One, thanks for joining us for our next presentation. We have the President CFO of Community Health Systems to talk about, give us an overview of the company. Kevin and I were just talking earlier, we're gonna kind of run through his priorities and hit on some of the topical things that have been certainly been topical to everyone. Thank you, Kevin. Thank you for joining us this conference. I'll open it up by if you could just talk to me about some of your initiatives you highlighted on the call and what you're, you know, where you are today in terms of, you know, opportunities and so forth. Sure. Thanks, Larry, and thank you for hosting us today. Thank you everyone for joining us and the time you're spending here. Yeah, we mentioned a couple kind of top priorities, one being kinda opportunistic growth. We continue to make some investments in growth opportunities. We believe that our portfolio, as a result of some of the demographic shift, the economic shift, is positioned well for the future. We're in a number of low tax jurisdictions, and those areas are experiencing some greater growth at the moment, and we think that that's gonna be in our favor. We mentioned we are opening, I believe, it's 118 inpatient beds in our Naples markets between this quarter and the 1st quarter of next year is one of our bigger investments that we believe, you know, will have a very positive impact. We've got a number of outpatient access points that we continue to focus on. There's a lot of opportunity there. On the expense side, continuing to make some big improvements in expense reductions, our margin improvement program that we're focused on putting some discipline around that and how we track and report and manage some of that. We think there's runway. We've been at that now for two years, starting late 2019, and believe we've got some, a couple of years in front of us, on that to continue to drive, some of the margin improvement. Great. Thank you. Thank you for that. As it relates to your outpatient footprint, I know it's been a priority. Can you just speak to your deployment of capital into the outpatient footprint, be it, you know, primary care, you know, ED, urgent care centers, and your kind of footprint within certain markets? Is that presumably a key priority given, especially given the trends? It is, you know, patient care really starts with that primary care physician. We continue to focus on adding more primary care physicians to our portfolio. We're also investing in urgent cares, freestanding EDs. We're adding, you know, approximately five ambulatory surgery centers a year. We have, I think about 85% of our markets now, we have ASCs. Okay. In those markets. Mm-hmm. Continuing to look for opportunities. Now, I think that, you know, we feel good about where we're at there. The markets where we don't have an ASC presence are markets where we probably don't need one, because that convenience factor of having an ASC versus outpatient at the hospital doesn't exist. Yeah. That convenience isn't as big a differentiator in certain markets. Right. Have you seen in terms of the outpatient strategy, I know you've seen a shift. Is that something you think that is permanent in nature in terms of the shift? It seems, seemingly a more aggressive shift out of the inpatient setting to an outpatient setting. We're seeing that across the board. We are. You know, there's been a number of procedures taken off the inpatient-only list. Right. Mm-hmm. By Medicare. Commercial payers kinda follow suit and start to direct m ore of that business. There is certainly, as I mentioned, a convenience factor- Yeah. I think for the patient to be able to get those procedures done as an outpatient versus inpatient. We believe we're capturing that business in our networks. Mm-hmm. There is a focus. I think if you look at our net revenue, certainly the growth of outpatient net revenue is outpacing, the growth of inpatient revenue. Part of that is, I think as a result of the pandemic and recovery, we're seeing an absence of some of the i npatient business. I do think that comes back and balances. Right. That a little bit going forward. Mm-hmm. I do believe outpatient will continue to grow. Is that something that you think potentially comes back in 2023, in the near term, or is it? I do. Dated concept? I, you know, we had expected it to come back probably sooner than it has. I do believe that some of that does come back in 2023 as we continue to recover from the pandemic. Expanding that conversation to just your volume metrics. You had talked about on your call that volumes picked up as you moved through the third quarter. I know for the year, they're below what your expectations were, but you said they were picking up through the quarter. Can you just kind of walk through what your thought process on our volumes kind of throughout the year and as you're kind of looking ahead? Have there been any material shifts in times of what you're seeing in the market that would kind of alter your thought process about where volumes are? They have. You know, to start the year, with a big COVID surge, we really expected the recovery of that deferred business to occur quite quickly, after the surge was over, which was similar to what we saw during the very first wave of COVID, that during the Delta wave, or following the Delta wave, we saw a fairly quick recovery of that deferred business. After Omicron, it really stalled. It started, March was strong and then that recovery stalled. What we really attribute is somewhat of a working theory that I think it's played out and now over the year is, you know, about that time that recovery was starting, restrictions were lifted on people, that was the spring. Weather was getting nice, people were able to travel. The Omicron surge was of much lower acuity, and people felt the risk of a maybe a follow-on surge would be even lower acuity. People started to get back to more normal activity, taking vacations, traveling. Our doctors were taking significantly more time off traveling. Through the summer, and into the third quarter, I believe our business was largely disrupted because of that. As the kids got back to school in the fall, people returned home to their primary residence. Travel season was over. Doctors were coming back, starting to practice at a higher, you know, degree, more patients then getting referred back to the hospitals. We saw volumes pick up and that was kind of the back half of the third quarter, and we're seeing that continue on into the fourth. Could I ask, are you seeing a little bit of a bump from flu as well? We are. Although the flu has been relatively low acuity. Mm-hmm. Not to a great degree in terms of admissions. Mm-hmm. We are seeing a pickup in clinic visits, in some ED visits. Yeah. As a result of the flu. Again, generally lower acuity. Okay, great. Thank you. Moving on to probably what is a wonderful topic for you, in terms of contract labor. I know I think the data points on the call were $60 million in 3Q of 2021, $190 million, 1Q coming down to $150 million, coming down to $100 million. Obviously trending very favorably. Can you walk us through kind of a little bit of history there and kind of how you're thinking about that going forward? Obviously, improved material, then more rate. Actually, rate's been a part of it. It's been utilization, a little bit of both. Sure. Pre-pandemic, we, you know, we average maybe $30 million a quarter of contract labor. It's something that we've always used. You use it for seasonal business. You know, here in Florida, that has a much higher seasonal fluctuation during the year, always utilized more contract labor. Again, average about $30 million a quarter. We saw the spikes that you just mentioned, you know, really beginning in the fourth quarter. Right. Of 2021, when it was $140 million, then up to $190 million, $150 million, $100 million. We'll expect to see continued decrease into the fourth quarter, although not the same level of decline we saw sequentially from Q2 to Q3. Probably, you know, as we look out into 2023 continuing to improve. Mm-hmm. It is both a decrease in rate and utilization. Mm-hmm. I would say at this point, at least through the third quarter, it was probably evenly split between a decline in rate and decline in utilization. Okay. I believe that we'll, you know, part of what we're gonna see in the fourth quarter is as the rate comes down to a level where we may have suspended some services because. Mm-hmm. It just didn't make sense to staff with such high rate, staffing. As the rate continues to come down, we may bring some of that contract labor back. We also have a higher seasonal fourth quarter and first quarter in Florida, which will bring some additional contract labor back as we normally would. That does slow down some of that decline. I continue to say we'll see continued improvement. Substantial improvement. Yeah. Yeah. Throughout 2023 then. Just from a longer term perspective, is it reasonable to think that you could get back to anywhere near $30 million a quarter? Or is this kind of a. Yeah, I would not expect us to. Right. I would expect something probably if we get down to the $50 million-$60 million range a quarter, it really, at that point, is probably no longer part of the story. Right. Yeah. Okay. I know you've talked about on the call, you had referenced, recruiting. You've made progress from a full-time side. I think you were saying you're up 12% as a reference point. Can you just walk us through your strategy around recruiting and how much opportunity that presents you to offset that contract labor? Sure. We made really, you know, big strides, I believe, in the third quarter, really second and third quarter, which contributed to our ability to take out more contract labor. We're up, you know, for the year, roughly 1,500, a little over 1,500 nurses full-time. Okay. You know, we've moved our recruiting function, into a centralized environment. Mm-hmm. You know, in the beginning of 2022. That's been very beneficial for a number of reasons. One, we're able to cast a wider net, by doing it centrally, using more technology and online, you know, type recruiting efforts, as opposed to what was going on locally. We have better control over it. Tim and I are able to get kinda daily reports where we're able to track, you know, numbers of offer, number of interviews, number of applications, offers made. Mm-hmm. Acceptances declined. Gives us much better management insight into that whole function. That's led to much better, you know, kind of, flow through of improved recruiting efforts. Recruiting. Okay. At the end of the day, that's playing a part in the substantial decrease from Q1 to Q3, Q4. Ye-ye-yes. Is that fair to say? Yeah. That's fair to say because. Our overall staffing, if you think about, including both employed and contract labor, has not increased significantly. Right. Kind of the total number of FTE. Total absolute number. The contract labor was not all incremental to treat COVID patients. Right. The overall staffing size has remained relatively flat. As we bring down contract labor, it's contingent upon us being able to backfill some of those headcount with full-time employees. Okay. Thank you for that. one last point on labor. I know we've heard, and you had referenced as well some of the incremental costs that you incurred in the third quarter with regards to recruiting, you know, incentive bonuses, other related incentives you made occur to bring people. Was that a cost, if I look at it sequentially, that was, I won't call it largely embedded, but was it a part of 3 Q that we may not see going forward as you brought the labor on board? I do think we had a bigger impact in Q3 than we may see going forward. Some of that is really some of the onboarding costs of new hires. You're training, it's unproductive time, getting them up to speed. As those employees then get into the workforce and stream, you know, and becoming more productive, you're able to leverage that, you know, that time and expense more. We'll see some continued costs on that as we go forward, but I think it becomes more normalized. We don't see that bigger spike that we saw in the third quarter. Is there a, if I may, and feel free to not answer this question, but anybody could quantify that? Yeah, I have not quantified that yet, so, at least not publicly. Okay, thank you for that. Commercial rate discussions has also been a topic that has been, you know, in the inflationary environment, pricing leverage and kind of how you think about, you know, today, what you're gonna get on the rate side and potentially, and those discussions with payers, how those are progressing. Are you able to push through some of this message to the payers, and will we see that going forward? We have been. Are we getting what we're asking for? No. Right. Are we getting a rate lift that's greater than what we've historically gotten? Yes. I would say, you know, on the commercial side, all in, when you factor in the contracts, some of them aren't renewing this year. Right. They're rolling over at zero, or maybe they just have an inflator in them. Kind of an all-in number, I would expect commercial rates to be up 4%-6%. 4%-6%. Next year. That's about 100 basis points. Yeah. Higher than we've seen historically. Mm-hmm. Some success individually. You know, we have contracts that we're seeing in the high single digit rate increases. Yeah. I would expect that, you know, some of the contracts that or that did not renew this year, that will renew next year. Mm-hmm. That I would expect us to be able to get some additional rate lift, as we. Okay. Renew those in 2023 for 2024. Okay. There's still some tailwind on the commercial rates for us. Kevin, you've mentioned, I think, in recently that you think 2023 will get back to kind of a normalized kind of top line, kind of mid-single digits. Mm-hmm. Is that the thinking largely being the recovery on the volume side that drives that from where we are today? Yes. well, I think there's a couple. There's a number of moving parts in there. Right. Certainly expect volume to continue to recover. Okay. That the recovery probably, you know, occurs throughout the year. I also look at some of our investments into higher acuity services, some of our expansion of, like the beds we're adding, next year. You know, we've opened a de novo hospital in Tucson this year. That was June first, I believe, that opened up. We'll have a full year of operations next year that are relatively fully ramped up, you know, by the time we get to January, and we'll have a full year of operation. That should add some additional volume in that market, you know, acuity. Then there's a payer mix, you know, and as we continue to, you know, push and target and hope to achieve better payer mix, there should be some benefit there. Okay, great. Thank you. Capital allocation strategy, just how you think about it from, you know, deployment of capital into your portfolio. Maybe as part of that conversation, talking about you talked about recently about potentially monetization of assets coming into play as well. Could you just hit on those two points in the sense that they're linked, but more the capital allocation strategy. You've purchased, you know, part of your capital structure, some of your bonds back. If you could just walk us through your mindset in terms of capital allocation and where the deployment of, you know, the monetization of assets plays into that? Sure. you know, we have some medium-term targets to get out below 5 x leverage. you know, our leverage has been high. we're working to get that down. as part of that, you know, obviously, EBITDA growth is a significant portion of that. as we have opportunities like we had in this past quarter, where we had cash available to us, and the markets were trading at. Where they are. You know, some pretty attractive levels in terms of debt buyback, we believe that utilization of that cash to buy back some debt, and help you know, contribute to debt deleveraging made a lot of sense. We'll continue to look at those opportunities, you know, in a market where, you know, say we exited 2021, where most of our debt structure was trading near par. Right. You know, then you have other choices. Do you if you have excess cash or proceeds from an asset sale, you know, do you reinvest that in something that's gonna. Mm-hmm. Add more EBITDA. Mm-hmm. Delever that way, or do you use it to pay down debt? I think in the current market with. Right. Our pricing, it makes sense to. Yeah. To bite on debt. As I think about asset monetization, you know, we do have some assets that as I really continuously look at our portfolio, and as we kinda exit now the pandemic, and look at what the prospects are. Right. In some of our markets, have there been changes either favorable or unfavorable? Mm-hmm. Do we have still some assets that don't quite fit into the network structure? Mm-hmm. That we're building that we can leverage scale? Are there opportunities where there might be a willing, participant to transact with? Right. Yeah. Kinda all those things combined, you know, there are some assets that we're advancing some discussions. Mm-hmm. We have one in West Virginia that we've announced, that we have a signed APA on. Some other assets that we are in some further advanced discussions on that may come to fruition and may not. Yeah. If we have those opportunities at the time that we transact that, we would take a look at what makes the most sense and how to use those proceeds. Okay. You don't have a targeted, I know in the past, the times you've talked about having targeted proceeds you'd like to monetize. You don't have kind of a target at this point in time, or you don't think? No. It's more just opportunities as they present themselves. Right. At this point, we've not targeted a proceeds number. It's really looking at opportunistic. Opportunistic, okay. Transactions. Okay. Okay, great. I know we'll probably have a few questions in the audience, so kinda ran through my questions, and I'll go ahead and open it up. Thanks, Kev. Thanks for coming. Sure. Thank you. Can you discuss on your other operating expenses, excluding contract labor, what are the largest buckets of that expense and what have been the growth drivers? That line item has been increasing over the past few quarters. Sure. There's a couple of the big ones. One is supplies. We have a number of other, you know, insurance, kind of our fixed cost, type utilities, insurance and so forth, that are in that. Medical specialist fees is one in there. We've had really good success. We had, kinda through the second quarter, I think six quarters in a row that we were able to hold those non-labor expenses flat, from an absolute dollar spend. In the third quarter, we did see about a 2.5% year-over-year increase in non-labor expenses, if you think about the inflationary environment we're in, to hold those non-labor expenses to only 2.5% increase, we felt pretty good about that. Some of that increase, that 2.5% was attributed to some of the onboarding costs that Larry had mentioned earlier. Some of it was some utility cost increases. If you think about our footprint across the Southeast and Southwest in the third quarter is the most extreme temperatures and is our highest quarter of utility utilization. With utility prices increasing as they have, that's contributed. I think going forward, you know, we won't be able to hold that flat continuously, not in this inflationary environment. If we're in the 2%-3% kinda range, I think that would be a very good target for us to hit. Is it cost fixed costs? Absent the supplies, yes. You know, I'm not sure what the percentage is including supplies in that, 'cause supplies are clearly a variable cost. Other than the supplies, the vast majority of that is more of a fixed cost. Thanks, Kev. I just wanna jump in, if I could, one question as well. Can you talk about the dynamics and economics around, I know you've talked about, I know it's closing service lines or capacity and bed constraints just largely based off of labor. How challenging has that been? Is that an opportunity going forward as labor, I'll call, comes back or able to restaff and open up beds? Will that create a revenue opportunity, a greater revenue opportunity going forward? What are the, kinda the decision points around that, if you will? I do think it creates an opportunity. You know, part of the headwind, it is labor, but it's also demand. I think it's patient behavior. A lot of the kind of volume restrictions we're seeing today, I believe are really patient behavior, versus us kinda limiting ourselves. Right. Because of labor. If we think about second quarter coming, we were fully expecting, you know, much more volume recovery. We staffed for more volume recovery, added incremental, some contract labor in the second quarter, expecting that. The volume just wasn't there. In the third quarter, we were able to pull back on some of the additional staffing. We consolidated some service lines. We consolidated a couple facilities, suspended some services where the volume just isn't there, so we're able to get rid of the staffing. You know, I think it's a combination, but I do think that it is an opportunity for us going forward, because we do have some additional capacity. Is the labor challenges also translating to length of stay? In, in terms of. It has. Part of that is the labor challenges in the post-acute care space, which was preventing us from discharging patients. Right. Then contributing to longer lengths of stay. Right. As that continues to work its way, you know, out of the system. Sure. It will allow us to, you know, further reduce our length of stay. Gotcha. Okay, great. Thank you. Jenga, pretty good. Bye. Referred to a new normal for salaries, wages, and benefits, that's probably 200-300 basis points above, you know, 2019 levels. Can you share with us what your new normal would be? Thanks. You know, I do think there is a new normal in kind of that base rate, because once you give the base rate, it's, you know, it's not something that's easily taken away. What we are doing though, to offset some of that, is looking at our care delivery model, utilizing additional LPNs, nurse practitioners, allowing our RNs to practice at the top of their license, utilizing, you know, adding things like partial shifts into the mix to make it more attractive for nurses if they or maybe a caregiver outside of the workplace at home, and they're able to work four-hour shifts instead of your traditional, you know, eight or 12-hour shifts that have been scheduled. Doing things like that to make it more attractive, you know, is going to allow us to offset. There's also been, you know, through the pandemic and through this labor market, utilization of, like, sign-on bonuses, stay bonuses that have contributed to a significant increase in labor expense. I don't see those continuing, so I think that is something that isn't part of the permanent increase. Right. In the labor structure. Mm-hmm. I would say for next year, we're thinking that, you know, right now our thinking is that the base rates probably increase about 4%, kind of 4% inflation next year. Next year. All right. Kevin, thank you. Just curious, could you just help me understand how you guys will get down to less than 5 x leverage? Like, what specifically if, w hat's the goal to get there? What are you guys gonna do? Just help me understand that. It's a combination of EBITDA growth and debt pay down. I think kind of the, you know, combined with as we grow EBITDA and we're getting ourselves back to being free cash flow positive, we think that free cash flow can help further, you know, our debt pay down and, to get us there. What would you say your realistic long-term EBITDA margin profile looks like on a normalized basis? Our medium-term goal is to be about 16%. You know, we're confident that we can get there. Have you disclosed how much of your revenue is from your ambulatory surgery centers? No. We do not manage our ambulatory surgery centers as a separate segment of our business. It's integrated into our hospitals, so we don't disclose that separately. Is that something you consider breaking out in the future? It's not how we're structured, not how we manage the business, so no, probably not. Just to follow up. On the ASCs that you plan on opening, the five a year, are you doing JVs and working with specialties to build those out, or are you a majority interest or minority interest? I'm sorry, I missed the first part of that. For your ASCs? Oh, for our ASC? Yes. We're probably evenly split between owning outright and JVed ASCs. We're kind of pursuing both. We have some in the majority of our JVs, we're the majority owner. We have just a couple that we're a minority owner in, but probably even, pretty evenly split between wholly owned and JV. I think we're running low on time. Maybe time for one more question if there's one more question out there. Okay, why don't we go ahead and wrap. Yeah. Oh. One more. One more. Nike shirt. Can you for your CapEx, what's the mix between spend on the outpatient side or initiatives versus inpatient? I don't have that percentage handy. The majority probably, you know, at least recently, has been on the inpatient side for a couple reasons. One, where we've added, you know, some pretty significant, like in Naples, adding inpatient beds, is a higher cost construction. On the outpatient side, the majority of that spend, we're able to get into those access points at a lower cost point from capital. It, it's more tied to, you know, some equipment. Oftentimes, we're leasing space, so it's pretty capital light in terms of entry into the outpatient space. Can I ask one last question? I'm sure you've been getting this a little bit, the guide for 4Q. Without getting into specifics, looking at some of the intricacies, contract labor's sequentially it's just a stronger quarter, as we've talked about. Contract labor is beneficial, I mean, it's 1x in 3Q. Are we missing anything that sequentially plays into that? Any data points that could help drive the sequential benefit? You know, those are the big ones. It's volume recovery. It's kinda some normal seasonality in terms of volume as well. I think our expectation is the volume recovery is greater than what we, you know, maybe had seen historically because of the disruption. Right. In 3Q. That we experienced in Q3, Q2 and Q3. Contract labor being a big piece. Those are the big pieces. Okay. Okay. Okay, great. Thank you. Thank you, Kevin. Yeah. Thank you, Larry. Thank you for joining us for the conference. Thank you, everyone. Thanks, everyone.