THC - Earnings call transcript Q3 2018 | Tenet Healthcare Corporation

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Operator

Good day. And welcome to the Tenet 3Q 2018 Earnings Call.

As a reminder, today's call is being recorded. At this time, I would like to turn the call over to Brendan Strong, Vice President of Investor Relations. Please go ahead.

Brendan Twohig Strong

morning. Good to are referred company's on today's website. in slides posted call the The cautionary information on slides. note statement Please the forward-looking included the in

of In business These position. certain today that limited plans the and to, events future expectations, addition, financial current during respect not forecasts, please discussion to on available our outcome with based nature, and to matters expressed Actual timing our earnings materially but, statements our are including, represent management's statement. those statements but address events constitute and relate information, These currently statements made statements. any their forward-looking statements to could outlook by uncertain. future as forward-looking from forward-looking in that note results differ and future

you Chairman our or information, obligation cautioned to to Factors Executive speak the information of their recent I'll filings. please Tenet's Rittenmeyer, forward-looking are turn most subsequent to statements XX-K Ron? not no as Officer. Tenet assumes reliance Chief more forward-looking respective in other Executive put Tenet's refer Form on any discussed and call Ron SEC now that update Risk over to statements. these and For and dates, undue

Ronald A. Rittenmeyer

and morning us. Brendan, for thanks joining Thanks, good and

Dan put a details, the Before dives my I and the take few quarter from minutes into thought I'd perspective. into context

we and of spend lower time this solid to view items but and $X.XX, the several we the posted and the in Dan CEO operations. adjusted was consensus X $X.XX. will There comparability came EBITDA above end at the of detail while we our a we Conifer that impacting and materials on some hospital we've afternoon, as summarize some the our puts in fell time yesterday higher X you materials the in projected in slides My and range year-over-year was short that and is As saw in within the and number, overall above impacted presentation had on are added which range of EPS USPI, end takes that. quarter larger range,

I normalized this points First, a the to improved in for year its as a less XXX hospital the EBITDA allow mistake, The me to are basis, margins grew priorities top quarter. to no minutes up On excellence over those take Make XX.X%. quarter. add Ambulatory segment basis declined color adjusted hospital facility-level it and comments grew statistics. X.X% while and relates third adjusted Conifer X.X% want few some by quarter. NCI EBITDA operational my operations. growth to this so

While an we had divestitures, quarter, next shift And on number we're this well growth that to this acceptable. restore the market When as good believe share, for admissions our Tenet very we noted market Detroit in which a Detroit. some is a impact organic services. is as to admissions a do quarters, and positive Detroit expect markets for we the the we're we a a had that as in while that a we market trends important we begun we which and a also from a to XX has Detroit, in in cases, deeper. at adjusted all a these improvements on we in had outpatient not quarter, we in and are and follows believe that growth cases inpatient XX admissions we share we're the Detroit expectations rather of not which into into observation been discussed that confident has settlements our several remains and challenges impact we're will remain and is malpractice in we the environment looking have look but suggests losing improvements see prior hospital topic continue. trends noted past volume the headwind from has We really having stabilize. very headwinds persist path negative noting shift greater remains rebuild to see

I our team we my versus shift are as stating have markets, opportunities As a appropriate and I to in not and growth. are said, make while And excuses in with a from to inpatients see we few what observation we satisfied outpatients corrections. seen have headwinds not we noted, some

speaking built marketing campaign et community the theme wraps, tailored at the as In local a local the from community. a a community. employees, level the drive part directed at our to to care. grassroots community stronger past of have churches. cetera, market services bus for and built much us increased has to We program a Each community in level our Detroit, departure example, and This speaking of is the hospital uses and billboards, radio, the on are This specific using programs at markets its marketing to this nurses, on events, is a needed. selected efforts with position it expanding in tailored clear physicians, message we

our our both less the care further and service micro this offerings business. new centers, focused weekly of urgent solid and with reviews, of non-surgical quality, our to this team in and feel amounts structure margins tremendous be I has performance commercial in our stronger with develop improvements their engine its have of performance should as Ambulatory portfolio. the in support margin about created stated continue surgical other on performance has performance in growth Conifer build-out up off-campus in past. points areas with driven job by future. continue. resources a We a this among we hospitals, our the improved appropriate the part position overall In very items. improving opportunities pleased NCI The strong to was as done develop to in We're this XXX quarter EDs lines, and hospital-by-hospital basis, and facility-level the This financial USPI's in Conifer's outpatient on of the market over a additional short a of XX.X%. basis was good a adjusted great and segment, Overall, in quarter the continue improvement capital to going dramatic with period Conifer's the strategies, underscores we and revenue quarter I've value EBITDA and we very time.

portfolio of spoke, terms we activities we Healthcare the Aspen last of In since in in sale August. UK completed

and Last venture remaining and target continue Oklahoma USPI the in quarter. plan the for fourth HPI joint We the closing with to City. the Hospital a week, formed new Group Community Chicago health INTEGRIS

surgical our total to this care of number Southeastern USPI bringing patients an new has venture transaction, ownership surgical two expand also Tower hospitals to for a part of Pennsylvania. now partner USPI As Health additional access a XX. healthcare to in joint position announced in hospitals with

end roughly $XXX We $XXX million the million between by growth the This million a XXXX. be the deployed have USPI's will Ambulatory on acquisitions in $XXX will to provide nice and the year. and to quarter of third tailwind

Now, I'd about the process. second like talk Conifer a and take

energy improve Over time, driving of exploration has number of to significant the the Conifer. enabled progress XX% the have a including EBITDA we made potential of we it a year last business. the year-to-date. substantially growth us sale and at into of same that within We At invested performance business time adjusted have changes made the

is commitment efficient believe an shareholders very for deliver this and I has than realize opportunities is time stages. will as mentioned, explore in been we this contract to transactions. to Tenet the the our performance by while decision we and to options more improvement that the outright now and the are right. construct viable deliberate in some it not sale. or spin-off, did to we should This detail combination value that And taking process close are I Conifer very the our a need and the while I time our this this from By as Conifer's the taking go to to worth to for a new now tax this alternatives be participants. allow of such We has down the merger, strategic Conifer a one way, the for even final We in few the process actively been believe could That shareholders. raised includes and accomplished evaluating to other have faster, time, right are many today waste. started alternative out when a shareholders investment to do Conifer now we has And late

like also Before perspective enterprise. provide I to some a conclude, on XXXX, I'd for thoughts XXXX early on the few

we to our outlook to and fourth X% into the lower XX% planning based will on process, reflect to we consensus XXXX quarter. faced are EBITDA EBITDA for in are grow we deliver consistent We this XXXX, going quarter hospital expect X% positions the in the to that to this, deliver growth the somewhat where we continue segment us expect to which in with challenges with results which And expectations. Even are our range in we Conifer. expect to XXXX adjusted with EBITDA business that

I'm finalize release to With to turn our We planning we results XXXX some to Dan? closing over have months process provide more I'll that, it we'll the when full our February. have business over Dan going next for work do quarter in and our outlook to and fourth comments.

Daniel J. Cancelmi

our we adjusted good range but below and wanted expectations. Ron, the you, of that in $XXX million level everyone. achieve EBITDA generated We quarter, Thank within morning, of the to

basis, offsetting the normalized grew EBITDA EBITDA. range $X.XX high-end delivering for As this Adjusted normalized outlined this lower X% was X, the of EPS on lower was a and year. X.X% anticipate we NCI XX% we growth EBITDA above on the slide with quarter, our quarter to and

XX.X%. million, EBITDA free of million for X. listed months year-over-year and flow points. less hospital with in was basis XXX $XX was EBITDA million year-over-year X.X% million, NCI the nine And but to normalize the first Our $XXX up this rose a year, Ambulatory million increase improvement adjusted $XXX $XXX after margins over up a segment $XX was facility-level slide Conifer's down of EBITDA $XXX was on $XXX up year. million items XX.X% delivered which million last of EBITDA, cash you

on up adjusted were admissions admissions hospital volumes, which Turning down and X.X%. summarized to X.X% are were X, slide

adjusted As and basis margin discussed on our admissions of have by subscale points dilutive call basis XX lowered number a closed we this we XX admissions various quarter, hospitals, points. at earnings services last

After closures, admissions normalizing Continued due service Detroit X.X% softness XX points. for admissions and basis or due revenue. cardiovascular were admission by increased to per recent and expense $XX line growth adjusted Fee malpractice operating strong including supply on down lowered only adjusted Similar $XX growth, in Revenue were quarter. were X.X% partially increased and expense also from were X.X% this acuity and our high-intensity These admissions sale up to quarter. the admission California. in was up for SW&B X.X%, risk-based primarily up of the expenses losses supply this Detroit adjusted California X.X%. by X.X% admissions in per increased adjust contracts asset. items gain adjusted quarters, if X.X%, Provider Other Overall, per about offset to X.X% of were cost costs admission, you adjusted million and up a the increased million an procedures.

our loss and in the As forward be shown we X, a in XXXX. going slide contracts on a on anticipate with fourth risk-based quarter will lower smaller million losses about even quarterly on basis these $X

in than our As not quarter. risk-based impacting was Also, on $XX we was gain or items results had malpractice contracts, expenses, QX expense why million than reason this anticipated about on losses million you think more sale. three lower the key we $XX other a had forecast these about we forecast, the which asset were $XX operating of our million did anticipated

growth Moving this care third USPI's rates exclude of X, quarter. were business August. was business, In we slide strong imaging per this our up growth Ambulatory X.X%. X.X% remains surgical to up case revenue in growth up the non-surgical with sold increased X% consists revenue and urgent Cases Starting centers, which which and Aspen revenue strong quarter, X.X%. these again in the now USPI's quarter, on

year. X, increased XX.X%, slide growth adjusted the on EBITDA NCI with anticipate XX% facility-level for we the shown that consistent full less As

to USPI for continued foundation expect a acquisitions $XXX providing we $XXX mentioned, to strong this year, deploy Ron next year. As million million on growth USPI's

revenue year. $XX Moving XX, margins slide points, which was this resulting Conifer's customers, Despite quarter. to in as this, EBITDA We up was XXX by in fourth compared divestitures Conifer XXX points in be basis result down long-term Conifer's in growth of margin a basis by should with And quarter of prospects. more Tenet million improved X.X% last confident line proposition on and and expectations. the other than to our remain value

XXXX. EBITDA to improvement X% to X% margin leading year, additional Conifer next expect growth We at in of

through $XX additional XX primarily to EBITDA for in the by This Ambulatory slides XX, risk-based is lowered million reduction to midpoint due a $XX hospital the partially our of you expense, million. will by Turning malpractice increase the adjusted million due note the contract we and that outlook to full-year $XX offset segment. losses segment,

outlook Conifer's has not on changed. EBITDA Our

our free and of Turning In Fee to in million we Provider the in ratio anticipate of California reduction was meet debt through million million $XXX this to million anticipated $XX range payments leverage market our proceeds for and cash realize We in quarter and cash paid expect quarter to did $XXX million a flows, the And for summary, we flow in off million In and open to to expectations. $XXX $XXX adjusted the to $XX results fourth hospital quarter, of timing lowered our investing Programs X.XX. EBITDA million end change another Michigan. acquisitions. at our reflecting of about $XXX repurchases from divestitures, Ambulatory the from quarter. the expect approximately the retire we another fourth the not

finally However, XXXX, and EBITDA X% X% normalized EBITDA outlook we of range grow Company-wide, expect our strong year. XX% in And Conifer for XXXX to USPI from delivered X% the growth range. we anticipate to this to results.

turn now the to Let me call Ron. back

Ronald A. Rittenmeyer

Dan. I'd company. where relevant we are strides, on In some which a to few slide of were believe comments like a most outlined that Thanks, as to This are made make we XX. year, noteworthy I closing,

infections preventing points by instituted Since a obviously and operating of discipline sharper more basis standardized, score decline improved XX and we we've groups January, in rigor. expense and seen this by our levels with our management, rates X infections. implementing proven, for we've First, and X we improved of we experience. much delivering our methods have patient with approach XX% In lowered are effective area and an patient hospital-acquired of experience evaluating

with If $XXX million. recall, you started we an reduction, additional then we million $XXX later identified

full $XXX on are deliver of of the end annualized track the million We year. to rate by run the

behavioral our today, will will and Vice transitioned context, in the provide little we I promoted the named and has functions to buy-up this including and Our off-campus November, Since eliminated and results. names were deep Brett corporate to leadership November corporate the job joining closed four additional Baylor our USPI, from To of and we And at roles USPI were who operations, succeeding enhanced in in or divesting confident top on their given and you all the nine strategy, eight also, has will enterprise, we've our promotion EDs a notch outpatient also quality. earned company's We and surgery including margin Chairman businesses. XX% and changed done the board company last home, to positions solicit right, include colleagues and centers, including hospice duplicative USPI. for thrive our health wide eliminated and same legacy. Since been team terrific continue is XXXX. our is and perspective, and important ratio. realigned operation. And also as that USPI the leverage of our dilutive. layers. not We've shape care of topics, At entire time, his service, we of a programs, to and of to prime them. bought transitioned engage the integrate as throughout portfolio with These improving. our well we've added of very role shareholders new physicians deliver performance. and Vice corporate feedback last Bill and of or Tenet. a other performance And taken meeting leaders continue We last the He USPI, will is He's top respect non-core provision of have centers the We've we from people has health in and service roles forward USPI important we've systems across as year improving and Chairman team, guidance they his in our important his Bill exited under internally, management I'm urgent may experience members Brett's him culture team. programs, to in was non-core are lowering leadership. XX%, the frequently to the by-laws fresh CEO his look Brodnax many leadership from of work but a diversity. leaders. know, to our subscale hospitals governance. hospital very the USPI Governance on its instill outpatient and the we count centers, approximately in as grateful due his XX amended people ranks original performance a UK, Brett and built we've Tenet, my to operations special range of adding and an which part drove Chairman responsibilities. continue of We're and faces facilities one-third And and and incredible locations. of work our centers, This to our and we've best be role We since practices. improved. still we've happening of built OB contribution five years a of of at shareholder-friendly completed policies performance to health I announced time our stronger his Wilcox, around related our and company XX% as that, and culture of assets,

moving we the growth area into initiatives each of business. year balance look XXXX, to are and prioritizing of with the we As the

the our are portfolio months areas focused on this in at ventures. last making addressing hospital services through and tremendous needed. of leveraging market-by-market Conifer, we on And positioned what improvement base top the two now, value. USPI, We're we're and serve delivered well At client slide works expanding summarized for have we to our year, are are in in XX, services. adding increase line business. client to for changes improving that surgical and acquisitions As we're demand and going joint seasonal and growth, our Right we

should improving returns not expect they overcome I an be It achieve. net, headwinds many rather to provide but stop the to are quality, without and service to to they us continue Not we going but expected not an excuse but addressing making. So opportunity. and admissions, is not cases, in the are we're also improvements easily

it So turn questions close and you. this section I'll with now. Thank we can over that, operator, for

Operator

Thank you.

We from will next take question Citi. ahead. of go our Giacobbe Please Ralph

is line Your now open.

Ralph Giacobbe

a Thanks. Hoping sense (XX:XX) of the first. in give revenue for you with could arrangements, happened your of and the some risk the factors some how we the contribution Good you to investment exit these ability based quarter long then maybe contracts – run, us take with The contracts I sort in start to from losses? guess morning. the quarter. the what of Can

Daniel J. Cancelmi

morning, This Ralph. Good is Dan.

been Let to in me we've Southern emanated address had business from years based And it's that. losses of these referring is number The that that for a business. we're solid business and risk a California. where

and tend month. seen. or we've the And or what offices into our manages between at been other acuity, of contracts as settings. claims, could attributable been of year, are they Just speaking, negotiates that it's member that's fixed Based hospitals in paid a a other such as population higher contracts These a type deterioration the can to the a and claim mix incremental a an risk-based that's we've lot, business, of it. things a per IPA including per the some amount experience you're business, whether related care life this Generally there's background incurred, it and dollars, trends, ESRD capitation-related bit where number some of to hospital, imagine. then physician items on plans of and type seen each drive you for and for specialty enters claims be little with different patients, the on they're the cared

so, the And address about driver year, we're based experience that the of had losses. this with our where quarter to and was – at the of this in on $XX million we the

sense going-forward makes We that where are it the business contracts we But we evaluating the and sense necessary. we're we're terminate contracts, we evaluating the will doesn't a can it sell and evaluating if if if fully exit on it. basis; business it all going if business forward, will makes

Ralph Giacobbe

you give a of Okay. the base? Can revenue sense us

Daniel J. Cancelmi

It's about so. $XXX million or

Ralph Giacobbe

to, the is there. And guess, I then just little That's your pretty payer wanted ex the steady The you some Okay. details Provider lower of attributed get Fee even I mix a outlook (XX:XX) pricing expectations. helpful. more to looked healthy. California

little on more what context of flesh I what's So, can and you're help pressures, just a those if driving seeing sort payer want out you so mix there?

Ronald A. Rittenmeyer

Yeah.

I'll – me provide a let me payer address let So, me context. the little let – mix, but

in losses reduction segment plan, the in encountered. that contracts, it's these mentioned to So, we've as we malpractice release, in outlook, our of incremental well these risk-based expenses as to, largely to hospital the related terms as attributable

well – there a to payer As mix, some trends portion there. the related is as

noticed business some as mix uninsured we commercial of volumes book prefer well. have would and may just between of up higher obviously the are than You

So, it. we're on

that growth to felt leadership was we and changes, we're the where all of different we doing at But at need with right guidance it this adjust strategies number some a of the every based have to We markets. prudent the each point. hospital at trends we're that. and on now make Where

Ralph Giacobbe

Thank right. you. All Okay.

Operator

take go will Mizuho Hynes ahead. Securities. We from next our Ann now Please question of

is line Your open.

Ann Hynes

or into go that sale the to changed forward? mentioned detail you process little of Conifer moving that was Ron, Thanks. with about Tenet. the contract your what Can try strategic to part and process sale, of a get bit you Conifer Hi. you reworked process,

Ronald A. Rittenmeyer

current is got, process. on the contract, during forward. The and of the we've we I a month-over-month Tenet on spent a one But the new the really that move have Conifer that time renew lot one between process the Well, contract, this developing reality doesn't we've we mean, basis. one a to could contract expires. have

And I'm with that comfortable contract. talking that are. At about we not forward so, going given publicly where we're this point,

So, appropriately just at look we performance. looked and consider the clearly that that put that adjusted that I in other series we expect. We've contract forward a pricing We've and on a of have all some things as they has you standards would say the also to. on pricing and expect heavy perform we achieve, Conifer's them areas focus to cash that to

I of a have we the think also, much and between performance that in measure. the better last done Conifer's things year, really we gap the job closing

You begun Conifer from clients. know think by we measurement be the we versus is measuring good have shift really done the the to what they expect performance

needs performance that good to customer, defined little we've done we And was, there process. there by Conifer. be by and I that the think, mix in a this needed not So, to fix

I that it to appropriate Conifer would like the and I And is length it all get it's So, say to and to with think upside to provides is very are provides mission supposed its them execute for supposed contract protections doing. they with it's the the be collected be. arm's Tenet cash balanced,

I think it could that's best point. this the I at describe probably way

Ann Hynes

program? past And presentations. on update in potential any that It's something a highlighted you've Thanks. right. divestiture lot All

Ronald A. Rittenmeyer

B, tell you like that We're not fit. getting about, finalizing impossible then divestiture we difficult and publicly Other to when whether type we the hospital the because always to divest than a of I strategically we're thing as would very to made – – or proven our of at a I but in a is you, telling it the to looking mentioned going doctors, It's a is kiss the always we're performance publicly hard signed, business in close obviously this not you've still talked retain C start or they ones you unless cetera we're always ball announce have past, divestitures to going to or staff, going deal that looking in A, of lot et it's program death have statements. play. I catch. we've We're know at words is to there maintain that that operations. sounds forward. those almost

don't to more want create turmoil to So, I that.

I view think tell the I is a would But don't good look at posture there where active that's that think for us you going in profitability. we past. I done we've continually forward. go an that business

out take Just closed. at dilutive. look reasonably lines been that taking this We've lines service we've margin a year are aggressive the service

continue or to debt to at going still on assets, of providing or bring USPI to the move our want whether is better look in, down basis not or cash of at the some at we are assets. We or pay type it's assets, those Tenet it whether they're of other redeploy and return to

reasonably asking see if that expressing makes doing. we're So, work interest that's guess, sense way, I'd continually I an better a the if call what and interest we a that, to than effort us we ongoing only process at evaluate in say we and that is active every call actually people get when

glib I need think degree. that do sale here to of I've go what So, to some only it's I concern it kind got bite think with careful is a you – a I locations you looking big because you're just a mean, mentioning we're get a comment is it's – you and for everything bite just actively if at do that. is not that the later,

Ann Hynes

Yeah.

Okay.

Ronald A. Rittenmeyer

the you. give So, I that's best can

Ann Hynes

Thanks.

Ronald A. Rittenmeyer

Sure.

Operator

from go take We now ahead. our Josh Please will Raskin of Nephron. next question

open. is Your line

Rachana Fellinger

Rachana is a thanks number to Josh. for improve of on question. This for operations. hospital you Ron, And highlighted Hi. ongoing initiatives the

could fully we timeframe should how the to a assets? Also, about you give think us XXXX? stabilize for Detroit spend CapEx So,

Daniel J. Cancelmi

This morning. Dan. Good is

Let address estimated expenditures basis, on when a me certainly the I'll XXXX capital of consolidated for expenditures, $XXX we're – capital million. talking about year, this

of in on perspective additional patient the level pipeline $XXX the $XXX hospitals, we'll obviously We're access patient and out business. in focusing to probably increasing that with obviously In terms would care in micro from that business. improve I gone freestanding in year. service capital high-acuity our now, this care Certainly, continue our sites, our again will very, I lines, about in we invest our EDs, of next next hospital drive growth neighborhood USPI hospital invest strong mentioned year, that haven't very the million drive markets, probably yet. detail remarks, capital to points But be all we'll say urgent surgical year. capital The to million the access in hospitals' to business. is business,

where we'll those could levels. we'll call. certainly USPI we be certainly, And past so, on years mean, over of investing we with arise, on be levels million $XXX when exactly be Conifer, think I business. next $XXX the we least been a in it's out – at capital come several of the type February little At that certainly of we'll we've year our at And that. million, low a that opportunities north depending But the

I the capital Conifer years. been in of And material the several expect in wouldn't that over so, investing we've past change type any

Ronald A. Rittenmeyer

that, we're then the to going on of talked in we be do, this the we're Dan is our amount be Yeah, and sure focus make going to better and maintenance the forward return, – means are to diligent will a for are that, the get thing where appropriately. always money really always we and on that I'd that which capital only putting preventive certainly business, we things there's about. you very going dollars to greater return. stuff those things type But you on add free, have a is spending spending beyond some capital not of There and focus maintenance the returns, do, hospital the some is

think, color add. I'd the only I other So, that's

J. Eric Evans

[Rachana] is (XX:XX). This Evans, (sic) Josh Eric Yeah.

on couple there. there. Ron Your things question, a of mentioned follow Clearly, seen earlier, Detroit we've up stabilization to

business from really and about the you we guys planning a our is our perspective. of agreement You know Wayne just there heard lot finalized – a State basics focus

investing in Michigan physician in community of the renowned everything our the of access is is in the premier our in really in as in big the That's Ron specialists, Rehab the markets. well doing approved community are there community. state. that Medical also physicians, Michigan increasing in our and access children's primary a of Institute is XXth the need, of from Detroit. connection points We Detroit And Hospital we heavily as Children's urgent got for assets meet we're look, city actually of meeting mentioned, We've plan, hospital premier our Detroit with the we points, just some Center, to need Michigan to asset. as the center care there right care that bring The the other the have marketing state a

the best XXXX. And organic mentioned, in to to acute so, job very using in focused those we're our in the half that second Ron and growth and to on the expect are an make number investments And take very, staff, is docs and Detroit best that. our as attract return sure to we've the of we made we assets

Rachana Fellinger

Okay, great. Thank you.

Operator

now will We from Please Rice Suisse. Credit take question A.J. our next ahead. go of

Credit Suisse Thanks. everybody. (USA) is A.J. LLC Your Securities Rice line Hi, - open.

talking parts. First, obviously lot growth XXXX maybe you range, about more to Obviously, be pretty your for outlook, X% just about straightforward get moving business been little on talk to surface reasonable a we've a of you've a would seem X% to Detroit. got and this the but to

the and the $XXX plan million mentioned are got think west, got assumption of got already savings of there headline of other year out the headwinds the you've things you among in – is you've You the that about about at, growth X% what assumption big and then exiting and maybe that health annualizing some your the to divestitures acquisitions you're some When versus in X% that Chicago businesses, the ones annualized if USPI is core to there's number? you really highlight, to X% the growth, X% those, tailwinds. the

Daniel J. Cancelmi

is This Dan. A.J. morning, Good

me what we Let feel we think think we next about year, about can address When that. we deliver. good

through me just thinking a sense give how to pieces Let and we're math. some about you of the get

very, recently. well, are let's very minutia we but levels with ability there. recently, the we've get the very, assets growth more specific obviously good online USPI number performing we out continued We'll coming we of put feel continue very to when good the the obviously, the guidance, about of business, USPI's terms that a transactions Ambulatory into felt seen and start – very at In grow to about

there terms year. X% think In to we've should as we be mentioned X% next Conifer, prepared in of growth remarks, our

realize $XXX So, million cost initial at And million right $XXX math where realizing year. the reduction the for to for at track going Conifer about We're least you're our you with – or Conifer about in this that can thinking out. least million our do as We're year. next pointed that on $XXX initiatives. see and on is, where we've

rolling $XX So well. another million there's as year into next

when grow look you those but that we've some obviously we next optimistic business, with very business lot – hospital contracted book been have business, pieces, as management or at hospital so, a terms pricing have well about pricing cost where obviously X% as to those certainly of we as there's a about creates good we good growth. opportunities We of issues that continued is from issues our we you feel there. just type And year. real opportunities X% strong you XX% have of opportunities targeting. already get next year, to year that feel our this good to had next listen, we're the that's But that in so are addressing, a have that's from and We think commercial what well of we year – on

In the and just seen good is about terms recent sense have next at. Medicare, X% you've next of in, there. It's came obviously so obviously Medicare we year. for Outpatient updates X% us about year, where of

cost growth Rice additional growth, I LLC Credit the well Conifer A.J. actions. that Suisse come that that we good as those in other USPI incremental Okay, targeting. So, have we're items mentioned. work grow about. growth, The that's to to would Securities feel cost the to pricing, business management, do hospital obviously as from and real great. - And will be (USA) what volumes We the

this as broadened have whatever for guess can your if more community – guys happens kind this aspect has collecting think might to could flesh the and can't okay, about you follow going of to to about you're be And fee get contract, rework a that me me could management. own, realize potentially from contract there you contract? revenue out if be upfront dollars a Conifer. little probably made have that spin-off, buyer think is could contract, the do it's Let in that? it's been things what on the sure or I Conifer might maybe commentary table? a entity, cycle new bit, I'm talking they're of go focus do you incorporated I transaction? between think if ongoing whatever, you and just some on in is there's to that – And consider, talked my the the on, your wonder discussion their in what you trade-off for going the up, with to the is – How think able payments, upfront actually do people the new an here, I of or that dollars I potential ongoing about some relationship that investment the about back and a I you you that you're maybe stone around is think and there

Ronald A. Rittenmeyer

This is Ron.

written, plan finally with The when never where answered of deal Sure. I we it's stone, consider, right? questions, extending is in I'll out it most fundamentally we and kind to that on way. depends out. Would You mean, Tenet, is it contracts this what and go throw is as we contract stone. how the it but in plays the cut that those longer? contract The deal of

agreement start sides. we commercial not would good Conifer, agreement, have both I a yeah, agreement with we for certain So, over consider and to because things. mean, we're it's it's an a going clearly,

to – they get get they it's expectations, a a they to We're If live important. premise penalty very If to divorce, There's we miss deliver because going they got I still and hurts. and for on expectations, is So, a paid. above return. our higher but to get a right, if reason deliver deliver, with deliver that cash they them. got they married that, the collecting them. mean, they based we're get

our So, It's this they not optional major life part at a stage. are of forward. going

So, the go the that and deal. long-term part that's a with of the it, in contract will anticipates sale value

up this that most been be at There own? truly So, was you or opportunity far you're stage nuances that I can of this than think Rice is point, where Yeah. (XX:XX). about a ways because that think, I there major you've Securities do talked and those there concerns that can though more I worry enough don't that got along flexible, more the stuff terms don't strong even maybe, concerns is their an would to are thinking Credit I they - that in so look could (USA) think or has it, we're are I Conifer has LLC maybe Suisse to A.J. on bringing about. do of discussed at are been but entities structure would things

Ronald A. Rittenmeyer

sure, always guy theoretically, that's we Yeah. when want negotiation, Well, it. and price stand mean he in the to feels more of mean, just listen, that's part I a lower should the I against you be – And his you're with why everybody part support of him and that give that's you're deal. negotiating – can

of they're value behind time here where company. tactics spent negotiating both have of my into sides of been, is of the stand I end saying. get the what something lot This And we day, of life kind you in So, know at the we've but to look a the doing.

(USA) some Otherwise, to doesn't have something can't reason that So... it, you So, A.J. Right. right? promise there's promise in no - skin LLC Rice Securities Credit it. Suisse

Ronald A. Rittenmeyer

good ...but and I at have Suisse stage, very feel here those Thanks Credit so. lot. Securities Rice we've (USA) that bracketed LLC things think I - A.J. we a made this Okay. progress confident

Operator

We question will now Jaffray. James Please ahead. take Sarah of from Piper our next go

open. is line Your

Sarah E. James

Thank you.

you're to shift looking deeper inpatient outpatient. that into share in this from mentioned You

specific you shift way once able that utilize can understand you Is the to a for about or identify then, to outpatient wanted that growth? And I how could to you're can track tracking how So, categories? patients talk you're surgical benefit that. to you there it, information

J. Eric Evans

Eric. is This morning. Good

outpatient, So, a into the to I'll break from mentioned, of there's couple so buckets. it of inpatient a couple shift we things

this, as is is saw that bucket not our observation patient a in in first a patients, hospital bed which increase a this inpatient. we in that head is an an classified is The a basically, it's quarter

them shift we're up the we And level whether time. confident to expansion pretty just classify from of We to this have that's at looking sure time the see around. each are seen for those they move We quarter. cancel this much we that that and is And in we to we're more just of other we trying observation a closely it is had see there. We're than types the right markets of make make of we've moved that and patients something very quarter that patients an out. sure and Typically, so, down, acuity. understand

We have a normal trend.

So, quarter. it's a little different this

So, that closely. very we is at look one that

of business. on a medical great wants that to in one of is USPI question have technology is we making in to setting a a do an our go that we in-patient work And having to about communities, opportunity patient shift can opportunity, when and have or general, we second our to staff, each The things earn so we part manage that closely that with other sure the from out-patient. very together that shift lockstep just the that that different that with with

the acuity that that And used closely hospitals as thoughtfully list ensure see every ASC you that updated earn ASC number then know, business we're bring that in with so, only hospitals done the high we're in will be that. setting; on very that to that are and planning done we leaves were the year, setting. now backfills And to and gets about the how do in in Brett the the as procedures number business I business out-patient that as to one, well-positioned an hospitals And opportunity. coordinate we two, in that

we for with that our movement markets USPI happening that time, one it's have appropriately. work in with a and to it's make So, deal to sure closely that's long very we a been

Sarah E. James

where treatment for when high select to in-patient, just acuity you and acuity in seek backfilling about relying talk on high it. increasingly reviews clarify, are to they And the Got items. consumers ratings

high evolving spend. So, how specifically, and decisions, attract Thanks. So, marketing is thinking share of gain in hiring kind investments their across CapEx to acuity? I'm

J. Eric Evans

strategy. USPI urgent Ron our a have want our taking of make I patient which the our increased big progress so closely for care driving is with that. on, the which market exactly do are the improvement great is in very the why outcomes – in on, making be that and in deductibles sure branding question. experience confident focused on transparency we very, Yeah, driving local then we're push it's our more patient service we increased is And and a believe is consumerism touched we high-end we going each to lot forward. we in they a consumer. and is deliver to clearly, USPI where to feel in, strategy healthcare with the news a we're very, and power ambulatory more is big with for the The to course, meet as mean, hold treated. lines. work And how center This part of in It's of market, part we left provider premier well-positioned us in our markets good market on that very positions

Sarah E. James

you. Thank

Operator

ahead. now next Ana our Leerink will of We question Partners. take go Please from Gupte

line open. is Your

Ana Gupte

Hey. Thanks, Yeah. morning. good

$X.X baseline. into that you I clearly your higher you question obviously think bridge EBITDA like on hospital one-timer, those the the in that get account account to it's if those first a EBITDA, for it and have for don't the then the is up any had would you like I Can – which it adjusted to you haven't Detroit. billion was what you a us with magnitude the deck, malpractice adjusted of be the adjustment feels but two for give come are? So, took sense on would

Daniel J. Cancelmi

Ana, Dan. this is

that Let schedule six. include slide or malpractice on that. line as a Yes. did me separate address We not

were in costs the quarter. not about were the that in in million the incremental quarter remarks malpractice though, As I guidance $XX my mentioned for roughly third our

into our So the math what do in want talked we Again, when last to into you could QX had above that add over your and million $XX analysis. we if August. you also factored guidance

Ana Gupte

Okay.

treating been which story guess, the case more dramatically. have – in – there U.S. EBITDA So, headline the it'd which billion, would positive, be down doctors pretty I would would, roughly then $X.XX

Is if investors out, that looks I that suggested. mean, from I the headline there fair? than myth the a think, that a better it was is feedback you lot that take

Daniel J. Cancelmi

As five And some settle it, contract the part as years of our was of million older older to old. about I components claims, was incremental risk-based $XX contributed as and the through losses of we guidance were went there million. various of various than to to malpractice well the adjustment certainly that malpractice mentioned, which $XX

Ana Gupte

Okay.

a because on in-patient That's and the pricing expectation on helpful. outweighing out-patient. growth net the the basis say is Okay. pricing you you Then, Thanks. the that have, growth XXXX sustainable

in after in mix there. And line optimize look utilization with degree you kind and/or point? what at can commercial bad rationalization, where the the the to improvement you of capacity incorporating other portfolio relative are improvements, service this debt in-patient the any payer setting? your You're your you And in seeing is your to acuity at segments? issues When

J. Eric Evans

And answer is this Eric. a I'd couple questions. so, those of

we of forward, first utilization all, So, look when still capacity remains.

pricing, But rid say from think on getting we're plenty support, or capacity obviously we're We we're have, that little higher have in capacity high a acuity our go markets the and we focus I the high is remaining items lines. would obviously, of that perspectives forward's about a keeping to acuity of. when markets our you in our continuing service than growth utilization ones to perspective,

our And ERs. so, seeing we're in show you're It's revenue. seeing the growth that in up the same thing

one and slightly. two down at X%. visits, The up and If about you four look they're level they're the five, level

negotiated. part acuity that that managed along of expect with to is going agreement continue that, we've we a fair terms So, drive to already the care

hospitals good or we that at divested, So, markets, in, we're closely in of USPI in our and healthcare market us to thinking what market markets have grow Brett the assets. X very with acuity one to those the not you positions the about better looking we we just and in grow in be volume overall number a ever. service two the kind From working than about we the positioned We pricing. out-patient be of share, feel system up those really remain does markets. – at markets perspective, of high approximately the market line in, that the that also but in, again look we're we're is the and like in-patient XX% we our look if feel think share well because points

Ana Gupte

Got for it. the color. Thanks

Operator

from our John We now Please next James. of take Raymond will ahead. Ransom go question

Your open. line is

John W. Ransom

to I'm question. mad at At get Hi. the of me, having ask this Ron risk going

gentle. a with you a talk think one much the simple value? I as on mean, today price without I also could your too you Conifer, but be a The about please as of to is, price struggling about assume, So, do that? be little years when payout divestitures buyers sacrificing it road, how should how flexibility that and thing five preserve bit down we potential I'm

Ronald A. Rittenmeyer

to I a question. to It's That's – appreciate point. had Really do is It to you, hear never want from – We've it negotiation a obviously John. or it question. an the that an buyers good you've comment got approach a with interesting to good is question. interesting divestiture. guarantee

can't that. do we So,

John W. Ransom

Right.

Ronald A. Rittenmeyer

here. realism There's

based numbers, then – reasonable some you us for have gets do or on some argument know to deal floor, got you you USPI the other you – some do try portfolio handled projection business You've what they you is how – right? to we believe and then today of what acquisitions. will some set but during set If that with acquisition happen through rolls Conifer, pay that, into an and

John W. Ransom

Right.

Ronald A. Rittenmeyer

et their cetera price. They probably and to would They wouldn't. negotiate we'd a and add just volume it

are base So, of take that Conifer's In part a over industries and us others, and to client lose the my and business. again, acquires to of on that. outsourcing build ins if what and the owns which is it's and CHI in they every job business, experience, it which to just a then of to are, base time some outs ins time contract terms primarily clients going And just of a kind me, going because of its part to of does. degree, potentially different customer piece piece is it's outs divest and and an is business, the some benefit their

of on a is outsourcing proving position in the business, there spend hospital ins don't if for you I here, a in performance handle of differently that's that. as look security. because time outs typically and don't And Security people take normal it's of of. sort want that outsourcing – thought since process. this security. looking little going we viewed problem that's side, on that been at is found outsourcing part And the a the of it's really I bit we how are lot have industry, I've no So, is you and and execution because can that the out only more every a

major a off. point as somebody it on see don't I or of turning So,

that I pipeline we hospitals, or in also they've the think years some transitional them can – of And that a in frank to in be we the try way, some short adjustments. those we of that do that of to make about because and not. to doing Conifer business retained period usually, They that be divestiture. of but two there's know some what what's years already by Conifer prove it. maybe divested, to past, up the when give a business. that divest it's has they lost two the year, we But

saying of question, part that's answers know way best negotiation. your So, of just I don't if that think again, it, can so... I I think the but

John W. Ransom

It's about transition, No. interesting helps. so that two-year the

Ronald A. Rittenmeyer

it Well, some less. be year. mean, I are could a

John W. Ransom

Yeah.

Ronald A. Rittenmeyer

on depends So... buying right? It who's it,

John W. Ransom

horse and other XXX? how in physician the just dead just catching much Management of beat university, Right. of settled getting was How on your but kind would My the much, about you that, too Detroit deficiencies the of to not with that much up talked the is of question opinion, guys turning issue be corner. some and

Ronald A. Rittenmeyer

Again, a hard question.

question do or job, other be, – at right problem, box. Now, when all the university with wrong, through times? a of did they so would they feeds what think thing went lots they of thing darn think, the they at XXX? Management doctors on, Did right I times. going few a cases, The do probably good all base – your the okay, right? the did happened some answer the they but in the cases whole thing, is missed right I things that's What we didn't probably

leading it combination. has a So, said We're He He in the pretty But guy totally have is very job. a we up major great changes. organization it's I Tedeschi. some mean, that, He made we a Tony doctor. – great there. well having a does rallied

what totally and change That's whole doing. So, I'm your you're and the comfortable got how in approaching putting Downtown is problem company. marketing we're marketing kind. were and community as our with digital issue, just you've that. to out go other buses not in back effective as rebuild rebuild as a We But into on billboards digital and things Detroit, the is in marketing probably and

expanded consumer think I what's people business. And that's a our in we've And marketing at so now – helped. really we've more that brought look as

do it's want really a you of do So, thoughts? Eric, you other to combination of all have – it. any

J. Eric Evans

were a well. we some No, struggles foundational had ability in and Detroit the confident making, distractions, year with a downtown is our feel certainly while covered a I orthopedics in you partnership core part piece mean, and I we And community of of community. think it there I the mean, very Detroit the this ultimately, Center And that growth announced we've leaders. lot to vibrant a of we're there make investments company. in Medical

We in of strategic Hospital core part Children's last service including to invest opening our have week. continued our this lines tower the up

We of it and see this so the a see around. story (XX:XX). a place lot we again we in growth And becoming pieces turn to have stabilizing

Ronald A. Rittenmeyer

do that every resonate marketing believe doing to effort, care, has of a And community fact just had has mean, we're not not just they theme at a I where really even community outreaches we you that and it's the the in community, digital When may the I community. that important we the where mean, see environment of exists And in inner-city outreach the aspect. it. of begun – the think inner-city

Medicare/Medicaid a doing positive on the major that's drive of signing weeks. we're up and last tremendously – So a had positive influence a in couple

you else all think, something you to Do okay. have good. its – I want So,

John W. Ransom

you so Thank much. Thanks.

Ronald A. Rittenmeyer

Okay.

John W. Ransom

Thank you.

Ronald A. Rittenmeyer

Sure.

Operator

final ahead go open. is Robert your from question of Matthew will take Please We line our Baird. Gillmor

Matthew D. Gillmor

And business? I trends trend in with comp about perspective. growth The from a was Is growth stronger the that specialty of the the there easier talked part on Thanks. ask I just about you October there the quarter? did you the confidence? the from the talk Are Ambulatory very were fourth the know you to then, driving volume or confidence quarter the business. a about that ramp. Hey. seeing in something in perspective geography obviously Were case Can that based little that's want good. normal seasonality? got particular a any

William H. Wilcox

opportunities been. de inorganic strong pipeline Hi. through in organic This Wilcox. see mergers as we positive as both is through the Dan to that Bill is And the acquisitions. and novos, the continue trends mentioned it's ever as and also Well, and

are large many contributing many come are some a the stability through for systems developing number, I surgery health strategies. looking owners and ours. health partners which are focused those that a or think, like And system on of with that affiliating would there's Ambulatory that potential partners strategic then, many of really centers, independent company to factors on the

November, always with to nurses the have year fourth time do the we and as – working expanded to surgical volumes we're become volumes, have confident be the with for the and certain and able going – we as to as particularly our on days We're years. schedules, and we more four make our physicians of we're terms that possible. that closely strong we us more a December In always in more cyclical end as last it's quarter, our dependent that. very to to And much the three operating

Matthew D. Gillmor

leave it. Got there. Bill. Thanks, I'll it

Brendan Twohig Strong

a anybody That's call. going Thanks. give right. questions, our conclude if has to today. Thanks any much, And All call very please follow-up me Matt.

Operator

call. today's concludes That

may you. Thank disconnect. You now

Brendan Twohig Strong	Tenet Healthcare Corp.
Ronald A. Rittenmeyer	Tenet Healthcare Corp.
Daniel J. Cancelmi	Tenet Healthcare Corp.
J. Eric Evans	Tenet Healthcare Corp.
William H. Wilcox	Tenet Healthcare Corp.
Ralph Giacobbe	Citigroup Global Markets, Inc.
Ann Hynes	Mizuho Securities USA LLC
Rachana Fellinger	Nephron Research LLC
A.J. Rice	Credit Suisse Securities (NYSE:USA) LLC
Sarah E. James	Piper Jaffray & Co.
Ana Gupte	Leerink Partners LLC
John W. Ransom	Raymond James & Associates, Inc.
Matthew D. Gillmor	Robert W. Baird & Co., Inc.

Tenet Healthcare (THC) 6 Nov 182018 Q3 Earnings call transcript