revenues per equivalent admission............ 3.1 3.1 2.0 2.7
</TABLE>

---------------

(a) EBITDA is defined as income from continuing operations before
depreciation and amortization, interest expense, settlement with federal
government, gains on sales of facilities, impairment of long-lived assets,
restructuring of operations and investigation-related costs, minority interests
and income taxes. EBITDA is commonly used as an analytical indicator within the
health care industry, and also serves as a measure of leverage capacity and debt
service ability. You should not consider EBITDA as a measure of financial
performance under generally accepted accounting principles. The items excluded
from EBITDA are significant components in understanding and assessing financial
performance. You should not consider EBITDA in isolation or as an alternative to
net income, cash flows generated by operating, investing or financing activities
or other financial statement data presented in the financial statements as an
indicator of financial performance or liquidity. Because EBITDA is not a
measurement determined in accordance with generally accepted accounting
principles and is thus susceptible to varying calculations, EBITDA as presented
may not be comparable to other similarly titled measures of other companies.

(b) Excludes nine facilities at June 30, 2000, 16 facilities at June 30,
1999 and 12 facilities at December 31, 1999 that are not consolidated (accounted
for using the equity method) for financial reporting purposes.

(c) Licensed beds are those beds for which a facility has been granted
approval to operate from the applicable state licensing agency.

(d) Represents the total number of patients admitted (in the facility for a
period in excess of 23 hours) to our hospitals. Management and certain investors
use admissions as a general measure of inpatient volume.

(e) Management and certain investors use equivalent admissions as a general
measure of combined inpatient and outpatient volume. Equivalent admissions are
computed by multiplying admissions (inpatient volume) by the sum of gross
inpatient revenue and gross outpatient revenue and then dividing the resulting
amount by gross inpatient revenue. The equivalent admissions computation
"equates" outpatient revenue to the volume measure (admissions) used to measure
inpatient volume resulting in a general measure of combined inpatient and
outpatient volume.

S-8
<PAGE> 9

HISTORICAL FINANCIAL DATA

The following table sets forth our summary historical consolidated
financial data for the years ended December 31, 1999, 1998 and 1997 and the
six-month periods ended June 30, 2000 and 1999, certain selected ratios for the
years ended December 31, 1999, 1998 and 1997 and the twelve-month periods ended
June 30, 2000 and 1999 and our financial position at June 30, 2000. This
financial data has been derived from, and should be read in conjunction with,
our audited consolidated financial statements and the related notes filed as
part of our Annual Report on Form 10-K for the year ended December 31, 1999 and
the unaudited condensed consolidated financial statements and the related notes
filed as part of our Quarterly Report on Form 10-Q for the quarter ended June
30, 2000. Financial data for the six-month periods ended June 30, 2000 and 1999
and at June 30, 2000 and the selected ratios for the twelve-month periods ended
June 30, 2000 and 1999 are unaudited and, in the opinion of our management,
include all adjustments necessary for a fair presentation of the data. The
results of operations for the interim periods are not necessarily indicative of
the results to be expected for the entire year.

<TABLE>
<CAPTION>
SIX MONTHS YEAR ENDED
ENDED JUNE 30, DECEMBER 31,
----------------------- ------------------------------------
2000 1999 1999 1998 1997
---------- ---------- ---------- ---------- ----------
(UNAUDITED)
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues............................................ $ 8,404 $ 8,816 $ 16,657 $ 18,681 $ 18,819
Interest expense.................................... 255 229 471 561 493
Income from continuing operations................... 24 428 657 532 182
Net income (loss)................................... 24 428 657 379 (305)
OPERATING DATA:
EBITDA (a).......................................... $ 1,705 $ 1,584 $ 2,888 $ 2,868 $ 2,851
Number of hospitals at end of period (b)............ 195 204 195 281 309
Number of licensed beds at end of period (c)........ 42,240 43,969 42,484 53,693 60,643
Admissions (d)...................................... 788,700 873,200 1,625,400 1,891,800 1,915,100
Equivalent admissions (e)........................... 1,166,500 1,300,200 2,425,100 2,875,600 2,901,400
Average length of stay (days) (f)................... 5.0 5.0 4.9 5.0 5.0
Average daily census (g)............................ 21,611 23,992 22,002 25,719 26,006
PERCENTAGE CHANGE FROM PRIOR YEAR PERIOD:
Revenues............................................ (4.7)% (8.9)% (10.8)% (0.7)% 0.2%
Admissions (d)...................................... (9.7) (11.2) (14.1) (1.4) 1.0
Equivalent admissions (e)........................... (10.3) (12.7) (15.7) (1.1) 2.7
Revenues per equivalent admission................... 6.3 4.4 5.7 0.3 (2.4)
</TABLE>

<TABLE>
<CAPTION>
TWELVE MONTHS YEAR ENDED
ENDED JUNE 30, DECEMBER 31,
----------------------- ------------------------------------
2000 1999 1999 1998 1997
---------- ---------- ---------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
SELECTED RATIOS:
Ratio of EBITDA to interest expense................. 6.1x 5.6x 6.1x 5.1x 5.8x
Ratio of total debt to EBITDA....................... 2.3x 2.4x 2.2x 2.4x 3.3x
Ratio of total debt to total capitalization......... 53% 52% 50% 45% 54%
Ratio of earnings to fixed charges.................. 2.0x 2.9x 3.1x 2.6x 1.8x
</TABLE>

<TABLE>
<CAPTION>
AT
JUNE 30, 2000
-------------
(UNAUDITED)
<S> <C>
FINANCIAL POSITION:
Assets.............................................. $17,692
Working capital..................................... 407
Long-term debt, including amounts due within one
year.............................................. 6,967
Minority interests in equity of consolidated
entities.......................................... 739
Stockholders' equity................................ 5,379
</TABLE>

---------------

(a) EBITDA is defined as income before depreciation and amortization,
interest expense, gains on sales of facilities, impairment of long-lived assets,
settlement with federal government, restructuring of operations and
investigation-related costs, minority interests and income taxes. EBITDA is
commonly used as an analytical indicator within the health care industry, and
also serves as a measure of leverage capacity and debt service ability. You
should not consider EBITDA as

S-9
<PAGE> 10

a measure of financial performance under generally accepted accounting
principles. The items excluded from EBITDA are significant components in
understanding and assessing financial performance. You should not consider
EBITDA in isolation or as an alternative to net income, cash flows generated by
operating, investing or financing activities or other financial statement data
presented in the financial statements as an indicator of financial performance
or liquidity. Because EBITDA is not a measurement determined in accordance with
generally accepted accounting principles and is thus susceptible to varying
calculations, EBITDA as presented may not be comparable to other similarly
titled measures of other companies.

(b) Excludes nine facilities at June 30, 2000, 16 facilities at June 30,
1999, 12 facilities in 1999, 24 facilities in 1998 and 27 facilities in 1997
that are not consolidated (accounted for using the equity method) for financial
reporting purposes.

(c) Licensed beds are those beds for which a facility has been granted
approval to operate from the applicable state licensing agency.

(f) Represents the average number of days admitted patients stay in our
hospitals.

(g) Represents the average number of patients in our hospital beds each day.

S-10
<PAGE> 11

RATIO OF EARNINGS TO FIXED CHARGES

The following table sets forth the ratio of our consolidated earnings to
fixed charges for the periods presented.

<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
------------ ------------------------------------
2000 1999 1999 1998 1997 1996 1995
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
1.52x 3.70x 3.11x 2.58x 1.81x 4.99x 3.94x
</TABLE>

For the purpose of computing the ratio of earnings to fixed charges,
"earnings" consist of income from continuing operations before minority
interests, income taxes and fixed charges. "Fixed charges" consist of interest
expense, debt amortization costs and one-third of rent expense, which
approximates the interest portion of rent expense.

USE OF PROCEEDS

We estimate that the net proceeds from the offering of the Notes, after
deducting the estimated underwriting discount and expenses of the offering, will
be approximately $ million. We intend to use all or substantially all of the
net proceeds from the sale of the Notes to reduce the balance outstanding on our
$2.0 billion revolving credit facility, which amounts will then become available
to us for reborrowing and the remainder, if any, for general corporate purposes.
As of June 30, 2000, we had $700 million outstanding under the credit facility,
of which $490 million remained outstanding at August 1, 2000. Based on our
current credit ratings, borrowings under the credit facility have an all-in cost
of LIBOR plus +1.25% per annum (7.89% at June 30, 2000). The maturity date of
the revolving credit facility is February, 2002. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations -- Liquidity and
Capital Resources."

S-11
<PAGE> 12

CAPITALIZATION

The following table sets forth our total capitalization as of June 30, 2000
and as adjusted to give effect to the offering of Notes by this prospectus
supplement and the use of net proceeds from the offering. You should read this
table in conjunction with "Management's Discussion and Analysis of Financial
Condition and Results of Operations" contained elsewhere in this prospectus
supplement.

<TABLE>
<CAPTION>
AS OF JUNE 30, 2000
------------------------
AS
HISTORICAL ADJUSTED
---------- --------
(UNAUDITED;
DOLLARS IN MILLIONS)
<S> <C> <C>

Long-term debt due within one year.......................... $ 691 $ 691
------- -------
Long-term debt:
Senior collateralized debt due through 2034............... 176 176
Senior debt due through 2095.............................. 3,576
Bank term loans........................................... 1,700 1,700
Bank credit agreement(a).................................. 700
Subordinated debt due through 2015........................ 124 124
------- -------
Total long-term debt.............................. 6,276
------- -------
Total debt........................................ 6,967
------- -------
Minority interests in equity of consolidated entities....... 739 739
------- -------
Stockholders' equity:
Common stock $.01 par value per share; authorized
1,600,000,000 voting shares and 50,000,000 nonvoting
shares; outstanding 536,491,600 voting shares and
21,000,000 nonvoting shares............................ 6 6
Capital in excess of par.................................. 722 722
Other..................................................... 8 8
Accumulated other comprehensive income.................... 43 43
Retained earnings......................................... 4,600 4,600
------- -------
Total stockholders' equity........................ 5,379 5,379
------- -------
Total capitalization.............................. $13,085 $
======= =======
</TABLE>

---------------

(a) Of this amount, $490 million remained outstanding at August 1, 2000.

S-12
<PAGE> 13

SELECTED CONSOLIDATED FINANCIAL DATA

The following table sets forth our selected consolidated financial data for
the years ended December 31, 1999, 1998, 1997, 1996 and 1995 and the six-month
periods ended June 30, 2000 and 1999 and selected ratios for the years ended
December 31, 1999, 1998, 1997, 1996 and 1995 and for the twelve-month periods
ended June 30, 2000 and 1999. This financial data has been derived from, and
should be read in conjunction with, our audited consolidated financial
statements and the related notes filed as part of our Annual Report on Form 10-K
for the year ended December 31, 1999 and the unaudited condensed consolidated
financial statements and the related notes filed as part of our Quarterly Report
on Form 10-Q for the quarter ended June 30, 2000. Financial data for the
six-month periods ended June 30, 2000 and 1999 and at June 30, 2000 and 1999 and
the selected ratios for the twelve-month periods ended June 30, 2000 and 1999
are unaudited and, in the opinion of our management, include all adjustments
necessary for a fair presentation of the data. The results of operations for the
interim periods are not necessarily indicative of the results to be expected for
the entire year.

You should read the following selected consolidated financial data together
with "Management's Discussion and Analysis of Financial Condition and Results of
Operations" included elsewhere in this prospectus supplement.

<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
--------------------- ---------------------------------------------------------
2000 1999 1999 1998 1997 1996 1995
--------- --------- --------- --------- --------- --------- ---------
(UNAUDITED)
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS:
Revenues.................................. $ 8,404 $ 8,816 $ 16,657 $ 18,681 $ 18,819 $ 18,786 $ 17,132
Income from continuing operations......... 24 428 657 532 182 1,461 1,025
Net income (loss)......................... 24 428 657 379 (305) 1,505 961
Diluted income from continuing operations
per share............................... .04 .70 1.11 .82 .27 2.15 1.52
Diluted net income (loss) per share....... .04 .70 1.11 .59 (.46) 2.22 1.43
Cash dividends per share.................. .04 .04 .08 .08 .08 .08 .08
SAME FACILITY PERCENTAGE CHANGE FROM PRIOR
YEAR PERIOD (a):
Revenues.................................. 5.8% 3.4% 5.3% (0.2)% 1.1% 6.6% 10.2%
Admissions (b)............................ 2.6 1.8 2.7 0.4 1.7 3.8 4.6
Equivalent admissions (c)................. 2.6 1.8 2.5 1.4 3.5 5.8 8.6
Revenues per equivalent admission......... 3.1 1.6 2.7 (1.5) (2.3) 0.7 1.5
FINANCIAL POSITION (AT END OF PERIOD):
Assets.................................... $ 17,692 $ 16,650 $ 16,885 $ 19,429 $ 22,002 $ 21,116 $ 19,805
Working capital........................... 407 357 265 304 1,650 1,389 1,409
Net assets of discontinued operations..... -- -- -- -- 841 212 142
Long-term debt, including amounts due
within one year......................... 6,967 6,660 6,444 6,753 9,408 6,982 7,380
Minority interests in equity of
consolidated entities................... 739 768 763 765 836 836 722
Stockholders' equity...................... 5,379 5,434 5,617 7,581 7,250 8,609 7,129
CASH FLOW DATA:
Cash provided by operating activities..... $ 693 $ 401 $ 1,223 $ 1,916 $ 1,483 $ 2,589 $ 2,264
Capital expenditures...................... 876 690 1,287 1,470 1,833 2,139 2,991
OPERATING DATA:
EBITDA (d)................................ $ 1,705 $ 1,584 $ 2,888 $ 2,868 $ 2,851 $ 4,214 $ 3,648
Number of hospitals at end of period
(e)..................................... 195 204 195 281 309 319 319
Number of licensed beds at end of period
(f)..................................... 42,240 43,969 42,484 53,693 60,643 61,931 61,347
Weighted average licensed beds (g)........ 42,053 49,454 46,291 59,104 61,096 62,708 61,617
Admissions (b)............................ 788,700 873,200 1,625,400 1,891,800 1,915,100 1,895,400 1,774,800
Equivalent admissions (c)................. 1,166,500 1,300,200 2,425,100 2,875,600 2,901,400 2,826,000 2,598,300
Average length of stay (days) (h)......... 5.0 5.0 4.9 5.0 5.0 5.1 5.3
Average daily census (i).................. 21,611 23,992 22,002 25,719 26,006 26,538 25,917
Occupancy rate (j)........................ 51% 49% 48% 44% 43% 42% 42%
</TABLE>

S-13
<PAGE> 14

<TABLE>
<CAPTION>
TWELVE MONTHS ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
----------------------- --------------------------------------------------------------
2000 1999 1999 1998 1997 1996 1995
---------- ---------- ---------- ---------- ---------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
SELECTED RATIOS:
Ratio of EBITDA to interest
expense................... 6.1x 5.6x 6.1x 5.1x 5.8x 8.6x 8.0x
Ratio of total debt to
EBITDA.................... 2.3x 2.4x 2.2x 2.4x 3.3x 1.7x 2.0x
Ratio of total debt to total
capitalization............ 53% 52% 50% 45% 54% 43% 49%
Ratio of earnings to fixed
charges................... 2.0x 2.9x 3.1x 2.6x 1.8x 5.0x 3.9x
</TABLE>

---------------

(a) Same facility information excludes the operations of hospitals and their
related facilities that we either acquired or divested during the current and
prior period.

(b) Represents the total number of patients admitted (in the facility for a
period in excess of 23 hours) to our hospitals. Management and certain investors
use admissions as a general measure of inpatient volume.

(c) Management and certain investors use equivalent admissions as a general
measure of combined inpatient and outpatient volume. Equivalent admissions are
computed by multiplying admissions (inpatient volume) by the sum of gross
inpatient revenue and gross outpatient revenue and then dividing the resulting
amount by gross inpatient revenue. The equivalent admissions computation
"equates" outpatient revenue to the volume measure (admissions) used to measure
inpatient volume resulting in a general measure of combined inpatient and
outpatient volume.

(d) EBITDA is defined as income before depreciation and amortization,
interest expense, gains on sales of facilities, impairment of long-lived assets,
settlement with federal government, restructuring of operations and
investigation-related costs, merger, facility, consolidation and other costs,
minority interests and income taxes. EBITDA is commonly used as an analytical
indicator within the health care industry, and also serves as a measure of
leverage capacity and debt service ability. You should not consider EBITDA as a
measure of financial performance under generally accepted accounting principles.
The items excluded from EBITDA are significant components in understanding and
assessing financial performance. You should not consider EBITDA in isolation or
as an alternative to net income, cash flows generated by operating, investing or
financing activities or other financial statement data presented in the
financial statements as an indicator of financial performance or liquidity.
Because EBITDA is not a measurement determined in accordance with generally
accepted accounting principles and is thus susceptible to varying calculations,
EBITDA as presented may not be comparable to other similarly titled measures of
other companies.

(e) Excludes nine facilities at June 30, 2000, 16 facilities at June 30,
1999, 12 facilities in 1999, 24 facilities in 1998, 27 facilities in 1997, 22
facilities in 1996 and 19 facilities in 1995 that are not consolidated
(accounted for using the equity method) for financial reporting purposes.

(f) Licensed beds are those beds for which a facility has been granted
approval to operate from the applicable state licensing agency.

(g) Weighted average licensed beds represent the average number of licensed
beds, weighted based on periods owned.

(h) Represents the average number of days admitted patients stay in our
hospitals.

(i) Represents the average number of patients in our hospital beds each day.

(j) Represents the percentage of hospital licensed beds occupied by
patients. Both average daily census and occupancy rate provide measures of the
utilization of inpatient rooms.

S-14
<PAGE> 15

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS
INVESTIGATIONS AND LITIGATION

RESULTS OF OPERATIONS

Revenue/Volume Trends

Our revenues continue to be affected by an increasing proportion of revenue
being derived from fixed payment, higher discount sources, including government
payers, managed care providers and others. Under the Balanced Budget Act of
1997, our reimbursement from the Medicare and Medicaid programs was reduced by
significant changes that were phased in through October 1, 1998, and will
continue to be reduced as certain changes continue to be phased in during 2000
and 2001. The Balanced Budget Act of 1997 contains a requirement that the Health
Care Financing Administration adopt a prospective payment system for outpatient
hospital services, which is currently anticipated to be implemented in August
2000. As of the date

S-15
<PAGE> 16

of this prospectus supplement, we are not able to quantify the effect, if any,
that the outpatient prospective payment system will have on our financial
results. We continue to experience a shift in our payer mix as patients move
from traditional indemnity insurance and Medicare coverage to medical coverage
that is provided under managed care plans. We generally receive lower payments
per patient under managed care plans than under traditional indemnity insurance
plans or traditional Medicare. With an increasing proportion of services being
reimbursed based upon fixed payment amounts (where the payment is based upon the
diagnosis, regardless of the cost incurred or level of service provided),
revenues, earnings and cash flows are being reduced. Revenues from capitation
arrangements (prepaid health service agreements) are less than 1% of
consolidated revenues.

We expect reductions in the rate of increase in Medicare and Medicaid
reimbursement, and increasing percentages of patient volume related to patients
participating in managed care plans to present ongoing challenges. The
challenges presented by these trends are enhanced by our inability to control
these trends and the associated risks. To maintain and improve our operating
margins in future periods, we must increase patient volumes while controlling
the cost of providing services. If we are not able to achieve reductions in the
cost of providing services through operational efficiencies, and the trend of
declining reimbursements and payments continues, results of operations and cash
flows will deteriorate.

Management believes that the proper response to these challenges includes
the delivery of a broad range of quality health care services to physicians and
patients, with operating decisions being made by the local management teams and
local physicians, and a focus on reducing operating costs through implementation
of our shared services initiatives.

Operating Results Summary

The following tables summarize our results from continuing operations for
the six months ended June 30, 2000 and 1999 and the years ended December 31,
1999, 1998 and 1997 (dollars in millions):

<TABLE>
<CAPTION>
SIX MONTHS
ENDED JUNE 30,
--------------------------------
2000 1999
-------------- --------------
AMOUNT RATIO AMOUNT RATIO
------ ----- ------ -----
<S> <C> <C> <C> <C>
Revenues.................................................... $8,404 100.0 $8,816 100.0
Salaries and benefits....................................... 3,306 39.3 3,514 39.9
Supplies.................................................... 1,325 15.8 1,376 15.6
Other operating expenses.................................... 1,532 18.2 1,740 19.6
Provision for doubtful accounts............................. 601 7.2 667 7.6
Depreciation and amortization............................... 521 6.2 574 6.5
Interest expense............................................ 255 3.0 229 2.6
Equity in earnings of affiliates............................ (65) (0.8) (65) (0.7)
Settlement with federal government.......................... 745 8.9 -- --
Gains on sales of facilities................................ (18) (0.2) (257) (2.9)
Impairment of long-lived assets............................. -- -- 160 1.8
Restructuring of operations and investigation-related
costs..................................................... 25 0.3 60 0.7
------ ----- ------ -----
8,227 97.9 7,998 90.7
------ ----- ------ -----
Income before minority interests and income taxes........... 177 2.1 818 9.3
Minority interests in earnings of consolidated entities..... 55 0.7 28 0.3
------ ----- ------ -----
Income before income taxes.................................. 122 1.4 790 9.0
Provision for income taxes.................................. 98 1.1 362 4.1
------ ----- ------ -----
Net income.................................................. $ 24 0.3 $ 428 4.9
====== ===== ====== =====
Percentage change from prior year period:
Revenues.................................................. (4.7)% (8.9)%
Income before income taxes................................ (84.6) 17.5
Net income................................................ (94.4) 9.1
Admissions (a)............................................ (9.7) (11.2)
Equivalent admissions (b)................................. (10.3) (12.7)
Revenues per equivalent admission......................... 6.3 4.4
Same facility percentage change from prior year period (c):
Revenues.................................................. 5.8 3.4
Admissions (a)............................................ 2.6 1.8
Equivalent admissions (b)................................. 2.6 1.8
Revenues per equivalent admission......................... 3.1 1.6
</TABLE>

S-16
<PAGE> 17

<TABLE>
<CAPTION>
1999 1998 1997
--------------- --------------- ---------------
AMOUNT RATIO AMOUNT RATIO AMOUNT RATIO
------- ----- ------- ----- ------- -----
<S> <C> <C> <C> <C> <C> <C>
Revenues......................................... $16,657 100.0 $18,681 100.0 $18,819 100.0
Salaries and benefits............................ 6,694 40.2 7,766 41.6 7,631 40.6
Supplies......................................... 2,645 15.9 2,901 15.5 2,722 14.5
Other operating expenses......................... 3,251 19.5 3,816 20.4 4,263 22.6
Provision for doubtful accounts.................. 1,269 7.6 1,442 7.7 1,420 7.5
Depreciation and amortization.................... 1,094 6.6 1,247 6.7 1,238 6.6
Interest expense................................. 471 2.8 561 3.0 493 2.6
Equity in earnings of affiliates................. (90) (0.5) (112) (0.6) (68) (0.4)
Gains on sales of facilities..................... (297) (1.8) (744) (4.0) -- --
Impairment of long-lived assets.................. 220 1.3 542 2.9 442 2.4
Restructuring of operations and investigation
related costs.................................. 116 0.7 111 0.6 140 0.7
------- ----- ------- ----- ------- -----
15,373 92.3 17,530 93.8 18,281 97.1
------- ----- ------- ----- ------- -----
Income from continuing operations before minority
interests and income taxes..................... 1,284 7.7 1,151 6.2 538 2.9
Minority interests in earnings of consolidated
entities....................................... 57 0.3 70 0.4 150 0.8
------- ----- ------- ----- ------- -----
Income from continuing operations before income
taxes.......................................... 1,227 7.4 1,081 5.8 388 2.1
Provision for income taxes....................... 570 3.5 549 3.0 206 1.1
------- ----- ------- ----- ------- -----
Income from continuing operations................ $ 657 3.9 $ 532 2.8 $ 182 1.0
======= ===== ======= ===== ======= =====
Basic earnings per share from continuing
operations..................................... $ 1.12 $ .82 $ .28
Diluted earnings per share from continuing
operations..................................... $ 1.11 $ .82 $ .27
% changes from prior year:
Revenues....................................... (10.8)% (0.7)% 0.2%
Income from continuing operations before income
taxes........................................ 13.5 178.8 (84.1)
Income from continuing operations.............. 23.6 191.2 (87.5)
Basic earnings per share from continuing
operations................................... 36.6 192.9 (87.1)
Diluted earnings per share from continuing
operations................................... 35.4 203.7 (87.4)
Admissions (a)................................. (14.1) (1.4) 1.0
Equivalent admissions (b)...................... (15.7) (1.1) 2.7
Revenues per equivalent admission.............. 5.7 0.3 (2.4)
Same facility % changes from prior year (c):
Revenues....................................... 5.3 (0.2) 1.1
Admissions (a)................................. 2.7 0.4 1.7
Equivalent admissions (b)...................... 2.5 1.4 3.5
Revenues per equivalent admission.............. 2.7 (1.5) (2.3)
</TABLE>

---------------

(a) Represents the total number of patients admitted (in the facility for a
period in excess of 23 hours) to our hospitals. Management and certain investors
use admissions as a general measure of inpatient volume.

(b) Equivalent admissions are used by management and certain investors as a
general measure of combined inpatient and outpatient volume. Equivalent
admissions are computed by multiplying admissions (inpatient volume) by the sum
of gross inpatient revenue and gross outpatient revenue and then dividing the
resulting amount by gross inpatient revenue. The equivalent admissions
computation "equates" outpatient revenue to the volume measure (admissions) used
to measure inpatient volume resulting in a general measure of combined inpatient
and outpatient volume.

(c) Same facility information excludes the operations of hospitals and their
related facilities that we either acquired or divested during the current and
prior year.

S-17
<PAGE> 18

Six Months Ended June 30, 2000 and 1999

Income before income taxes decreased 84.6% to $122 million in 2000 from
$790 million in 1999 and pretax margins decreased to 1.4% in 2000 from 9.0% in
1999. The decrease in pretax income was primarily attributable to the accrual of
an estimated settlement with the federal government in the second quarter of
2000. Excluding the settlement charge, income before income taxes increased 9.8%
to $867 million in 2000.

Revenues decreased 4.7% to $8.4 billion in 2000 compared to $8.8 billion in
1999. Inpatient admissions decreased 9.7% from 1999 and equivalent admissions
(adjusted to reflect combined inpatient and outpatient volume) decreased 10.3%.
Revenues, admissions and equivalent admissions declined primarily as a result of
our restructuring of operations. During 1999, we completed the spin-offs of
LifePoint Hospitals, Inc. and Triad Hospitals, Inc. and the sales of 24 hospital
facilities. On a same facility basis, revenues increased 5.8% and admissions and
equivalent admissions increased 2.6% from 1999. Revenue per equivalent admission
increased 6.3% from 1999 to 2000 and on a same facility basis increased 3.1%.
The increase in revenue per equivalent admission on a same facility basis
primarily resulted from successes achieved in renegotiating and renewing certain
managed care contracts on more favorable terms to HCA. The increase in revenue
per equivalent admission on a consolidated basis resulted from the combination
of the same facility improvement and the benefit from the restructuring of
operations transactions. While we achieved some successes in managed care
pricing, attaining revenue increases continues to present a challenge due to
decreases in Medicare rates of reimbursement mandated by the Balanced Budget Act
of 1997 (which lowered 2000 revenues by approximately $20 million), and a
continuing shift in revenues away from traditional Medicare and indemnity payers
to managed care (managed care as a percentage of total admissions increased to
42.2% in 2000 compared to 39.9% in 1999).

Salaries and benefits, as a percentage of revenues, decreased to 39.3% in
2000 from 39.9% in 1999 due to the restructuring of operations. Salaries and
benefits as a percentage of revenues for the facilities included in the
spin-offs of Triad and LifePoint were 42.4% for 1999, and salaries and benefits
as a percentage of revenues for the facilities included in our National Group
(our operating segment which includes nine consolidating hospitals at June 30,
2000 that we intend to sell or close and the operations of some other hospitals
which have been sold) were 46.0% for 1999. During 1999, we divested 24
hospitals.

Supply costs increased as a percentage of revenues to 15.8% in 2000 from
15.6% in 1999, due to an increase in the cost of supplies per equivalent
admission of 7.4% related to the increasing costs of new technology and
pharmaceuticals.

Other operating expenses (primarily consisting of contract services,
professional fees, repairs and maintenance, rents and leases, utilities,
insurance and non-income taxes) as a percentage of revenues decreased to 18.2%
in the second quarter of 2000 from 19.6% in 1999, due primarily to the
restructuring of operations. The other operating expenses as a percentage of
revenues for the facilities included in the spin-offs of Triad and LifePoint
were 22.4% for 1999, and the other operating expenses as a percentage of
revenues for the facilities included in our National Group were 26.4% for 1999.
Also, some insurance subsidiary funds were reallocated among investment
managers, resulting in the recognition of previously unrealized gains that
decreased other operating expenses by approximately $27 million during the
second quarter of 2000.

Provision for doubtful accounts, as a percentage of revenues, decreased to
7.2% in 2000 from 7.6% in 1999; however, we continue to experience trends that
make it difficult to maintain or reduce the provision for doubtful accounts as a
percentage of revenues. These trends include payer mix shifts to managed care
plans (resulting in increased amounts of patient co-payments and deductibles),
delays in payments and the denial of claims by managed care payers and increases
in the volume of health care services provided to uninsured patients in some
facilities.

S-18
<PAGE> 19

Equity in earnings of affiliates remained basically flat as a percentage of
revenues at 0.8% in 2000 as compared to 0.7% in 1999.

Depreciation and amortization decreased as a percentage of revenues to 6.2%
in 2000 from 6.5% in 1999, primarily due to the restructuring of operations.
Depreciation and amortization as a percentage of revenues for the facilities
included in the spin-offs of Triad and LifePoint was 7.0% in 1999.

Interest expense increased to $255 million in 2000 compared to $229 million
in 1999, primarily as a result of an increase in interest rates during 2000
compared to 1999 and the interest expense, beginning May 2000, related to the
settlement with the federal government. The average rates for our bank
borrowings increased from 6.24% during the six months ended June 30, 1999 to
7.60% during the six months ended June 30, 2000.

During 2000 and 1999, respectively, we incurred $25 million and $60 million
of restructuring of operations and investigation-related costs. In 2000, these
costs included $20 million of professional fees (legal and accounting) related
to the governmental investigations and $5 million of other costs. In 1999,
restructuring of operations and investigation-related costs included $42 million
of professional fees (legal and accounting) related to the governmental
investigations, $2 million of severance and $16 million of other costs.

During 2000, we recognized a pretax gain of $18 million ($8 million
after-tax) on the sale of one hospital. During 1999, we recognized a pretax gain
of $257 million ($151 million after-tax) on the sale of three hospitals and some
related health care facilities. We used proceeds from the sales to repay bank
borrowings.

During 1999, we also identified and initiated, or revised, plans to divest
or close during 1999 and 2000, 15 consolidating hospitals and four
non-consolidating hospitals. The carrying value for the hospitals and other
assets expected to be sold was reduced to fair value based upon estimates of
sales values, for a total non-cash, pretax charge of approximately $160 million.

Minority interests increased as a percentage of revenues to 0.7% in 2000
from 0.3% in 1999 due to improved operations at some joint ventures.

The effective income tax rate was 80.3% in 2000, due to a valuation
allowance recorded in the second quarter, and was 45.8% in 1999, due to
nondeductible intangible assets related to gains on sales of facilities and
impairment of long-lived assets. If we excluded the effect of the valuation
allowance, the nondeductible intangible assets and the related amortization, the
effective income tax rate would have been approximately 39% for both 2000 and
1999.

We have completed a restructuring of our operations. Assuming the
restructuring was completed as of the beginning of the period, our remaining
core facilities had combined net income which decreased 86.8% from $402 million
in 1999 to $53 million in 2000. Excluding gains on sales of facilities,
impairment of long-lived assets, settlement with federal government and
restructuring of operations and investigation-related costs, combined net income
for our remaining core facilities increased 18.5% to $567 million in 2000 from
$479 million in 1999.

Years Ended December 31, 1999 and 1998

Income from continuing operations before income taxes increased 13.5% to
$1.2 billion in 1999 from $1.1 billion in 1998 and pretax margins increased to
7.4% in 1999 from 5.8% in 1998. The increase in pretax income primarily resulted
from reductions from 1998 to 1999 in salaries and benefits and other operating
expenses as a percentage of revenues.

Revenues decreased 10.8% to $16.7 billion in 1999 from $18.7 billion in
1998 due to the reduction from 281 hospitals at December 31, 1998 to 195
hospitals at December 31, 1999. During 1999, we restructured our operations by
completing the spin-offs of LifePoint and Triad and the sale of 24 hospital
facilities. On a same facility basis, both admissions and revenues per

S-19
<PAGE> 20

equivalent admission increased 2.7% from 1998 to 1999, resulting in a 5.3%
increase in revenues. The increases in revenue per equivalent admission of 5.7%
on a consolidated basis and 2.7% on a same facility basis from 1998 to 1999
primarily resulted from successes achieved during 1999 in renegotiating and
renewing certain managed care contracts on more favorable terms. While we
achieved some successes in managed care pricing, attaining revenue increases
continues to present a challenge due to decreases in Medicare rates of
reimbursement mandated by the Balanced Budget Act of 1997 (which lowered 1999
revenues by approximately $124 million), and a continuing shift in revenues away
from traditional Medicare and indemnity payers to managed care (managed care as
a percentage of total admissions increased to 41% in 1999 compared to 39% in
1998).

Salaries and benefits, as a percentage of revenues, decreased from 41.6% in
1998 to 40.2% in 1999. The increase in revenues per equivalent admission was a
primary factor for the decrease. In addition, we were more successful in
adjusting staffing levels to correspond with the equivalent admission growth
rates (man hours per equivalent admission decreased approximately 3% compared to
1998).

Supply costs increased as a percentage of revenues to 15.9% in 1999 from
15.5% in 1998 due to an increase in the cost of supplies per equivalent
admission related to the increasing costs of new technology and pharmaceuticals.

Other operating expenses (primarily consisting of contract services,
professional fees, repairs and maintenance, rents and leases, utilities,
insurance and non-income taxes) decreased as a percentage of revenues from 20.4%
to 19.5% due to certain fixed costs such as contract services, rents, leases,
and utilities remaining relatively flat while revenue per equivalent admission
was increasing. A decline in professional fees, due to the sales of certain
teaching facilities that had costs for medical directorships, also contributed
to the decrease.

Provision for doubtful accounts, as a percentage of revenues, decreased
slightly to 7.6% in 1999 from 7.7% in 1998. We continue to experience trends
that make it difficult to maintain or reduce the provision for doubtful accounts
as a percentage of revenues. These trends include payer mix shifts to managed
care plans (resulting in increased amounts of patient co-payments and
deductibles), delays in payments and the denial of claims by managed care payers
and increases in the volume of health care services provided to uninsured
patients in certain facilities.

Depreciation and amortization remained relatively flat as a percentage of
revenues at 6.6% in 1999 versus 6.7% in 1998.

Interest expense decreased to $471 million in 1999 compared to $561 million
in 1998 primarily as a result of a decrease in average outstanding debt during
1999 compared to 1998. The spin-offs and facility sales resulted in the receipt
of cash proceeds in 1999 and in the third and fourth quarters of 1998 which were
used to pay down borrowings.

Equity in earnings of affiliates remained relatively flat as a percentage
of revenues at 0.5% in 1999 and 0.6% in 1998.

During 1999, we recognized a pretax gain of $297 million ($164 million
after-tax) on the sale of three hospitals and some related health care
facilities. We used proceeds from the sales to repay bank borrowings.

During 1999, we also identified and initiated, or revised, plans to divest
or close during 1999 and 2000, 23 consolidating hospitals and four
non-consolidating hospitals. The carrying value for the hospitals and other
assets expected to be sold was reduced to fair value based upon estimates of
sales values, for a total non-cash, pretax charge of approximately $220 million.

During 1999 and 1998, respectively, we incurred $116 million and $111
million of restructuring of operations and investigation-related costs. In 1999,
these costs included $77 million of professional fees (legal and accounting)
related to the governmental investigations, $5

S-20
<PAGE> 21

million of severance costs and $34 million of other costs. In 1998,
restructuring of operations and investigation-related costs included $96 million
of professional fees (legal and accounting) related to the governmental
investigations, $5 million of severance costs and $10 million of other costs.

Minority interests decreased slightly as a percentage of revenues to 0.3%
in 1999 from 0.4% in 1998.

The effective income tax rates were 46.5% in 1999 and 50.8% in 1998 due to
non-deductible intangible assets related to gains on sales of facilities and
impairments of long-lived assets. If we excluded the effect of the
non-deductible intangible assets and the related amortization, the effective
income tax rate would have been approximately 39% for both 1999 and 1998.

We have substantially completed a restructuring of our operations. Assuming
the restructuring was completed as of the beginning of the period, our remaining
core facilities had combined net income from continuing operations of $669
million in 1999 versus $452 million in 1998, an increase of 48.1%. Excluding
gains on sales of facilities, impairment of long-lived assets and restructuring
of operations and investigation-related costs, combined net income for our
remaining core facilities increased 13.1% to $838 million in 1999 from $741
million in 1998.

Years Ended December 31, 1998 and 1997

Revenues decreased 0.7% to $18.7 billion in 1998 compared to $18.8 billion
in 1997, primarily as a result of the sales of facilities and declines in
volumes. Inpatient admissions decreased 1.4% from 1997 to 1998 and equivalent
admissions (adjusted to reflect combined inpatient and outpatient volume)
decreased 1.1%. The small decline in revenues compared to the decline in
equivalent admissions resulted in a slight increase in revenues per equivalent
admission of 0.3%. On a same facility basis, revenues decreased 0.2%, admissions
increased 0.4% and equivalent admissions increased 1.4% from 1997 to 1998. On a
same facility basis, the decline in revenues combined with an increase in
equivalent admissions resulted in a decline in revenues per equivalent admission
of 1.5%.

The decline in revenues was due to several factors, including decreases in
Medicare reimbursement rates mandated by the Balanced Budget Act of 1997 (which
lowered 1998 revenues by approximately $215 million), continued increases in
discounts from the growing number of managed care payers (managed care as a
percentage of total admissions increased to 39% in 1998 compared to 35% in 1997)
and a net decrease in the number of consolidating hospitals and surgery centers
since 1997 due to the sales of several facilities during 1998. We had 281
consolidating hospitals and 102 surgery centers at December 31, 1998, compared
to 309 hospitals and 140 surgery centers at December 31, 1997.

Income from continuing operations before income taxes increased 178.8% to
$1.1 billion in 1998 from $388 million in 1997. Pretax margins increased to 5.8%
in 1998 from 2.1% in 1997. The increase in pretax income was primarily
attributable to gains on the sales of facilities and a small increase in the
operating margin. Excluding the gains on sales of facilities, asset impairment
charges and restructuring of operations and investigation-related costs, income
from continuing operations before income taxes increased 2.0% to $990 million in
1998 from $970 million in 1997 and the pretax margin increased to 5.3% in 1998
from 5.2% in 1997. These increases were primarily attributable to a decrease in
other operating expenses as a percentage of revenues.

Operating expenses increased as a percentage of revenues in almost every
expense category, except other operating expenses, which declined 2.2% from
1997. The increases were primarily attributable to our inability to adjust
expenses in line with the decreases experienced in revenues and reimbursement
trends. Management's attention to the investigations, reactions by certain
physicians and patients to the negative media coverage and management changes at

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<PAGE> 22

several levels and locations throughout HCA contributed to our inability to
implement changes to reduce operating expenses in response to the revenue
declines.

Salaries and benefits, as a percentage of revenues, increased to 41.6% in
1998 from 40.6% in 1997. The increase was due to a 3.4% increase in salaries and
benefits per equivalent admission, which can be attributed to a 2.7% increase in
labor cost per hour and a 0.5% increase in man-hours per equivalent admission.

Supply costs increased as a percentage of revenues to 15.5% in 1998 from
14.5% in 1997 due to a 7.7% increase in the cost of supplies per equivalent
admission, while revenues per equivalent admission increased only 0.3%.

Other operating expenses (which includes contract services, professional
fees, repairs and maintenance, rents and leases, utilities, insurance, marketing
and non-income taxes) decreased as a percentage of revenues to 20.4% in 1998
from 22.6% in 1997. The decrease resulted from small decreases in several of
these expense categories as a percentage of revenues, including lower marketing
costs due to the cancellation of a national branding campaign.

Provision for doubtful accounts, as a percentage of revenues, increased to
7.7% in 1998 from 7.5% in 1997 due to internal factors such as computer
information system conversions (including patient accounting systems), which
diverted some of the time of business office employees from their billing and
collection functions to assist with the system conversions at some facilities,
and external factors such as payer mix shifts to managed care plans (resulting
in increased amounts of patient co-payments and deductibles) and increases in
claim audits and remittance denials from some payers. Management is unable to
quantify the effects of each of these factors because the data to support the
classification of writeoffs to these categories is not accumulated due to
volume, standardization and cost constraints. The shift in payer mix is expected
to continue and the provision for doubtful accounts is likely to remain at
higher levels than in past years (1996 and prior).

Equity in earnings of affiliates increased slightly as a percentage of
revenues to 0.6% in 1998 from 0.4% in 1997.

Depreciation and amortization increased as a percentage of revenues to 6.7%
in 1998 from 6.6% in 1997, primarily due to the slowdown in revenue growth and
increased capital expenditures related to ancillary services (such as outpatient
services) and information systems. Capital expenditures in these areas generally
result in shorter depreciation and amortization lives for the assets acquired
than typical hospital acquisitions.

Interest expense increased to $561 million in 1998 compared to $493 million
in 1997. A primary reason for the increased interest expense is an increase in
the average interest rate on our borrowings. Our credit ratings were downgraded
in both 1998 and 1997 and this caused a shift in credit sources from the
commercial paper market to bank debt.

During 1998, we recognized a pretax gain of $744 million ($365 million
after-tax) on the sale of some hospitals and surgery centers. The gain includes
a pretax gain of $570 million ($335 million after-tax) on the sale of 21
hospitals to a consortium of not-for-profit entities, a pretax gain of $203
million ($50 million after-tax) on the sale of 34 surgery centers, and a loss of
$29 million ($20 million after-tax) on the sale of six hospitals and other
facilities.

During 1998, management approved a plan to divest a group of our medical
office buildings. The divestiture is expected to be completed through the
transfer of the medical office buildings to a joint venture in which we will
maintain a minority interest. The carrying value for these medical office
buildings, along with certain hospitals and other facilities expected to be
sold, was reduced to fair value, based upon estimates of sales values resulting
in a non-cash, pretax impairment charge of $542 million ($175 million of the
total impairment charge was related to the medical office buildings).

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<PAGE> 23

During 1997, we recorded $442 million of asset impairment charges. The
charges primarily related to hospital and surgery center facilities to be sold
or closed ($402 million) and physician practices ($40 million) where projected
future cash flows were less than the carrying value of the related assets.

We incurred $111 million and $140 million of costs during 1998 and 1997,
respectively, of restructuring of operations and investigation-related costs. In
1998, these costs included $96 million of professional fees (legal and
accounting) related to the governmental investigations, $5 million of severance
costs and $10 million of other costs. In 1997, these costs included $61 million
of severance costs, $44 million of professional fees (legal and accounting)
related to the governmental investigations and $35 million of other costs.

Minority interests decreased as a percentage of revenues to 0.4% in 1998
from 0.8% in 1997. The decrease in minority interest expense was attributable to
declines in profitability in certain operations that have minority ownership and
the sales during 1998 of certain minority-owned operations (the majority of the
34 surgery centers that were sold during 1998 had minority owners).

Income from continuing operations increased 191.2% to $532 million ($.82
per diluted share) during 1998 compared to $182 million ($.27 per diluted share)
in 1997. Excluding the gains on sales of facilities, asset impairment charges,
and restructuring of operations and investigation-related costs, income from
continuing operations increased 4.3% to $590 million ($.91 per diluted share) in
1998 from $565 million ($.85 per diluted share) in 1997.

We substantially completed a restructuring of our operations (including the
spin-offs of LifePoint and Triad and the divestiture of some facilities).
Assuming the completion of the restructuring, as of the beginning of the period
our remaining core facilities had combined net income from continuing operations
which increased 84.0% to $452 million in 1998 from $246 million in 1997.
Excluding gains on sales of facilities, impairment of long-lived assets and
restructuring of operations and investigation-related costs, combined net income
for our remaining core facilities increased 50.4% to $741 million in 1998 from
$493 million in 1997.

LIQUIDITY AND CAPITAL RESOURCES

Cash provided by continuing operating activities improved to $693 million
during the first six months of 2000 compared to $401 million in 1999. The
improvement was primarily due to an increase in net income, excluding gains on
sales of facilities, impairment of long-lived assets and the settlement with
federal government, to $513 million in 2000 from $408 million in 1999. Also
during the first six months of 2000, we made tax payments of $378 million versus
$452 million in 1999. Cash provided by continuing operating activities totaled
$1.2 billion in 1999 compared to $1.9 billion in 1998 and $1.5 billion in 1997.
The decrease in cash provided by continuing operating activities during 1999
primarily resulted from an increase in tax payments and increases in accounts
receivable and other current assets. During 1998, we applied for and received a
refund of approximately $350 million, resulting from excess estimated tax
payments made in 1997 based upon more profitable prior periods. The increase
from 1997 to 1998 was primarily due to the loss incurred from continuing
operations during 1997.

Cash used in investing activities was $785 million during the first six
months of 2000, compared to cash provided of approximately $1.4 billion during
1999. The decrease was due primarily to proceeds from the disposition of
hospitals and other health care facilities of $624 million in 1999 compared with
$263 million in 2000, cash flows from changes in investments of $548 million in
1999 (including repayment by a nonconsolidating joint venture of advances of
approximately $330 million) compared with cash used of $96 million in 2000, and
the $886 million in proceeds in 1999 related to the spin-offs. In 2000, we also
used $290 million to acquire hospitals and health care entities, and we had no
acquisitions in 1999. Cash provided by investing activities was approximately
$0.9 billion in 1999 and approximately $1.0 billion in 1998,

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<PAGE> 24

compared to cash used in investing activities of $2.7 billion in 1997. Our
restructuring of operations resulted in the receipt of cash proceeds of
approximately $1.8 billion in 1999 and $2.8 billion in 1998. In 1997, we used
$1.2 billion of cash to complete the acquisition of Value Health, Inc., a
provider of specialty managed care benefit programs.

Cash flows provided by financing activities totaled $194 million in the
first six months of 2000 compared to cash used of approximately $2.0 billion in
1999. The primary financing cash flow activities included the repurchases of our
common stock (approximately $255 million and $1.9 billion during 2000 and 1999,
respectively) and the receipt of net proceeds from debt issuances of $448
million in 2000. Cash flows used in financing activities totaled approximately
$2.3 billion in 1999 and $2.7 billion during 1998, compared to cash provided by
financing activities of $1.3 billion in 1997. We primarily used the cash flows
provided by continuing operating activities and investing activities to
repurchase approximately 82 million shares of our common stock in 1999 and to
pay down debt during 1998. During 1997, we used approximately $1 billion of cash
to repurchase approximately 29 million shares of our common stock. We funded the
repurchase in 1997 with the issuance of long-term debt, commercial paper and
bank borrowings.

Working capital totaled $407 million as of June 30, 2000, compared to $265
million at December 31, 1999. At December 31, 1999 current liabilities included
$500 million outstanding under our senior interim term loan. In March 2000, we
repaid the $500 million using proceeds from a new $1.2 billion senior term loan.
Management believes that cash flows from operations, amounts available under our
revolving credit facility, proceeds from our senior term loan and our access to
debt markets (including the net proceeds from the Notes offered hereby) are
sufficient to meet expected liquidity needs during 2000.

Excluding acquisitions, capital expenditures were $586 million during the
first six months of 2000 compared to $690 million for the same period in 1999.
We expect planned capital expenditures in 2000 to approximate $1.3 billion.
Management believes that its capital expenditure program is adequate to expand,
improve and equip its existing health care facilities.

Investments of our professional liability insurance subsidiary to maintain
statutory equity and pay claims totaled $1.7 billion at June 30, 2000 and at
December 31, 1999 and $1.8 billion at December 31, 1998.

During 1997, we announced both the cessation of sales of interests in our
hospitals to physicians and our intention to repurchase physician ownership
interests in our hospitals. We paid approximately $8 million and $41 million to
repurchase some physician interests in 1999 and 1998, respectively.

We have various agreements with joint venture partners whereby the partners
have an option to sell or "put" their interests in the joint venture back to HCA
within specific periods at fixed prices or prices based on specific formulas.
The combined put price under all such agreements was approximately $400 million
at June 30, 2000. During 2000, one of our joint venture partners exercised its
put option, whereby HCA purchased the partner's interest in the joint venture
for approximately $47 million. We cannot predict if, or when, other joint
venture partners will exercise such options.

During the first quarter of 1998, the Internal Revenue Service issued
guidance regarding certain tax consequences of joint ventures between for-profit
and not-for-profit hospitals. As a result of the tax ruling, the IRS may propose
to revoke the tax-exempt or public charity status of certain not-for-profit
entities that participate in such joint ventures or to treat joint venture
income as unrelated business taxable income. We are continuing to review the
impact of the tax ruling on our existing joint ventures and the development of
future ventures, and are consulting with our joint venture partners and tax
advisers to develop appropriate courses of action. The tax ruling or any adverse
determination by the IRS regarding the tax-exempt or public charity status of a
not-for-profit partner, or the characterization of joint venture income as
unrelated business

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<PAGE> 25

taxable income, could limit joint venture development with not-for-profit
hospitals, require the restructuring of some existing joint ventures with
not-for-profits and influence the exercise of the put agreements by some
existing joint venture partners.

In November 1999, we announced that our Board of Directors authorized the
repurchase of up to $1 billion of our common stock. During the first quarter of
2000, we settled forward purchase contracts associated with our November 1999
authorization for approximately 8.5 million shares at a cost of $250 million and
during the second quarter of 2000, settled forward purchase contracts associated
with the same authorization for approximately 1.8 million shares at a cost of
approximately $53 million. In accordance with the terms of the forward purchase
contracts, the shares purchased remain outstanding until the forward purchase
contracts are settled by HCA. Forward purchase contracts totaling approximately
24.1 million shares at a cost of approximately $697 million remain outstanding
until settled by HCA.

In March 2000, we announced that our Board of Directors authorized the
repurchase of up to $1 billion of additional common stock. Some financial
organizations purchased approximately 5.3 million shares of HCA's common stock
for approximately $119 million during the first quarter of 2000 and
approximately 11.3 million shares for approximately $322 million during the
second quarter of 2000 utilizing forward purchase contracts. In accordance with
the terms of the contracts, these shares remain outstanding until settled by
HCA. We expect to repurchase the remaining stock associated with the March 2000
repurchase authorization through open market purchases, privately negotiated
transactions or forward purchase contracts.

During the first quarter of 1999, as part of the agreement related to our
share repurchase programs, we entered into a Letter of Credit Agreement with the
United States Department of Justice. We provided the government with letters of
credit totaling $1 billion. The understanding reached with the government in May
2000 provides that the letters of credit will be reduced from $1 billion to $250
million at the time of the settlement payment. In addition, the understanding is
that any future civil payments on cost reports or physician relations will
reduce the remaining amount of the letters of credit dollar for dollar.

The resolution of the governmental investigations and the various lawsuits
and legal proceedings that have been asserted could result in substantial
liabilities to HCA. At this time, we cannot reasonably estimate the timing or
amounts of the ultimate liabilities; however, it is possible that the resolution
of certain of the contingencies could have a material adverse effect on our
results of operations, financial position and liquidity.

IMPACT OF YEAR 2000 COMPUTER ISSUES

We experienced no material adverse effect to our results of operations,
financial condition or ability to provide for our patients' safety and health as
a result of the Year 2000 date conversion in our computer systems and programs
and those of third parties.

MARKET RISK

We are exposed to market risk related to changes in interest rates and
market values of securities. We currently do not use derivative instruments to
offset the market risk exposure of the investments in debt or equity securities
of our wholly-owned insurance subsidiary or to alter the interest rate
characteristics of our debt instruments.

Our investments in debt and equity securities were $1.2 billion and $510
million, respectively, at June 30, 2000. These investments are carried at fair
value, with changes in unrealized gains and losses recorded as adjustments to
stockholders' equity. The fair value of investments is generally based on quoted
market prices. We do not expect changes in interest rates and market values of
securities to be material in relation to our financial position and operating
results.

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<PAGE> 26

With respect to our interest-bearing liabilities, approximately $2.9
billion of long-term debt at June 30, 2000 is subject to variable rates of
interest, while the remaining balance in long-term debt of $4.1 billion at June
30, 2000 is subject to fixed rates of interest. Our variable interest rate is
affected by both the general level of U.S. interest rates and our credit rating.
Our variable rate debt is comprised of our credit facility, on which interest is
payable generally at LIBOR plus 0.45% to 1.5% (depending on our credit ratings),
and bank term loans on which interest is payable generally at LIBOR plus 0.75%
to 2.5%. Due to increases in LIBOR, the average rate for our credit facility
increased from 5.81% for the quarter ended June 30, 1999 to 7.44% for the
quarter ended June 30, 2000, and the average rate for our term loans increased
from 6.50% for the quarter ended June 30, 1999 to 7.98% for the quarter ended
June 30, 2000. The estimated fair value of our total long-term debt was $6.6
billion at June 30, 2000. The estimates of fair value are based upon the quoted
market prices for the same or similar issues of long-term debt with the same
maturities. Based on a hypothetical 1% increase in interest rates, the potential
annualized losses in future pretax earnings would be approximately $29 million.
The impact of such a change in interest rates on the carrying value of long-term
debt would not be significant. The estimated changes to interest expense and the
fair value of long-term debt are determined considering the impact of
hypothetical interest rates on our borrowing cost and long-term debt balances.
To mitigate the impact of fluctuations in interest rates, we generally target a
portion of our debt portfolio at a fixed rate, either by borrowing on a fixed or
floating rate basis or entering into interest rate swap transactions. We have
not, during 2000 or 1999, participated in any interest rate swap agreements.

Foreign operations and the related market risks associated with foreign
currency are currently insignificant to our results of operations and financial
position.

EFFECTS OF INFLATION AND CHANGING PRICES

Various federal, state and local laws have been enacted that may limit our
ability to increase prices. Revenues for acute care hospital services rendered
to Medicare patients are established under the federal government's prospective
payment system. Total Medicare revenues as a percentage of our total revenues
approximated 29% in 1999, 30% in 1998 and 34% in 1997.

Management believes that hospital industry operating margins have been, and
may continue to be, under significant pressure because of changes in payer mix
and growth in operating expenses in excess of the increase in prospective
payments under the Medicare program. Management expects that the average rate of
adjustment for Medicare prospective payments for inpatient hospital services
will range from (0.3%) to 0.0% in 2000. In addition, as a result of increasing
regulatory and competitive pressures, our ability to maintain operating margins
through price increases to non-Medicare patients is limited.

IRS DISPUTES

We are contesting income taxes and related interest proposed by the IRS for
prior years aggregating approximately $191 million as of June 30, 2000.
Management believes that final resolution of these disputes will not have a
material adverse effect on our results of operations or liquidity.

During the first quarter of 2000, HCA and the IRS filed a Stipulated
Settlement with the Tax Court regarding the proposed disallowance by the IRS of
certain acquisition-related costs, executive compensation and systems conversion
costs, which were deducted in calculating taxable income, and the methods of
accounting used by some subsidiaries for calculating taxable income related to
vendor rebates and governmental receivables. As a result of the settlement, we
paid additional tax and interest of approximately $156 million during 2000. The
settlement had no impact on our results of operations.

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DESCRIPTION OF BUSINESS
OVERVIEW

HCA - The Healthcare Company (which, until May 25, 2000, was called
"Columbia/HCA Healthcare Corporation") is a holding company whose affiliates own
and operate hospitals and related health care entities. At June 30, 2000, these
affiliates owned and operated 195 hospitals and 80 outpatient surgery centers
and provided extensive outpatient and ancillary services. Our affiliates are
also partners in several 50/50 joint ventures that own and operate nine
hospitals and three outpatient surgery centers, which are accounted for using
the equity method. Our facilities are located in 24 states, England and
Switzerland.

RESTRUCTURING AND REORGANIZATION

In 1997 we encountered significant challenges and changes. The hospital
industry was adversely affected by Medicare reimbursement reductions resulting
from the Balanced Budget Act of 1997, increased managed care penetration and
increased government scrutiny of hospital operations. In addition, we learned
that we were the subject of a federal investigation related to government
reimbursement programs. The investigation was subsequently expanded in July 1997
to include billing practices, home health operations, relationships with
physicians, DRG coding and Medicare cost report preparation.

OUR BUSINESS STRATEGY

Our primary objective is to provide the communities we serve with a
comprehensive array of quality health care services in the most cost-effective
manner. We also seek to enhance financial performance by increasing utilization
of, and improving operating efficiencies in, our facilities. We expect to
accomplish these objectives by implementing the following strategies:

- REINFORCE OUR "PATIENTS FIRST" PHILOSOPHY AND OUR COMMITMENT TO ETHICS
AND COMPLIANCE: We are committed to a values-based corporate culture that
prioritizes the care and improvement of human life above all else. The
values highlighted by our corporate culture - compassion, honesty,
integrity, fairness, loyalty, respect and kindness - are the cornerstone
of our company. To reinforce our dedication to these values and to ensure
integrity in all that we do, we have developed and implemented a
comprehensive ethics

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<PAGE> 28

and compliance program that articulates a high set of values and
behavioral standards. We believe that this program has reinforced our
dedication to excellent patient care in a concrete way.

- FOCUS ON STRONG ASSETS IN SELECT, CORE COMMUNITIES: We are focusing on
communities where we are or can be the number one or number two health
care provider. To achieve this goal, management initiated a comprehensive
restructuring process in 1997 that has transformed us into a smaller,
more focused company. This restructuring allows us to focus our efforts
on our core communities, which are typically located in urban areas
characterized by highly integrated health care facility networks. Since
1997, we have reduced the number of our hospitals by more than 40%, or
141 hospitals, and the number of surgery centers by 70, and sold
substantially all of our home health operations and various other
non-core assets. We intend to continue to optimize core assets through
selected divestitures and acquisitions and capital expenditures.

- DEVELOP COMPREHENSIVE LOCAL HEALTH CARE NETWORKS WITH A BROAD RANGE OF
HEALTH CARE SERVICES: We seek to operate each of our facilities as part
of a network with other health care facilities that we own or operate
within a common region. We believe that by being a comprehensive provider
of quality health care services in selected communities, we will be
better able to attract and serve patients and physicians.

- GROW THROUGH INCREASED PATIENT VOLUME, EXPANSION OF SPECIALTY AND
OUTPATIENT SERVICES AND SELECTIVE ACQUISITIONS: We intend to identify
opportunities in areas where demand for comprehensive health services is
not adequately met. We believe that expansion of specialty services will
strengthen our health care delivery networks and attract new patients. To
support this expansion, we plan to actively recruit additional
specialists. Recognizing that the shift from inpatient to outpatient care
is likely to continue, we intend to enhance the access to and the
capabilities of our outpatient services by devoting additional capital
resources to outpatient facilities.

- IMPROVE OPERATING EFFICIENCIES THROUGH ENHANCED COST MANAGEMENT AND
RESOURCE UTILIZATION: We have initiated several measures to improve the
financial performance of our facilities. To reduce labor costs, we
implemented in many communities a flexible staffing model whereby
hospital units are staffed at the lowest demand level and additional
staff is accessed through shared pools of caregivers. To curtail supply
cost, we formed a new group purchasing organization that allows us to
achieve better pricing in negotiating purchasing and supply contracts. In
addition, as we grow in our select core markets, we believe that we will
continue to benefit from economies of scale, including supply chain
efficiencies and volume discount cost savings. Also, we expect to be able
to reduce operating costs and to be better positioned to work with health
maintenance organizations, preferred provider organizations and
employers, by sharing certain services among several facilities in the
same market.

- RECRUIT AND DEVELOP STRONG RELATIONSHIPS WITH PHYSICIANS: We plan to
actively recruit physicians to enhance patient care and fulfill the needs
of the communities we serve. We believe that recruiting and retaining
motivated physicians is essential to being a premier provider of health
care services. We believe our quality initiatives enhance our competitive
position when recruiting and attracting physicians.

- STREAMLINE AND DECENTRALIZE MANAGEMENT CONSISTENT WITH OUR LOCAL
FOCUS: Our strategy to streamline and decentralize our management
structure affords management of our remaining core facilities greater
flexibility to make decisions that are specific to their respective local
communities. This, in turn, leads to a smoother, less hierarchical
operating structure and creates a more nimble, responsive organization.

- EFFECTIVELY ALLOCATE CAPITAL IN ORDER TO MAXIMIZE RETURN: We carefully
evaluate investment opportunities and invest in projects that add to our
primary objective of providing comprehensive, high-quality health care
services in the most cost-effective manner. We

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maintain and replace equipment, renovate and construct replacement
facilities and add new services to increase the attractiveness of our
hospitals and other facilities to patients and physicians. In addition,
we evaluate acquisitions that complement our strategies and assess
opportunities to enhance stockholder value, including repayment of
indebtedness and stock repurchases.

HEALTH CARE FACILITIES

We currently own, manage or operate hospitals, ambulatory surgery centers,
diagnostic centers, cardiac rehabilitation centers, physical therapy centers,
radiation oncology centers, comprehensive outpatient rehabilitation centers and
various other programs.

At June 30, 2000, we, either directly or through joint ventures, operated
204 hospitals with 44,937 licensed beds. Most of our general acute care
hospitals provide medical and surgical services, including inpatient care,
intensive and cardiac care, diagnostic services and emergency services. The
general acute care hospitals also provide outpatient services such as outpatient
surgery, laboratory, radiology, respiratory therapy, cardiology and physical
therapy. A local advisory board, which usually includes members of the
hospital's medical staff, generally makes recommendations concerning the
medical, professional and ethical practices at each hospital and monitors such
practices. However, the hospital is ultimately responsible for ensuring that
these practices conform to established standards. When we acquire a hospital, we
establish quality assurance programs to support and monitor quality of care
standards and to meet accreditation and regulatory requirements. We monitor
patient care evaluations and other quality of care assessment activities on a
continuing basis.

Like most hospitals, our hospitals do not engage in extensive medical
research and medical education programs. However, some of our hospitals have an
affiliation with medical schools, including the clinical rotation of medical
students.

We also operate other outpatient or related health care facilities
including ambulatory surgery centers, diagnostic centers, outpatient physical
therapy/rehabilitation centers, outpatient radiation therapy centers, cardiac
rehabilitation centers and skilled nursing services. These outpatient and
related services are an integral component of our strategy to develop a
comprehensive health care network in each of our target markets.

In addition to providing capital resources, we make available a variety of
management services to our health care facilities, most significantly ethics and
compliance programs, national supply and equipment purchasing and leasing
contracts, accounting, financial and clinical systems, governmental
reimbursement assistance, construction planning and coordination, information
systems, legal counsel, personnel management and internal auditing services.

SOURCES OF REVENUE

Hospital revenues depend upon inpatient occupancy levels, the ancillary
services and therapy programs ordered by physicians and provided to patients,
the volume of outpatient procedures and the charges or negotiated payment rates
for such services. Charges and reimbursement rates for inpatient routine
services vary significantly depending on the type of service (e.g.,
medical/surgical, intensive care or psychiatric) and the geographic location of
the hospital.

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<PAGE> 30

We receive payment for patient services from the federal government
primarily under the Medicare program, state governments under their respective
Medicaid programs, HMOs, PPOs and other private insurers, as well as directly
from patients. The approximate percentages of patient revenues from continuing
operations of our facilities from these sources during the periods specified
below were as follows:

<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, DECEMBER 31,
----------- ------------------
2000 1999 1999 1998 1997
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Medicare.................................... 29% 30% 29% 30% 34%
Medicaid.................................... 7 6 7 6 6
Managed care and other discounted........... 39 35 37 32 28
Other sources............................... 25 29 27 32 32
--- --- --- --- ---
Total............................. 100% 100% 100% 100% 100%
=== === === === ===
</TABLE>

Medicare is a federal program that provides certain hospital and medical
insurance benefits to persons age 65 and over, some disabled persons and persons
with end-stage renal disease. Medicaid is a federal-state program administered
by the states which provides hospital benefits to qualifying individuals who are
unable to afford care. Substantially all of our hospitals are certified as
providers of Medicare and Medicaid services. Amounts received under the Medicare
and Medicaid programs are generally significantly less than the hospital's
customary charges for the services provided.

To attract additional volume, most of our hospitals offer discounts from
established charges to certain large group purchasers of health care services,
including Blue Cross, other private insurance companies, employers, HMOs, PPOs
and other managed care plans. Blue Cross is a private health care program that
funds hospital benefits through independent plans that vary in each state. These
discount programs limit our ability to increase charges in response to
increasing costs. Patients are generally not responsible for any difference
between customary hospital charges and amounts reimbursed for such services
under Medicare, Medicaid, some Blue Cross plans, HMOs or PPOs, but are
responsible to the extent of any exclusions, deductibles or co-insurance
features of their coverage. The amount of such exclusions, deductibles and
co-insurance has generally been increasing each year. Collection of amounts due
from individuals is typically more difficult than from governmental or business
payers.

INVESTIGATIONS AND LITIGATION

We are the subject of various federal and state investigations, qui tam
actions, shareholder derivative and class action suits filed in federal court,
shareholder derivative actions filed in state courts, patient/payer actions and
general liability claims.

In March 1997, federal authorities searched various facilities of our El
Paso, Texas operations pursuant to search warrants, and the government removed
various records and documents. In February 1998, also in El Paso, an additional
warrant was executed and a single computer was seized. In July 1997, numerous
facilities and offices affiliated with HCA were searched pursuant to search
warrants issued by the United States District Court in various states. During
July, September and November 1997, we were also served with subpoenas requesting
records and documents related to laboratory billing and DRG coding in various
states and home health operations in various jurisdictions, including, but not
limited to, Florida. In January 1998, we received a subpoena which requested
records and documents relating to physician relationships. In June 1999,
Columbia Home Care Group received a subpoena seeking records related to home
health operations. In March 2000, we received a subpoena that requested records
relating to wound care centers.

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<PAGE> 31

In July 1997, the United States District Court for the Middle District of
Florida, in Fort Myers, issued an indictment against three employees of one of
our subsidiaries. The indictment related to the alleged false characterization
of interest payments on certain debt resulting in Medicare and TRICARE (formerly
CHAMPUS) overpayments since 1986 to Fawcett Memorial Hospital, a Port Charlotte,
Florida hospital that we acquired in 1992. We were served with subpoenas for
various records and documents. A fourth employee of one of our subsidiaries was
indicted in July 1998 by a superseding indictment. The trial on this matter
commenced on May 3, 1999. On July 2, 1999, the jury returned a mixed verdict,
finding two such employees guilty and acquitting one. The jury was unable to
reach a verdict as to the fourth employee. The government and the fourth
employee executed an agreement to defer prosecution for 18 months, after which
charges will be dismissed. The two convicted employees were sentenced in
December 1999 and both have appealed to the 11th Circuit.

In addition, several affiliated hospital facilities in various states have
received individual federal and/or state government inquiries, both informal and
formal, requesting information related to reimbursement from government
programs.

In general, we believe that the United States Department of Justice and
other federal and state governmental authorities are investigating certain acts,
practices or omissions in which we are alleged to have engaged with respect to
Medicare, Medicaid and CHAMPUS patients regarding (a) allegedly improper DRG
coding (commonly referred to as "upcoding") relating to bills submitted for
medical services, (b) allegedly improper outpatient laboratory billing (e.g.,
unbundling of services and medically unnecessary tests), (c) inclusion of
allegedly improper items in cost reports submitted as a basis for reimbursement
under Medicare, Medicaid and similar government programs, (d) arrangements with
physicians and other parties that allegedly violate certain federal and state
laws governing fraud and abuse, anti-kickback and "Stark" laws and (e) allegedly
improper acquisitions of home health care agencies and allegedly excessive
billing for home health care services.

We are cooperating in these investigations and understand, through written
notice and other means, that we are a target in these investigations. Given the
scope of the ongoing investigations, we expect additional subpoenas and other
investigative and prosecutorial activity to occur in these and other
jurisdictions in the future.

We are a defendant in several qui tam actions brought by private parties on
behalf of the United States of America, which have been unsealed. The actions
allege, in general, that we and certain subsidiaries and/or affiliated
partnerships violated the False Claims Act, 31 U.S.C. sec. 3729 et seq., for
improper claims submitted to the government for reimbursement, as well as
improper payments for physician referrals. The lawsuits generally seek three
times the amount of damages caused to the United States by the submission of any
Medicare or Medicaid false claims presented by the defendants to the federal
government, civil penalties of not less than $5,000 nor more than $10,000 for
each such Medicare or Medicaid claim, attorneys' fees and costs. To our
knowledge, the government has intervened in six unsealed qui tam actions. We are
aware of

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<PAGE> 32

additional qui tam actions that remain under seal and believe that there may be
other sealed qui tam cases of which we are unaware. We are also a defendant in a
number of other suits, which allege, in general, improper and fraudulent
billing, overcharging, coding and physician referrals, as well as other
violations of law. Some of the suits have been conditionally certified as class
actions.

We remain the subject of a formal order of investigation by the SEC. We
understand that the SEC investigation relates to the anti-fraud, insider
trading, periodic reporting and internal accounting control provisions of the
federal securities laws.

We are also subject to claims and suits by patients and others arising in
the ordinary course of business, including claims for personal injuries or for
wrongful restriction of, or interference with, physicians' staff privileges.

We are not able to predict the outcome or quantify the effects that the
ongoing investigations or the initiation of additional investigations, if any,
will have on our financial condition and results of operations in future
periods. If we are found to have violated federal or state laws relating to
Medicare, Medicaid or similar programs, we could be subject to substantial
monetary fines, civil and criminal penalties and exclusion from participation in
the Medicare and Medicaid programs. Similarly, the amounts claimed in the qui
tam and other actions are substantial, and we could be subject to substantial
costs resulting from an adverse outcome of one or more of these actions. Any
sanctions or losses could have a material adverse effect on our financial
position and results of operations.

For more information regarding these investigations and suits, see our
Annual Report on Form 10-K for the year ended December 31, 1999 and "Part II,
Item 1: Legal Proceedings" contained in our Quarterly Report on Form 10-Q for
the quarter ended June 30, 2000, incorporated by reference in this prospectus
supplement and the attached prospectus.

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<PAGE> 33

MANAGEMENT

The following are certain key members of our management:

<TABLE>
<CAPTION>
NAME AGE POSITION(S)
---- --- -----------
<S> <C> <C>
Thomas F. Frist, Jr., M.D............ 61 Chairman of the Board and Chief
Executive Officer
Jack O. Bovender, Jr................. 54 President and Chief Operating Officer
David G. Anderson.................... 52 Senior Vice President - Finance and
Treasurer
Richard M. Bracken................... 47 President - Western Group
Victor L. Campbell................... 53 Senior Vice President
Jay F. Grinney....................... 49 President - Eastern Group
R. Milton Johnson.................... 43 Senior Vice President and Controller
Robert A. Waterman................... 46 Senior Vice President and General
Counsel
</TABLE>

Thomas F. Frist, Jr., M.D. has served as Chairman of the Board and Chief
Executive Officer since July 1997. Previously, he served as Vice Chairman of the
Board from April 1995 until July 1997. From February 1994 to April 1995, he was
Chairman of the Board. Dr. Frist was Chairman of the Board, President and Chief
Executive Officer of HCA - Hospital Corporation of America from 1988 to February
1994.

Jack O. Bovender, Jr. has served as President and Chief Operating Officer
since August 1997. From April 1994 to August 1997, he was retired after serving
as Chief Operating Officer of HCA - Hospital Corporation of America from 1992
until 1994. Prior to 1992, Mr. Bovender held several senior level positions with
HCA - Hospital Corporation of America.

David G. Anderson has served as Senior Vice President - Finance and
Treasurer since July 1999. From September 1993 until July 1999, he served as
Vice President - Finance and was elected to the additional position of Treasurer
in November 1996. From March 1993 until September 1993, Mr. Anderson served as
Vice President - Finance and Treasurer of Galen Health Care, Inc. From July 1988
to March 1993, Mr. Anderson served as Vice President - Finance and Treasurer of
Humana Inc.

Richard M. Bracken has served as President - Western Group since August
1997. From January 1995 to August 1997, Mr. Bracken served as President of the
Pacific Division. From July 1993 to December 1994, he served as President of
Nashville Healthcare Network, Inc. From December 1981 to June 1993, he served in
various hospital Chief Executive Officer and Administrator positions with
HCA - Hospital Corporation of America.

Victor L. Campbell has served as Senior Vice President since February 1994.
Prior to that time, Mr. Campbell served as HCA - Hospital Corporation of
America's Vice President for Investor, Corporate and Government Relations. Mr.
Campbell joined HCA - Hospital Corporation of America in 1972. Mr. Campbell is
currently a director of the Federation of American Health Systems and the
American Hospital Association.

Jay F. Grinney has served as President - Eastern Group since March 1996.
From October 1993 to March 1996, Mr. Grinney served as President of the Greater
Houston Division. From November 1992 to October 1993, Mr. Grinney served as
Chief Operating Officer of the Houston Region.

R. Milton Johnson has served as Senior Vice President and Controller since
July 1999. From November 1998 until July 1999 he served as Vice President and
Controller. Prior to that time, Mr. Johnson served as Vice President - Tax from
April 1995 to October 1998 and as Director of Tax of Healthtrust, Inc. - The
Hospital Company from September 1987 to April 1995.

Robert A. Waterman has served as Senior Vice President and General Counsel
since November 1997. Mr. Waterman served as a partner in the law firm of Latham
& Watkins from September 1993 to October 1997; he was also Chair of the firm's
healthcare group during 1997.

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<PAGE> 34

DESCRIPTION OF THE NOTES

The Notes being offered will be issued under an indenture, dated as of
December 16, 1993, as supplemented on May 25, 2000, between HCA and The First
National Bank of Chicago. Bank One Trust Company, N.A., the successor of The
First National Bank of Chicago, will act as the Trustee. A form of the indenture
is filed as an exhibit to the registration statement, of which the accompanying
prospectus is a part. The following is a summary of certain provisions of the
indenture and of the Notes (or debt securities, as they are referred to in the
accompanying prospectus). This summary does not purport to be complete and is
subject to, and qualified by, the indenture.

The Notes will mature on , 20 . The Notes will bear
interest at the rate per year shown on the cover of this prospectus supplement,
computed on the basis of a 360-day year of twelve 30-day months. The period
during which the Notes will earn interest will begin on , 2000 or
from the most recent interest payment date to which interest has been paid or
provided for. The interest will be payable twice a year on and
, beginning on , 2001. Interest payable on any
Note that is punctually paid or duly provided for on any interest payment date
shall be paid to the person in whose name such Note is registered at the close
of business on and , as the case may be, preceding
such interest payment date. We may pay interest, at our option, by checks mailed
to the registered holders of the Notes.

The Notes will be issued in book-entry form only.

Several banks and other financial institutions have provided us with a $1.2
billion credit facility under a term loan agreement dated as of March 13, 2000,
as amended. We will be in default under the Notes if a default occurs under that
agreement (as it may be amended, modified, extended, renewed or replaced from
time to time) and that default results in an acceleration of the maturity of our
indebtedness under that agreement. A declaration of the acceleration of the
maturity of the Notes for this reason is subject to annulment if the default
that caused acceleration of the indebtedness under the term loan agreement is
cured or waived and the Trustee is given notice of the cure or waiver within
sixty (60) days of the declaration. We do not need the consent of the holders of
the Notes to enter into any amendment, modification, extension, renewal or
replacement of the term loan agreement. An acceleration of the indebtedness
under the term loan agreement will cease to constitute a default following the
time, if ever, as the Notes are rated Baa3 (or the equivalent) or higher by
Moody's and BBB- (or the equivalent) or higher by Standard & Poor's. "Moody's"
means Moody's Investors Service, Inc. and its successors. "Standard & Poor's"
means Standard & Poor's Ratings Services, a division of The McGraw-Hill
Companies, Inc. and its successors.

You can find more detailed information regarding the terms of the Notes in
the prospectus under the heading "Description of the Debt Securities."

BOOK-ENTRY SYSTEM

The Depository Trust Company, New York, New York, will act as the
Depositary for the Notes. The Notes will be represented by one or more global
securities registered in the name of Cede & Co., the nominee of the Depositary.
The provisions described under "Description of the Debt Securities -- Book-Entry
System" in the accompanying prospectus will apply to the Notes. Accordingly,
beneficial interests in the Notes will be shown on, and transfers thereof will
be effected only through, records maintained by the Depositary and its
participants.

The Depositary has advised us and the Underwriters that it is:

- a limited purpose trust company organized under the New York Banking Law,

- a "banking organization" within the meaning of the New York Banking Law,

S-34
<PAGE> 35

- a member of the United States Federal Reserve System,

- a "clearing corporation" within the meaning of the New York Uniform
Commercial Code, and

- a "clearing agency" registered pursuant to the provisions of Section 17A
of the United States Securities Exchange Act of 1934, as amended.

The Depositary holds securities, such as the Notes, deposited by its direct
participants. The Depositary also facilitates the settlement among direct
participants of securities transactions in deposited securities, such as
transfers and pledges, through electronic computerized book-entry changes in the
direct participants' accounts. This eliminates the need for physical movement of
securities certificates. Direct participants include securities brokers and
dealers (including the Underwriters), banks, trust companies, clearing
corporations and certain other organizations. The Depositary is owned by a
number of its direct participants and by the New York Stock Exchange, Inc., the
American Stock Exchange, Inc. and the National Association of Securities
Dealers, Inc. Access to the Depositary's book-entry system is also available to
others such as securities brokers and dealers, banks and trust companies that
clear through or maintain a custodial relationship with a direct participant,
either directly or indirectly. These entities are known as indirect
participants. The rules applicable to the Depositary and its direct and indirect
participants are on file with the SEC.

Principal and interest payments on the Notes registered in the name of the
Depositary's nominee will be made in immediately available funds to the
Depositary's nominee as the registered owner of the global securities. Under the
terms of the Notes, we and the Trustee will treat the persons in whose names the
Notes are registered as the owners of the Notes for the purpose of receiving
payment of principal and interest on them and for all other purposes whatsoever.
Therefore, neither we, the Trustee nor any paying agent has any direct
responsibility or liability for the payment of principal or interest on the
global securities to owners of beneficial interests in the global securities.
The Depositary has advised us and the Trustee that its current practice is, upon
receipt of any payment of principal or interest, to credit direct participants'
accounts on the payment date in accordance with their respective holdings of
beneficial interests in the global securities as shown on the Depositary's
records, unless the Depositary has reason to believe that it will not receive
payment on the payment date. Payments by direct and indirect participants to
owners of beneficial interests in the global securities will be governed by
standing instructions and customary practices, as is the case with securities
held for the accounts of customers in bearer form or registered in "street
name," and will be the responsibility of such direct and indirect participants
and not of the Depositary, the Trustee, or HCA, subject to any statutory
requirements that may be in effect from time to time. Payment of principal and
interest to the Depositary is the responsibility of the Trustee or HCA.
Disbursement of such payments to the owners of beneficial interests in the
global securities shall be the responsibility of the Depositary and direct and
indirect participants.

Notes represented by a global security will be exchangeable for Notes in
definitive form of like tenor issuable in authorized denominations and
registered in such names as the Depositary shall direct, only if either (i) the
Depositary notifies us that it is unwilling or unable to continue as Depositary
for such global security or if at any time the Depositary ceases to be a
clearing agency registered under applicable law and we do not appoint a
successor depositary within 90 days or (ii) we, in our discretion at any time,
determine not to require all of the Notes of the series to be represented by a
global security and so notify the Trustee. The Notes will be in denominations of
$1,000 and in any greater amount that is an integral multiple. Subject to the
foregoing, a global security is not exchangeable, except for a global security
or global securities of the same aggregate denominations to be registered in the
name of the Depositary or its nominee.

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<PAGE> 36

OPTIONAL REDEMPTION

The Notes will be redeemable as a whole or in part, at our option, at any
time, at a redemption price equal to the greater of (i) 100% of the principal
amount of such Notes and (ii) the sum of the present values of the remaining
scheduled payments of principal and interest thereon discounted to the
redemption date on a semiannual basis (assuming a 360-day year consisting of
twelve 30-day months) at the Treasury Rate (as defined below), plus 50 basis
points, plus, in each case, accrued interest thereon to the date of redemption.

"Treasury Rate" means, with respect to any redemption date, the rate per
annum equal to the semiannual equivalent yield to maturity of the Comparable
Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as
a percentage of its principal amount) equal to the Comparable Treasury Price for
the redemption date.

"Comparable Treasury Issue" means the United States Treasury security
selected by an Independent Investment Banker and having a maturity comparable to
the remaining term of the Notes to be redeemed that would be utilized, at the
time of selection and in accordance with customary financial practice, in
pricing new issues of corporate debt securities of comparable maturity to the
remaining term of the Notes. "Independent Investment Banker" means one of the
Reference Treasury Dealers appointed by the Trustee after consultation with us.

"Comparable Treasury Price" means, with respect to any redemption date, (1)
the average of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) on the third
business day preceding the redemption date, as set forth in the daily
statistical release (or any successor release) published by the federal Reserve
Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S.
Government Securities" or (2) if the release (or any successor release) is not
published or does not contain the prices on that business day, (a) the average
of the Reference Treasury Dealer Quotations for the redemption date, after
excluding the highest and lowest Reference Treasury Dealer Quotations, or (b) if
the Trustee obtains fewer than four Reference Treasury Dealer Quotations, the
average of all the quotations.

"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any redemption date, the average, as determined by
the Trustee, of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) quoted in
writing to the Trustee by the Reference Treasury Dealer at 5:00 p.m. on the
third business day preceding the redemption date.

"Reference Treasury Dealer" means each of Chase Securities Inc., Goldman,
Sachs & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated and Salomon
Smith Barney Inc. and their respective successors; provided however, that if any
of the foregoing shall cease to be a primary U.S. Government securities dealer
in New York City (a "Primary Treasury Dealer"), we shall substitute another
Primary Treasury Dealer.

We will mail notice of any redemption between 30 and 60 days preceding the
redemption date to each holder of the Notes to be redeemed.

Unless we default in payment of the redemption price, on and after the
redemption date, interest will cease to accrue on the Notes or portions called
for redemption.

SAME-DAY SETTLEMENT AND PAYMENT

Settlement for the Notes will be made by the Underwriters in immediately
available funds. So long as the Depositary continues to make its same-day funds
settlement system available to us, all payments of principal and interest on the
Notes will be made by us in immediately available funds.

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<PAGE> 37

UNDERWRITING

We and the Underwriters have entered into an Underwriting Agreement
relating to the offering and sale of the Notes. In the Underwriting Agreement,
we have agreed to sell to each Underwriter, and each Underwriter has severally
agreed to purchase from us, the principal amount of Notes that appears opposite
its name in the table below:

<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
UNDERWRITER OF NOTES
----------- ----------------
<S> <C>
Chase Securities Inc........................................ $
Goldman, Sachs & Co.........................................
Banc of America Securities LLC..............................
Deutsche Banc Securities Inc................................
Merrill Lynch, Pierce, Fenner & Smith Incorporated .........
Salomon Smith Barney Inc....................................
Scotia Capital Markets......................................
Banc One Capital Markets, Inc...............................
BNY Capital Markets, Inc....................................
FleetBoston Robertson Stephens Inc..........................
SunTrust Equitable Securities Corporation...................
TD Securities (USA) Inc.....................................
---------------
Total............................................. $
===============
</TABLE>

The obligations of the Underwriters under the Underwriting Agreement,
including their agreement to purchase Notes from us, are several and not joint.
Those obligations are also subject to certain conditions in the Underwriting
Agreement being satisfied. The Underwriters have agreed to purchase all of the
Notes if any of them are purchased.

The Underwriters have advised us that they propose to offer the Notes to
the public at the public offering price that appears on the cover page of this
prospectus supplement. The Underwriters may offer the Notes to selected dealers
at the public offering price minus a selling concession of up to % of the
principal amount of the Notes. In addition, the Underwriters may allow, and
those selected dealers may reallow, a selling concession of up to % of the
principal amount of the Notes to certain other dealers. After the initial public
offering, the Underwriters may change the public offering price and any other
selling terms.

In the Underwriting Agreement, we have agreed that:

- we will pay our expenses related to this offering, which we estimate will
be $ ; and

- we will indemnify the Underwriters against certain liabilities, including
liabilities under the Securities Act of 1933, as amended.

The Notes are a new issue of securities, and there is currently no
established trading market for the Notes. In addition, we do not intend to apply
for the Notes to be listed on any securities exchange or to arrange for the
Notes to be quoted on any quotation system. The Underwriters have advised us
that they intend to make a market in the Notes, but they are not obligated to do
so. The Underwriters may discontinue any market making in the Notes at any time
in their sole discretion. Accordingly, we cannot assure you that a liquid
trading market will develop for the Notes, that you will be able to sell your
Notes at a particular time or that the prices that you receive when you sell
will be favorable.

In connection with the offering of the Notes, the Underwriters may engage
in overallotment, stabilizing and syndicate-covering transactions in accordance
with Regulation M under the Securities Exchange Act of 1934, as amended.
Overallotment involves sales in excess of the offering size, which creates a
short position for the Underwriters. Stabilizing transactions involve bids to
purchase the Notes in the open market for the purpose of pegging, fixing or
maintaining

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<PAGE> 38

the price of the Notes. Syndicate-covering transactions involve purchases of the
Notes in the open market after the distribution has been completed in order to
cover short positions. Stabilizing transactions and syndicate-covering
transactions may cause the price of the Notes to be higher than it would
otherwise be in the absence of those transactions. If the Underwriters engage in
stabilizing or syndicate-covering transactions, they may discontinue them at any
time.

Some of the Underwriters and their affiliates engage in various general
financing and banking transactions with us and our affiliates. In particular, an
affiliate of Chase Securities Inc. is the administrative agent and a lender, and
other affiliates of the Underwriters also are lenders, under our senior credit
facilities and will receive a portion of the amounts repaid under our revolving
credit facility with the net proceeds of the offering. Because more than 10% of
the net proceeds will be paid to affiliates of the Underwriters, the offering is
being conducted in compliance with Rule 2710(c)(8) of the Conduct Rules of the
National Association of Securities Dealers, Inc. In accordance with that rule,
Goldman, Sachs & Co. is acting as the "qualified independent underwriter" for
the offering. That rule requires that the initial public offering price can be
no higher than that recommended by the qualified independent underwriter. In
acting as the qualified independent underwriter, Goldman, Sachs & Co. has
performed due diligence investigations and reviewed and participated in the
preparation of the registration statement of which this prospectus supplement
forms a part. Goldman, Sachs & Co. has received $10,000 from us for this role.

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<PAGE> 39

PROSPECTUS

COLUMBIA/HCA HEALTHCARE
CORPORATION

$1,500,000,000

DEBT SECURITIES

---------------------

This prospectus is part of a registration statement that we filed with the
Securities and Exchange Commission utilizing a "shelf " registration process.
Under this shelf process, we may, from time to time, sell the debt securities
described in this prospectus in one or more offerings up to a total dollar
amount of $1,500,000,000.

This prospectus provides you with a general description of the securities
we may offer. Each time we sell securities, we will provide a prospectus
supplement that will contain specific information about the terms of that
offering. A prospectus supplement may also add, update or change information
contained in this prospectus.

You should rely only on the information incorporated by reference or
provided in this prospectus and the prospectus supplement. Neither we nor any
underwriter has authorized anyone else to provide you with different
information. This prospectus is not an offer to sell and it is not soliciting an
offer to buy these debt securities in any state where the offer is not
permitted. You should not assume that the information in this prospectus or the
prospectus supplement is accurate as of any date other than the date on the
front of the document.

We will provide specific terms of these debt securities in supplements to
this prospectus. You should read this prospectus and any supplement carefully
before you invest.

---------------------

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

August 5, 1999
<PAGE> 40

WHERE YOU CAN FIND MORE INFORMATION

We are subject to the informational requirements of the Securities Exchange
Act of 1934 and file reports and other information with the SEC. You may read
and copy these reports at the public reference facilities maintained by the SEC
at 450 Fifth Street, N.W., Washington, D.C. 20549. You may obtain information on
the operation of the public reference room by calling the SEC at (800) 732-0330.
You may also inspect these reports at the SEC's New York Regional Office, Seven
World Trade Center, New York, New York 10048, at its Chicago Regional Office,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661, and at the New
York Stock Exchange, 20 Broad Street, New York, New York 10005, on which our
common stock trades. In addition, the SEC maintains an Internet site that
contains reports and other information regarding us (http://www.sec.gov).

We have registered these securities with the SEC on Form S-3 under the
Securities Act of 1933. This prospectus does not contain all of the information
set forth in the Registration Statement. You may obtain copies of the
Registration Statement, including exhibits, as discussed in the first paragraph.

The SEC allows us to "incorporate by reference" into this prospectus the
information we file with it, which means that we can disclose important
information to you by referring you to those documents. The information
incorporated by reference is considered to be part of this prospectus, and later
information that we file with the SEC will automatically update and supersede
this information. We incorporate by reference the following documents:

- our Annual Report on Form 10-K for the year ended December 31, 1998;

- our Quarterly Report on Form 10-Q for the quarter ended March 31, 1999;

- our Current Reports on Form 8-K dated February 23, 1999, April 21, 1999,
May 11, 1999 and July 28, 1999; and

- any future filings made with the SEC under Section 13(a), 13(c), 14 or
15(d) of the Securities Exchange Act of 1934 until our offering is
completed.

You may obtain copies of the above information (including exhibits), upon
written or oral request, without charge. You should direct requests to John M.
Franck II, Corporate Secretary, Columbia/HCA Healthcare Corporation, One Park
Plaza, Nashville, Tennessee 37203 or by telephone at (615) 344-9551. Our web
site address is www.columbia-hca.com.

2
<PAGE> 41

THE COMPANY

Columbia/HCA Healthcare Corporation is a holding company whose affiliates
own and operate hospitals and related health care entities. The term
"affiliates" includes our direct and indirect subsidiaries and partnerships and
joint ventures in which our subsidiaries are partners. At June 30, 1999, these
affiliates owned and operated 204 hospitals and 81 freestanding surgery centers
and provided extensive outpatient and ancillary services. Our affiliates are
also partners in several 50/50 joint ventures that own and operate 16 hospitals
and four freestanding surgery centers, which are accounted for using the equity
method. Our facilities are located in 24 states, England and Switzerland.

Our primary objective is to provide a comprehensive array of quality health
care services in the most cost-effective manner possible. Our hospitals provide
a full range of medical services including such medical specialties as internal
medicine, general surgery, cardiology, oncology, neurosurgery, orthopedics and
obstetrics, as well as diagnostic and emergency services. We also provide
outpatient and ancillary health care services at both our general acute care
hospitals and at our freestanding facilities, including outpatient surgery and
diagnostic centers, rehabilitation facilities, home health care agencies and
other facilities. In addition, we operate psychiatric hospitals which generally
provide a full range of mental health care services in inpatient, partial
hospitalization and outpatient settings.

We were formed in January 1990 as a Nevada corporation and reincorporated
in Delaware in September 1993. Our principal executive offices are located at
One Park Plaza, Nashville, Tennessee 37203, and our telephone number at that
address is (615) 344-9551.

RATIO OF EARNINGS TO FIXED CHARGES

The following table sets forth the ratio of our consolidated earnings to
fixed charges for the periods presented.

<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED
JUNE 30, FOR THE YEAR ENDED DECEMBER 31,
------------- -------------------------------------
1999 1998 1998 1997 1996 1995 1994
----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
3.70x 2.86x 2.58x 1.81x 4.99x 3.94x 4.09x
</TABLE>

USE OF PROCEEDS

Unless otherwise specified in a prospectus supplement accompanying this
prospectus, we intend to use the net proceeds from the sale of the debt
securities for general corporate purposes. We intend to offer the debt
securities periodically when prevailing interest rates and other market
conditions are advantageous.

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<PAGE> 42

DESCRIPTION OF THE DEBT SECURITIES

GENERAL

The description below of the general terms of the debt securities will be
supplemented by the more specific terms in the prospectus supplement.

We will issue the debt securities in one or more series under an indenture
dated as of December 16, 1993 between us and The First National Bank of Chicago,
which we will call the "Trustee." The indenture describes the terms of the debt
securities and does not limit the amount of debt securities or other unsecured,
senior debt that we may issue.

The debt securities will be unsecured and will rank equally with all of our
other unsecured and unsubordinated indebtedness. The indenture limits our
ability and that of our subsidiaries under certain circumstances to secure debt
by mortgages on our principal properties, by entering into sale and lease-back
transactions or by issuing subsidiary debt or preferred stock. In a liquidation
or reorganization of any of our subsidiaries, the right of holders of the debt
securities to participate in any distribution is subject to the prior claims of
creditors of that subsidiary, except to the extent that we are a creditor.

In addition to the following description of the debt securities, you should
refer to the detailed provisions of the indenture, a copy of which is filed as
an exhibit to the Registration Statement. The article and section numbers refer
to those in the indenture.

The prospectus supplement will specify the following terms of the issue of
debt securities:

- the title of the debt securities;

- any limit on the aggregate principal amount of the debt securities;

- the date or dates on which the debt securities may be issued and are or
will be payable;

- the rate or rates at which the debt securities will bear interest, if
any, or the method by which such rate or rates shall be determined, and
the date or dates from which such interest, if any, will accrue;

- the date or dates on which such interest, if any, will be payable, the
method of determining holders to whom any of the interest shall be
payable and the manner in which any interest payable on a global debt
security will be paid if other than book-entry;

- each office or agency where the principal, premium and interest on the
debt securities will be payable and where the debt securities may be
presented for registration of transfer or exchange;

- the period or periods within which, the price or prices at which, and the
terms and conditions upon which, the debt securities may be redeemed at
our option;

- our obligation, if any, to redeem, repay or purchase the debt securities
pursuant to any sinking fund or analogous provisions or at the option of
a holder, and the period or periods within which, the price or prices at
which, and the terms and conditions upon which, the debt securities will
be redeemed, repaid or purchased pursuant to any such obligation;

- whether the debt securities are to be issued with original issue discount
within the meaning of Section 1273(a) of the Internal Revenue Code of
1986, as amended, and the regulations thereunder;

- whether the debt securities are to be issued in whole or in part in the
form of one or more global notes and, if so, the identity of the
depositary, if any, for such global note or notes;

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<PAGE> 43

- if other than dollars, the foreign currency or currencies or foreign
currency units in which the principal, premium and interest on the debt
securities shall or may be paid and, if applicable, whether at our
election and/or that of the holder, and the conditions and manner of
determining the exchange rate or rates;

- any index used to determine the amount of payment of principal, premium
and interest on the debt securities;

- any addition to, or modification or deletion of, any events of default or
covenants provided for with respect to the debt securities;

- any other detailed terms and provisions of the debt securities that are
not inconsistent with the indenture (Section 301); and

- any special provisions for the payment of additional amounts with respect
to the debt securities.

The debt securities may be issued at a substantial discount below their
stated principal amount. The prospectus supplement will describe any federal
income tax consequences and other special considerations applicable to discount
securities. Discount securities may provide for the declaration or acceleration
of the maturity of an amount less than the principal amount if an event of
default occurs and continues.

DENOMINATIONS, REGISTRATION AND TRANSFER

Unless we state otherwise in a prospectus supplement, we will issue the
debt securities in registered form and in denominations of $1,000 or any
multiple thereof (Section 302). You will be able to exchange the debt securities
of any series (other than a global note) for an equal aggregate principal amount
of registered debt securities of the same series having the same maturity date,
interest rate and other terms, as long as the debt securities are issued in
authorized denominations. You may exchange the debt securities at the office of
the Security Registrar or co-Security Registrar that we designate in a
prospectus supplement. We will not impose any service charge for the exchange of
any debt security; however, we may ask you to pay any taxes and other
governmental charges as described in the indenture. The Security Registrar or
co-Security Registrar will effect the exchange when satisfied with your
documents of title and identity. We have appointed the Trustee as Security
Registrar (Section 305).

PAYMENT AND PAYING AGENTS

Unless otherwise indicated in a prospectus supplement, we will make
principal, premium, and interest payments at the office of our Paying Agent. We
may determine to pay any interest, including any installment of interest, (i) by
check mailed to you at the address in the register or (ii) by wire transfer to
the holder's account (Section 307).

Unless otherwise indicated in a prospectus supplement, the Trustee will act
as our sole Paying Agent with respect to the debt securities, through its
principal office in the Borough of Manhattan, The City of New York. We will name
any additional Paying Agents in a prospectus supplement. We may at any time
rescind the designation of any Paying Agent or approve a change in the office
through which any Paying Agent acts, but we must maintain a Paying Agent in each
place of payment for a series of the debt securities.

If we have paid any moneys to the Trustee or a Paying Agent for the
principal, premium, and interest on any debt securities, and those moneys remain
unclaimed two years after due and payable, the moneys will be repaid to us and
the holder of the debt securities may thereafter look only to us for any payment
(Section 1103).

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<PAGE> 44

BOOK-ENTRY SYSTEM

We may issue the debt securities in whole or in part in book-entry only
form, which means that they will be represented by one or more permanent global
notes that will be deposited with a depositary located in the United States. We
will identify the depositary and describe the specific terms of the depositary
arrangement in the prospectus supplement relating to each series. We will refer
to this form here and in the prospectus supplement as "book-entry only." The
following discussion pertains to securities that are issued in book-entry only
form.

One or more global notes will be issued to and registered in the name of
the depositary or its nominee. The depositary will keep a computerized record of
its participants (for example, your broker) whose clients have purchased the
securities. The participant will then keep a record of its clients who purchased
the securities. Beneficial interests in global notes will be shown on, and
transfers of global notes will be made only through, records maintained by the
depositary and its participants.

So long as a depositary or its nominee is the registered owner of a global
note, it will be considered the sole owner of the debt securities under the
indenture. Except as provided below, you will not be entitled to have debt
securities registered in your name, will not receive or be entitled to receive
physical delivery of the debt securities in definitive form and will not be
considered the owner under the indenture. Certain jurisdictions that require
purchasers of securities to take physical delivery of securities in definitive
form may impair the ability to transfer beneficial interests in a global note.
Neither we, the Trustee, any Paying Agent nor the Security Registrar will have
any responsibility or liability for payments on account of, or for maintaining,
supervising or reviewing any records relating to, the beneficial ownership
interests.

We will make payments of principal, premium and interest on debt securities
to the depositary or its nominee, as the registered owner of the global note. We
expect that the depositary for debt securities of a series, upon receipt of any
payment of principal, premium or interest in respect of a global note, will
credit immediately participants' accounts with payments according to their
respective holdings of beneficial interests in the global note as shown on the
records of the depositary. We also expect that standing instructions and
customary practices will govern payments by participants to owners of beneficial
interests in the global note held through the participants, as is now the case
with securities held for the accounts of customers registered in "street name."
These payments will be the responsibility of the participants.

A global note may not be transferred, except that the depositary, its
nominees and their successors may transfer an entire global note to one another.
Debt securities represented by a global security would be exchangeable for
certificates in definitive registered form with the same terms in authorized
denominations only if:

- a depositary of a series is at any time unwilling or unable to continue
as depositary and we do not appoint a successor depositary within 90
days; or

- we determine at any time not to have any debt securities represented by
one or more global notes.

In either instance, an owner of beneficial interests in a global note will be
entitled to have debt securities equal in principal amount to the beneficial
interest registered in its name and to physical delivery in definitive form
(Section 304).

LIMITATIONS ON US AND OUR SUBSIDIARIES

Limitations on Mortgages

The indenture provides that neither we nor any of our subsidiaries will
issue, assume or guarantee any indebtedness or obligation secured by mortgages,
liens, pledges or other encumbrances upon any principal property (which means
each of our acute care hospitals that

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<PAGE> 45

provides general medical and surgical services), unless the debt securities
shall be secured equally and ratably with (or prior to) such debt (Section
1105). This restriction will not apply to:

- mortgages securing the purchase price or cost of construction of property
or additions, substantial repairs, alterations or improvements, if the
debt and the mortgages are incurred within 18 months of the acquisition
or completion of construction and full operation or additions, repairs,
alterations or improvements;

- mortgages existing on property at the time of its acquisition by us or
our subsidiary or on the property of a corporation at the time of the
acquisition of such corporation by us or our subsidiary;

- mortgages to secure debt on which the interest payments are exempt from
federal income tax under Section 103 of the Internal Revenue Code;

- mortgages in favor of us or a consolidated subsidiary;

- mortgages existing on the date of the indenture;

- certain mortgages to governmental entities;

- mortgages incurred in connection with the borrowing of funds used to
repay debt within 120 days in the same principal amount secured by other
mortgages on principal property with at least the same appraised fair
market value;

- mortgages incurred within 90 days (or any longer period, not in excess of
one year, as permitted by law) after acquisition of the related property
or equipment arising solely in connection with the transfer of tax
benefits in accordance with Section 168(f)(8) of the Internal Revenue
Code; and

- any extension, renewal or replacement of any mortgage referred to above,
provided the amount secured is not increased and it relates to the same
property.

Limitations on Sale and Lease-Back

The indenture provides that neither we nor any subsidiary will enter into
any sale and lease-back transaction with respect to any principal property with
another person unless either:

- we or our subsidiary could incur indebtedness secured by a mortgage on
the property to be leased; or

- within 120 days, we apply the greater of the net proceeds of the sale of
the leased property or the fair value of the leased property, net of all
debt securities delivered under the indenture, to the voluntary
retirement of our funded debt or the acquisition or construction of a
principal property (Section 1106).

Limitations on Subsidiary Debt and Preferred Stock

The indenture provides that none of our restricted subsidiaries may,
directly or indirectly, create, incur, issue, assume or otherwise become liable
with respect to, extend the maturity of, or become responsible for the payment
of, any debt or preferred stock except:

- debt outstanding on the date of the indenture;

- debt representing the assumption by one restricted subsidiary of debt of
another;

- debt or preferred stock of any corporation or partnership existing when
it becomes a subsidiary;

- debt of a restricted subsidiary arising from agreements providing for
indemnification, adjustment of purchase price or similar obligations or
from guarantees, letters of credit,

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<PAGE> 46

surety bonds or performance bonds securing any of our obligations or
those of our subsidiaries incurred or assumed in connection with the
disposition of any business, property or subsidiary, except for the
purpose of financing an acquisition, provided that the maximum aggregate
liability does not exceed the gross proceeds from the disposition;

- debt of a restricted subsidiary in respect of performance, surety and
other similar bonds, bankers acceptances and letters of credit provided
in the ordinary course of business;

- debt secured by a mortgage incurred to finance the purchase price or cost
of construction of property or additions, substantial repairs,
alterations or improvements, if the mortgage and debt are incurred within
18 months of the later of the acquisition or completion of construction
and full operation or additions, repairs, alterations or improvements and
the mortgage does not relate to any other property;

- permitted subsidiary refinancing debt (as defined in the indenture);

- debt of a restricted subsidiary to us or another subsidiary as long as we
hold it; or

- any obligation pursuant to a permitted sale and lease-back transaction
(Section 1107).

Exempted Transactions

Even if otherwise prohibited by these limitations, if the aggregate
outstanding principal amount of all our other debt and that of our subsidiaries
subject to these limitations does not exceed 15% of our consolidated net
tangible assets, then:

- we or any of our subsidiaries may issue, assume or guarantee debt secured
by mortgages;

- we or any of our subsidiaries may enter into any sale and lease-back
transaction; and

- any restricted subsidiary may issue, assume or become liable for any debt
or preferred stock (Section 1108).

EVENTS OF DEFAULT

Under the indenture, an event of default applicable to the debt securities
of any series means:

- failure to pay the principal or any premium on any debt security of that
series when due;

- failure to pay any interest on any debt security of that series when due,
continued for 30 days;

- failure to deposit any sinking fund payment in respect of any debt
security of that series when due;

- failure to perform, or the breach of, any of our other applicable
covenants or warranties in the indenture, continued for 60 days after
written notice;

- events in bankruptcy, insolvency or reorganization; and

- any other event of default provided with respect to debt securities of
that series (Section 501).

If any event of default with respect to debt securities of any series
occurs and is continuing, either the Trustee or the holders of at least 25% in
aggregate principal amount of the outstanding debt securities of that series may
declare the principal amount, or in the case of discount securities, a portion
of the principal amount, of all the debt securities of that series to be due and
payable immediately. The holders may, under certain circumstances, rescind and
annul this acceleration prior to obtaining a judgment or decree (Section 502).

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<PAGE> 47

Other than the duties of the Trustee during a default to act with the
required standard of care, the Trustee is not obligated to exercise any of its
rights or powers under the indenture at the request or direction of any of the
holders unless the holders shall have offered to the Trustee reasonable
indemnity (Section 603). Subject to these indemnification provisions, the
holders of a majority in aggregate principal amount of the outstanding debt
securities of any series may direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or exercising any trust or
power conferred on the Trustee, with respect to the debt securities of that
series (Section 512).

We will furnish the Trustee annually with a statement as to our performance
of certain obligations under the indenture and as to any default in our
performance (Section 1109).

MODIFICATION AND WAIVER

We and the Trustee may modify and amend the indenture with the consent of
the holders of a majority in aggregate principal amount of the outstanding debt
securities of each series affected. We must have the consent of the holder of
each outstanding debt security affected to:

- change the stated maturity of the principal of, or any installment of
interest on, any debt security;

- reduce the principal, premium or interest on any debt security;

- reduce the amount of principal of discount securities payable upon
acceleration of the maturity;

- change the currency of payment of principal, premium or interest on any
debt security;

- impair the right to institute suit for the enforcement of any payment on
or with respect to any debt security; or

- reduce the percentage of holders whose consent is required for
modification or amendment of the indenture or for waiver of compliance
with certain provisions of the indenture or certain defaults (Section
1002).

The holders of a majority in aggregate principal amount of the outstanding
debt securities of each series may, on behalf of all holders of that series,
waive any past default under the indenture with respect to debt securities of
that series. However, such holders may not waive a past default in the payment
of principal, premium or interest, or any sinking fund installment with respect
to the debt securities, or waive a covenant or provision that cannot be modified
or amended, without the consent of the holders of each outstanding debt security
affected (Section 513).

CONSOLIDATION, MERGER, SALE OR LEASE OF ASSETS

We may consolidate with or merge into, or transfer or lease our assets to,
any corporation without the consent of the holders of any of the outstanding
debt securities under the indenture if:

- the successor corporation assumes our obligations on the debt securities
and under the indenture;

- after giving effect to the transaction, no event of default, and no event
which, after notice or lapse of time or both, would become an event of
default, shall have occurred and be continuing; and

- other conditions are met (Section 901).

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<PAGE> 48

DEFEASANCE

If so specified in a prospectus supplement, we may be discharged from all
obligations under the debt securities of any series, and we will not be subject
to the limitations in the indenture discussed in the above sections, if we
deposit with the Trustee trust money or U.S. government obligations that are
sufficient to pay all principal, premium and interest on the debt securities of
the series. We would deliver to the Trustee an opinion of counsel to the effect
that the deposit and related defeasance would not (1) cause the holders of the
debt securities of the series to recognize income, gain or loss for United
States income tax purposes or (2) result in the delisting of the debt securities
from any national securities exchange (if so listed) (Article Fourteen).

NOTICES

Notices to holders will be mailed to the addresses of the holders listed in
the security register (Sections 101, 105).

GOVERNING LAW

We will construe the indenture and the debt securities in accordance with
the laws of the State of New York (Section 111).

CONCERNING THE TRUSTEE

The Trustee has normal banking relationships with us.

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<PAGE> 49

PLAN OF DISTRIBUTION
GENERAL

We may sell the debt securities directly to purchasers or through
underwriters, dealers or agents. We may distribute the debt securities in one or
more transactions, either at a fixed price or varying prices, at prevailing
market prices, at prices related to prevailing market prices or at negotiated
prices. The prospectus supplement will identify the terms of the offering, the
names of the underwriters or agents, the purchase price, any underwriting
discounts, the method of distribution and the time and place of delivery of the
debt securities.

In connection with the sale of debt securities, underwriters, dealers or
agents may receive discounts, concessions or commissions from us or from
purchasers for whom they act as agents. Underwriters, dealers and agents that
participate in the distribution of debt securities may qualify as underwriters
under the Securities Act of 1933. The prospectus supplement will identify any
such underwriter, dealer or agent and describe any compensation paid by us.

We may agree to indemnify underwriters, dealers and agents that participate
in the distribution of debt securities against liabilities, including
liabilities under the Securities Act of 1933.

Since each issuance of a series of these debt securities will have no
established trading market, broker-dealers may make a market in the debt
securities. We cannot assure the liquidity of the trading market for the debt
securities.

DELAYED DELIVERY ARRANGEMENT

If so indicated in a prospectus supplement, we will authorize dealers or
agents to solicit offers by certain institutions to purchase debt securities
from us pursuant to contracts providing for payment and delivery on a future
date, if so permitted by the purchaser's jurisdiction. We must approve all
institutions, which may include commercial and savings banks, insurance
companies, pension funds, investment companies, educational and charitable
institutions and others. The dealers and other agents will not be responsible
for the validity or performance of these contracts.

LEGAL OPINIONS

John M. Franck II, our Senior Counsel and Corporate Secretary, is passing
upon the validity of the debt securities for us. As of June 30, 1999, Mr. Franck
owned approximately 6,556 shares and had options to purchase 125,620 shares of
our common stock. Jenkens & Gilchrist, a Professional Corporation, is passing
upon legal matters in connection with the offering of the debt securities for
any underwriters, dealers or agents. Jenkens & Gilchrist has rendered, and
continues to render, legal services to us.

EXPERTS

Ernst & Young LLP, independent auditors, have audited our consolidated
financial statements included in our Annual Report on Form 10-K for the year
ended December 31, 1998, as set forth in their report, which is incorporated by
reference in this prospectus and elsewhere in the registration statement. Our
financial statements are incorporated by reference in reliance on Ernst & Young
LLP's report, given on their authority as experts in accounting and auditing.

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<PAGE> 50

HCA - THE HEALTHCARE COMPANY