community health systems annual reports2007

C O M M U N I T Y H E A L T H S Y S T E M S , I N C .

4000 Meridian BoulevardFranklin, Tennessee 37067

(615) 465-7000www.chs.net

CorporateInformation/CommunityHealthSystems,Inc.

CorporateOfficeCommunityHealthSystems,Inc.4000MeridianBoulevardFranklin,Tennessee37067(615)465-7000www.chs.net

Form10-K/InvestorContactAcopyoftheCompany’sAnnualReportonForm10-K,filedwiththeSecuritiesandExchangeCommission,maybeobtainedfromtheCompanyatnocharge.RequestsfortheAnnualReportonForm10-KandotherinvestorinformationshouldbedirectedtoInvestorRelationsattheCompany’scorporateofficeoratwww.chs.net.

RegistrarandTransferAgentBNYMellonShareownerServices480WashingtonBoulevard29thFloorJerseyCity,NewJersey07310(201)680-5287

IndependentAuditorsDeloitte&ToucheLLPNashville,Tennessee

AnnualShareholders’MeetingTheannualmeetingofshareholderswillbeheldonTuesday,May20,2008,at8:00a.m.localtimeatTheSt.RegisHotel,LaMaisonetteI,2East55thStreet,NewYork,NewYork.

CommonStockInformationTheCompany’scommonstocktradesontheNewYorkStockExchangeunderthesymbolCYH.AsofMarch30,2008,CommunityHealthSystemshadapproximately39,900beneficialholdersofitscommonstock.Ofthattotal,49werestockholdersofrecord.Todate,theCompanyhasnotpaidcashdividendsonitscommonstock.

ThefollowingtablesetsforththehighandlowsalespriceinformationasreportedbytheNewYorkStockExchangeduringtheperiodindicated.

StockPrice

2007HighLowFirstQuarter$39.05$33.28SecondQuarter$41.72$34.86ThirdQuarter$44.50$30.39FourthQuarter$37.50$27.70


Community Health Systems, Inc.Annual Report 2007

Building on Success

Corporate ProfileLocated in the Nashville, Tennessee, suburb of Franklin,

Community Health Systems, Inc. is a leading operator ofgeneral acute care hospitals in non-urban and mid-sizemarkets throughout the country. Through its subsidiaries, theCompany currently owns, leases or operates approximately116 hospitals in 28 states and, with an aggregate of over17,000 licensed beds. Its hospitals offer a broad range ofinpatient medical and surgical services, outpatient treatmentand skilled nursing care. In addition, through its QHRsubsidiary, the Company provides management andconsulting services to over 160 non-affiliated general acutecare hospitals located throughout the United States.

Shares in Community Health Systems, Inc. are traded onthe New York Stock Exchange under the symbol “CYH.”



(615) 465-7000www.chs.net









StockPrice




Building on Success




05 06 07

$7.6

$6.6

$5.6

$4.6

$3.6

$2.6

OperatingRevenues(in billions)

05 06 07

120

105

90

75

60

45

Hospitals

05 06 07

$2.00

$1.65

$1.30

$0.95

$0.60

$0.25

Earnings PerShare (diluted)

Ho s p i t a l L o c a t i o n s / Commun i t y He a l t h S y s t em s , I n c .

AlaskaPalmer, Mat-Su Regional Medical Center

AlabamaBirmingham, Trinity Medical CenterCentre, Cherokee Medical CenterDothan, Flowers HospitalEnterprise, Medical Center EnterpriseFoley, South Baldwin Regional Medical CenterFort Payne, DeKalb Regional Medical CenterGadsden, Gadsden Regional Medical CenterGreenville, L.V. Stabler Memorial HospitalHuntsville, Crestwood Medical Center

ArkansasBentonville, Northwest Medical Center BentonvilleForrest City, Forrest City Medical CenterHelena, Helena Regional Medical CenterJohnson, Willow Creek Women's HospitalNewport, Harris HospitalSpringdale, Northwest Medical Center Springdale

ArizonaBullhead City, Western Arizona Regional MedicalCenter

Payson, Payson Regional Medical CenterTucson, Northwest Medical Center and Oro Valley

CaliforniaBarstow, Barstow Community HospitalFallbrook, Fallbrook HospitalWatsonville, Watsonville Community Hospital

FloridaCrestview, North Okaloosa Medical CenterLake Wales, Lake Wales Medical Center

GeorgiaAugusta, Trinity Hospital of AugustaBlue Ridge, Fannin Regional Hospital

IllinoisAnna, Union County HospitalGalesburg, Galesburg Cottage HospitalGranite City, Gateway Regional Medical CenterMarion, Heartland Regional Medical CenterMt. Vernon, Crossroads Community HospitalRed Bud, Red Bud Regional HospitalWaukegan, Vista Medical Center

IndianaBluffton, Bluffton Regional Medical CenterFort Wayne, Dupont HospitalFort Wayne, Lutheran Hospital of IndianaFort Wayne, St. Joseph HospitalPeru, Dukes Memorial HospitalValparaiso, Porter HealthWarsaw, Kosciusko Community Hospital

KentuckyFulton, Parkway Regional HospitalJackson, Kentucky River Medical CenterLouisa, Three Rivers Medical Center

LouisianaLake Charles, Women and Children's HospitalLeesville, Byrd Regional HospitalRuston, Northern Louisiana Medical Center

MissouriKirksville, Northeast Regional Medical CenterMoberly, Moberly Regional Medical Center

MississippiHattiesburg, Wesley Medical CenterVicksburg, River Region Health System

North CarolinaWilliamston, Martin General Hospital

NevadaMesquite, Mesa View Regional Hospital

New JerseySalem, The Memorial Hospital of Salem County

New MexicoCarlsbad, Carlsbad Medical CenterDeming, Mimbres Memorial HospitalHobbs, Lea Regional Medical CenterLas Cruces, MountainView Regional MedicalCenter

Las Vegas, Alta Vista Regional HospitalRoswell, Eastern New Mexico Medical Center

OhioMassillon, Affinity Medical Center, Doctors andMassillon Campuses

OklahomaClaremore, Claremore Regional HospitalOklahoma City, Deaconess HospitalPonca City, Ponca City Medical CenterTulsa, SouthCrest HospitalWoodward, Woodward Regional Hospital

OregonSpringfield, McKenzie-Willamette Medical Center

PennsylvaniaBerwick, Berwick Hospital CenterCoatesville, Brandywine HospitalEaston, Easton HospitalLock Haven, Lock Haven HospitalPhiladelphia, Chestnut Hill HospitalPhoenixville, Phoenixville HospitalPottstown, Pottstown Memorial Medical CenterSunbury, Sunbury Community HospitalWest Grove, Jennersville Regional Hospital

South CarolinaBennettsville, Marlboro Park HospitalCheraw, Chesterfield General HospitalFlorence, Carolinas Hospital SystemLancaster, Springs Memorial HospitalSpartanburg, Mary Black Healthcare

TennesseeBrownsville, Haywood Park Community HospitalClarksville, Gateway Medical CenterCleveland, SkyRidge Medical CenterDyersburg, Dyersburg Regional Medical CenterJackson, Regional Hospital of JacksonLexington, Henderson County CommunityHospital

Martin, Volunteer Community HospitalMcKenzie, McKenzie Regional HospitalMorristown, Lakeway Regional HospitalSelmer, McNairy Regional HospitalShelbyville, Bedford County Medical Center

TexasAbilene, Abilene Regional Medical CenterAlpine, Big Bend Regional Medical CenterBig Spring, Scenic Mountain Medical CenterBrownwood, Brownwood Regional Medical CenterCedar Park, Cedar Park Regional Medical CenterCleveland, Cleveland Regional Medical CenterCollege Station, College Station Medical CenterCorsicana, Navarro Regional HospitalDenton, Presbyterian Hospital of DentonGranbury, Lake Granbury Medical CenterHillsboro, Hill Regional HospitalJourdanton, South Texas Regional Medical CenterLaredo, Laredo Medical CenterLongview, Longview Regional Medical CenterLufkin, Woodland Heights Medical CenterSan Angelo, San Angelo Community MedicalCenter

Victoria, DeTar Hospital North and NavarroWeatherford, Weatherford Regional Medical Center

UtahTooele, Mountain West Medical Center

VirginiaEmporia, Southern Virginia Regional MedicalCenter

Franklin, Southampton Memorial HospitalPetersburg, Southside Regional Medical Center

West VirginiaOak Hill, Plateau Medical CenterRonceverte, Greenbrier Valley Medical Center

WyomingEvanston, Evanston Regional Hospital

Hospitals are owned or leased and operated bysubsidiaries of Community Health Systems, Inc.

Financial Highlights (a) (b)

Year Ended December 31,(In thousands, except per share amounts) 2007 (c) 2006

Operating ResultsNet operating revenues $ 7,127,494 $ 4,180,136Income from continuing operations $ 59,897 $ 177,695Income per share from continuing operations

Basic 0.64 $ 1.87Diluted $ 0.63 $ 1.85

Weighted average number of shares outstanding:Basic 93,517 94,984Diluted 94,642 96,233

(a) Continuing operating results exclude discontinued operations for all periods presented.

(b) The Company updated its analysis of the fair value of the assets and liabilities acquired in the Triad acquisition and revised our purchase price allocation of the Triad acquisition based upon the mostcurrent estimates. This purchase price allocation remains preliminary and material adjustments to the fair value of assets, liabilities and goodwill may result upon completion of the Company’s analyses.

(c) The effective date of the Triad acquisition was July 25, 2007.

As of December 31,2007 2006

Balance Sheet DataWorking capital $ 1,104,963 $ 446,101Total assets 13,493,643 4,506,579Long-term debt 9,077,367 1,905,781Stockholders’ equity 1,710,804 1,723,673

Year Ended December 31,Consolidated Same Store

2007 2006 % Change 2007 2006 % Change

Selected Operating DataNumber of hospitals (at end of period) 115 70 112 112Licensed beds (at end of period) 16,971 8,406 16,434 16,544Beds in service (at end of period) 14,604 6,753 14,159 14,066Admissions 463,212 307,964 50.4% 434,317 439,056 -1.1%Adjusted admissions 848,707 570,969 48.6% 792,190 789,184 0.4%Patient days 1,941,887 1,264,256 53.6% 1,824,399 1,872,581 -2.6%Average length of stay (days) 4.2 4.1 4.2 4.3Occupancy rate (average beds in service) 52.4% 54.3% 52.6% 54.4%Net operating revenues $ 7,127,494 $ 4,180,136 70.5% $ 6,571,528 $ 6,308,656 4.2%Net inpatient revenue as a % of

total net operating revenues 49.3% 50.0% 49.5% 50.9%Net outpatient revenue as a % of

total net operating revenues 48.6% 48.8% 48.4% 46.7%Income from operations $ 485,685 $ 385,057 26.1% $ 460,110 $ 550,519 -16.4%Income from operations as a

% of net operating revenues 6.8% 9.2% 7.0% 8.7%Depreciation and amortization $ 316,215 $ 179,282 $ 293,977 $ 279,485Equity in earnings of unconsolidated affiliates $ 25,132 $ – $ 23,627 $ 20,105

Liquidity Data:Adjusted EBITDA $ 827,032 $ 564,339 46.5%Adjusted EBITDA as a % of net

operating revenues 11.6% 13.5%Net cash provided by operating activities $ 687,738 $ 350,255Net cash provided by operating activities as

a % of net operating revenues 9.6% 8.4%

• Continuing operating results and statistical data exclude discontinued operations for all periods presented.

• Same-store operating results and statistical data include comparable information for hospitals acquired in the Triad acquisition for the months of August through December 2007 and 2006.

Since becoming a public company in2000, Community Health Systems, Inc.has continued to build momentum withan impressive record of profitable growth.In 2007, this momentum increased atan unprecedented pace, driven by ouracquisition of Triad Hospitals, Inc., aswe substantially increased our overall scaleand market reach. Today, we are proud ofour distinction as the largest operator ofgeneral acute care hospitals in non-urbanand mid-size markets in the UnitedStates. We believe we have created anopportunity to build on our past successand leverage these acquired assets todeliver greater value to our shareholders.

We believe the true measure of oursuccess is reflected in the manner inwhich we have built our business, and thefavorable reputation we have developedin the marketplace. Community HealthSystems, Inc. is a company built on trust– a trust we have created as the result ofour relationships with the communitieswe serve and our unwavering

commitment to improve the quality ofhealthcare for the people who live andwork in these communities. At the sametime, we have continued to focus on ourultimate objective of bringing healthcareclose to home – where it should be.

This has also made us a highly successfulcompany by financial measures. In 2007,our total net operating revenues reachedover $7.1 billion, and we reported netincome of $30.3 million, or $0.32 pershare (diluted). Our consolidatedfinancial results for the year reflect a50.4 percent increase in total admissionscompared with the prior year, primarilydue to the hospitals we acquired during2007, including the Triad acquisition.On a same-store basis, net operatingrevenues increased 4.2 percent, comparedwith the prior year. On a same-storebasis, admissions decreased 1.1 percent,compared with 2006, reflecting a morechallenging industry environment.

The Triad acquisition marks a significantmilestone for our organization andestablishes us as the largest publicly tradedhospital management company in theUnited States. This acquisitioncomplements our focus on non-urbanhospital facilities by adding mid-sizemarkets to our national footprint.Our hospitals have strong positions ineach of their respective markets and aregeographically diversified, whichminimizes our operating risk as noone state represents a disproportionatepercentage of our revenues or earnings.We strongly believe that the non-urbanand the mid-size markets represent the

most attractive growth opportunity forthe future. We are the sole provider ofgeneral acute care hospital services inapproximately 65 percent of our markets,giving us a distinct advantage over thoselarge urban providers who must addressintense competition.

Our operating strategy has always beenbuilt around developing standardizedand centralized business practices acrossmost aspects of our business. As a result,we have a business model in place thathas proven, over time, to be an importantdriver in improving revenue andoperating performance at both ourexisting and acquired facilities. As wecontinue to integrate the Triad hospitals,we will focus our expertise on thefurther expansion of this model to driveimproved returns on these additionalassets. Since the completion of theacquisition, we have been able to identifyoperating synergies including improvedsupply costs, more centralized andtargeted physician recruiting and amore efficient allocation of capital.As we continue to identify areas ofimprovement, we are also mindful ofthe need to effect these changes whilemaintaining strong physician andcommunity relationships.

Physician recruitment has always been animportant area of focus for our companyensuring the long-term success of ourhospitals. Perhaps more than any othersingle factor, the strength of the medicalstaff and its member’s ability to make thecritical daily decisions for patient care arevital to the performance of the local

WAYN E T. SM I THChairman of the Board,President and Chief Executive Officer

Letter to Shareholders

community hospital. The additionof qualified physicians creates theopportunity for increased admissionsin our hospitals and, in particular, theavailability of physicians in variousspecialties allows more patients to obtainhealthcare services at the local levelinstead of traveling to an urban facility.Additionally, access to more specialtyservices further drives the necessaryrevenues that sustain the hospitals’operations. With respect to physicianrecruitment, we employ the samecentralized process that has provensuccessful in other aspects of ouroperations. In 2007, we had anotheroutstanding recruiting effort as weadded a total of 769 new practitioners,representing a variety of clinicalspecialties, to our hospitals. Additionally,we are pleased with the enthusiasticreception we have received by the medicalstaffs at the former Triad facilities and welook forward to working together in ourcommon mission to enhance the level ofhealthcare in their respective markets.Approximately 20 percent of thephysicians recruited in 2007 were placedin former Triad facilities. We believe ourphysician recruitment initiatives andappropriate strategic investments in thetype of physical plant and equipment andclinical services that attract and retainphysicians, will continue to serve us wellas we integrate the Triad facilities. Asalways, our goal is to seek out the bestpractitioners in their respective fieldswho not only raise the level of care inour hospitals, but also become an integralpart of the community.

Since inception, Community HealthSystems, Inc. has been highly successfulin executing an aggressive acquisitionstrategy with a proven track record ofimproving operations at acquiredfacilities. Now, with that same execution,we are working diligently to ensure thatthe Triad hospitals we acquired continueto advance toward reaching their fullpotential. While this represents achallenge, it is an even more significantopportunity. Our track recorddemonstrates that we are well positionedto make the most of that opportunitywith favorable results. Our proven abilityto deliver on our promise and fosterpositive community relations has been,and will continue to be, a distinctcompetitive advantage for CommunityHealth Systems.

In addition to the acquisition of theTriad hospitals, we acquired two otherhospitals in 2007. While we expect to bedisciplined acquirers again in the future,our strategic focus for 2008 will be onpursuing growth opportunities within ourexisting markets through disciplinedcapital spending programs focused onachieving both a favorable level offinancial and operating performance andhigher patient satisfaction. Toward thatend, along with bringing new physiciansto our communities, we will continue tomake appropriate investments in newequipment, technologies and clinicalservices for our hospitals. Our definitivegoal for all of these initiatives is thesame - to provide a hospital that moreeffectively and conveniently meets theunique needs of its market.

Ultimately, Community Health SystemInc.’s prospects for long-term growth andincreased shareholder value rest on thecollective strength of our individualhospitals and the many dedicatedphysicians, nurses and hospitaladministrators who work and live in thecommunities we serve. We are veryproud of the team that represents ourfacilities in the market every day with ourshared vision to enhance the level ofhealthcare in more communities. Theclearest reflection of the caliber of thisteam is our long-term record of successand the commitment demonstrated byeveryone associated with CommunityHealth Systems in 2007 by delivering anoutstanding performance in what provedto be a pivotal year for the Company. Weintend to build on this success in 2008and look forward to the opportunitiesahead as we continue to build shareholdervalue. We close by thanking you, ourfellow shareholders, for the support yourinvestment provides.

Sincerely,

Wayne T. SmithChairman of the Board,President and Chief Executive Officer

B o a r d o f D i r e c t o r s a n d O f f i c e r s / Commun i t y He a l t h S y s t em s , I n c .

This Annual Report contains forward looking statements made pursuant to the “safe-harbor” provisions of the Private Securities Litigation Reform Act of 1995. Importantfactors that could cause our actual results to differ materially from the results contemplated by the forward looking statements are contained in our Annual Report on Form 10-K filed with the Securities and Exchange Commission(the “SEC”) and included with this Annual Report and in subsequent filings with the SEC.

Board of Directors

Wayne T. SmithChairman of the BoardPresident andChief Executive Officer

W. Larry CashExecutive Vice Presidentand Chief Financial Officer

John A. Clerico (1)

Co-founder and ChairmanChartMark Investments, Inc.

Dale F. Frey (2) (3)

Former Chairman andPresidentGeneral Electric InvestmentCorp.

John A. Fry (1) (3)

PresidentFranklin & Marshall College

Harvey Klein, M.D. (3)

Professor of Clinical MedicineCornell University MedicalCollege

Julia B. North (2) (3)

Former President –Consumer ServicesBellSouth Telecommunications

H. Mitchell Watson, Jr. (1) (2)

Former PresidentSigma Group of America

Officers

Wayne T. SmithChairman of the BoardPresident andChief Executive Officer

W. Larry CashExecutive Vice Presidentand Chief Financial Officer

William S. HusseyPresident – Division IVOperations

David L. MillerPresident – Division IOperations

Thomas D. MillerPresident – Division VOperations

Gary D. NewsomePresident – Division IIIOperations

Michael T. PortacciPresident – Division IIOperations

Kenneth D. HawkinsSenior Vice President –Acquisitions and Development

Barbara R. Paul, M.D.Senior Vice President and ChiefMedical Officer

Carolyn S. LippSenior Vice President – Qualityand Resource Management

Martin G. SchweinhartSenior Vice President –Operations

J. Gary SeaySenior Vice President and ChiefInformation Officer

Rachel A. SeifertSenior Vice President, Secretaryand General Counsel

T. Mark BufordVice President and CorporateController

Larry M. CarltonVice President – RevenueManagement

James W. DoucetteVice President and Treasurer

Robert A. HorrarVice President – Administration

Robert O. HorrarVice President – BusinessDevelopment

Tim G. MarletteVice President – MaterialsManagement

Linda K. ParsonsVice President – HumanResources

Kathie G. ThomasVice President – Home HealthServices

Gerald A. WeissmanVice President – Medical StaffDevelopment

(1) Member of the Audit andCompliance Committee

(2) Member of the CompensationCommittee

(3) Member of the Governanceand Nominating Committee

Performance GraphThe following graph sets forth the cumulative return of the Company’s common stock during the five year period endedDecember 31, 2007, as compared to the cumulative return of the Standard & Poor’s 500 Stock Index (S&P 500) and the cumulativereturn of the Dow Jones Healthcare Index. The graph assumes an initial investment of $100 in our common stock and in each of theforegoing indices and the reinvestment of dividends where applicable.

12/31/02

$129.09

$119.43

$128.68$135.41

$142.69

$124.86

$186.21

$149.70

$135.26

$177.37

$173.34

$144.57

$179.02$182.87

$156.65

$100.00

12/31/03 12/31/04 12/31/05 12/31/06 12/31/07

$200

$180

$160

$140

$120

$100

$80

$60

$40

$20

$0

Seated fromleft to right:William S. HusseyDavid L. MillerThomas D. Miller

Standing fromleft to right:Michael T. PortacciW. Larry CashGary D. Newsome

COMMUNITYHEALTHSYSTEMS,INC.

4000MeridianBoulevardFranklin,Tennessee37067

(615)465-7000www.chs.net

Co r p o r a t e I n f o rma t i o n /Commun i t y He a l t h S y s t em s , I n c .

Corporate OfficeCommunity Health Systems, Inc.4000 Meridian BoulevardFranklin, Tennessee 37067(615) 465-7000www.chs.net

Form 10-K/Investor ContactA copy of the Company’s AnnualReport on Form 10-K, filed withthe Securities and ExchangeCommission, may be obtainedfrom the Company at no charge.Requests for the Annual Reporton Form 10-K and other investorinformation should be directedto Investor Relations at theCompany’s corporate office or atwww.chs.net.

Registrar and Transfer AgentBNY Mellon Shareowner Services480 Washington Boulevard29th FloorJersey City, New Jersey 07310(201) 680-5287

Independent AuditorsDeloitte & Touche LLPNashville, Tennessee

Annual Shareholders’ MeetingThe annual meeting ofshareholders will be held onTuesday, May 20, 2008, at8:00 a.m. local time at TheSt. Regis Hotel, La Maisonette I,2 East 55th Street, New York,New York.

Common Stock InformationThe Company’s common stocktrades on the New York StockExchange under the symbolCYH. As of March 30, 2008,Community Health Systems hadapproximately 39,900 beneficialholders of its common stock. Ofthat total, 49 were stockholders ofrecord. To date, the Companyhas not paid cash dividends on itscommon stock.

The following table sets forththe high and low sales priceinformation as reported by theNew York Stock Exchange duringthe period indicated.

Stock Price

2007 High LowFirst Quarter $39.05 $33.28Second Quarter $41.72 $34.86Third Quarter $44.50 $30.39Fourth Quarter $37.50 $27.70

2006 High LowFirst Quarter $39.96 $35.33Second Quarter $38.39 $34.94Third Quarter $39.18 $35.70Fourth Quarter $37.26 $31.00

CommunityHealthSystems,Inc.AnnualReport2007

BuildingonSuccess

CorporateProfileLocatedintheNashville,Tennessee,suburbofFranklin,

CommunityHealthSystems,Inc.isaleadingoperatorofgeneralacutecarehospitalsinnon-urbanandmid-sizemarketsthroughoutthecountry.Throughitssubsidiaries,theCompanycurrentlyowns,leasesoroperatesapproximately116hospitalsin28statesand,withanaggregateofover17,000licensedbeds.Itshospitalsofferabroadrangeofinpatientmedicalandsurgicalservices,outpatienttreatmentandskillednursingcare.Inaddition,throughitsQHRsubsidiary,theCompanyprovidesmanagementandconsultingservicestoover160non-affiliatedgeneralacutecarehospitalslocatedthroughouttheUnitedStates.

SharesinCommunityHealthSystems,Inc.aretradedontheNewYorkStockExchangeunderthesymbol“CYH.”



(615) 465-7000www.chs.net









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Building on Success




Economy & Finance

community health systems annual reports2007