Good day, and thank you for standing by. Welcome to the Q3 2022 Universal Health Services Earnings Conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during this session, you will need to press star one one on your telephone. Please be advised that today's conference may be recorded. I would like to hand the conference over to your speakers today, Steve Filton, Executive Vice President and CFO, and Marc Miller, President and CEO. Please go ahead. Thank you, Michelle. Good morning. We welcome you to this review of Universal Health Services results for the Q3 ended September 30, 2022. During the conference call, we will be using words such as believes, expects, anticipates, estimates, and similar words that represent forecast projections and forward-looking statements. For anyone not familiar with the risks and uncertainties inherent in these forward-looking statements, I recommend a careful reading of the section on risk factors and forward-looking statements and risk factors in our Form 10-K for the year ended December 31, 2021, and our Form 10-Q for the quarter ended June 30, 2022. We'd like to highlight just a couple of developments and business trends before opening the call up to questions. As discussed in our press release last night, the company reported net income attributable to UHS per diluted share of $2.50 for the Q3 of 2022. After adjusting for the impact of the item reflected in on the supplemental schedule as included with the press release, our adjusted net income attributable to UHS per diluted share was $2.54 for the quarter ended September 30, 2022. During the Q3, we experienced a decrease in the number of patients with a COVID diagnosis treated in our hospitals as compared to the prior year quarter. As a percentage of total admissions, COVID-diagnosed patients made up 16% of our admissions in the Q3 of 2021, but only 6% of our admissions in the Q3 of 2022. In our acute segment, this decline in COVID patients resulted in reduced revenues due to the lower acuity and less of the incremental government reimbursement associated with COVID patients. While overall surgical volumes tended to recover to pre-pandemic levels, there was a measurable shift from inpatient to outpatient, resulting in further overall revenue softness. While we were able to continue to reduce the amount of premium pay in the quarter, which declined from $117 m`illion in the Q2 to $81 million in the Q3, there was insufficient revenue growth to offset the accelerated rate of wage increases and other inflationary pressures. The $25 million we received in quality incentive fund payments in Texas helped to narrow the gap, leading to an acute EBITDA result in the Q3, only slightly below our internal forecasts. At the same time, this decline in COVID activity allowed our behavioral hospitals to continue to reduce their labor vacancies, resulting in a reduction of the capping of the bed capacity. The effect of increased volumes, combined with solid pricing increases, largely offset higher labor costs, leading to a better EBITDA result in the quarter slightly below our internal forecasts. We also note that the Q3 included approximately $8 million of losses related to start-up facilities and $4-$5 million of losses related to the impact of Hurricane Ian in late September. For the nine months ended September 30, 2022, we've incurred approximately $45 million of losses in connection with the start-up facilities. Our cash generated from operating activities was $221 million during the Q3 of 2022, as compared to $442 million during the same quarter in 2021. The decline was largely due to the timing of payroll disbursements, the opening of new facilities, and the timing of or the receipt of certain supplemental reimbursements. We spent $570 million on capital expenditures during the first nine months of 2022. In reaction to the earnings softness experienced this year, we reduced the pace of our capital expenditures by about 22% to $165 million for the first nine months of the year. Although we moderated the trajectory of our share repurchases, we plan to continue to be an active acquirer of our own shares. For the full year of 2022, we estimate that we will acquire approximately 80% of the number of shares projected in our original guidance. During the Q3 of 2022, we repurchased approximately 1.6 million shares at an aggregate cost of approximately $158 million. During the first nine months of 2022, we repurchased approximately 5.85 million shares at an aggregate cost of approximately $704 million. Yesterday morning, we announced the appointment of Edward 'Eddie' Sim to Executive Vice President and President, Acute Care Division, succeeding Marvin Pember, who has announced his intention to retire. Eddie, who brings nearly 30 years of healthcare and leadership experience, most recently served as Chief Operating Officer at Centura Health in Denver, Colorado. Where he led the system's three operating groups, clinical delivery and shared services, with annual revenues of approximately $5 billion. In this role, he was responsible for supporting improved care coordination, operational and clinical excellence, and alignment across Centura Health's ecosystem of 19 facilities and more than 250 clinics. Prior to joining Centura Health, Eddie served in senior leadership roles of increasing responsibility for 11 years at Baptist Health in Jacksonville, Florida. As President of Physician Integration there, he was responsible for an employed physician network of 380 physicians and a clinically integrated network with more than 900 physicians. As we look forward to Eddie joining the company in early December, we thank Marvin for his 11 years of service to UHS. Under Marvin's leadership, our Acute Care Division has experienced robust growth and expansion in key markets, as well as achieved a significant number of industry accolades and public recognition for quality and service. Marvin will remain with the organization for a transition period following Eddie's start with us on December fifth. We are pleased to answer questions at this time. Thank you. Again, if you would like to ask a question at this time, please press star one one on your touchtone telephone. One moment while we compile the Q&A roster. Our first question comes from the line of Kevin Fischbeck with the Bank of America. Your line is open. Please go ahead. Great, thanks. E veryone's starting to look towards 2023. I don't know if you're in a position to provide any comments in that direction. That would be fantastic. If not, most of your peers have kinda given us kinda one-time items in 2022 to kinda level set the base we should be thinking about when thinking about 2023. Can you help us on either side of that analysis? Sure, Kevin. W hat, it has never been UHS's practice to give guidance for the following year until our Q4 earnings announcement in February. We're not gonna depart from that this year. W e've been pretty clear about the non-recurring items in our financials for the year. I'll just sort of comment on the Q3. The QIPP reimbursement that we received in Texas, the $25 million that Marc mentioned in his opening remarks, we believe should be a recurring reimbursement item, which is why we did not sort of suggest tossing it out of the Q3 consideration. You know, other than that, we've identified the start-up losses. We've identified the impact of the hurricane. I n theory, they should not reoccur next year. Then finally I know at least, you know, one of our peers described this DPP reimbursement in Florida, another sort of special Medicaid program. We do not record any of those funds in Q3 of this year, although we expect to record something in the neighborhood of about $30 million of those next quarter, in the Q4, and a similar amount next year. Okay, that's helpful. Are you thinking about, like, the government, you know, PHE money as kind of a headwind next year, or is that tied to COVID volumes and therefore not really necessarily something we should be backing out of this year's numbers? Yeah, I t's the latter, Kevin. T hose government programs that were meant to subsidize hospitals, whether it was HRSA or the 20% add-on or the sequestration waiver, all were designed to help hospitals deal with the higher acuity and higher expense of COVID patients. As there are fewer COVID patients, I think there's less of a need for that. I think the real, you know, variable as we think about the acute business is, particularly in 2022, as COVID volumes have declined, non-COVID volumes, electives and other procedures have been a little bit slower to recover and snap back than they were in 2021. I think we see them slowly coming back, and I think we think that will continue into 2023. In my mind, the pace of that recovery is probably sort of the most important variable as we think about the performance of the acute division in addition to the other prevalent item, which of course is just the labor tightness in the labor market. All right, great. Thank you. Thank you. Our next question comes from the line of Ann Hynes with Mizuho Securities. Your line is open. Please go ahead. Hi, good morning. Maybe on 2022 guidance, you didn't mention in the press release. Is that still a good gauge for this year? Directionally, would you prefer consensus estimates to go to the low to mid-range given the first three months? How should we think about that for Q4? C onsistent with our prior practice we don't mention guidance in the press release we're affirming our previous issued guidance, which is what we're doing. D uring the Q3 in some public appearances at conferences, et cetera I think I conceded that the top end of the guidance was practically not a reasonable target. W e feel like as long as the trends that we saw in Q3 continue to a reasonable degree in Q4, someplace in the lower half of guidance should be very achievable, especially with some of the non-recurring items, particularly the DPP monies in Florida that I mentioned in my previous response. All right. Just one follow-up question. Y ou said in your prepared presentation that you're reducing your expectations for share repurchase by 20%. Is that? Can you just talk about the drivers of that and how we should view it for next year and also, CapEx, for next year? Y ou reduced your budget by 33%. Is that just a wait and see or, do you think that will continue into next year? Thanks. Yeah. So just to clarify, what I said in the prepared remarks was our original guidance for the year presumed about $1.4 billion in share repurchases, obviously at a higher price than where we've been currently trading at. What I said is that, you know, we'd likely repurchase about 80% of the original number of shares, probably from a dollar standpoint that's more like, you know, 60%, you know, $800-$850 million of the original $1.4 billion. Similarly I think we've trimmed our CapEx forecast from $1 billion originally to something, again, more in like the $800 million range. I n both cases, we've done that out of an abundance of caution, obviously in an environment of rising interest rates, and just uncertain operating trends we wanna be, appropriately cautious. We continue to believe that investing in our own EBITDA growth and our own earnings stream is still one of the most prudent investments we can make. W e'll continue to be an active acquirer of shares into next year. W e'll be much more specific about what our, precise assumptions are when we give our guidance in February. I suggest that as people think about their models today, you think about CapEx and share repurchase in those sort of ranges of 2022, you know, $800 some million for CapEx and $800-$850 million for share repurchase. Great. Thanks. Thank you. One moment for our next question. Our next question comes from the line of Pito Chickering with Deutsche Bank. Your line is open. Please go ahead. Michelle, your line might be on mute. Okay, we'll go ahead and move to our next question. Our next question will come from the line of Justin Lake with Wolfe Research. Your line is open. Please go ahead. Hey, this is Justin Lake at Wolfe. Thanks. A couple questions here. First on wages. Steve, obviously, you guys did a great job of improving contract labor in the quarter. You're already kind of at your Q4 target. One, do you expect that to continue moderating or does it stabilize the year? To your point, a lot of it appears to be offset by higher wage growth. Can you give us any color on what wage growth's doing for your permanent employees, just so we can get an idea of how that's kind of running into next year? Yeah, Justin. O n the first question, yeah, we intend and plan to further reduce premium pay, premium pay was running about $35 million a quarter in the acute segment pre-pandemic. I don't think it's realistic to get down to those levels, but I think it's not a stretch to say that we should still be able to get down maybe another $15-$20 million at least in the next quarter. To your second sort of point, yeah, I mean, not all of that reduction sort of falls to the bottom line because some of the cost of reducing that premium pay is increased wages that we're having to pay to recruit and retain talent. I W e've said a number of times over the last several quarters that probably base wage rate inflation in both segments has been running, I'm gonna say 175-200 basis points higher than pre-pandemic levels. I think if in acute it was 3-3.25% pre-pandemic it's closer to 5% now. In behavioral if it was 2-2.5% pre-pandemic, you know, it's closer to 4-4.25% now. I think one of the reasons that, you know, we're, you know, not prepared to talk about, you know, specific 2023 guidance is we'd like to see how those trends sort out over the next several months. W e have a perspective that given some of the inflationary and other economic pressures out there, that it may actually contribute to, you know, somewhat of a lessening of the pressure on wages, and maybe we'll see that number probably not return to pre-pandemic levels, the wage inflation number, but maybe somewhere between where we are today and pre-pandemic levels. I think that's to be seen over the next several months. Got it. You kind of already went to my second question on just inflation. O ne of your peers talked about inflation, and it seemed like they were talking beyond labor. Just curious, when you think about supply costs, for instance, professional fees. T hings outside of labor that could be impacted by inflation. Are you seeing any kind of pivots there? Anything that's trending that we should think about into 2023? Thanks. Yeah if you look at our income statement, clearly, the biggest pressure is on the salary and wage line. Certainly we're experiencing, you know, inflation on an overall basis throughout our portfolio. As an example, utility costs, although it's a very small percentage of our overall costs, but they have clearly risen by significant numbers in many of our facilities. Again, the key driver is wages. Our focus is on reducing premium pay, filling, you know, as many permanent vacancies as we can. I think if we can do that, number one, that will drive higher volume growth, which will help us offset some of this inflationary pressure. Thank you. We'll move on to our next question. Our next question comes from the line of Jason Cassorla with Citi. Your line is open. Please go ahead. Great. Thanks. Good morning. Just on your prepared remarks around the measurable shift in surgical volumes to the outpatient setting in the quarter, do you believe this move is a sustained construct moving forward? Or, you know, would you call this as more of a one-time consideration, and you would expect a reversion back to a more gradual shift over time? Jason, obviously in sort of the broader context of the industry, this shift from inpatient settings to outpatient settings has been going on for an extended period of time, certainly well over a decade. I think it accelerated during the pandemic, from a behavioral perspective. People were in some cases more comfortable receiving care in settings outside of hospitals and hospital emergency rooms. W e've seen that, as just as one example, our freestanding emergency departments, we have about 25 of those today around the country, have been extremely busy, you know, during the pandemic and especially, I would say over the last six to 12 months. I think, again, for a variety of reasons, people are just more comfortable receiving their care there. T o a degree, we'll, you know, have sort of a, you know, normalization back to a bit of a mean. People will return to the hospitals as we move further and further away from, you know, the concerns about COVID and COVID surges. Obviously there are other reasons why the certainly the payers are taking advantage of this opportunity to continue to, pressure more business to move to outpatient, et cetera. Q uite frankly, we acknowledge all that and, you know, we've been investing in outpatient development in both of our business segments for that reason. I think it's the trend accelerated somewhat during the pandemic. M ore broadly, it's just a continuation of a trend that's been in place for some time. I think our business strategy in both of our businesses takes that into account, and we're very cognizant of that. Yeah. Okay, thanks. Just as a follow-up here, just as we think about the potential wind down of the COVID public health emergency early next year. Y ou've talked in the past about some of the considerations on Medicaid redeterminations and on volumes. I guess with the incremental FMAP dollars that have also rolled into the states also coming to an end, I know it's early, but I was wondering what your outlook is for Medicaid rates next year for both sides of the business, and if you think there could be pressure there just given the ending of FMAP. Yeah, I think sort of mechanically, the ending of FMAP probably creates some, incremental headwind, although I don't think we think it's necessarily material. Again, I think at a sort of 20,000 foot level, it's gonna be difficult for our reimbursement, especially from the government at the Medicare and Medicaid levels, to fully offset inflation. I think the way we're presuming that the biggest offset to these inflationary increases will be a return to pre-pandemic volumes and quite frankly, you know, volumes above and beyond pre-pandemic levels. Because, you know, to be perfectly frank, I don't think that pricing can account or can offset, you know, all of the inflationary pressures that we're gonna face. Got it. Okay. Thanks for all the color. Thank you. One moment for our next question. Our next question comes from the line of A.J. Rice with Credit Suisse. Your line is open. Please go ahead. Thanks. Hi, everybody. First, maybe just to ask you about the behavioral trends in the quarter. Obviously, that bounced back very nicely. Strong revenue up 8% and good margin leverage. I assume some of that is because COVID crowded out some psych cases last year, and you're just against an easy comp. Any updated thoughts on where we're at in terms of getting back to a normal growth cycle, mid-single digits or a little better even in the psych hospital businesses and the mix between revenue and volumes? I know hi storically, you sort of described that as about equal 2%-3% in each, but any updated thoughts on that given the strong quarter? I think we have said a number of times during the pandemic, A.J., that our experience has been that during periods of higher COVID utilization, the behavioral business has clearly struggled more than the acute business. There's really no benefit to the behavioral business. There's no increased acuity, there's no increased reimbursement. There's just the challenge of having to isolate COVID patients from the rest of the patient population, often resulting in some closed beds, et cetera. There's the pressure on labor. You know, whenever there's a COVID surge, we have more employees out sick even if it's only for a week or two, and it just creates more pressure in an already tight labor environment. W hat we experienced in Q3 is what we've experienced, previously, like in the Q2 of 2021, in a period of relatively low COVID utilization, which is, you know, not, you know, nearly as many sort of patient matching problems and the ability to fill more labor vacancies. When we're able to do that, we're able to admit more patients. You know, we've talked about being able in a sort of post-COVID environment or at least an endemic environment, being able to achieve that mid-single-digit to upper single-digit revenue growth that we've been able to historically achieve pre-pandemic in the behavioral business. The Q3 was reflective of our ability to do that. T he challenge is I don't know that we'll have a sort of straight line of that. W e may see another COVID surge in the winter here. But I think as we've said many times, we think the underlying demand for behavioral services remains quite strong. As long as we can continue to address and make progress on the labor issue, I think we're gonna continue to see revenue growth that's more closely related to our historical trends. Okay. Maybe just a question on the acute side. If I look at some of the metrics, length of stay showed a meaningful improvement, that obviously is a favorable benefit for you. Any comment on what was going on there? S ome of the companies are talking about, even if not year-over-year, because last year had a lot of COVID, sequentially, they're starting to see stabilization in metrics like payer mix and in you know revenue per adjusted admission, particularly on the commercial side, with a little bit of optimism around rate updates for next year. Any comment on any of those metrics that you would wanna give? Yeah, A s to the length of stay question, it's directly related to the metrics that Marc discussed in his opening remarks. Last year's quarter had 16% of our acute patients as COVID diagnosed. This year, it's 6%. The reduction in the number of those high acuity COVID patients, I think, is sort of directly related to the length of stay decline. I would add that we believe that further reductions in length of stay are possible and are actually maybe one of the most, if not the most significant opportunity we have to be more efficient and control costs. F or many of our patients, certainly for almost all of our government patients and for even a significant chunk of our commercial patients we're paid on a per admission basis. To the degree that there's an extra day or two of length of stay that is really unnecessary, we're just incurring additional costs without additional reimbursement. We've struggled during the pandemic for a number of reasons. A lot of it has to do with the inability to refer patients to traditional, you know, subacute venues because they're struggling with some of the same capacity issues we have and other issues. We're very focused on the continued reduction in length of stay. As far as your other question, I don't think we've had a lot of volatility in payer mix during the pandemic, so, I would say it's probably as stable and continues to be stable. Again, I would say the same thing I've now said a number of times. W hat we look forward to, as more and more people just get accustomed to living and working and getting their healthcare in a COVID environment or an endemic environment, that more people will be comfortable seeing their physicians getting primary and specialty care that they've historically gotten and getting that care in hospital settings and hospital outpatient settings. We think that trend has started to manifest itself and will continue. Okay. Thanks a lot. Thank you. One moment for our next question. Our next question comes from the line of Andrew Mok with UBS. Your line is open. Please go ahead. Hi. Good morning. I wanted to follow up on Justin's labor question. Steve, you mentioned another $15 million-$20 million in potential improvement in the Q4. Do you have visibility into that level of improvement today based on the current trends and anything else you would point to that's going to drive sequential EBITDA improvement in the Q4? Thanks. I would say, Andrew, is we've obviously had a significant amount of success in the acute division in reducing premium pay. It peaked at about $150 million in Q1. It was $117 million in Q2, as Marc said, and then $81 million in this Q3. We've seen that, you know, trending down and believe that we can continue to propel that further reduction. Obviously, there is some sort of level of fixed amount of premium pay that is appropriate. I was saying it was $35 million pre-pandemic. I don't think that's a realistic target at this point. T hat's the basis on which we believe that we can continue to reduce that number. It's clearly a trend, and it has not yet flattened out, and I don't think it will. Got it. Okay. As a follow-up, I think, Steve, you've mentioned earlier this year that you're starting to enhance your footprint in the Medication-Assisted Treatment line. Can you update us on progress there, and how would you characterize the broader MAT opportunity over the next 18 months? Thanks. Yeah, I mean, it's a-- At the moment, it's a relatively, sort of fragmented process in the sense that we're really doing it kind of boots on the ground, developing some MAT facilities into doing, or pursuing some, kind of small 1, 2, 3 off acquisition type areas. A s I've mentioned before, you know, we don't necessarily see this as a huge driver of growth in the future, as much as we see it as really enhancing our very fulsome continuum of care in the behavioral space. W e treat virtually all diagnoses across inpatient and outpatient settings, and MAT was just sort of a gap in that. W e're gonna continue to pursue the opportunity to do that, at least in some of our markets. I t's really much part of a much broader strategy of being one of the more comprehensive providers or maybe the most comprehensive provider of behavioral services in the country. Great. Thanks for the color. Thank you. One moment for our next question. Our next question comes from the line of Stephen Baxter with Wells Fargo. Your line is open. Please go ahead. Yeah. Hi. Thanks for the question. Wanted to ask a follow-up on the pricing discussion earlier. I think you suggested that it might be challenging for your pricing yield to keep up with inflationary pressures, but just wanted to clarify that. Was that commentary specific to your government yield or your overall pricing yield? I guess my actual question would have been, just wanted to get an update on your commercial rate negotiations for 2023. I guess, what percentage of your commercial book will be in the first year of a new contract in 2023? And then what do you think the incremental yield would be compared to a typical update? Thank you. Yeah. M y previous comments clearly called out the fact that because, you know, half of our revenue comes from government sources, and we know that they are simply not at the moment keeping up with inflation, although I think we believe that we'll continue to get incremental increases from those government sources over the next couple of years, that was probably the bigger challenge. I think on the commercial side of things, we continue to seek higher rates and more acknowledgment from our commercial payers that, you know, we need greater reimbursement to operate in this sort of inflationary environment. On the behavioral side of that, overall pricing has been strong. It was strong in the quarter. We've talked in previous calls about our relatively aggressive stance that we've been taking with a number of payers, in part because that's a business in which we've been capacity constrained. It makes sense to us or for us to go to our lowest paying payers and either require them to come up to, you know, market levels of reimbursement or terminate those contracts because if we're gonna turn patients away, it makes sense to terminate those that are sort of the most inadequate, if you will, payers. O n the acute side, and again, this idea of sort of how many of our contracts have been renewed, et cetera, I think is a little bit outdated in the sense that virtually all of our managed care contracts have short-term outs, but most of them have 90 or 120 day outs. We're renegotiating contracts in both our acute and behavioral spaces where we think there's an opportunity, where we think that a payer may be under market, where we think that, you know, we might have an appropriate amount of leverage to press for greater rates, et cetera. Yeah, we will definitely get more relief on the pricing side, clearly on our commercial side of the business, and we're aggressively seeking that. A gain, I was sort of describing the shortfall clearly as being more on the government side. Thank you. We'll go to our next question. Our next question comes from the line of Whit Mayo with SVB Securities. Your line is open. Please go ahead. Thanks. Just wanted to follow up on contract labor for just one second. Steve, how much of the improvement in the Q3 was utilization versus, you know, bill rates? And do you have an idea of what your exit rate was in the quarter? I've got you pegged at around 10% of acute SWB in the quarter, but just wondering if that, you know, trended maybe a little bit more favorably towards the end of the quarter. Thanks. Yeah, I n my mind, this is sort of intuitive that the improvement in premium pay is a combination of both rate and utilization. Obviously, as the demand for those temporary and traveling nurses comes down, the rates that are required or being, you know, demanded for them comes down as well. I would say it's a pretty even, you know, mix of rate and volume coming down. I don't have the specific month by month premium pay numbers in front of me, Whit. But as you know, I was sort of referring to in my, you know, in a previous response, I mean, what we, I think, have seen is a steady incremental decline in premium pay since the beginning of the year when COVID volumes peaked. Our exit rate in the quarter was certainly higher, however you want to view it, a lower amount of premium pay or a greater reduction than it was in the beginning of the quarter. Okay. Do you have a number for the contract labor spend in the behavioral segment? I know and recognize that it's not as significant of a pain point, but just wanted to see if you had that. Yeah. H istorically it's been about a third of what it is in the acute side, but I don't have the specific number in front of me. Okay. Well, one last one, just corporate overhead. I know this number bounces around, but came in lower than sort of where we thought it might shake out. Just any developments or anything to call out, would be helpful. Thanks. Yeah, I don't think anything terribly specific. I will say that the decline in corporate overhead in Q3 of this year was pretty consistent with what we experienced last year. A s we've, you know, analyzed those numbers, there's nothing, you know, terribly material driving that. Thanks, guys. Thank you. One moment for our next question. Our next question comes from the line of Gary Taylor with Cowen. Your line is open. Please go ahead. Hi, good morning. Just a couple quick ones for me. Doesn't sound like, on the hurricane, any material impact expected to continue into the Q4. That was just a disruption but nothing damaging that would be continuing. That's correct, Gary. We didn't suffer fortunately any, you know, significant physical damage in any of our facilities. I think all the impacts were temporary, and most should be recovered in the Q4. On the Florida DPP for 4Q, I know you'd mentioned that earlier in the year. I just wanna make sure I understand. The $30 million, is that the EBITDA impact, or is there? I'm thinking of, you know, the other companies have had, like, a gross revenue number or a provider tax number associated with it, and then a net sort of EBITDA contribution.1 Yeah. That $30 million is the EBITDA impact. Okay. Last one. When I look at modeling the acute segment, you know, the line that really is most challenging for me, and I'm just struggling to stay up with it and perhaps understand it, is that other operating expense line that's almost $100 million year-over-year. I don't think there's any contract labor in there. I think it's professional fees and utilities and insurance are always like the most largest items cited in that bucket. Could you just maybe confirm that and when you think and maybe just help us think about that up $100 million year-over-year, what the two or three largest drivers of that are? Sure. Clearly, we've you know, talked about this on previous calls, the most significant driver, and I think the biggest distortion is the insurance subsidiary, where we record our Medical Loss Ratio in that line. Because the Medical Loss Ratio for our insurance subsidiary, like any insurance subsidiary is, you know, 85% or 90% of revenues, and otherwise that other operating expense line for our hospitals is more something like 20% of revenues. To the degree that there's a revenue increase in the insurance subsidiary, it sort of distorts that line. In the Q3, there's about $30 million-$40 million increase in insurance subsidiary revenues and expenses. If you adjust that out of other operating expenses, r ather than like a 15% increase quarter-over-quarter, it's something like 10%. I think that's probably a reasonable go forward. I don't have the year-to-date numbers in front of me, but we can certainly provide those. We'll make a point, I think, you know, when we give guidance for 2023 of, you know, trying to separate out the impact of the insurance subsidiary on those numbers so it's easier for people to follow. I understand the difficulty that creates. Yes. Do I have the three largest buckets of spend on the acute other OpEx, correct? When we think about professional fees and utilities and insurance, yeah. Yeah. I would say after you know, adjusting out the insurance, there's a bunch of miscellaneous things. Probably the other most volatile item in the last most recent path has been physician payments. You know, our payments to physicians, including you know, locums physicians and increased subsidies for hospital-based physicians, et cetera, would be recorded on that line. Y ou're seeing some impact of that and then just the impact of broad general inflation. Thanks. Thank you. One moment for our next question. Our next question comes from the line of Michelle Pito Chickering with Deutsche Bank. Your line is open. Please go ahead. Yeah. Good morning, guys. Thanks for taking my questions. Three follow-up questions to AJ's focus on behavioral. Number one, how did behavioral admissions track in September or October? Is it fair to think about 3Q admission growth continuing into Q4? Number two, is 3Q margins and behavioral the right sort of, you know, run rate for the Q4? Number three, is it thinking about sort of 2023 behavioral, if pricing is in the 4%-5% range and wages are in the low 4% range, is there any reason we should not think about margin improvement in behavioral in 2023? Yeah, L ook, I think we made these comments broadly, and I think most hospitals have made these comments broadly. J uly volumes in both behavioral and acute were really rather soft. August tracked better, a nd I think September was sort of a reflection of the two earlier months combined. T he trend is upward. W hat we've learned during the pandemic is the trends are a bit more volatile than they have been historically. Again, the thing that we say with some confidence is that in periods of lower COVID utilization, behavioral volumes will tend to trend upward, and that's been our experience. A s far as the sort of question about if we continue to have mid-single digit and upper single digit revenue growth as we did in Q3 should that be enough to allow for margin improvement? I think the answer is yes. I mean, I think we saw that in the quarter, and, you know, I don't think there's any reason why we shouldn't continue to see that going forward. One quick follow-up on the acute wages. Are you seeing your competitors sort of raise full-time employee wages multiple times during 2022 like it did in 2021? Or are wages generally all coming up to same levels and hence why you think the wage inflation in acute should be less in 2023 than in 2022? Yeah, we definitely saw our acute care peers raising wage rates often multiple times during 2022, and again, particularly during COVID surges. As I said, our hope is that with COVID volumes more stable, and you know, hopefully without another really significant surge like we saw in January 2020 and January 2021, wage rates will be more reasonable and wage rate increases will be more reasonable in 2023. Look, the other issue is, I think as most people know, I mean, I think most of our not-for-profit peers are struggling financially, and that may be an understatement. I think again, the hope is that their willingness to give what we believe, what we would characterize as outsized pay increases, they're gonna have much less of an appetite for that in 2023 than maybe they did in 2022. Great. Thanks so much. Thank you, and one moment for our next question. Our next question comes from the line of Sarah James with Barclays. Your line is open. Please go ahead. Thank you. You said in your prepared remarks that you were able to lower the previous admission cap in behavioral due to filling the vacant positions. Can you give any color on what percentage of admissions you had to turn away in 3Q and what that looked like pre-pandemic? Yeah. Sarah, we generally don't give those metrics because I think they're hard to measure across the portfolio consistently. Not every hospital tracks it the same way, et cetera. We do try and track it, but internally. You know, I've been reluctant to give those metrics out publicly. What I will say is, what we do know during the pandemic is that the percentage of inbound call volume or you know, we call it call volume, but it could be, you know, over the Internet, et cetera, that we're able to satisfy was significantly lower than it was pre-pandemic. The main reason for that was because of, again, I'm gonna describe it as capped beds, and the beds could have been capped either because we were isolating COVID patients in certain units or because we didn't have enough staff. What we have, you know, manifested, you know, many times when COVID volumes decline is we know that the number of uncapped beds, you know, increase as COVID volumes come down. It, you know, it's difficult to give a precise impact of that, but again, I think you can see it in the, you know, the 8% same store revenue growth in Q3. Got it. Given the roughly $200 million reduction in CapEx guide in conjunction with your commentary in Q2, that you're leaning on de novo openings this year, related to staffing shortages, what impact does that have on openings going forward? Is it influencing your thoughts around what new builds might happen in 2023? I think it's mostly a timing issue. I think that we have a view that CapEx investments that make economic sense that pencil out to a reasonable return, et cetera, make sense. They may not make sense from a timing perspective to add capacity in an environment in which we're already, you know, having difficulty staffing the existing capacity we have. Ultimately, they'll get built. I don't know that, you know, there's any, because the reality is 2023 large expansion projects that would be adding capacity, scheduled capacity are probably, you know, already well committed to. You know, I think that our deferral or delay in CapEx, you know, probably pushes out some 2024 projects to 2025 and 2025 to 2026. It's that sort of thing rather than, I think, an immediate impact in 2023. That makes sense. Thank you. Thank you. One moment for our next question. Our next question comes from the line of Noah Kaye with Stifel. Your line is open. Please go ahead. Noah, your phone may be on mute. All right. I am showing no further questions at this time, and I would like to turn the conference back over to Steve Filton for any further remarks. We'd just like to thank everybody for their time this morning, and I look forward to. Please go ahead. This does conclude today's conference call. Thank you for participating. You may all disconnect. Everyone, have a great day.