Hospital Corporation of America and Subsidiaries - Page 5

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               At the outset of its organization, HCA generally placed all            
          newly constructed or acquired hospitals in separate corporations.           
          During later years, in some cases, HCA placed all newly acquired            
          or newly constructed hospitals located in a particular State in a           
          separate corporation rather than having a separate corporation              
          for each hospital in that State.  In a few instances, HCA                   
          acquired a group of hospitals that, for various business reasons,           
          were placed in a single corporation or were allowed to remain in            
          the acquired corporation.                                                   
          The Reorganization                                                          
               During early 1987, HCA's management (HCA Management) decided           
          that petitioners could function more efficiently if HCA operated            
          a smaller, more homogeneous group of hospitals than the                     
          approximately 250 facilities petitioners then owned and operated.           
          HCA Management concluded that petitioners would retain the large,           
          full-service hospitals, and that they would sell facilities that            
          did not meet those criteria.  HCA Management ultimately selected            
          104 hospitals (Hospitals) and approximately 90 professional                 
          office buildings and related medical facilities to divest from              
          the HCA organization.  Hereinafter, we shall refer to the                   
          Hospitals and related medical facilities collectively as the                
          Facilities.                                                                 
               Located primarily in suburban and rural areas in 22 States             
          of the United States, the Facilities ranged in size from 1,500              






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