I'm Whit Mayo. I lead, Leerink's efforts covering healthcare providers and managed care. It's my pleasure this afternoon to have, the team from HCA: Erol Akdamar, Frank Morgan, Chris Wyatt, and we've got David that runs the, the Austin market here. And, Chris, I think I saw that's no longer your title anymore, is it? Didn't you? For me? Yeah. No, that's it- That's the new title? That's got me correct, yes. That's correct? It does. Okay. Yeah. I thought I saw an HCA. Okay. I was just thinking about that. Well, guys, maybe just to get into some of the relevant topics, just let's talk about just the volume environment. It's been a fairly positive start to the year, probably 18 months of good demand, as you guys describe it, within the marketplace. Just how durable do you feel like today's volume environment is? I'll start with that. You know, we're very pleased in the Q1. We had 6% admission growth, 5% adjusted admission, 7% ER growth. So very pleased, and that was generally ahead of the guidance this year, which was 3%-4% adjusted admission growth, so pleased at the start. When we look across the demand environment, I think we see some really good trends from our standpoint. When we look at the coverage environment, we think we're in a pretty favorable spot right now with the HIX's enhanced subsidies being in place are helping to catch some of the redetermination activity. We look at population growth in our markets. We look at, you know, some of these other drivers of demand, low employment and the like. And so I think we feel pretty good, Whit, about what we saw in the Q1. We feel good about the guidance we gave in terms of adjusted admission growth for the year, and we think that's a good. I t'll translate through the rest of the year. What about if you unpack some of the specific service lines? Is there anything that stands out? I know you guys kinda categorize things into a bunch of different buckets? Yeah B ut is there any key observations that, you know, you pull out of the data that you guys are able to look at? Sure. Erol, do you wanna talk a little bit about broad-based view from. Yeah What we're seeing? I think that demand, particularly in the ER, has been particularly strong. Yeah. And so, inpatient surgery is strong. You know, Chris said it, and it, it's sort of across the continuum. And so I think, you know, in the state of Texas, which American Group is mostly Texas, Colorado, and a few other markets, population growth has really helped us. I think, you know, in DFW, well in excess of the average growth, I think, on a five-year run, DFW will add 670,000 people. Houston will add about 650,000 people. Austin, a little smaller market, will add 350,000 people, but that's 13% growth compared to 8% and 7.5% in DFW and Houston. I think population growth really helps drive demand, particularly- Yeah in the state of Texas. Yes. No, that's helpful, and I mean, looking at the exchange volumes that you reported in the Q1, I mean, it just, the number just stands out, over 50% increase year-over-year, and the enrollment nationally is up roughly 30%. You know, what do you think you... What do you attribute that outsized outperformance relative to the market? I think there's a couple things from our standpoint. One, if you look at that growth, and you're right, 30% enrollment growth from the last enrollment period across the states in which we operate. But look in a state like Texas, where it's closer to 45%, and so that's... We got a significant volume of our exchange admissions coming from Texas and Florida. Florida is about the national average. Texas is higher. So one, I think, is just where we're located is helping to drive that above the national average that you're seeing in terms of HIX enrollment growth. I think we've got a little bit of additional access to lives as well, under contract, so that's increased just a little bit. That's also a contributing factor there of what's helping us outpace. I mean, are there any additional, like, outreach education efforts that you have, partnering with health plans to try to get out into the community and make people aware of the tax credits that are out there? Maybe just a level of this was just coming from redeterminations. Yeah, certainly. I just feel like there's some strategies you have around it. Definitely, as you think about redeterminations, which probably, we believe, is one of the elements helping to drive some of the exchange growth. We've put a significant focus on the redetermination process, both in helping individuals work through the process to requalify for Medicaid coverage, but then also understand what other coverage options may be available, you know, to the extent they're not able to requalify for Medicaid. Okay. Back to Erol, you made comments around the growth in the ER. I think one of the initiatives that HCA has been more vocal about is case management, throughput, trying to invest into transcription stuff, and just trying to drive additional throughput. Maybe just unpack a little bit like where you are in that initiative right now? Yeah, sure A nd any of the results you've seen? C oming out of the pandemic, capacity was restricted partially due to workforce limitations. I think, we're largely in a position now where we, you know, we've significantly decreased contract labor, and at the same time, our hiring is up. Our net hires year-over-year are increasing and allowing us to be at the point now where all of our capacity, by and large, is online. And so I think that is helping us accept transfers in. So 85% of our admissions typically come from within the market, 15% come from what we call outreach or outside of our primary and secondary market, and those end up being some of the higher-end services that you wouldn't have in an outlying or a rural community, like transplant, like burn, trauma, and the like. From a margin standpoint, it ends up being a higher margin business as well. I think part of it is just opening our capacity, and then from an ER standpoint, really been focused on four things, and I think Chris may have said this, but 75% of our admissions come through the emergency room, so it's critically important. One out of every two surgeries are generated out of the emergency room. Really four focuses there, and I'll let David talk a little bit about his experience with operations, but first and foremost was operational excellence, and so we've had initiatives around that, and that's throughput, arrival to greet, ensuring that we can get the patients out of the ER and up into a hospital bed, which obviously having workforce to open those beds has helped. And then our EMS strategies being the provider of choice for emergency medical services in the community so that paramedics can come in, their wall time is less than five minutes. They can transfer a patient and get back out in the field and deal with the demand out there. And then a couple other things is access points, just ensuring that we have the correct access points. So again, in Texas, we have 109 emergency rooms. 59 of those are freestanding emergency rooms, so they're out in the community, somewhat removed from the hospital, and creating access and capacity, and then I'll let David talk a little bit about operational excellence. Yeah, just, you know, I think it all starts with our improving capacity on the inpatient side because of the improving balance, you know, between supply and demand on staffing upstairs. That enables us to get the patients up faster, get more patients through the ER faster, which is critical. Erol mentioned some of the metrics that we're driving. We have monthly operating reviews around ER performance, which help us monitor, measure, and continue to drive that effort. We've seen a 30% reduction in our declines year-over-year. We continue to have robust outreach programs. We have 28 care collaboration agreements with 28 hospitals around Central Texas, so that's a great feeder for us, and those are situations where those hospitals don't have either the capacity or the capability to take care of higher level of care patients, and so those really support our ERs. So when you say. All of those. 30% reduction denials, can you may In declines. In declines, sorry. That's right, for our transfers. Okay. That's right. Okay. Staffing has gotten better upstairs. That has enabled us to accept more transfers. The other thing I'd point out is that, our offer rate is even higher than it was, you know, historically pre-pandemic. So, our efforts to be a sort of soft target for the transfer with the rural hospitals, even through the pandemic when they were really, sort of desperate to get their patients to another level of care, I think are now paying dividends for us. The fourth point I was gonna make was clinical capabilities, and that's around, you know, some of the higher-end programs, like stroke, for instance, in Denver. You know, our footprint in Denver is 8 or 9 hospitals, but we have 60 hospitals in multiple states around Denver that transfer in neuroscience patients, particularly stroke, into that network. When you look at your staffing model today, what's different versus 2019? You know, what did you guys maybe adjust, or are we back to similar staffing levels from four or five years ago? You know, I think from a staffing standpoint, obviously, you know about some of the challenges that many providers faced during and right in the aftermath of the pandemic, and so, we've been very focused on, you know, addressing nurse turnover, and we think we've made some good progress on it. Hiring is up, and how, you know, how have we been focused on that? We've been focused on looking at career paths for nursing, looking at technology we're putting around the nurses to make them more efficient, looking at additional skill sets that we can put to allow the nurses to operate at the very top of their license so that we can take administrative tasks off of them. We're looking at virtual nursing opportunities to be able to help from a staffing standpoint as well. So I think that we have looked at a variety of different options and activities to be able to improve staffing. I don't think that the model has a wholesale change from prior to the pandemic, but it's been a focus and level of effort, and these varieties of activities really support our nurses and their efficiency, their experience, their career path, that we think has really helped us improve from a turnover and retention standpoint. Do you think it's possible that maybe with all the hiring efforts across the industry, that there's certain pockets where maybe you've overhired or that other health systems may have overhired? I mean, I can't speak to other health systems. Yeah. From our standpoint, I think the answer to that is no. We still have... You know, we're very pleased with where we are from a contract labor standpoint in the- Yeah I n the company. We talked about 20% decline in the Q1. It's down to about 5% of our SWB, but we still think we've got more opportunity in that area. We've got a little bit of a gap between where we were pre-pandemic as a percent of SWB and where we were in the Q1, and so we're gonna continue to push to see where we can get down to. We're not gonna eliminate all contract labor. We're still gonna need flexible staffing, but that, that, to us, would indicate I don't think we've overhired because I still think we've got opportunity in the contract labor side. All right, I want to go ahead and address the DPP stuff before I forget. Sure. There was a little bit of noise within the quarter, maybe a little bit less DPP earnings, a little less revenue, maybe more expenses. Can you maybe just flesh out kind of what happened, Chris? And I know that it's very complicated, the accounting around each one of these individual programs, but any additional insight would be helpful. Sure. Let me just take it from an expense side first. You know, in the context of other operating expenses, there were certainly some questions discussed around other operating expenses in the Q1, and that's where our state supplemental payment programs, from a year-over-year standpoint, we did see some increase in those supplemental payment programs, but it was as we expected. Whether it's from starting an accrual methodology in the state of Florida, where we started that in the Q4 of last year, and we saw some additional expenses related to it, or a new program related to the state of Nevada, that we recorded in the Q1. We have some, from time to time, certain matters that create a little bit of choppiness. We try to get to an accrual methodology as quickly as we can, once we have confidence and good visibility into the cash flows under these programs, but that caused a little bit of an increase in an expense on a year-over-year standpoint, you know, under these programs, and it's something that, again, you know, we will. We continue to feel like there's really a small headwind year-over-year in terms of the earnings. Sure. We called that out in our annual guidance because of accruing Florida and because of some settlements that we had in the state of Texas. But we generally feel like that's the right spot from a guidance standpoint. We don't see anything structurally concerning in those programs right now, but that's how we're kind of seeing this year. Tennessee is working on a program. Any- Yeah additional color on that? Yeah, so we're aware of the program in Tennessee. I just mentioned that that program's not yet been approved by CMS. Right. Once it has been approved by CMS, we can, you know, further comment on that program. We are aware of it, and it seems positive, but we need CMS to approve it. Yeah. Maybe just to hit on some of the financial resiliency programs you guys identified, 30 of these different programs are in different stages. Which are some of the ones that you're the most excited about, Erol, when you look at, you know, your division and the success results that we're beginning to see out of those? I think the case management initiative- Yeah Is particularly exciting, given the results that we're seeing already, Whit. I think that we've seen significant improvement in case management when we look at the expected length of stay, and then managing to the expected length of stay, and ensuring that we don't have sort of excessive days that end up being excessive cost and, you know, holding patients in a hospital longer than they need to be. And so I'd say the case management initiative has come along really at a very good time for us, because as demand has gone up, it's been really important that we create capacity within our hospitals. And creating beds by reducing the length of stay is the most efficient way to do that. Right. It also helps you on the labor front as well, as you're, you know, you're able to care for more patients with the same nursing staff because the patient isn't there a day longer. So I think David's got some examples of results in Austin on case management. Yeah, you know, this is the second year in a row, 2023 over 2022, length of stay was down. Length of stay is down again, 2024 over 2023. But our intensity, our case mix index, really hasn't changed at all. So we still have the intensity, maybe see a little uptick in intensity, but we're seeing greater efficiency, so I think that's important. The other thing that's really helpful for us, being part of HCA with such a large organization in 43 markets, is our benchmarking initiative. You know, we're able to look at similar types and sizes of facilities in all areas around the country and learn from those and see where we have operating efficiencies, and so that will be big for us, I think. I think there's a lot more to be yielded there. Maybe just sticking on Austin for a minute since we got you here. What did St. David's look like five years ago, you know, where it is today, and where it'll be in five years? Where are you allocating a lot of capital in terms of the areas that you're investing? Well, we're probably in a phase of the greatest sort of capital investment that we've had as a system. St. David's is a joint venture partnership between HCA and the St. David's Foundation. Locally, we have about. The foundation of that is about seven core hospitals, surrounded by 125 sites of care around the market: urgent care centers, freestanding EDs, ASCs, those kinds of things. I would probably focus more, Whit, on five years from now. We have planned about $1 billion worth of investment in the market. Some of that is already online. A significant amount of that is sort of in the pipeline. We are planning a new behavioral health hospital in this market, two new acute care hospitals, one to the north of the market in Leander, one to the south of the market in Kyle. Those are submarkets that we're really not in at the hospital level, so those will help us capture the significant growth that we're seeing there. And then we have in flight, three or four different large, existing asset expansions, Round Rock Medical Center, North Austin Medical Center. One will start in the next year at South Austin Medical Center. So it's important for us to continue to create capacity at our existing assets. It's also important for us to make sure that geographically, we have capabilities in places where we aren't currently in rapidly growing areas. And then, of course, that's all really gonna be driven by our ability to staff it, and we're seeing a lot of good, good news there. Kind of. Chris, is there any difference in the underlying utilization or care activity patterns of Medicare Fee-for-Service versus MA today when you- Yeah, I mean, in terms of utilization, you know the backdrop. Obviously, there's more lives moving to Medicare Advantage. Right. We got more Medicare beneficiaries covered under Medicare Advantage now than we do under traditional, and we're seeing that dynamic in our business as well. In the Q1, 14% of our volume growth was in Medicare Advantage, or we had 14% volume growth admissions in Medicare Advantage, versus we were fairly flat from a traditional standpoint. We did move into this new Two-Midnight Rule in Medicare Advantage during the Q1 of this year. That's something that in the traditional Medicare side has been in place for over a decade now. Right. But we are seeing, you know, a little bit of an increase in admissions greater than two midnights. Under the Two-Midnight Rule, we think they're appropriate, underneath, this, this Two-Midnight Rule that we're operating under from an MA standpoint. So yes, we're seeing a little bit higher, increase in admissions over two midnights. It's not a significant portion driving that 14%. It's a relatively minor piece of it. So is there some slight increase in, you know, in admissions because of the Two-Midnight Rule? Yes, but it's still a very small, portion of what's driving the growth overall in, in Medicare Advantage. Yeah. Just sticking on the topic of Medicare Advantage, given that the plans are feeling their own strains right now, it's been described by others in the industry that they're seeing behavior change with some of the plans, and whether it's post-discharge denials or just making things more administrative cumbersome. Just maybe elaborate more on kind of the friction that you see growing with some of the MA plans today. Y ou know, I'll say from a Medicare Advantage standpoint, the Two-Midnight Rule, our early returns have been somewhat positive. Again, it's very early. We don't have a lot of claims that have been adjudicated. We've actually seen a slight decline in pre-authorization denials for our facilities at least. There is. You're right, there's certainly friction in the process that we have with our payers, but we've seen it at a slightly lower level. But I will caution that, again, it's fairly early. We've not seen a lot of claims adjudicated. We had a bit of a disruption in claims adjudication with the Change event during the Q1 that further, you know, challenges us seeing a significant volume of adjudicated claims. But the early returns are, you know, modestly positive for us. Okay. There's been organizational change at HCA for the last few years. I think as Sam likes to tell me, he's had to repopulate the talent pool. Right. But I think that's also created, like, this desire to increase the speed, the market, the agility. I don't know. Erol, do you just wanna comment a little bit on some of the kind of broader organizational changes over the last two or three years? Sure. So with the change that happened about a year and a half ago was going from two groups to three groups. One of the group presidents retired. Jon Foster moved to be the COO of the company, and so you had three new. He had three former division presidents moving up to a group level, and so that created somewhat of a trickle-down throughout the other divisions. So in the American Group, I have basically four new division—no, three new division presidents. David's a veteran and been in his position a while. So it really created the need to pull folks up and have them maybe play up a little bit. But I think the beauty of HCA is, and I've been with the company 31 years, a little bit of product of this is just the ongoing development sort of along the way, if you will. I think when I started 31 years ago, it was a little less formal and a little more just get the next job and sort of lean on the corporate resources and develop. But it got way more structured with, you know, graduate students coming out of master's in healthcare or MBA programs, coming into a formalized, structured residency within HCA, where they're developed and they're sort of assimilated into both the company and the industry. Then a couple three years in, for a chief operating officer, maybe a little longer for a chief nursing officer or even a CFO, there's a development program that's more formal for more of an early careerist, where we're developing the talent. We're exposing them to corporate learnings. They're learning in the field. They're moving around the company. A fair amount of us have moved around quite a bit. So what I would say is I think HCA does a tremendous job of growing its own talent, developing that talent, promoting it, and supporting through that promotion. The most recent transition really necessitated some pretty formalized orientation training, particularly for three new group presidents. So, I mean, the whole company hospital structure had new people managing it. John was there to support, and Sam's always there to support. So we really formalized the orientation process, both to the field but also from a corporate resource standpoint. We've taken that learning now, and we're starting to use that on our large hospital CEOs, what we call E, F, and G hospitals. They end up being our larger earners, and that worked so well. Now we're doing a version of that program for all new CEOs, and so I think the depth of development training, the opportunity to play up... I think one of the things unique about HCA is when you promote within this company, you tend to, you're leaning on the same people you knew in your prior role from a corporate support function. Sure. You've got the same systems in your hospital. You have the same operating reports and discipline, and so it really creates, I think, for quicker transition, for the ability to hit the ground running faster. But with the move and the shift that you discussed, I think it just necessitated getting more formal and learning. You know, Sam likes to say we're a learning organization, and that level of disruption has created a learning and a discipline that I think we'll be able to carry forward. Got it. Let me just stop, see if there are any questions from the audience, and I can keep going. Maybe just spend a minute talking about just the broader physician strategy and, and how that's evolved and the desire, willingness to employ, how you're partnering. Each market's gonna be different in terms of, like, the pace of play and everything like that, but just, like, where, where you're spending a lot of your time in terms of developing that physician strategy. Yeah. Well, and I, I presented this at the investor conference, so it's familiar to me. Yeah A nd it's, it really is an important strategy for the company. Our, our physicians are our key partners, and they are differentiators in terms of what we're able to do as a health system, so we approach them as partners. There's about 45,000 physicians on our collective active medical staffs, and so one of the differences, I think, from a, an HCA perspective to some of our system competitors is, they've migrated more to an employee-first sort of approach to their, their medical staffs, more of kind of a closed medical staff. We've sort of approached the market as being a bias towards independence, but there are certainly pockets of specialties, like cardiology, that are more procedural and heavily weighted towards a hospital, where they've desired to be employed, and so we've employed more in that space as well. But I think it's less than 20% of our medical staff is employed, and so it's predominantly still independent. I think graduate medical education has been a big differentiator for us. We've been active in that space for 4 or 5 years now. We're the largest trainer of graduate medical education physicians in the country. That is both helping us support our hospitals, but also creating a workforce for the future, and so we're partnering with physicians in that way as well. You know, we don't employ a lot of primary care. Some of our competitors do. I think a surrogate, if you will, for primary care is our urgent care platform, which has proliferated in the last four or five years. Really started materially in Dallas with the acquisition of the CareNow chain there. And now, I think we're gonna be, at the end of the year, 330 or so urgent cares across the country, and so, that's sort of our way to step into a little more of the urgent sort of hospital-centric episodes of care that then feed downstream. And we talked about kind of our whole network offering, and how that really each of our hospitals has a network around it that that operates in their space. And then in a market like Austin, all those come together to be the St. David’s HealthCare system. One of the things we focus deeply on is navigating patients across that continuum. So if a patient comes into an urgent care or freestanding emergency room, we can leverage that encounter to get them either upstream or downstream to an aligned physician that that works within our health system. Good for the system, but also good for the patient and their continuity of care. I feel like I get a lot of emails from CareNow. Yeah. Just maybe talk. I'm glad you're a patient. Many visits this year. Just maybe talk about capital priorities this year. You've been kind of quiet on, w ell, not too quiet. You closed a handful of acquisitions in the Q4, maybe more than I thought. But, aside from that, I feel like some of the acute care activity's been a little quiet. Do you think we see maybe more development activity pick up? You know, just speak to capital priorities first, I mean, we've said, you know, CapEx is gonna be our first option in terms of- Right o ur capital deployment, $5.1 to 5.3 billion this year. We're operating under a $6 billion share repurchase program, and then trying to provide a reasonable growth in our dividend. You know, from an M&A standpoint, we have found, you know, some of these, what we call tuck-in acquisitions, inside our existing markets. We haven't had anything in terms of a new market acquisition since, Mission and then Savannah before that. So but we're finding opportunities within our existing markets, and Erol can speak to, because several of the recent ones, have been in, south of, say, the North Texas Division, for instance, in Dallas, where we've been able to add some assets there. So we continue to look for those opportunities and, you know, execute them, as we can. Okay. Well, with that, we've got about a minute left. I can just cut you guys loose. Thank you. Is there any questions? I have one. I probably should know this, but I don't, so I apologize. Within your capital allocation, can you discuss the amount of funds going to behavioral? Is that something that you're gonna be using or employing a lot more, and what's the breakdown of behavioral versus... I'm sorry, on a percentage of revenue, roughly? So from a behavioral health standpoint, I would say we do have a few new behavioral health facilities that are coming online, a couple, within Erol's markets in which he operates. So we are investing, you know, periodically in behavioral health capacity. I don't have a revenue number for you. I think to size it as a percentage of our admissions, it's about 5 or 6% of our, the company's admissions overall, so that gives you some perspective on the size of behavioral health. Just to be clear, this is not something that you would prioritize relative to other needs of the acute care hospital? Well, I think it goes into the mix of considerations for us as we think about, you know, for instance, our ER strategies. There's a linkage there between ER and behavioral health and making sure we have the right amount of capacity there. So it is certainly in our sights and in our thinking, you know, as we think about our capital allocation. Okay.