Welcome to the HCA Healthcare Third Quarter 2023 Earnings Conference Call. Today's call is being recorded. At this time, for opening remarks and introductions, I would like to turn the call over to Vice President of Investor Relations, Mr. Frank Morgan. Please go ahead, sir. Good morning, and welcome to everyone on today's call. With me this morning is our CEO, Sam Hazen, and CFO, Bill Rutherford. Sam and Bill will provide some pre-preliminary remarks, and then we'll take questions. Before I turn the call over to Sam, let me remind everyone that should today's call contain any forward-looking statements, they're based on management's current expectations. Numerous risks, uncertainties, and other factors may cause actual results to differ materially from those that might be expressed today. More information on forward-looking statements and these factors are listed in today's press release and in our various SEC filings. On this morning's call, we will make reference measures such as Adjusted EBITDA, which is a non-GAAP financial measure. A table providing supplemental information on Adjusted EBITDA and reconciling net income attributable to HCA Healthcare Inc. is included in today's release. This morning's call is being recorded, and a replay of the call will be available later today. With that, I'll now turn the call over to Sam. All right, good morning. Thank you for joining the call. The business fundamentals for the company were solid in the quarter, with broad-based volume growth on a same-facility basis across our footprint and various service lines. These results reflected continued strong demand for our services and healthy operating margins on a same-facility basis. Across most areas of our business, we maintained the operational momentum that we experienced over the past three quarters, including continued progress with our labor agenda. Unfortunately, our results were unfavorably impacted by our Valesco hospital-based physician venture. Bill will give additional detail on this impact in a moment. We are continuing our efforts to integrate this venture and anticipate implementing additional actions that should improve its operational results over the next few quarters, including less pressure for the company in the fourth quarter. Because of this issue, primarily, we have lowered the top side of our earnings guidance for the year to reflect the effects of these losses. It is important to understand that we believe the decision to consolidate Valesco was strategically imperative in maintaining the overall competitive positioning and capacity offerings of the company. As has been the case historically with our teams, I am confident that we will find a pathway forward to mitigate the impact it has had on our results. For the third quarter, diluted earnings per share were $3.91. Same-Facility admissions grew 3.4% year-over-year. Inpatient volumes were supported by continued strong acuity and a favorable payer mix, with Same-Facility commercial admissions growing an impressive 7%. Same-Facility equivalent admissions increased 4.1%. This growth was driven by emergency room visits, which grew 3.5%. We are encouraged by our ER revitalization program and the results it is producing for our patients. Outpatient surgeries on a same-facility basis grew approximately 1% year-over-year. Other outpatient categories also grew, including outpatient cardiology procedures, which increased almost 5%. These factors contributed to an increase in same-facility revenue of 7.9% as compared to the prior year. In the quarter, we continued to invest significantly in our people with additional investment in orientation programs, Galen College of Nursing, and clinical education facilities. Turnover was stable in the quarter, and nurse hiring was the strongest it has been all year. These positive results helped reduce contract labor costs 12.5% as compared to the third quarter last year, and 11% sequentially. During the quarter, we maintained available bed capacity. Instances where we could not accept patients from other hospitals represented only 0.9% of total admissions, which is consistent with the rate in the second quarter. We believe the significant investments we are making in our networks, our people, and our technology agenda will provide us with the necessary resources to improve our service offerings and deliver higher quality care to our patients with greater accessibility. I'm proud of our people for what they do every day to deliver on our purpose. I want to thank them for their dedication and their overall great work. HCA Healthcare has a disciplined operating culture that we will maintain into the future. This focused approach, which benefits all stakeholders, enhances our ability to execute clinically, strategically, and financially. Let me close with this: We look forward to our upcoming Investor Day on November ninth, when we will provide more details about the company's approach to driving sustained long-term growth and shareholder value. We will also provide some early perspectives on the upcoming year, as well as longer-term thinking on growth targets. With that, I will turn the call to Bill for more details on the quarter's results. Great. Thank you, Sam, and good morning, everyone. I will provide some additional comments on our performance for the quarter. Consolidated net revenue increased 8.3% to $16.21 billion from $14.97 billion in the prior year period. This was driven by 4.5% growth in equivalent admissions and 3.6% increase in revenue per equivalent admission. Same-facility revenues grew 7.9%. As Sam mentioned in his comments, the Valesco joint venture had a negative impact of approximately $100 million on the company's Adjusted EBITDA in the quarter, as well on a year-to-date basis. A portion of the third quarter results was due to revising our revenue estimates from the second quarter as we began to see claims being paid. This result was not what we were expecting, as we are experiencing revenue shortfalls compared to what we originally modeled. The Valesco operating results had a negative impact on Adjusted EBITDA margins of approximately 80 basis points in the quarter and 40 basis points on a year-to-date basis. Going forward, we anticipate the loss from this venture to approximate $50 million a quarter. We are working diligently on multiple efforts to address these results, including making program adjustments where necessary, deploying efforts to reduce the cost structure, and working with payers for more appropriate reimbursement. As we have discussed previously, we have seen subsidy requests increase from contracted hospital-based providers. Professional fee expense for contracted providers have grown approximately 20% on a year-to-date basis. Although we are encouraged, the rate of growth of these payments slowed in the third quarter as compared to the second quarter. In addition to the mitigation strategies discussed above, we continue to assess other operational adjustments within our cost resiliency programs to help offset some of the impact from these issues. Let me speak to some cash flow and capital allocation metrics. Our cash flow from operations was $2.48 billion in the quarter. Capital spending was $1.15 billion. We paid about $160 million in dividends and repurchased $1.14 billion of our stock during the quarter. Our debt to Adjusted EBITDA leverage ratio remains near the low end of our stated range of three to four times. As noted in our release this morning, we are updating our full year 2023 guidance as follows: We expect revenues to range between $63.5 billion and $64.5 billion. We expect net income attributable to HCA Healthcare to range between $4.94 billion-$5.13 billion. We expect Adjusted EBITDA to range between $12.3 billion-$12.6 billion, and diluted earnings per share to range between $17.80-$18.50. We expect capital spending to approximately $4.7 billion for the year. Before we open it up for questions, I'd like to provide some commentary on our year-to-date performance. We believe our core business metrics remain solid. Year-to-date, our same-facility admissions have grown 3.3%, equivalent admissions have grown 5.1%, non-COVID admissions have grown 7.5% over prior year on a year-to-date basis. Same-Facility ER visits have grown 5.7%, inpatient surgeries have grown 2.3%, and outpatient surgeries are up 3.1%, all on a year-to-date basis. These volume metrics have outpaced our original expectations going into the year. Our payer mix trends remain favorable. Same-Facility managed care admissions increasing 5.3%, and Medicare admissions increasing 4.3% on a year-to-date basis. Medicaid and uninsured admissions are slightly down from the prior year on a year-to-date basis. Our Case Mix Index has held and increased slightly over prior year, and our Same-Facility revenues have increased 6.4% on a year-to-date basis. Our Same-Facility labor costs and supply costs are below prior year as a percentage of revenue. Through a focused and diligent effort, our operating teams have done an incredible job of addressing the contract labor pressures we had last year. On a year-to-date basis, our contract labor expense is down 18% or over $300 million from the prior year. We have confidence that a similar focused and diligent effort will help address the current physician cost pressures over time. Lastly, when we look at our current Adjusted EBITDA guidance for 2023, we think there are several notable items to consider. We discussed in our year-end call in January, COVID support payments, the out-of-period Texas Waiver payment, and the 340B impact from 2022, which all total approximately $500 million. When you consider the $145 million payer settlement we recorded in the first quarter of this year, as we take all of that into account, we are pleased with the growth rate we've been able to achieve. In addition, our diluted earnings per share, excluding losses on sale of facilities and losses on retirement of debt, has grown 7.2% year-to-date. I wanted to take a moment to put this quarter in some perspective. With that, we look forward to your questions, and I'll turn the call over to Frank to open it up. Thank you, Bill. As a reminder, please limit yourself to one question so that we might get as many as possible in the queue, an opportunity to ask a question. Rihanna, you may now give instructions to those who would like to ask a question. Thank you. As a reminder, if you would like to ask a question at this time, please press star, followed by the number one on your telephone keypad... Our first question comes from Kevin Fischbeck with Bank of America. Your line is open. Great, thanks. Maybe just want to build on that last point there. You know, the commentary about the year-to-date performance being strong is well taken, but I guess I get a lot of questions about whether there's anything unusual, I guess, in the performance this year. I think people are trying to figure out whether this is a good base to think about future growth or whether there's anything, whether it's in the volumes or the rate or the payer mix, that we really shouldn't be expecting to continue. So I guess, is this a good base, and should we think about normal growth off of this? Thanks. Kevin, it's Sam. You know, it's our belief that demand for healthcare remains strong and will remain strong into the future, just given the population trends that we see in our market, the aging of the baby boomers, as well as chronic conditions. I know there's been a lot of concern about GLP-1 and so forth. We think it's way too early for any of that to have an impact on demand in the near term or even the intermediate term. And so from that standpoint, we're really encouraged by what we see from a demand standpoint. Our overall competitive positioning, we believe, continues to be strong. It's indicated within our market share trends vis-a-vis where we were pre-pandemic, and so we're encouraged by that. We continue to have resources, we believe, to continue investing in our company appropriately, in positioning our agenda with the necessary resources to accomplish our objectives. And so, from our standpoint, economies remain strong across our portfolio, and we believe that supports some of the payer mix trends that we've seen. So we're reasonably optimistic here that the overall top line metrics that you're seeing have durability. Our next question comes from A.J. Rice with UBS. Your line is open. Hi, everybody. Obviously, as you went through, strong results, obviously, the focus on this professional fee challenge. I know coming out of the second quarter, you were, I think, thinking it would step down in Q3 and Q4, and now it sounds like, if anything, it probably stepped up a little bit. I'm trying to understand what was the variance in the quarter relative to previous expectations? Was it $50 million? It sounds like even in the quarter, there's some catch up from Q2, so maybe it's a, a significantly bigger number, as a negative. And then, is the right way to think about Q4 and into next year, a $50 million quarterly run rate that you're assuming just continues, and therefore, you've got to pick up in 2024, one more $50 million adverse comparison? Hopefully, that makes sense. If I could squeeze in, just thinking about this quarter, the DPP payment from Florida, was that in line with what you thought, or was that the net benefit a little better? Yeah, A.J., this is Bill. Let me try to take those. So let's, you know, talk about Valesco first and isolate that from our pro fees. I would tell you our professional fee expense, the non-Valesco, is coming in kind of what we expected. I mean, as I said, our rate of growth in the third quarter slowed from the rate of growth from the second quarter, although we continue to see subsidy requests, and we've got efforts to mitigate those. You know, there's no doubt the issue for us in the quarter was the Valesco operations. As I mentioned, we're not clearing as much revenue that we anticipated, and I think it's best you have to look at that on a year-to-date basis because we did make some revisions as we started to see claims being paid in the third quarter. And we believe, as I mentioned, it's probably about a $50 million a quarter run rate for Valesco. We have a number of efforts underway to mitigate this that I spoke of as well, but in the short run, that's what we're sizing it at. And you're right, when you look at next year, we'll, you know, we'll have three quarters of it this year versus four next year. But we'll give you more of our thinking when we talk about 2024 later on, but you've sized it about right. Anything on the Florida payment? The Florida DPP was slightly above what we expected, but we had other programs, A.J., that were less than we expected. So you got to look at it in the overall context of the revenue mix of the company, and I don't think it's that discrete necessarily to just focus on one element of it. But it was slightly above. Okay. All right. Thanks so much. Our next question comes from Ben Hendrix with RBC Capital Markets. Your line is open. Thank you very much. Excluding Florida DPP from both quarters, EBITDA margin appears to have declined by about 180 basis points year-over-year, suggesting close to $300 million total headwind. If Valesco is $100 of that, how would you characterize the remaining $200 million or so that brings us short of the 3Q 2022 margin? You mentioned the higher subsidy requests and maybe DPP in other quarters, or in other regions other than Florida, but is there anything else to call out there that would weigh on margin? Thanks. Yeah, Ben, this is Bill. You know, isolate the margin, really, that other operating line is where you see we've lost some margin for on the as reported quarter. Valesco was about 50 basis points of that when you adjust for Valesco. Kind of the pro fee growth was about 40 basis points, and the balance was really due to the, the increase of the supplemental expenses that we recorded in the quarter relative to Florida DPP and other programs. So you know, the way I think about it, if you exclude Valesco, other operating was off about 120 basis points. Y ou know, 40-50 was the pro fee effect, and the balance was just the increase of the supplemental expenses that we recognized in the quarter. Labor was strong when I talked about as supply costs looks trend. So it's really isolated to those two issues, the Valesco and supplemental payments as much as anything. I think, Bill, just to add a point to that, our same facility operating margin, which did include those elements Bill spoke to, were actually in line with our internal expectations. So I think from the standpoint of a little bit of pressure, we anticipated some pressure, but it was reflected, again, in the overall performance of our same facility. So the most of this lands on the Valesco challenge with respect to the revenue and the earnings associated with that venture. Thank you. Our next question is from Gary Taylor with TD Cowen. Your line is open. Hey, good morning. One question and one clarification. Just on a clarification, I think we'll see this in the queue, but I think professional fees were 22% of other OpEx in the 1Q, 24% in the 2Q. Just wondering what that number was for the third quarter? Sounds like it maybe slowed a little bit or didn't change a lot. And then my real question just really was about hitting into 2024. I mean, we see a lot of volume strength. I mean, if we look at, you know, the stat comps, you know, year-to-year, admissions, adjusted admissions, ER, all accelerated, you know, pretty nicely. I'm just wondering how you're thinking about carrying that volume strength into, you know, 2024, and presumably the guidance you'll give us in a few weeks at that Investor Day. Well, Gary, this is Sam and Bill to jump in here. You know, we believe again that our core business, our hospital-centric core business is performing well. I mean, our volumes were broad-based. Every division in our company had admission growth, had adjusted admission growth. Every service category in our business offerings had growth except for OB. Our obstetrics volumes, mainly births, were down slightly, pediatric was down slightly, and our behavioral was down because we made some capacity adjustments, not because demand is shrinking in behavioral, just because we needed capacity that we felt might be more productive. So across geography and across service lines, really solid performance. On the labor front, we were investing in the quarter in our labor agenda at the same time as making improvements. And what I mean by that, we have invested heavily in new graduate training programs. We've done that throughout the year. That actually created a little bit of a headwind in the quarter and throughout the year for us. We think that will help us as we push into the fourth quarter and on into 2024 with making adjustments to our labor agenda. We've invested in our Galen College of Nursing facilities, as well as our other clinical education. So we're investing in our agenda for the long-term prospects that all of these initiatives represent. Bill spoke to the revenue yield. I think the revenue yield from acuity, payer mix, and pricing is positive. So I mentioned that our same-facility results were in line with our expectation. I think the second thing that's important here, Gary, is that we pride ourselves on making adjustments, if we have a variance, and I am confident in our teams, I'm confident in who we are as an organization, and we've proven it over time that we can make adjustments and find solutions to really complex problems. And so we've got one. It's not what we anticipated, but again, we had the necessary requirements to consolidate a business that was struggling and somewhat distressed, but very important to our offerings in the community. So I think as we work through it, as we gain a better understanding of it, we will be able to make adjustments and get the proper reimbursement we need from the payers for the services that we're now providing. And so, you know, fortunately, our balance sheet remains strong, as Bill alluded to, and our ability to invest in our agenda to maintain, our positioning and, and execute on our agenda remains strong. So when I pull up and provide some context here, I, I, I'm encouraged by what I see, in the quarter and for the year, and what that portends for the company as we push into the future. Gary, this is Bill. On your clarification, pro fees as a percent of other operating was just under 24% in Q3, similar to what it was in Q2. Thank you. Our next question comes from Ann Hynes with Mizuho. Your line is open. Hi, good morning. I know you don't wanna provide 2024 guidance now, but is there any major headwinds and tailwinds that you want to call out before heading into the event? And to that degree, I know Nevada is introducing a UPL program. Do you have any sense what that incremental benefit will be next year? Thanks. Anne, this is Bill. Yeah, there's only one we'll call out, as I mentioned in my comments, was the payer settlement we recorded in the first quarter. Other than that, we'll give you our full commentary later on 2024. And on the bond, it's still too early. We're waiting for the approval level, and when we discuss 2024, we'll update you on what our thinking is and the estimate of that is. All right, thanks. Our next question comes from Whit Mayo with Leerink Partners. Your line is open. Hey, thanks. Good morning. Sam, can you maybe just go back and elaborate on the ER revitalization program, how Valesco plays into that, and exactly, you know, where you are in the evolution of that program and any tangible progress that you expect to see in 2024? Thanks. So our ER revitalization program was initiated maybe a year ago, nine months ago. Whit, I don't remember the exact point. We determined that a couple of things: One, demand for emergency room services continues to be robust. It was actually more resilient coming out of the pandemic than we had anticipated. So we felt we needed to reenergize our operations because we had had some turnover in our leadership, and we had a business opportunity associated with demand. So our teams came together and went about sort of revitalizing, for lack of a better term, our basic operations with respect to our emergency rooms. We have proven standards and processes over time that we think create a really good experience and a positive outcome for our patients. And so we wanted to retrain a number of our new leaders, including some of our physician leaders, through Valesco and others into these standards and these processes. The early results of our program are really positive. Our patient satisfaction is up four or five points from when we began the program. Our throughput continues to improve. I think we're seeing an ER patient within nine or 10 minutes with a clinician as soon as they present to our door. Our throughput times with respect to discharging our patients has improved, as well as those who get admitted. We're able to get them onto the floors more efficiently than we were before. We continue to believe we have opportunities to strengthen that program, and so we're expanding the reach of our training. Again, that will include our physician leadership, both in Valesco as well as other, hospital provider contractors that we have. And we think this will play in well, Whit, into our investments that we're making into our emergency room, platform, both hospital-based as well as our freestanding emergency rooms, which continue to perform at an even higher level. So all of that to say is, it's yielded volume growth, it's yielded patient throughput, improvement, and most importantly, it's yielded patient satisfaction, increases that we are encouraged by. We will continue to, hopefully achieve. Thanks. Our next question comes from Brian Tanquilut with Jefferies. Your line is open. Hey, good morning, guys. Sam, it seems like you have an idea of what needs to be done at Valesco, but maybe going down to the nuts and bolts of it. As we think about, you know, the fact that you employ these docs now, it sounds like this is more of a revenue issue. So is that just a matter of tacking them on to the HCA contract, or, you know, what needs to be done there? And maybe just for Bill, kind of related to this, if you can give us the contribution of Valesco to revenue per same store admit. Thanks. Let me speak to how we're approaching it. Again, we're learning as we go. I forgot the... I think it was, like, 5,000 physicians across how many programs? 200 different programs. A really large-scale business that, again, we felt we were at a point where we had to make a decision, and I am comfortable that we made the right decision for the company long term. So as we learn more and more about this business, we think there are going to be opportunities on how we allocate the staffing underneath this business. Obviously, our emergency rooms are 24/7, 365. We won't necessarily change the staffing per se, but there could be complementary approaches to that. There are overhead opportunities we think over time we will be able to get to. But you're right. Ultimately, we will need to get paid for these services appropriately. We do have some contracts today. We feel like those will have to be adjusted in the future, and we're confident that we can achieve appropriate reimbursement underneath these programs and get us to where it's an appropriate service that's reimbursed reasonably as we get through it. But, you know, that's just not happening immediately, and that's part of the challenge. And again, you know, we need anesthesiologists, we need emergency room physicians, we need hospitals in order to deliver the volume and maintain positioning. And so that rationale went into our decision making, and so now we have to, you know, rationalize the operations. And I think those are the areas that we're going to focus on, and we believe in a reasonable period of time, we'll make progress on that. Brian, to your revenue numbers, Valesco revenue is just under $400 million year-to-date, about $380 million on a year-to-date basis. Our next question comes from Stephen Baxter with Wells Fargo. Your line is open. ... Yeah, hi, thanks. I appreciate all the commentary on the professional fees and the growth slowing in the third quarter some. It does still seem like a pretty challenging environment out there for those firms, and, you know, as we do some checks, hearing anesthesia, in particular, remains a pressure point. Is this something that you think you can manage closer to flat going forward, or is this just becoming part of the new norm around something that you'll need to offset as you think about the puts and takes for 2024? Thank you. Well, it's hard to call. We do believe the rate of growth should slow going forward compared to what we've seen this year. As I said, we're working diligently on multiple work efforts, and not only in the, in the Valesco, but working with our contracted providers as well. So again, I think we'll see slowing growth. We think we've dealt with some of the more acute issues out there, but the substantive requests are still there, but we're managing through it, and, and we'll continue to do that as we continue to go on. We'll update you on our progress, but we're working diligently to affect and slow that rate of growth, and its impact on us. I think Bill alluded to this in his commentary earlier about, you know, the pressures we saw with contract labor, nurse shortages, capacity management, and so forth. And I would submit that we've worked our way through that reasonably well, and we still believe there are opportunities for us to make strides forward on that agenda. We're gonna learn from that, how we managed that it timely, aggressively, and responsibly, and I think apply those same learnings to the situation we have here and get to an answer that makes sense for the company. And so I'm confident, as I said, that we have the mindset and the wherewithal to work through these and get us to a reasonable solution. Our next question comes from Peter Chickering with Deutsche Bank. Your line is open. Hey, good morning, guys. There are a lot of moving parts in the margin this quarter, but if you normalize for the Florida DPP and the $50 million from prior period on Valesco and look at the implied fourth quarter margin ramp, it looks higher than normal sequential margin improvement for the fourth quarter. So can you help bridge us or what are the key drivers to get to that implied guidance for margin for four Q? Yeah. You know, Peter, historically, our fourth quarter is our best margin performance quarter. There obviously, this quarter was impacted a little higher than normal because of the Valesco 80 basis points I talked about and the Florida DPP. Our Same-Facility margins were, you know, over 20%. So we, we think, you know, our guidance is reasonable based on our outlook right now. But I think it's a combination of maybe not having some of the, the immediate pressures we had this quarter, and then the expectation that the fourth quarter tends to trend stronger than our average. All right, thanks so much. Yeah. Our next question comes from Cal Sternick with JP Morgan. Your line is open. Thanks for the question. Just wanted to go back to Valesco for a second. So is the expectation that the $50 million loss per quarter persists this level throughout next year, or would you expect to end the year at a slightly lower run rate? And then just on the mitigation levers, I mean, obviously, it sounds like reimbursement is probably the bigger component here, but is there any way to give a sense for magnitude of the cost side? I'm just wondering if you give some color on what those levers are and just, you know, how much of that $50 million you think you'd offset, purely just with cost reductions. Yeah, I mean. So right now, as I said, it's probably $50 million a quarter, but we're working diligently to mitigate that. And as we go through the next couple of quarters and into 2024, we'll continue to update on our progress on that. We view the primary issue as revenue shortfalls, and that's what we're working through. You know, there may be some cost adjustments we can make, but I think it's primarily a revenue approach that we're gonna take to try to turn the results around. And, you know, I just have to put. It's $50 million a quarter, and we have confidence that we've dealt with similar issues in the past, and we'll work through that. But, it's primarily a revenue challenge that we'll get through. You know, and didn't mention earlier, but with our increased position, we now manage the revenue cycle all the way through. So I think that puts us in a much better position to assess and address some of these revenue trends. So we have the revenue cycle functions from contracting to coding, to billing and collections, and so we think we're in a reasonably good position to be able to at least assess those trends and then come up with appropriate actions to respond to it. Our next question comes from Jason Sassorla with Citigroup. Your line is open. Great, thanks. I just, I guess with surgeries up about 1% in the quarter, a little bit better on the inpatient side, wanted to ask about trends within service lines, and the comp was a little bit difficult, this quarter, but anything to call out there? And then, Sam, it sounds like from your comments, you're not seeing any impact from GLP-1, so you don't expect much there, but just making sure we caught that right, and if you have any other thoughts on potential, impacts to underlying demand or trends down the line, it'll be helpful. Thanks. Yeah. Let me start with the GLP issue. We think it's way too early to make any judgment about the effects on our business, generally. I think the second point that I would make related to GLP-1 is the fact we have a very diversified mix of revenues, as a company. I mean, obviously, we've gone through orthopedic, total joints, going from inpatient to outpatient. We've seen other drugs come into the mix, statins, as an example, with cardiology, and we're actually doing more cardiology procedures in the company now than we've ever done in the history of the company. So I, you know, I don't really know how to judge the implications. Bariatric surgeries in our company is a really small program, less than 0.5% of overall revenue. Obviously, we have patients who do have diabetes, but, some of those patients aren't gonna lose it necessarily, immediately either. So it's way too early to make judgments, we believe, around that. When you look at the, the mix of business, again, as I said earlier, we had very broad-based service line, performance that was solid. Very few service categories were down. We actually had a calendar headwind, in the quarter with respect to surgical days and cardiology procedure days, where we had one less, surgical day in the quarter than we did last year. So our performance in the face of that headwind was strong as well. So, you know, that's what I would say was, it was similar on inpatient and outpatient as far as the mix of service volume growth and so forth. So very consistent, very broad-based, again, across our geography, and so we're pretty pleased with the outputs. Our next question comes from Scott Fidel with Stephens. Your line is open. Hi, thanks. Was hoping you could maybe talk about some of these recent developments in the environment as it relates to the potential, you know, indicators around, you know, future wage trends, and in particular, thinking about some of the union actions that we've been seeing, and some of these minimum wage laws that are getting passed at the state level, such as in California. You know, just curious on sort of whether you see these in aggregate, potentially creating some more pro-inflationary pressure on wages, or do you think that those they may be a bit over, sort of, you know, focused on and won't affect the overall trajectory of the wage environment? Thanks. The market for labor has normalized in very material ways compared to where it was a year to a year and a half ago. And we're seeing it in our cost per hour as a company, which has really lined up with the expectations we had for the year, and we've seen stabilization across the elements of our compensation programs and so forth. There are some minimum wage laws out in California that has a very de minimis impact on our company. Most of our compensation was already in line with that. We have very few issues with that. Unionization across the country, beyond the healthcare industry, is an issue, as everybody understands, but we have been successful in pushing through those issues, organizationally and have landed in a spot that we think is not going to put too much pressure on our business in the near term. So, you know, that's where we are. Obviously, the markets change, they're dynamic, and we have to adjust to those. But we're seeing, you know, positive signs with respect to turnover, with respect to hiring, and even the number of new students who are populating our Galen College of Nursing programs is very encouraging, suggesting that there's a sufficient pipeline of new nurses who want to be educated and go into the workforce. So we're pretty encouraged by the macros that we're seeing. There are obviously issues that we have to pay attention to, and we are, but we're reasonably encouraged with our overall agenda, as it relates to our people and the efforts that we have in place. Our next question comes from Jamie Perse with Goldman Sachs. Your line is open. Hey, thank you. Good morning. Just a bigger picture question for you guys. You've talked about longer term margins, 19%-20% being a fairly sustainable range for you. A lot of moving parts right now. So just at a high level, is there anything you see in the business right now that can take you off of that trajectory more permanently, and just your level of confidence in getting back to that margin rate and sustaining it going forward? Thank you. Yeah, I mean, listen, Bill, I think we have a, you know, a reasonably long track record of producing margins that are in a pretty tight range, even as we've dealt with, you know, periodic cost pressures, whether it be contract labor before or maybe bad debts in the previous cycle and, or physician costs now. So I think as a team, you know, we have confidence we can continue to operate the company at reasonably strong efficiency levels. We've spoken in the past. We have a number of initiatives around technology and innovation, on our resiliency programs that continue to target the opportunities to operate even more efficiently in the future. So you know, I, I think our historical performance is a, is a reasonable expectation for us, and we've got opportunity to continue to drive efficiency through the organization. Our next question comes from John Ransom with Raymond James. Your line is open. Hey, good morning. If I take your $380 million of Valesco, I think you did a little over 220 in 2Q. So that means the revenue drops sequentially by, like, $60 million. I know you're talking about this, a revenue problem, but in your guidance going forward, maybe you could clarify kinda your revenue and cost outlook to get you to that -$50 million. And again, why was it such a... I know seasonality, but why such a steep ramp in 3Q or decline in 3Q on revenue, unless I'm doing my numbers wrong? Thanks. Yeah, John, I alluded to this in my comments. You know, we did make some revisions to our revenue estimates in the third quarter. In the second quarter, it was still new. We were putting providers on new contracts, billing. We had not received a lot of claims being paid. As claims started to be adjudicated and paid. So I think it's better to just look at that on a year-to-date basis. You know, it's roughly $200 million a quarter, somewhere around that neighborhood, is kinda what we think the model will be going forward. And, again, it may fall on either side of that. But I think it's best to look at the year to date, and we understand the third quarter drop, but it's really just because we had no history on there, and as claims started to be paid, we were able to revise that. So that's why it's $100 million EBITDA for a year, for the quarter. It's about the same year to date. It's kinda ties into our $50 million going forward. It's $200 million revenue, $250 million cost business, is what's embedded in your guide going forward, just to be clear? Yeah. If you want, if you wanna think very broadly, that would be pretty consistent. All right. Thank you. Yeah. Our next question comes from Justin Lake with Wolfe Research. Your line is open. Thanks, good morning. I'm gonna pile on with this physician stuff. So just, I've never seen a business kinda be off this far from... Like, you guys are obviously very, very good at what you do. I know this is a new business, but to be, you know, $50 million of revenue on a $250 million baseline, 20%. So I just-- the, like, can you triple-click on that for me and just say, like, what did you think was going on versus what is? And then the, for, you know, when you gave your headwinds/tailwinds for next year, you, the only headwind you talked about was that payment, which makes sense. But, you know, you've given some numbers around the subsidy costs, right? The physician costs that run through operat- other operating. They do seem like they've been a pretty big drag on margins. My estimate is somewhere around $300 million, give or take, year-over-year, versus kind of revenue growth. Are you assuming that that's not gonna, you know, grow at anywhere close to that pace next year? Or do you think you could, like, and therefore, it's not a, another $300 million headwind next year, or are you just assuming that we can offset it, and so, you know, we kinda grow normally ex the, you know, $145? Thanks. All right, Justin. Well, a couple things. One, literally, we talked about 2024. We'll give you our 2024 guidance assumptions, you know, some of that on the Investor Day, more details as we go through the planning on there. But as I said, we are expecting the pro fee growth rate trends to lower going forward, and we're working diligently to make that happen. You know, on your opening question around Valesco, you know, just to emphasize what Sam said, this was, you know, a very complex and large integration of 200 programs, 5,000 providers that happened very quickly. And we were operating, you know, maybe on some incomplete historical data. And as we started to see claims being paid, the revenue was just clearing at lower rates than we anticipated. Again, I think we've got a number of initiatives to try to offset that. And so we're working on both of those. But so that's how I would address the Valesco shortfall right now, and then, you know, we're continuing to work on the pro fee and do expect that growth rate to decline going forward. Our next question comes from Sarah James with Cantor Fitzgerald. Your line is open. Thank you. So when I look at the moving pieces in the guidance revision and the change in the Valesco revenue, it looks like you guys are implying core is doing a little bit better, especially if I use midpoint. So can you give us an update on what you're seeing so far, the first couple of months into 4Q volumes, and how we should think about what 2023 guidance implies for the volume transition from 3Q to 4Q? Yeah. So, you know, as you know, we don't comment on the current quarter. We've made, I think, several comments on the core business trends we're seeing with really strong volume, reasonable pricing. The core operating expenses of the company are doing well in labor and supplies. You know, I think it, you know, as a, as a broad brush, it would be our expectation those trends generally continue going forward. We don't see anything from a macro perspective changing that. But, again, too early, and we're not commenting on kind of inter quarter or early quarter activities. But as I said, and Sam mentioned in his comments, we're pleased with the core fundamentals that we're seeing. Good demand in the market. We're positioned very well, and our same-facility operations is going pretty well. Unfortunately, we are dealing with the Valesco integrations, and we'll, we'll overcome that. But, I think you could reasonably expect that our core trends that we've seen here today should, for the most part, continue at a reasonable pace. Thank you. ... Our next question comes from Joshua Raskin with Nephron Research. Your line is open. Hi, thanks. I hate to beat this dead horse, but just on the reduction in revenues on Valesco as the claims were getting processed, I'm just curious, what was causing that reduction in revenue? Was that, you know, a lower rate issue? Was that payer mix? Was that reduction in codes submitted versus paid, or was that just less services? And then I know there's been some challenges to the No Surprises Act underway. I I know the arbitration process just started back up again. Is, is any of that gonna mitigate any of the impact there? Yeah, yeah. So it's hard to attribute the shortfall in any one area. As I said, you know, we were operating on maybe some incomplete historical data as our model is, and probably an array of other issues that, you know, potential other hospital providers are experiencing. And so, yeah, we've got a number of initiatives that we're going to try to address, that we've talked about. You know, if we can continue to see, we prefer to be an in-network providers to avoid the out of the surprise billing and that IDR process. And so we're working with our payers diligently to be in network and to get reasonable rates going forward, and that's gonna be part of our action plan. Our next question comes from Brian Tanquilut with Jefferies. Your line is open. Brianna, I think we're done, if you wanna close the queue. Thank you. Seeing no further questions, I will now turn the call back over to Frank Morgan for closing remarks. Brianna, thank you so much for your help today, and thanks to everyone for joining on the call. I'm around this afternoon, if I can answer any additional questions you might have. Have a great day. This concludes today's conference call. Thank you for your participation. You may now disconnect.