Trevor Fetter – President and CEO Steve Newman – COO Biggs Porter – CFO

Adam Feinstein – Lehman Brothers Tom Gallucci – Merrill Lynch Shelley Gnall – Goldman Sachs Ken Weakley – Credit Suisse Shirley Skolnick – CRT Capital Group Justin Lake – UBS Gary Lieberman – Stanford Group Rob Hawkins – Stifel Nicolaus Kemp Dolliver – Cowen & Co. John Ransom – Raymond James & Associates Mike Scaralango [ph] – Merrill Lynch Miles Highsmith – Credit Suisse Whit Mayo – Stephens

Good morning, and welcome to the Tenet Healthcare’s conference call for the first quarter ended March 31, 2008. This call is being recorded by Tenet and will be available on replay. A set of slides has been posted to the Tenet website, which the management will refer during this call. Tenet's management will be making forward-looking statements on this call. These statements are based on management's current expectations and are subject to risks and uncertainties that may cause those forward-looking statements to be materially incorrect. Management cautions you not to rely on and makes no promises to update any of the forward-looking statements. Management will be referring to certain financial measures, including adjusted EBITDA, which are not calculated in accordance with general accepted accounting principles, or GAAP. Management recommends that you focus on the GAAP numbers as the best indicator of financial performance. During the question-and-answer portion of this call, callers are requested to limit themselves to one question and one follow-up question. At this time, I will turn the floor over to your host, Trevor Fetter, President and CEO. Mr. Fetter, please proceed.

Great, thank you, operator, and good morning. Let me start by saying I am pleased with our results for the first quarter. Tenet is performing more consistently than at any point in the recent past and it's becoming increasingly clear that the strategies we have in place are proving to be effective. We have now had two consecutive quarters of breakeven to slightly positive same-hospital admissions growth, which is a great improvement over the consistent declines we saw from 2004 through most of 2007. Our same-hospital admissions were up 1.0% for first quarter with flu contributing only 20 basis points. While we still have more work to do, this is the first quarter in a long time in which I would say we are pleased with our EBITDA performance. Same-hospital adjusted EBITDA was up 23% to $239 million. And even though it's still well below our industry peer companies, our EBITDA margin rose 120 basis points year over year to 9.9%, continuing an upward trend of several quarters. Thanks to our efforts across multiple initiatives, we now have a steady flow of physicians joining our medical staffs. Going forward, we expect they will increase the number of patients they refer to our hospitals. Additionally, we are getting attractive pricing increases from our commercial managed care customers. I believe this is a result of our multiyear efforts to raise our standards for clinical quality, improve the reputations of our hospitals, and Tenet as a company, and employ better informed contracting strategies. The strong cost discipline that we've demonstrated in the past few years continued in the first quarter. One of the good things about our business is the operating leverage that you can generate through modest increases in volume when combined with good cost control. This operating leverage helped us deliver…

Thank you, Trevor, and good morning, everyone. Let me start by reviewing our progress on medical staff development and relationship building. Physician relations represents an appropriate starting point because it's the cornerstone of our business, and physicians are incredibly influential in determining our market share and growth. We continue to place significant effort into our Physician Relationship Program, or PRP. Through the PRP initiative we made 13,158 calls on 6,764 physicians in first quarter. The PRP targeted physicians with existing active staff privileges, increased their admissions to our facilities by 5.7% in the first quarter of '08 compared to their admissions in Q1 '07. This is our best quarterly performance since we launched the PRP program in late 2005. We also called on 497 unaffiliated physicians in the first quarter. This group of almost 500 physicians represents practitioners currently lacking admitting privileges at any of our hospitals. This effort is aimed at redirecting physicians already in our service areas. This creates a virtual pipeline for future expansion of our medical staffs. Many of the calls made in prior time periods resulted in new physicians joining our staffs and contributed to the admissions we achieved in the first quarter. We added 178 active medical staff in the first quarter net of attrition. When added to the previously reported 2007 expansion of our active medical staff, this aggregates to a 10.3% growth of our hospital's medical staffs since the beginning of 2007. I want to highlight some of the enhancements we are making in the PRP program. We are extending the numbers of staff in our hospitals joining the PRP teams, and educating them through our expanded training curriculum. We are also launching a customized education program for our hospital-based physician recruiters. Our overall admissions grew 1.0% in the quarter compared to…

Thank you, Steve, and good morning, everyone. Trevor and Steve have already done a good summary, so I will focus more detail on some of the financial elements in the quarter. Before I do, I will note that our first quarter adjusted EBITDA of $234 million keeps us well on a path to achieve our outlook for $775 million to $850 million adjusted EBITDA for the year. On a same-hospital basis, adjusted EBITDA increased to $239 million, an increase of 23%. It was a relatively straightforward quarter, but there are a few items I will mention. First, favorable cost report settlements added $2 million pre-tax, down from the $12 million recorded in the first quarter of 2007. Second, there was $8 million of bad debt mitigation resulting from the settlement of long overdue disputed managed care accounts. Third, we recorded $6 million of funding from Georgia Medicaid, $4 million of which is retroactive to last year as the state reversed approximately $7 million of its funding cuts we disclosed last year. Fourth, we recorded $6 million in distributions from an HMO in which we have an equity interest. Fifth, we incurred impairment and restructuring charges of approximately $1 million. And six, we increased our provision for litigation related to California wage and hour and other matters by $47 million. The first four items I just mentioned are included in our adjusted EBITDA results, the last two related to impairment and restructuring and litigation are not. It is, of course, a judgment call as to which of these items might be nonrecurring, not just for the quarter but for the year. Of those affecting adjusted EBITDA, the only item which I would rule out from repeating on an annual basis is the $4 million retroactive portion of the Georgia Medicaid funding.…

Thank you. (Operator instructions) Our first question is coming from Adam Feinstein of Lehman Brothers. Adam, you may go ahead. Adam Feinstein – Lehman Brothers: Thank you, pretty close. Hey, thank you for all those details as always. Maybe just starting with the volumes, just clearly you are seeing improvement there on the commercial managed care side, you spent time talking about that. But I am just curious about the Medicare fee for service or Medicare Part A, just the weakness there. I was just curious if there was any reason why that would have been the case I would think with flu you'd see a lot of Medicare patients, so just wanted to understand that portion of the volumes.

Adam, this is Steve Newman. We continue to show general strength across the company in the Medicare fee-for-service business. Obviously, the growing segment is the Medicare managed care business where we've seen significant growth over the last year. Adam Feinstein – Lehman Brothers: Okay. So you think all of that is a function of just the mix shift to the commercial Medicare?

Right. Adam Feinstein – Lehman Brothers: Okay. All right. And then just a follow-up question, if I may here. So, with all the improvement you are seeing in pricing, when do you think we'll start to – I know, Biggs, you highlighted there could be some offsetting things throughout the year but just – you've been signing a lot of these contracts over the last several months. Just curious in terms of your thoughts when we'll start to annualize some of this benefit. Do you think that's something that will annualize in the fourth quarter or is that something that based on all the contracts you have signed that we won't see you annualize until the first quarter 2009?

Well, I think that from the standpoint of the negotiated prices we should continue to see benefits throughout the year. We did have price increases kick in, in the second half of last year, so there will be some year-over-year effects of that anniversarying. Having said that, we do think the negotiations are going to continue to benefit the risk or the thing that's hard to measure is to what degree there could be payer shift as we go through the year that might offset that some. Adam Feinstein – Lehman Brothers: Okay. Thank you very much. Great quarter.

Thank you. Our next question is coming from Tom Gallucci with Merrill Lynch. Tom Gallucci – Merrill Lynch: Good morning. I just wanted to make sure I understand a little bit more on the volume side of things. You talked about year-to-date up 1.6%. I guess that the flu would have had maybe a 0.1% or 0.2% boost to that. And then you still have an extra weekday for the four-month period, and an extra day I guess in general. So, it would seem that maybe you are still under 1% sort of through the first four months adjusted for the day. Trying to think about going forward, the TGI category seemed to be doing well. The non-TGI categories, can you help us understand what – is there a thing that you are proactively closing, or is it just things that you are not emphasizing as much? And if you are not emphasize them as much, but you still want to be active in them, how do you stop that deterioration and actually get some growth in those non or lesser important categories?

I think that's a good question. I think you've accurately characterized it. We are getting good growth in our TGI-focused areas. As will you remember early on in the rollout of TGI, we had significant service de-emphasis in our California region. As we moved TGI east across the company, there were less active service closures, but certainly de-emphasis has occurred. In many instances where we don't have a service line emphasized what we attempt to do is maintain market share and to work on improving the efficiency of rendering the care in those particular areas. Sometimes we work directly on variable costs, such as implants or length of stay or supply costs that occur in rendering of care to those patients. But all in all, I think the number of services that we have to shrink are very small today as we look across the entire company. So our efforts are to grow the targeted growth service lines both in terms of volume and profitability while focusing on improving quality and service in that area and maintain the standards, improving profitability in those services that were not in the targeted growth priority list. Tom Gallucci – Merrill Lynch: Just as a matter of perspective, what percent of your business roughly maybe are the eight TGI categories versus the rest?

Not to be glib, but not as much as we'd like in the future. Probably 40% of our total business are in the TGI service lines and we'd like to see that grow over time. Tom Gallucci – Merrill Lynch: Thank you.

Thank you. Our next question is coming from Matthew Borsch of Goldman Sachs. Shelley Gnall – Goldman Sachs: Hi, thanks for taking our question. This is Shelly Gnall on for Mat Borsch. Question on some of your markets. I am wondering if you are seeing any sort of differential demand for outpatient services that could be related to co-pays or increased price sensitivity because of the economy. And maybe if you could comment on any increase in unemployment in your end markets that would be interesting, too.

Sure, Shelly. I've got the unemployment statistics. Let me start by saying that we have managed our portfolio in a way where we've reduced over the past few years our exposure in markets like California and Florida. In those markets unemployment is down slightly more than it is in the United States, but we have other markets importantly, El Paso, as an example, where the employment actually – employment is up, unemployment has decreased. And in the – we did a lot of looking for any sort of recession effects in our business. The only indication we could come up with is that in the managed care sector, our non-ER managed care business is weaker than our ER-based managed care business, but patient credit quality is even with last year and we have more of our uninsured patients are employed now than they were a year ago. That's up by 10 points to nearly 70%. Shelley Gnall – Goldman Sachs: Okay. Great. Thanks. That's a lot of detail. And then as we look at the surgery declines, I'm wondering if you could comment on any color. Is there any important trend to take away from the decline in the surgery volumes related to the co-pays, deductibles or the elective component of these surgeries?

It's interesting. We've certainly seen a decrease over the last year in areas like plastic surgery. There are multiple factors involved in that. For example, many have been shifted to competitors’ ambulatory surgery facilities, so we see those volumes continue to drop. It's hard to know whether that is related to the overall economy or whether or not it's simply a shifting out of our facilities. Shelley Gnall – Goldman Sachs: Okay. Great. Thanks very much.

Thank you. Our next question is coming from Ken Weakley of Credit Suisse. Ken Weakley – Credit Suisse: Thanks. Good morning, everyone.

Good morning, Ken. Ken Weakley – Credit Suisse: I was just curious, in terms of the recovery of Tenet at some point debt paydown will be an element of that and I don't know if I missed it during the presentation, I didn't hear it all. But can you walk me through your thoughts on strengthening the balance sheet in times, say in '09, '10, what your plans are and hopes or for that sort of debt level in time?

Well, we continue to have the benefit of time. We don't have any debt due until December of 2011, so there's still a fair runway here and our general approach baseline plan has been and continues to be to improve our performance, and as we get out to the period of time, some reasonable period before December '11, start to refinance, get the benefit of improved performance, improved credit ratings, and lower interest rate. In between now and then, if the stars align and it makes sense to do something sooner, so be it, but the baseline is to concentrate on our performance, get the benefit of that. Ken Weakley – Credit Suisse: Okay. And then second question, on the pricing strength, can you give a little more color on how uniform your pricing gains may be across your footprint, and what the duration of the contracts may look like in terms of – not just how long the contract is going to be, but what the increases will be in the out years? I mean sometimes there's a big difference between initial versus the latter prices. So I'm just trying to get a sense of what we should expect going forward.

Ken this is Steve Newman. Part of your question is the duration of the agreements. And as we've said before they vary between two and four years. Ken Weakley – Credit Suisse: Okay.

Certainly we want inflationary resets on an annual basis, plus those things which move us along with the market to maintain our rate parity during that time period, but I wouldn't say that we are front-end loading or back end loading any of our contracts. It's fairly smooth throughout the period. Ken Weakley – Credit Suisse: Okay. Very good. Thank you.

Thank you. Our next question is coming from Shirley Skolnick with CRT. Shirley Skolnick – CRT Capital Group: Thanks very much. I am noticing that your shares are trying to be down about 4%. One of the other hospital companies are also down about 4%. And I can only speculate that it's related to concerns about the quality of your earnings about potentially – we've heard criticism, obviously, over the last couple of weeks of – that the company is over reserved, and to put it bluntly, the only way it can make its numbers is through one-time items. I guess I want to give you the opportunity to respond to that, so that I don't have to miss-state what the company's view is or I can reflect it accurately in my own thought process about the company. And specifically, related to as you discussed, Biggs, some of the, albeit in my mind small, one-time items this quarter that may, in fact, be ongoing issues for the company that are positive, but I think it is something that needs to be discussed, especially when you report an absolutely fabulous reported EBITDA number; you have negative cash flow from operations, albeit we understand the seasonality of that to some extent. It does lend itself to that criticism and I'd like to hear your response.

Well, you know, we take the approach of communicating a lot about our results and trying to be as clear as possible as to what the content of items are, not to encourage people to back them out because they are one-time, but rather just to make sure that we give a good basis for analysis. And as I pointed out, and started out the conversation with the list of items which influenced the quarter, albeit some of it small, the only thing, which I've pointed out that seemed to be truly not repeatable, at least on an annual basis, is the retroactive adjustment on Georgia Medicaid, which is only about $4 million. One of the reasons for me mentioning that is because we had a focus on Georgia and Florida Medicaid DSH funding last year, and had said that it was reducing by 60 million. So clearly there was a $7 million reduction of that in – or improvement, if you will, restoration of that in Georgia, so it's worth noting. And in the context of that it’s worth noting that $4 million of it hit this quarter on a retroactive basis. In terms of one of the other items on the managed care negotiations and the $8 million related to the settlement of some old accounts, we have been doing that quarter after quarter. That has been a mitigation of bad debt expense. That is a reflection of the fact that we continue to work the older accounts and try to get favorable resolution. Of course, some of them are not favorably resolved. They're reserved for it. And it has no effect. Others that are favorably resolved were able to bring in cash and take that to the bottom line. And I'd call that myself good quality earnings…

I'll start with the results from the results from the Stanislaus center in Modesto, Shirley? Shirley Skolnick – CRT Capital Group: Yes.

That particular facility has not quite met our expectations in terms of volume because we lost three psychiatrists in the first three months after the acquisition. It is still profitable. It is still adding to our volume. The total number of incremental admissions for the quarter is around 450. With respect to the transaction, St. Christopher's with Temple that is meeting our expectations, and added about 650 admissions to the quarter. Shirley Skolnick – CRT Capital Group: And those were profitable additions, you'd say?

Definitely profitable. Shirley Skolnick – CRT Capital Group: Great. Thanks so much.

Thank you. Our next question is coming from Justin Lake of UBS. Justin Lake – UBS: Thanks. Good morning. Couple of questions. First on bad debt. Your slide show indicates that your uninsured charity care admissions were up 1.3% year-to-date for April. That's materially higher than the 1.2% decline through March. So just doing some quick math, it looks like April uninsured and charity care admissions might have been up 8% to 10%. Can you tell you what you are seeing in April there on the uninsured and charity care side if those numbers sound correct?

Well, my first comment would be on a month-to-month basis as you drill into the various categories it obviously – you get more fluctuation when you look at it over a broader period. I don't think there's a particular reason or cause in there for a month-to-month fluctuation. Sometimes it's a matter of classification, particularly within – from a month-to-month standpoint. Charity, once somebody walks into the hospital, it will take a certain amount of time to determine are they going to be uninsured charity, do they get covered by Medicaid, and that creates some fluctuation on a month-to-month basis, including reclassifications that occur in subsequent periods where there's determinations made after the fact based upon further information given. So I don't think there's a particular story in there looking at the month. We will obviously look at it following May and for the quarter and see if there's a trend there, but for one month I wouldn't overreact. Justin Lake – UBS: Okay, But that 8% to 10% number is approximately correct. And can you tell us what you are seeing as far as the – what the month of April would look like without – I know you report this number, the ex-charity care and uninsured admissions. If I were to back out 8% to 10% or 8% to 10% increase in debt uninsured it would like that 3.7% in April might have been low – closer to 1%. Am I in the ballpark there or what does April look like without the uninsured and charity care?

I don't have the breakdown, but I think that your math is producing too severe an adjustment. Justin Lake – UBS: Okay, so 1% would be too conservative?

I believe so. Justin Lake – UBS: Okay. And then just quickly, maybe you could comment on bad debt in general then.

Give me the question gain, Justin, and I’ll come back. Justin Lake – UBS: Sure. Just looking for what the admissions look like in the month of April, if we ex out uninsured and charity care.

Justin, we don't have the number. We didn't break it out that way. It would reduce it from the 3.7%, but not by as much as taking it down to 1%. We don't have a crisp answer for you on that. Justin Lake – UBS: No problem. And just given what you are potentially seeing there in April, I know month to month this stuff is going to fluctuate, but following on the heels of what one of your largest peer in national [ph] said today regarding bad debt I'm just curious, what have you got embedded in your assumptions in that roll-forward table when you put out 850 million this years, a billion next year as far as your bad debt assumptions, either as a percentage of revenue or percentage of admits and how that is expected to roll forward?

Well, our outlook for the year gave range of 6.5% to 7% on bad debt expense. Included in the roll-forward table effectively is at the lower end of that 6.5%, which presumes that to the extent that we have any increase in uninsured we are able to mitigate it through our bad debt initiatives, which we have been doing. So I think it's a reasonable and achievable assumption that roll-forward table, but in terms of what the range could be, 6.5% to 7%. Justin Lake – UBS: Okay. Just one last question on managed care pricing. You reported managed care pricing I think was 4.6% in the quarter. I know you billed in Medicare and Medicaid into that, government managed care. Can you tell us what it looks like just on the commercial book alone?

Justin, you ask that question all the time and we always say the same thing. We don't break that out specifically, but thank you for your question. Justin Lake – UBS: Thanks, guys.

Our next question is coming from Gary Lieberman of Stanford Group. Gary Lieberman – Stanford Group: Thanks. Good morning. Could you guys just tell us what in your guidance – what you have embedded in terms of your expectations on the commercial admission growth, either for the TGI service lines or for the commercial managed care admissions all in?

Well, the guidance has range. I think at the upper end of the range it would probably have relatively constant mix from the first quarter. At the lower end of the range it would have some shift, as I said earlier, from a payer mix standpoint between payer categories, not just between plans but between payer categories. Gary Lieberman – Stanford Group: Okay. But I guess I mean if I look at it on – if I'm looking at the chart on Slide 15, is the year-over-year growth – do you need the year-over-year growth to become materially above zero%, or can it sort of stay in the sort of negative percentage–

Okay. Price increases, we believe can offset what we've experienced and some continuation of volume loss in commercial managed care. Okay? So we think we can achieve in the range with further loss of commercial managed care, obviously it depends on how significant it is. It doesn't have to turn positive, in other words. Once you get to 2009 it becomes more important that we have commercial growth combined with other TGI growth where there's profitable target growth initiative lines that depend on Medicare. So it's going to take a combination of the profitable businesses volume growth they are in, in order for us to achieve 2009. Gary Lieberman – Stanford Group: Okay. And then if I could just ask a quick follow-up to that. In terms of the sale of the medical office buildings, how – in terms of your thinking, how do you expect that to impact volumes in general, and I guess specifically sort of the commercial managed care segment. And I guess specifically with regards to the sale of the medical office building space, do you expect any – a portion of the physicians that are currently residing in those medical office building space to go somewhere else or what's your thinking there and what kind of visibility do you have into that?

We don't expect it to have any impact on our volumes. We think that – we operate with them on a market basis. A new owner will operate with them on a market basis. And I think that also – the new owner be somebody who is a professional property manager and might be more effective at it than we are. That's one of the reasons why I think the MOBs are good assets to sell. Gary Lieberman – Stanford Group: Okay. Great. Thanks a lot.

Thank you. Our next question is coming from Rob Hawkins of Stifel Nicolaus. Rob Hawkins – Stifel Nicolaus: Hi, good afternoon. Most of my questions have been asked, but I've got a couple. The turnover for the physicians that you mentioned earlier and kind of the net number was pretty good. Can you give me a benchmark against last year, and speak a little bit to what your target is for this year? You did a 178 net. Is that right?

Right. Rob, we expect that number to vary from quarter to quarter. It's influenced by a number of factors. The largest factor is when physicians finish their training, either in residency or fellowship, which is usually in June, so we expect to have them relocate to our hospitals and medical staffs, usually in the third quarter, and that's when you can expect, although not always, the highest number of staff additions. There's a pipeline for adding physicians to our medical staff, especially those that are being employed and those that are relocating from out of state. The pipeline duration is six to nine months after we identify the physicians, sign the letter of intent, eventually sign an agreement with them, and get them on site with a state license practice, and then after our malpractice coverage comes through, they can go before the medical executive committee, and the governing board to get their privileges granted. We expect, net of attrition, in 2008, to add a total of about 1,000 active medical staff. Once again, that's net of attrition. The numbers, in total, are larger than that, but they also include the comings and goings of hospital-based physicians, which really don't contribute to the growth of our inpatient and outpatient volumes. Rob Hawkins – Stifel Nicolaus: And is that kind of in that same 10% range or better for kind of year-over-year, a 1000 net-net growth?

A 1000 would probably mean our growth for the year would be in about the 8% range. Rob Hawkins – Stifel Nicolaus: Okay, great. And I missed which states you are shifting or requalifying charity patients to Medicaid. That was kind of an impressive stat for this quarter. I know you mentioned you were having some problems with Florida and California and their Medicaid problems. But, can you kind of give us an update of what – where you got some of that benefit and maybe what the outlook is for other states for your facilities? Whether you might be able to – maybe continue to see that improvement?

I don't think we have broken it out by state. We did comment in the release that there was the benefit of working to get people qualified, and that certainly has been a focus of ours, but I think it's a broad focus. And I wouldn't isolate it to any given state. Rob Hawkins – Stifel Nicolaus: Okay. I thought the way it was worded in the press release made it sound that way. So, this is something that we can maybe continue to see whittle down a little bit, the charity care for the year?

That's certainly our objective. Rob Hawkins – Stifel Nicolaus: Okay, alright, I'll jump back in the queue. Appreciate your time.

Thank you. Our next question is coming from Kemp Dolliver with Cowen & Co. Kemp Dolliver – Cowen & Co.: Hi, thanks.

Good morning, Kemp. Kemp Dolliver – Cowen & Co.: Hi. First question relates to USC. And I maybe over-interpreting the language in the 10-Q, but it says it might go into discontinued operations in the second quarter. What's the triggering event if it hasn't happened already? Do they need to raise financing, or do you need a definitive or?

Well, certainly having a definitive agreement is more conclusive. There's a number of tests under the accounting standards that had to be passed or required before you pursue any disc ops or required to pursue any disc ops. Definitive agreement would be in lines I think with that. Keeping in mind this particular facility is little different from a normal disposition activity because it is related to resolving a dispute as opposed to just an action to go and change our portfolio. So the test on how they would apply would end up being a little different. But, as we progress through it, it becomes more definitive, yes, that would be the point where it make sense for it to go into discontinued operations. Kemp Dolliver – Cowen & Co.: Okay. Thanks. The second question is when I do the math on the benefit from the Stanislaus acquisition, and then the pickup from St. Christopher's, those combined look like they accounted for three quarters of the same-store admissions growth in the quarter, which, given some of the statistics, in terms of physician recruiting and the like, it was surprising that their contribution is that large. So I guess I'm trying to appreciate what's going on in two contexts. What else other than the decline in commercial managed care was a drag on your volumes, and also, are any of these – are any of the statistics that you give in terms of physician recruiting like inclusive of the physicians who might be referring from St. Chris or the physicians that remained at Stanislaus? Thank you.

Kemp, this is Steve. I think that your estimate is pretty close. My estimate was about 65%. You said three quarters. So I think we are pretty much in the ballpark. As we said before, three hospitals are responsible for the majority of the commercial managed care loss. The others are either up or flat to slight – very slight negative. And we've seen that across the company. I think that we continue to focus on things that we've identified previously. That is, expanding our medical staffs, especially consistent with the TGI service lines. That obviously takes awhile to grow those practices, and as we've said, ramping up the new physician practices, depending on whether there are specialists or whether they are a primary-care physician is an 18 to 24-month process. You will see those that were added in '07 add sequentially to the volumes going forward. We continue our PRP program. We continue our strategy to be an in-network provider in our managed care contracts. All of these things should aggregate to admissions volume growth over time. We are seeing in individual markets that we are clearly taking market share from the competitors, but there are all sorts of externalities, which have been identified earlier in the discussion including the overall economic conditions and the overall accentuation of activities by manage care payers to diminish inpatient utilization. So there are a number of puts and takes with respect to what aggregate volume looked like in a large company like ours that operates in 12 states and we'll continue to focus on those things growing volume locally. Kemp Dolliver – Cowen & Co.: That's great. Thank you.

Thank you. Our next question is coming from John Ransom of Raymond James & Associates. John Ransom – Raymond James & Associates: Hi, good morning. Good work on a multiyear turnaround. And I know it hasn't been easy. I have a strange question. Does quality matter yet to payers, and is there an inflection point coming, in your opinion, with CMS not paying for mistakes and infection rates becoming more public, et cetera? I mean, so, in other words, is there an investment – the investment you made in quality, is the return really still to come? I know you've gotten on some of these preferred list, but I just wonder if there is any tangible benefit yet, strange that sounds.

You know, it's actually a great question, it’s one we ask ourselves all the time, John. I think we were early in emphasizing clinical quality. We made a bet that there would be a greater and quicker move towards both consumers as well as payers recognizing differences in clinical quality and then rewarding it with volume and price. We – as you point out on these Centers of Excellence our rate of designation is like six times the national average for these payers. We now have increasingly built in bonuses for good performance and quality into our managed care contracts, even though it's still small. Even last week when we announced this new agreement in Philadelphia that includes a bonus for achieving quality standards. It's becoming the strategy for CMS to differentiate on pay-for-performance. They haven't exactly figured out how to do it yet. We certainly are qualifying for all of the additional payments or the lack of deductions, however you want to look at it, that they put in place for the core measures, and then for the H cap surveys and all that. So as you look at different hospital organizations, we are submitting 100%, we are getting the supplemental payments and so forth. But it hat not resulted in the differential volumes that I would have expected. It has certainly helped our reputation. I think that that absolutely gives us leverage in this managed care negotiations and one of the – is a contributor to the strong pricing. And I also believe that it will come and it will come faster than anybody anticipates, and it's a really hard thing to do. It takes years, so it's good that we have had this head start. So we have no regrets on it, and as you look at whatever statistics you want to choose, we look good on quality. It's absolutely the right thing to do. I think it's a smart strategy, and it was probably a little bit early, but I think that it will ultimately be proven to be very effective from an economic point of view. Certainly the continued declines, stabilization and now declines we've seen in malpractices as a result of that as well. John Ransom – Raymond James & Associates: Well, I mean, I think it's terrific. I guess my – as you look at your infection rates, do you have any good data on how your infection rates might compare to the industry average? And do you have any idea what your exposure might be when they stop paying for that stuff? And is that an area where you might see a quicker return on your quality initiatives than some other things?

I’ll ask Steve to comment on that. Infection rates, of course, are now part of the core measures as well.

Right. Certainly the surgical infections, ours are significantly lower than the national means, and compare well to those that are published that we see. Overall, infection rates across all hospitals are not published today, except on certain state databases, but we continue to focus on those things to decrease the likelihood of hospital-acquired infections. We also have a multiyear project to prepare us for what are called the never 27 or never 28 events that are supposed to not occur in hospitals in which certain payers, CMS with eight effective October 1, 2008, and subsequent years, probably adding to that list, we are working with our patient care services and nurses to improve our systems to diminish the likelihood that we have any of those never events. So this is a multiyear process for us, John. We continue to accelerate it. We think it will serve us well in the pay-for-performance environment and eventually we believe that premium outcomes should get premium payments. John Ransom – Raymond James & Associates: Okay. Thanks a lot.

Thank you. Our next question is coming from Mike Scaralango [ph] with Merrill Lynch. Mike Scaralango – Merrill Lynch: Hi, good morning. Biggs, just looking at the cash balance of 278, I think you mentioned that it would be down modestly at the end of the second quarter, which is going to be kind of a skinny number relative to the company's cash burn. So I was hoping we could nail down the timing of some of these cash inflows. So on the 400 to 600 by the end of next year, can you give us a sense as to how much you hope to have say by the end of the third quarter or by end of the fourth? And then USC, what's your best guess as to what quarter we should drop that in? And sounds like you should get around 300 million for that one if I heard that right. And then lastly, you mentioned some cash impact related to Redding and I totally missed what that was.

The – last question first. We've had arbitration proceeding going on for sometime with respect to insurance coverage on our Redding settlement. We don't have the final resolution of that, but if resolved in our favor that could produce positive cash inflow, and it’s disclosed in our 10-K. You can go look it at it for some more information. It's been out there for awhile. We would hope certainly that that is resolved and resolved favorably this year, but I can't give assurance. The – in terms of the broader question on timing, the reason we haven't given specifics as to timing of the 400 to 600 million is because depending upon market conditions and the inherent challenges with large transactions, it's hard to speculate as to MOB’s without complete third quarter or fourth quarter or – if there was a disruption in the market would we have to wait to complete it next year. Certainly our expectation would be that we can get that complete this year, but as I said, until it's done, we haven't rolled it into it our forecast – rare visibility there were have rolled into our forecast. In terms of a number of the smaller items on the list in terms of the 400 to 600, we would hope that we can get the benefit of those, second or third quarter, even if the MOB is not complete. So we are working on it. We are certainly interested in driving cash in sooner as opposed to later. Obviously that makes sense irrespective of our cash balance. Instead of break it down by quarter, I don't think it really makes sense to do that until we are little bit closer to knowing what the real timing is of execution on some of these. Mike Scaralango – Merrill Lynch: And USC, is that definitely a second half event, or could that be next year?

I wouldn't want to speculate. I think that we – we obviously want to get this wrapped up and would certainly hope that it's resolved this year, but there's plenty of things left to do. Mike Scaralango – Merrill Lynch: Alright. Maybe I can just ask a simpler question. What do you think the likelihood is that you need to hit your revolver between now and the year?

What's the likelihood of hitting the revolver? Mike Scaralango – Merrill Lynch: Yeah.

We still do not believe that we need the revolver this year, and accordingly through these cash activities, do not forecast needing it in the future. Mike Scaralango – Merrill Lynch: Okay. Thank you.

Thank you. Our next question is coming from Miles Highsmith of Credit Suisse. Miles Highsmith – Credit Suisse: Yeah, good morning, guys. Just a question. I know it's sort of intermediate to longer term but can you remind us what percent of your markets would you say you have a reasonable opportunity for achieving rate parity at this point?

I would say that in almost all of our markets we have an opportunity to hit rate parity. We've done a lot of that over the last 15 months. We made a lot of progress there. It's a very small minority of our hospitals now. We are not at rate parity. We intend to give more information about that at investor day as we update our discussion from investor day last year, but certainly negotiating from a national perspective has helped us reach rate parity in a number of those markets that were below the mean previously. Miles Highsmith – Credit Suisse: Okay. That's great. I think I probably asked the question poorly. Just to make sure, the real question I had was what percent of your markets remaining have the opportunity to achieve rate parity. I think your comment was it’s a very small percent that still remains. Is that correct?

Right, right. I don’t think we’d characterize a specific number but it's a small number. Miles Highsmith – Credit Suisse: Okay. Thank you.

Thank you. Our next question is coming from Whit Mayo of Stephens. Whit Mayo – Stephens: :

We don’t calculate it.

We don’t have specific payer mix information we typically give out. If there's a different question you'd like to ask, we might help you on that. Whit Mayo – Stephens: Well, I guess another question would just be, is there any particular state that you guys think you are seeing more of the shift from fee-for-service in the Medicare Advantage? I guess I would presume that Florida would probably be the largest one.

I would say you are right. I think we are seeing it at Florida and we are also seeing it in California. California has really led the country as far as the states in which we operate the Medicare Advantage and Florida has gotten into that particular business, even with physician intermediaries in the last two to three years.

Whit, could you repeat your question on the payer mix? If you are just asking about the dis-aggregation of managed care, it’s in the press release. Whit Mayo – Stephens: Yeah, I can do the math.

It's 16% managed Medicare, 9% managed Medicaid, but is that what you were asking? Whit Mayo – Stephens: Yeah, that was it.

Yeah, I am sorry, misunderstood it. Whit Mayo – Stephens: No, no, no, that's fine, guys. And just, one other question I had just, do you have any internal expectations with the timing of monetizing or potential monetizing of Broadlane?

You know, I think – it would be subject [ph] to the fact that it’s a company in which we are an investee and it's a matter for all the shareholders of Broadlane and for the board, so we are working our way through it with them, but I don't want to forecast a timing event on that beyond saying that we expect it between now and next year. Whit Mayo – Stephens: Okay. Now, that's fair. Okay. Thanks, guys. I appreciate it.

Thank you. Our final question is coming from Shirley Skolnick of CRT. Shirley Skolnick – CRT Capital Group: Thanks very much. I did want to follow-up on something you said is new news, Biggs, and that’s you got seismic relief?

Yes. Shirley Skolnick – CRT Capital Group: And, yeah, can you be a little bit more – give us more detail on that? Because as I recall, this was a multi-billion-dollar issue for the company, even after you divested the most seismically needy properties. And also, is there any progress on the healthcare properties litigation and issues there, especially since I'm reminded that one of issues out there (inaudible) is seismic?

Okay. On the seismic, the broader question, it's not a multi-billion dollar issue. I think in the 10-K we've had disclosures ranging around $400 million on a current dollar kind of basis subject to inflation. But the regulations in California were changed over the last couple of quarters to allow for a different form of testing, a different standard to be met, which if met, could create relief from the seismic requirements, and we have applied for that relief for a number of our facilities. For some of them we have received that relief. There are still some applications left in. So we know that we do have some amount of relief. We then have to translate that into revisions of our estimates of costs because it may not be the entire facilities receives relief but some portion of it.. And so we have to then take that information, basically redo our analysis of what the activity needs to be and what the cost of it is, have to get that approved by the state, et cetera. So there's a ways to go before we have a real definitive answer. We are certainly working to determine what a reasonable estimate is. And once we feel like we have something we have good confidence in, we'll share it. Shirley Skolnick – CRT Capital Group: Okay, because if I remember, the press coverage of it initially was that it could be a very significant material reduction in the hospitals – California hospitals, generally, in theirs seismic costs. It could save the industry from significant–

It varies hospital by hospital. Some hospitals will not get relief and will have significant expenditures, and others may have no expenditure to make whatsoever. So if you look at it on an individual hospital basis, it can be very significant for us but on an aggregate basis we're still measuring. Shirley Skolnick – CRT Capital Group: Okay. And any update on the issues with the six leased hospitals and healthcare properties?

We continue to proceed through our discussions. The litigation is stayed while we are in those discussions. We have been working actively with the ACPI to get resolution and are very hopeful that we will achieve that point near term. Shirley Skolnick – CRT Capital Group: Okay.

As to seismic impact, that would not have an effect on us either way because seismic is a responsibility at least our position has been seismic is a responsibility. Shirley Skolnick – CRT Capital Group: Yeah, well I understand that. But my thought was this that if their issue is they don't want to pay for it and your issue is you don't want to pay for it and that facility happens to be one of the ones that qualifies to not have a big bill, perhaps that leads to an earlier resolution of the thorny little problem. That was my thought.

I don't believe that the facility is going to qualify. Shirley Skolnick – CRT Capital Group: Thank you very much.

Thank you. At this time I would like to turn the floor back over to Trevor Fetter for any closing remarks.

We just don't have any closing remarks. We'll look forward to seeing you at our investor day. Thanks

Thank you. This does conclude today's Tenet conference call. You may now disconnect.