Universal Health Services (UHS) 26 Apr 192019 Q1 Earnings call transcript

Company Profile

Participants

Steve Filton	Chief Financial Officer
Alan Miller	Chief Executive Officer
Justin Lake	Wolfe Research
Josh Raskin	Nephron Research
Ralph Giacobbe	Citi
Kevin Fischbeck	Bank of America
A.J. Rice	Credit Suisse
Ana Gupte	BBB Leerink
Peter Costa	Wells Fargo Securities
Steven Valiquette	Barclays
Whit Mayo	UBS
Gary Taylor	JPMorgan
Matthew Gillmor	Robert Baird
Pito Chickering	Deutsche Bank

Call transcript

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Operator

Good morning, my name is Heidi, and I will be your conference operator today. At this time, I would like to welcome everyone to the First Quarter 2019 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. [Operator Instructions] Thank you. begin may you Filton, your conference. Steve

Steve Filton

ended Alan this morning. morning. Universal Services first Miller, this our us joining Health quarter the for also is results XX, We of XXXX. CEO, review Good March welcome to you

and conference similar using and words will this represent that forecast believes, During forward-looking I anticipates, statements. as expects, be Alan call estimates, words such projections and

the section these on the for up forward-looking questions. familiar XX, factors our For with risks reading developments highlight and call to of inherent in careful anyone a We'd XXXX. statements the I statements, to the forward-looking and couple in risk recommend and opening December factors and of a not trends uncertainties business like just year risk ended XX-K Form before

decrease revenues a our the adjusted admissions over first prior-year night, resulted release, for our X.X% of adjusted a per first The the for impact diluted share X.X% the in reported the basis, patient As XXXX. the patient primarily per more increased quarter same Adjusted care Revenue day the for to for than rose increased increase from quarter. during prior attributable X% owned release $X.XX adoption of per facility in year attributable our over behavioral quarter. our a in to X.X% revenue ASU facilities XXXX discussed revenues per basis as XX, of March X.X% comparable last health health adjusting X.X% quarter and of Company adjusted favorable admissions in increased UHS share the and adjusted After in to On behavioral On year facility discussed XXXX. during income same division first division UHS net our in XXXX-XX press quarter diluted of days from the during quarter. our a admission. increased quarter ended $X.XX our the X.X% was increase acute income first XXXX. adjusted net press a

by first approximately provided XXXX. activities the cash was million $XXX during operating of Our quarter

receivable last Our of first decreased of to XXXX the quarter year. XX during the accounts days XX days days as first quarter outstanding during compared to

debt at compared to the XX, hospitals We opened health behavioral new first XX.X% XXXX. open health XX, XX.X% of to XXXX. at quarter Our expect to the XX beds beds completed the end spent our behavioral at on before during and ratio March another XXX year. capitalization XXXX and total of capital declined to of busiest We $XXX million as expenditures March new

opened in one and over to in XX XXXX. departments Florida, completed the the repurchase conjunction of also the and quarter, share in with We expected program that two Wellington, the Texas; South to other number total of emergency our In course with new year. more bringing our freestanding open FEDs several in first commenced

this schedule information first statistical behavioral X-Ka XXXX, as morning included we release a the the XXXX discussed, to XX.X of and night's Exhibit XXXX. to the for filed XX, inaccurate. health filed behavioral XX, corrected three as Other I XXXX last three reported Exchange months statistical and originally on the Form March just Certain solely the changes ended was time. as that reported, reported the for Alan be same as related with XXXX Form March as as and three health schedule facilities health, months behavioral all questions statistical ended to XXX,XXX to in March information included be or the statistics, The financial months per final release no pleased press $XXX any and selected evening. approximately as required will Commission. the at facility was included of $XXX as of ended including of related data or our One data with share. last other statistical approximately XX, X-K quarter stock shares night last than this Securities at During cost of data note to press are a answer our million statistical hospitals repurchased your was approximately

Operator

Your the of Research. ahead. first Instructions] Wolfe Please Lake Justin [Operator with question go from comes line

Justin Lake

Thanks, good morning, Steve.

the how quarter flow And so of off. through estimate? off your on few How you was see it looked far EBITDA below was the did weak of you and Thanks. acute First the through pricing. acute why was far in EBITDA the was a internal kind a It side. expectations pricing one, Can us quarter quarter. kind from how was things, like there. walk

Steve Filton

Justin. Sure,

of were a So shorter first behavioral where our of short. we expectation, say as our of we I similar And results, the know think about acute a be. million me let year expected made suggested to little million we that think were were consensus estimates couple conversely, quarter pennies first $XX that. measurably you internal our I however. last $XX than or Internally, all, short results I up own were half care bit of probably of short to results

So, weakness. of revenue, was, in did short as per that the we higher driver quarter suggested abate, patients, acute the I perspective. were adjusted main on. saw was year. or again, pennies of quarter as medical We see margin, surgical on admission this What went ultimately, shift pattern typical margin, the in the an as higher pricing you of EPS revenue, early a sort particularly we The lower side think I to said from pattern shortfall lower not a couple patients of that is which measurable really revenue

better surgical February, get the words, in to they're stages were And in in got the volumes better into March. continuing second got extremely early looks it weak like they January, they better quarter. other in of So,

Justin Lake

And.

and therefore acute February? an January, So from perspective a and miss in perspective were the was April much business pretty profitability saying in are March in you acuity from line the or

Steve Filton

mix least we obviously I'm did and so haven't statistical perspective, is closed April, in any improve to service information, at Obviously I March, to continue all about, But broader April point. at about sort again that from of But to a picture of dynamic say mix profitability. those improve incomplete will it haven't payer trends it this certainly kind comments talked of make we I the that continue that April. point an Yes. stuff, at not in April. appears terms into service about going April's seem seen mix and to this

Justin Lake

Okay, all the thanks for color.

Operator

comes from line ahead. question Raskin Josh Research. Please with of next Your Nephron go the

Josh Raskin

your should And is guess then coming Steve. IPPS anything or payments M&A the where typically XQ. Medicare about the fee-for-service, reset Medicare recent impact the does that related to fee-for-service thoughts we as versus overall second, payment October thinking directly that, Hi, X. morning, if Two thanks. on I in just changes questions, proposal of be see facilities. to terms wanted Good about. just any in with come I related. week, the changed of I the and first advantage we I guess, kind years in anything were of to think has this Thanks.

Steve Filton

far like had of believe October. as as I IPPS in an would that our X.X% on guidance IPPS assumption XXXX by all-in beginning sort in so Yes, something an basis rule, X.X%. increase the or we the

the the estimates. in coming that's again very we I now, effect the wage final to of impact our out think were effect exchanges, all the when of we close with and of rule calculated and with DSH

from and impact think has guidance, an So perspective, largely I is our a XXXX certainly our push.

being them your I – as sort contractually as I that far overall rates Medicare we described of Advantage generally second As to think Medicare the rate. traditional tend reset question, think find follow and with

be strongly So I to think connected. them find we generally

Josh Raskin

Perfect, thank you.

Operator

Your next from the line question go Citi. of Ralph Please Giacobbe ahead. comes with

Ralph Giacobbe

Thanks, good morning.

softness, magnitude early all versus the part you greatest give recent of the in And maybe the the surgical just decline In a line terms of sense the impact. surgical of recovery? then of can saw which at us quarter

Steve Filton

mean. I Yeah,

volumes up surgical So relative volumes admissions up in up X%. volumes we admissions for the so year, I and have to is X%. X%, last volumes if generally outpatient then with are maybe to that were quarter, surgical are were lockstep, surgical X% tend usually what flat move Ralph that think Historically, found inpatient

So quarter seeing. greater the to in disconnect level the certainly we're was accustomed than what of

necessarily terms a you think early if mean inpatient front they end. in then can in were I surgeries of – quarter In of or the were up flat that down terms sort in cadence don't I in of and me, as the but progression. we're the the it, quarter, towards about and of monthly the better quarter little have for got bit

Ralph Giacobbe

line? surgical anything And on Okay.

Steve Filton

saying in open terms pacemakers. higher and margin, I decline and include knees of saw and hips a orthopedics, would revenue is And surgeries, was spine. cardiology, before, what those would hearts include and in what They higher those Yes. stent we

you would that margin of I high-acuity, think all revenue, of the So, high procedures. higher traditional areas sort think as

and across were quarter the down portfolio. recover I we the And to board, For as part, recover as said, progressed. did most the the across began

Ralph Giacobbe

Okay just of just and altogether, of those it it shift to clarify, to loss more to surgical a outpatient. was was from or procedures volume, inpatient then to

of margins got pricing is is which dynamic. and but the kept still that sort looked you the okay, it, maybe So volumes why not overall got the or hit

Steve Filton

of sort metrics. overarching the just I'll repeat mean I again Well,

up X%. X%, inpatient flat, admissions adjusted were were Our up surgeries surgeries were outpatient

lower and surgical revenue, bit but medical inpatient you there patients shift again I little the leads outpatient, believe from to biggest it lower margin shift medical more less patients. patients to is, those a So patients are is of believe and

Ralph Giacobbe

Okay, you. fair enough. I that, thank with leave

Operator

Your go next Kevin comes question of with America. Bank from ahead. Please of line Fischbeck the

Kevin Fischbeck

Thanks.

that than came revenue expecting cost side, exactly quarter. was guess, it On the I the on or psych side? you the better better was in were you – numbers it were What a what was beat in the said

Steve Filton

Yeah.

the see fell which robust recall, we had revenue our we call, admission how pricing we on basic unfortunately last stay. ended the to of couple side was kind those X% roughly, of Kevin at year-end as length talked in growth year, X% about a of behavioral months X.X% growth, if We numbers had you just ago, we guidance growth. pressure premise our was on same-store continued pretty of So, QX

we an X% first it to were that the end that in in X% assumption again year, at length declined our quarter said as XXXX, Although and the we would the of in was decline guidance X% continue embedding of least largely XXXX. expected at stay of or

as So in played expected. respects, many underlying the out metrics we

more saw or predicted efficiency, little just saw guidance on EBIT we I basis. bit as we flattish same our store we – presumed a a relatively think

we been a that couple bit talking of I a and store this, about little years. pressure same salary And bit growth, the of and on EBITDA X% or of a had anniversarying basis. wage little I something last of we've the the it's think a efficiency, that's think more for some of of

Kevin Fischbeck

some to or the of visibility I and pressures. far far more There, Or The Okay. continued continuing give right pressure stay And it's as to in was range, that going there to of around kind I that kind assumption is recent as in quarters. then the a of anything as stay seeing guess to of the pressure? still be length guess be you quarter X% better, are length that of decline you abate. to as

Steve Filton

Yes.

while, that cadence been state managed of, sort make reluctant has And to of into particular we're So have real certainly continued it I in behavior been predict it consequence, length behavioral. tend volatility about definitive of or occurs, more the length stay varies. of patients managed predictions The migration the I of look, talked, historically a of as to level think occurs. of not quarters the particular the to the lower biggest go. aggressive recent Medicaid being, aware a a geography about which length in plans, variable they of payers and We've traditional which we've the easy is of to in going biggest states where the pace us And stay direction think Medicaid the for how at care and there migration stay. and the

and We're sure number a reflect length I cetera, we're XX of numbers course is that things expect of certainly decline the X%. best and doing consistent months, idea X% to internally or stay of proper the length So, think do going to of payers we'd next to try the et those outcomes. a XX make treatment with stay their and with our to that, over clinical from fair stick the or diagnoses

the near a we think expectation X% X% So, from the is but financial it to or perspective, work for continue still I decline on term.

Kevin Fischbeck

And accrual DOJ then question, I was flat sequentially. the settlement this last guess maybe the for

at two a not this sides sign the the a I'm it this that, to So, go far point into the ways settlement more there in sign how getting and a progress is lot there's are of to sure that was very read or discussions? not that apart a and not close past quarter end you're that still to is made

Steve Filton

of government those in sort year-end last a the non-monetary interaction ago about discussed. criminal were of felt issues government, has we periods talked had we settlement with a negotiated months, like otherwise. call were investigations, conclusion we think release our the of a and shifted non-monetary like agreement of with I the the idea the to an What our nearing to the be but couple monetary And several months related couple that items, over there that of the on and of of things terms and release was and focus a

committed government, that think We as to are that is And the to sure so bringing will what's this and conclusion. go to vigorously we negotiate always it continue I our but I think rather faster are sides read resources dedicating with happens. to matter make hope to both a in that be

Kevin Fischbeck

thanks. Great,

Operator

Your line ahead. next question Rice Credit go Please with comes from Suisse. of A.J. the

A.J. Rice

everybody. questions. Hi, Two

because all postponable you medical maybe certain of here is off as an any the you operators mind hips out nature back hearts we're doesn't. to and those we're relevance has of of flattening When proliferation guess, Is and it case on the that that my rattled or knees aspects elective to even whereas as health talk sort what open just there seeing? of of of plans. categories, the some that seasonality some surgical drilling factor in I to of a high-deductible and First maybe of little obviously what a a But seeing indication some strength down further is surgical. you

Steve Filton

long the that time. an those described uptick and for done et the bigger speculated those deductible in deductibles at I A.J., and treatments that existed So certainly in on be clock of as What cetera. dynamic as have And themselves and late resets have the has and in more real start quite elective November I became as procedures would that over that last their people year more cetera. so a you have then deductibles exacerbated have in frankly February satisfied their see became honestly years, et think December, and the several seen the is to dynamic many people we is kind just we look that slow deductibles, procedures plans January. high years and

objective of So, I think our we it's In not an unreasonable sort don't of postulation you difficult see prove, that that's an about what enough sort information to patients. for know some very have just of that's way us happening. we

those this make insurance sort know of last to position kind versus of broad of really year You conclusions. year sort

year, dynamic speculation judgments. that what's also in make position would probably make I in has than a point certainly generally think part acute it, know a some payers is to per we fully. I'll acuity. to UHS revenue be the necessarily better operators last been sort the sort I those it of be reporting operators of first are And that our but may in stronger and other on were explain struggling there But cases that, stronger quarters, of of the couple happening. the in answer that doesn't unit,

into playing as comparison think working we're think do I of high that's this and I historically well. bit little off pretty So, a

A.J. Rice

to activity And being been relative update deal discussions buyback both industry. there. possibly discussion was course down maybe rather sides Okay. on year. last interest deployment. deployment. the on have capital going some the give cadence like as other were on guess, wonder perspective? if you're then Any XX X.X conservative to in the it of out down about you you low there's deal I for and drilling and months to deals there's government the also Any thoughts buyback which seemed know debt-to-EBITDAR from pipeline over times, And And causing is your the I to a capital little markets I color very an of to, I some maybe with question be been physician ask activity the the you could might your is in. activity also

Steve Filton

we made that guidance our pretty consistently for we've low averaged the to think number. in three last Embedded similar $XXX million of A.J. million over years I point I the annually. So, share a think XXXX as $XXX million $XXX repurchase

a on quarter, I to think XXb-X into we're based on the our and first second done we've quarter under comfortably buying to track get those numbers. that the performance

repurchases government, those all although to think weaknesses we settle we're the I that advantage sort change of trying we that doesn't what in cadence of believe cetera likely is take pace the what stock. until certainly the et unjustified probably said the and with dramatically, we've of

In opportunities. terms deal of

think with Obviously, our always on, leaves flexibility. comment conservative of level I a the we to made difficult you've of certainly specificity. any that's us that and point lot capital structure concur

So, opportunities a to they going all but respond time comment not on to them, to are specifically. we we're evaluating position the arise like and presented as to we're opportunities any certainly feel in us we're and

A.J. Rice

Okay, thanks a lot.

Operator

Your Please the Ana question Leerink. with go next comes BBB from Gupte line ahead.

Ana Gupte

morning morning Hey, Steve, good Alan. thanks, good

mix in? play any from sites that perhaps mix, question that do delayed you're A.J.’s to you would see seasonality And one, medical. me, perhaps service last able any Is shifting surgical high mix seen anything seen of to that about shifting to Is which one and the differences ambulatory there before? of anything kind tell hadn't on by geographies then deductibles? different? various from to you've payer incrementally, you you're playing Also, Just the from

Steve Filton

would prepared my shift seen emergency markets rooms of in that in in developing and think, fairly the certainly certain remarks, seen importantly, markets, otherwise our mean, and into business out emergency FEDs. and those business feel in capturing of like active some freestanding we some mentioned those hospitals we've entities. But I No. I in of freestanding I opening room competitors that seeing, think we're more been I our we're we've have

in did So are rather and percentage markets, dynamic dynamics certainly of ER medical. portfolio, generally, of the the robust. one in ER higher present shift of this And this patients remains just the We think business or surgical our quarter more admissions. We in think to capture look looked in of two. across of at saw a we I from one not we we our many dynamic seeing of I fact, the see is at

So specific it and any didn't seem patterns to be really determine us geographically regard. for in couldn't that

Ana Gupte

it's growth. got to observation do And Okay. on to lower used with stays, pricing more higher anything not be your which pattern volume,

I then of XXXX that's it think a sort bit. probably and slipped

Steve Filton

last mean, idea maybe we of explained make bubble comments strong success before, getting to we year in I had as some was West, what I admission payers, A.J. that acuity more which the Yes. the of in-patients is sort observation. out cases revenue categorized the rather I we’ve we describe experiencing that to related early I to that were some think trying with to and of as those of than particularly our – per

patients So that bigger that anniversary-ing But is least could at that of it's I incremental shift revenue some some to surgical the think that the the issue is of again although weakness an in impact. QX medical have patients. of possible dynamic,

Ana Gupte

On Okay, great. – behavioral. to behavioral switching Thanks.

the last to out was X% you length to volumes staffing maxed in and back pressure of kind Do volumes the, by me on payer X%? one-third on staffing months, it's to Medicaid you'll Medicaid, wrong. of of Correct you're which this about Are then two-thirds the seeing managed Medicaid. kind XX same timing the I shift, offset like clinical the get feel you of mix of driving return managed the that on hopefully, stay talked from you So and dynamic think stay, the if in XX length up, on to I'm dynamic here Medicaid?

Steve Filton

Yes.

of is back for Since about we've think us we of really reached late progress. shortages talked made really think, that and look, XXXX deal great problem I when labor impacting kind in a pressures XXXX, then, us So its were height. and causing I early that the

Now still the environment labor we tight as a pretty of remain certainly the in rest country. does

and either we've shortages some we so a and psychiatrist than much or they And those have of even we today sort think cases, amount more of clinicians. still were of infrequent or years the where of multiple occurrence pockets made a a a have But shortage I nonprofessional are amount nonclinical progress number in significant or nurses psychiatrists and of ago.

barrier of a that admission biggest getting growth. we've bit, to think about X% probably little So before. we the length to to a and that's much talked remains less barrier issue, I that growth talked about The of stay of target sort before which or revenue

the of continue begin point also We and work on course not that. largely think I anniversary two, we're year we'll next at of that to point quite to that have or But the there a view some yet. over

Ana Gupte

one one. then Okay. And final

pointed the You've you your diversified offsetting commitment business somewhat out always usually, for one on the model. a company other. have And

surgical Looking get in on behavioral side, relative feel you plan to to at and the it's do the broadly guidance? then better and more sounds acute, first relative quarter, how beginning like it to

Steve Filton

it's to to three I I'll decades, for comment, like just two-segment our I we've we the of has well served in which think seems think pressure, strategy, Well, diversification to you one going good committed over been which under sort made, respects. be. be quarter that. strategy And mean, well that reiterate. business I us I'm And time example make feel But a to some other that many this the last been business as one was of over another is not tended

quarter, to of a little As businesses, last of miss point call. amount. last this first midpoint up last but sort year the in related. a was cadence The Street couple feels X.X% pennies we of within by that projections the will our missed made to year far get trajectory we still a view more or bit measurably I And as at But track this think point miss guidance. had we'd the behavioral that wound is we the the a on say how related. the We will acute quarter missed The we was were original I year least say difference on me we year's projected I internal greater by where year like where first our consensus year's of that be fact, of the view and of the one

So obviously, and our can't be certainly we this a that projections guarantee that, result that pennies we will given feel, we but missed year, couple the that only given of internal same in in trends that original be care acute about QX, the seem to we seem safely pretty within good have feel driven ability themselves, land guidance. miss our to to the our reversing by

Ana Gupte

Thanks Steve. Appreciate color. the

Operator

next line Securities. Wells Your Costa with of question go from comes Fargo Peter ahead. Please the

Peter Costa

of nonprofit to surgical color Medicaid build the delay fourth you cuts. Thanks press but around Can that How it sounds it's point. But that? coming won't to anymore I DSH cuts a that in a about it's quarter? exposed are that bit? little at you more I trying resolved there's all are to support still a probably talk little guys, up letter item. those know Can you this like bit. for know mostly running talk I that's Washington you a the on about for the volumes. the

Steve Filton

was in already. decline some in me. of if our we know project XXXX abate pleased I embedded the is mean, we front Hard I embedded likelihood guidance have in sort to XXXX that was that what that in point, be in we I say now and do Peter, that guidance. either our or don't and DSH disclose. step numbers Yes. our XXXX. reimbursement, all But reverse There to will of think this XX-K, Obviously, of is our but is Congress our disclose reimbursement DSH I into at would we the that.

Peter Costa

So it to it a an opposed is guys as upside delayed, through, if comes you to negative? it it's if be will

Steve Filton

correct. correct. That’s That’s

Peter Costa

Okay, thank you.

Operator

of the Barclays. Steven Valiquette with question next Your Please comes from ahead. go line

Steven Valiquette

Good Thanks. guys. morning,

level So month since more the pricing. around greater noise ago has by guess, us the for care for commercial now transparency the administration really, hospital elevated a push time or a current managed in passed I over little

Just conjecture just curious momentum if came that this out thoughts is maybe month? on any whether or last steam either have gaining you since updated losing

Steve Filton

Look, a transparency I think focus lot there pricing. on a in is

it government commercial little I very don't through have think, the some who degree, reality, stories And the I that don't sort sticker Medicare a wind anecdotal is insurance. that prices. call or insurance even of of what though really be that group Although patients I patients of paying there either bit or largely mean rather would like are the sort small of is health on sort to it's Medicaid misdirected. can a most focused from retailer up really lurid,

really So lot there's I our supposed problem. know it. on you're – our that addresses post I complied. a have it's to significant as don't now, that it focus We certainly a prices, a we on website. But don't know

this of broad kind will which sort in think what in-network what is more for billing, other a do umbrella the dynamic. do billing These physicians, providers. generally I that think generally solutions That of is will problem. on that are out-of-network get sort put be hospital collection when the there and of hospital-based physicians, cetera, of ER one what of call I'll in-network. a are not the includes – an under some in think area I surprise kind I search pressure it's initiatives who are and may more anesthesiologists, I think of – et billing traction

hospital-based networks very in few have we're any generally our those physicians to of be require that really in. We cases. We

think issue. that's we of So an don't much

amount that's I in sense, of gotten broader transparency think a that's a bigger issue traction. than pricing some the

Steven Valiquette

color. Thanks. the Appreciate Okay.

Operator

Please comes ahead. UBS. of question next from the go Mayo Your line with Whit

Whit Mayo

just second right. that's in in penciled the year maybe you if $X $X first Can the of segment? morning. for Good wasn't or but thanks. million sure what had Hey, us were the a million behavioral headwinds quarter remind I last for

to this trying out underlying real quarter. is figure what growth Just the

Steve Filton

Yes.

million. So I into year improved facilities I items from non-same-store million segment of facilities that will activity regulatory-challenged think three headwinds million that moved been from $X note to facilities. with $X the were behavioral or has – those this $X by health. Those of the the have maybe you're the referring

the That then The has think relatively we or Medicaid been $X were last quarter. remained other think that the that in slow has by impacted late And million was largely this million the offset $X issues the numbers. and facility recovery market quarter last was remains relatively our from million in drag – got from the that recovery hurricane a our facility But since Panama Medicare remains or early that by drag They facility also reopened million Gulfport, year. of to or of Rico. year in slow. City Mississippi first slow hurricane the improved referring start $X and in I the I been something you're million unfortunately, as quarter. probably drag closed Puerto like $X probably $X second And during a the relatively

So I'm we a sure not turnaround big there. have

Whit Mayo

Okay.

it much EBITDA the as as and first on So increased as maybe decreased think in same-store simplistic possible, or internally basis, a to normalize quarter? how tailwinds, you keep you do for headwinds

Steve Filton

Yes.

Gulfport basis, I by think improvement largely City being So Panama loss. push offset on a it's a same-store with the the

Whit Mayo

it. Got

quarter? impact cited And admission and I quarter XX-K. maybe any the your headwinds statistic least on the to what per And first way size helpful. had know that’s that at first for adjusted some included Okay, supplemental the you in you was, optically, revenue

Steve Filton

$X and a million we We payments drag as But DSH that actually year's million in sort the don't we in on last include there's acute business, well million year. first about recorded nothing pay-for-performance Medicaid to a So $X declines these in managed the $X get from reimbursement tables the on largely I quarter them California. of the as and side Qs think in and them projected probably basis. special of this Ks cash we our record

a their So like there's said, some million probably, I to or first about $X on the contribute weakness the acute revenues of pricing drag that quarter. the in million $X in

Whit Mayo

Okay.

don't And year-over-year. a I was Okay. curious down number. actually Case know one. it mix just if if gave maybe one was then just mix, case actually I last you

Steve Filton

me, front in I mix year-over-year, have Case is Whit. down but exact the don't numbers of

Whit Mayo

Thanks. follow I’ll Okay, with up you.

Operator

Taylor with Gary go of JPMorgan. line the ahead. from Please comes question next Your

Gary Taylor

Hi, good morning.

up we'd in numbers operating higher adjusted the was Just the anticipate a day on a acute, had, X.X%, And a mostly fixed one dollar what's than strong cost probably X% volume almost which, other out basis on acute basis, growth year-over-year. on the was is about a expense per of question Steve, on given little bucket. business I

So other on to quarter? anything this unique call operating expense out

Steve Filton

sort like costs. is area think, areas or lot I It's ER get up locums Those where of I up appropriately physician say think operating the included service rate. inflationary basis, that expense kind range other – in some understand inflation that temporary admission of just where it as is we the contract things more per an model in often going adjusted that point point out, you an if expense operating for in care of think expenses I that, or expect. where are generally is the last functional I way functional usually that's physician in to is seen or recorded adjusted which basis. all that expenses in single-digit our a I those we'd than hospital are the line. pressure we don't has And record there at so. think subsidies. costs few one acute is our will look record quarters. of in on that's And anesthesia Gary, our you're model just we've that other seen low kind pressure on I subsidies of people think making that by I

Gary Taylor

Got of sheet. sides anything, the not excluded at under to providers accounting the on that both Is of the that Also, one new report covenants universe, think rules balance all capitalized sheet, it's current I from see on the my the amendments in your just leases. We included? just balance it. no or you're least or first debt all

Steve Filton

correct. That’s

Gary Taylor

on is, And last leadership internal external, behavioral any is there search? question update

Steve Filton

and vigorously. of mean pleased candidates to make announcement I hope continues We've Yes. soon. to been to see that that be been able that an able search quite the about with we've quality

Gary Taylor

Okay, that’s you. it. Thank

Operator

the Robert Please ahead. Gillmor question with [Operator line your next Baird. from Instructions] of And comes go Matthew

Matthew Gillmor

up thanks performance. question. Hey, for the on the acute I'm following

the I direct I I'm mix think within the business, sure heard payer about trends answer. not asked but acute Ana

color provide payer mix maybe you the trended on how can during Steve, So some quarter?

Steve Filton

Yes.

Matt. stable, think mix payer been has I relatively

done qualify on Medicaid. we've – a focus the or I for of think uninsured trying we had our to process

driven to favorable by we've payer actually I fairly we a service as as that's length of in our degree. quarter, just evaluated mix out think And they they that uninsured mix by think uptick utilization an think found shift so were not generally, I sort of of revenue talked seen much Medicaid a But already. great that changes But kind the about Medicaid. at into we as I the for again, really were we

Matthew Gillmor

those the that to that one of Got out. on been some business, for in the of And large are have All And then context talk understand impacts and you of segment. how that different could between And was sort the business a lot within proposal try I it I rates it. come behavioral obviously about was effort classes. behavioral behavioral, there's my the confirm maybe minimal, sort different but of payer guess on acute differences differences Medicare of rates to bit sense and the because there a that was the between were little pretty hoping

Steve Filton

view had behavioral, higher between I than spread that the relationship payer think both behavioral the meaning payers lowest Medicare. overall three side, is acute point commercial the sort always the but larger, and of the on then the general is side. and those is Medicaid in terms reimbursable-wise, say acute reimbursement. similar is would in in on of is similar the of mean, I middle the and Medicare of rates I of the we've is level their relationship

Matthew Gillmor

Thank it. you. Got

Operator

go And ahead. Please your Chickering of line from Deutsche next comes Bank. question Pito with the

Pito Chickering

share Good hospitals my of guys. market Or Thanks across you question also guys competitors? widespread One the competitors? is Can quick share but taking and surgeries. only from market talk this about in your not morning, on questions. surgeries any your within against sort for if lost you

Steve Filton

track none our Unfortunately, virtually markets. in of quarter as and do about. all get in market information that share talking we're we Pito, the So real-time of it as is

– probably, there's clinicians, sort markets facilities, couple informal who that imagine, have share depending we're still communication of as multiple So nurses takes practice three you a But quarters between shifts. from might but seeing of really lot market, facilities. a away especially between we place or doctors but of the within at especially market on

we market have, basis. was sort so decline reasonable just in we're was as shift. on that of some the how think, in was real-time was little to quarter doing our evidence, And surgeries the I evidence And anecdotal a There there sense in share sort no of significant most even happening. concern that very a markets of that,

Pito Chickering

enough. A Fair Okay. few here. questions more quick

so? to from all You came also Has all hospital or disclosed admissions the of that XX% in last changed at behavioral that ERs. XX% year

Steve Filton

No, Pito. I so, don't think

that pretty that, stable I think number been while. a for has

Pito Chickering

And enough. Any Fair on employment Are the of looks growing McAllen Tracking it that any within for economy seeing time decade. you a as though growth green then first almost in Okay. McAllen. the is there sort market? in markets, of trends shoots there?

Steve Filton

been for by been from economically perspective last that payer has and the one recently. Texas as and years, softer South I volume changes some again, a of mean market the And we've mix yes, a several I of consequence, discussed think, a bit us. our they've encouraged, markets over as a quite

it sometimes, filter think into care their for takes health while underlying the to economy. sort of a local way I changes market-specific those

been. think that a more So huge don't I know market, but bit they're bullish that I in change we're a than seeing they've

Pito Chickering

rates length Medicaid the businesses. All impact Medicaid any readmission on stays different managed length that that rates? i.e., of Medicaid, stays that one no Do much of low stays you versus don't, lower – for you're ones have the this business states last at of have right. is managed heavily then looking see in length question obviously managed readmission states the going the to managed versus do see lower And the

Steve Filton

that a availability are The greatly great on. is the we one challenge That's have we that data. question focused and of

imagine, of As a is to when and readmitted, in one is it's patient you hospitals. hospital always not then might seen our our

don't I perfect we complete always on think So information readmissions. or have

Sometimes, that. the will have state

Sometimes, will share the that. payers

think that make get the the payers that But of the suitable that that really this some appropriate we frequently. at not we are and Sometimes we information cases, least can can patients – that of not the long-run earlier the we it. cases, discharged patient prove, where to we are can for being readmitted in other ways length or think argument, have we pressure were is – care our of in do more because who some there stay of on we many

don't of information. look have the at I payers have part we challenge draw we But own their same that information So assume conclusions. and a that is all the

Pito Chickering

Great, a thanks lot, guys.

Operator

turn questions over And there the to the the further queue. I back in are no presenters. call

Steve Filton

We you, look Thank time Okay. with and next quarter. forward to again Heidi. appreciate everybody's speaking everyone

Operator

concludes this call. And conference today's

now may You disconnect.

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