All right, good afternoon, everyone. We're gonna start our next panel here, close out the first day of the Goldman Sachs Healthcare Conference. We've got UHS with us and Steve Filton, Chief Financial Officer. Thank you for joining. Thank you. Let's start with acute care volumes. That's probably most topical on a lot of people's minds. I'm gonna start with just the first quarter and try to tease apart if there's, you know, anything unique about it, gauge where the recovery is, and then we'll, you know, see if we can get any color on current trends. You know, first, how would you describe the first quarter? I think, you know, there's a view that something changed in some way, that it was an easy comp. How would you just describe what the recovery looked like in the first quarter? Yeah, and to your point, Jamie, I mean, I think, you know, whatever was happening seemed to be reasonably consistent among all the public acute care hospital companies, all of whom I think recorded pretty strong volumes in Q1. To your point, there it was an easy comparison to the extent that the first quarter of last year was a quarter that had very high COVID volumes or, you know, still had high COVID volumes. We were going through the Omicron surge at the time, although replacing those COVID volumes, you know, certainly was a bit of a challenge. It felt to us as if there was some amount of catch-up or pull-through, as some people have described it, in Q1. We say that, I think, you know, with some relative lack of precision. You know, it's difficult for us to really sort of tell the history of a patient who comes to our hospital, whether they're there because they've postponed a procedure or, you know, deferred some sort of care or treatment for a period of time, et cetera. Overall, I mean, our acute care, same-store adjusted admissions were, I think, approximately 10%+ over the prior year quarter, and that certainly is sort of a historically, you know, very large number. Just, you know, our gut reaction, which I think we've articulated, you know, in our first quarter call and since then, is, you know, that we certainly had a sense that there would be some, you know, moderation in volumes. You know, on the other hand, I mean, I think we've said and continue to say, you know, elective procedures, elective and scheduled surgical and other procedural volumes have been reasonably strong, as we would've expected they'd be as COVID volumes would go down. I think it's a bit of a mixed bag. I think we had probably some amount of catch-up in Q1, and, you know, some moderation in Q2, I think there's still, you know, pretty encouraging volume trends from our perspective at least. Okay, that's helpful. When you say catch-up, I get that it's not precise, but is this just there were things on the schedule in the fourth quarter, flu, COVID, whatever it was, disrupted that, and you saw that come back in the first quarter? Or you also talked about pull forward, and, you know, is that economic uncertainty and people are kind of rushing in to get things done? I mean... Yeah, I think it's the idea that, you know, we certainly know that at the beginning of the pandemic, people were postponing all but, you know, the most emergent procedures. They weren't going to the hospital, but beyond that, they weren't, you know, seeing their, you know, primary care physicians for their annual visits or for more minor ailments. They weren't having sort of routine diagnostics, colonoscopies, you know, that sort of thing. As we've emerged from the pandemic, I think, you know, late in 2022 and into 2023, more and more people have returned to those sort of normal patterns, back to having an annual physical, back to their routine colonoscopy, et cetera. Those activities, by their sort of nature and definition, translate into sort of a, you know, a cascade of other follow-up procedures, et cetera. you know, I think you're seeing some of that. honestly, I think providers and other observers of the industry have been predicting that all along, and I think to some degree, we've been a little bit surprised that it's taken as long as it's taken. I think some of that is the sheer capacity in the system, meaning, you know, we hear from our own physicians, we hear from our own patients, that once they wanted to get back to their regular routines, it took them some time, you know, to get an appointment in their primary care practice. you know, if there's a follow-up, colonoscopy or whatever, you know, now it takes, you know, six months or eight months before that's on the schedule. We have our doctors telling us the same thing about the backlog in their schedule. I think you see that dynamic at work as well. The other thing you said is you expected some moderation, you know, into 2Q, the growth rates in 1Q aren't sustainable. I get the growth side, just given the comp, you know, 10%. From a level perspective and normal seasonality, did you expect more seasonality into 2Q? You know, more of a decline, or just from a level perspective, you know, forget growth? I mean, I think, you know, we went into 2023 with a bit of a mixed view in the sense that the normal seasonality that I think we've come to expect in this business tended to be absent during the COVID years. Again, in a, you know, traditional year or historically traditional year, Q1 tended to be the strongest quarter, lots of respiratory ailments, that sort of thing. Q2 would sort of moderate a little bit. Q3 tended to be the softest quarter when in the summertime, people and physicians are on vacation, and then Q4 rebounded a little bit. We did expect, I think, to some degree a return to those seasonal patterns. People are definitely taking vacations again, and, you know, kids are back in school, and they're on that sort of school schedule, that sort of thing. I think what we're also finding and what we expected, and we talked about, I think in our year-end call and subsequent to that, is this continued recovery in volumes, you know, for the reasons that I talked about. A little bit of both, you know, and I, and I realize that's not necessarily the easiest thing to follow or to sort of fit into a model, but I do think you're seeing both. You're seeing, you know, some element of that return to normal, traditional seasonality, but also this incremental and I think, you know, sustainable recovery in volumes that I think we've been expecting ever since the pandemic began. Can you give any color on just what you're seeing in April, May, June so far? I mean, is that recovery piece kind of evident in what you're seeing in any way? You know, I think we talked about an expectation that overall volumes, you know, largely on the acute side, measured and adjusted admissions, would likely moderate in Q2. I think we expected that procedural, elective surgeries and other procedural cases would continue to recover, as they have been, I would say, you know, since at least the second half of last year and certainly into the first quarter. Okay. Last one on this. I mean, we talked a moment ago about catch-up from 4Q into 1Q. Did a similar dynamic happen last year, 1Q- 2Q? I mean, we had the big Omicron wave in the first quarter. Is 2Q kind of, you know, a tough comp in a way? I know it doesn't look like it necessarily, but do you think there was some impact in 2Q last year from a similar dynamic of catch-up? Yeah, I mean, I think. Again, the problem, and I'm not suggesting all your questions aren't perfectly legitimate and good questions, but you know, I think there are a number of different dynamics affecting all these periods. You know, I think what we saw in Q2 of last year was, as you suggest, I think, some recovery in those non-COVID procedures after we saw COVID volumes decline, you know, from their highs in January and February 2022. By April, May of last year, we were definitely seeing some recovery. On the other hand, what we were seeing last year, I think, was still a pretty significant pinch in the labor force and some labor scarcity that I think was muting some volumes as well. I think, and there's a bit of sort of ups and downs in terms of the comparisons to last year. Okay. Okay, that's helpful. Let's turn to acuity. It's been a huge driver for all the hospitals over the last couple of years. How should we think about just core acuity? I know, you know, big difference in level of COVID in the first quarter and into this year, but in terms of just core acuity, ex-COVID, is it at sustainable levels, do you think, or, you know, where to from here? Yeah, I mean, I think our expectation is that beginning in Q2, the acuity comparisons, whether they're to the prior year, second quarter, or they're sequentially to the first quarter of this year, begin to be more meaningful, in that they're really becoming apples to apples comparisons. We're comparing, you know, essentially, I'm going to call it a non-COVID period or an endemic period in Q2 of this year to a similar period in Q2 of last year or a similar period in Q1 of this year. I think what we've talked about is, in that environment, you know, our expectation, not necessarily immediately in Q2, but over the course of the next several quarters, is that we return to kind of a more normal trajectory for the acute care business, which is, you know, something in the mid-single digit, top-line growth range, you know, 5%, 6% growth that would be split pretty evenly between price and volume. Price, you know, includes a number of things, including sort of, you know, real pure price, but also acuity. As you know, as this recovery piece plays out and you get the incremental volume that's maybe been on the sidelines or deferred, it's sort of a theoretical question, but what does the acuity of that missing piece look like as it starts to come back in? Does that pressure, you know, that, you know, that half of the revenue component on an incremental basis? I mean, again, I feel like I'm never giving a very straight answer to any of your questions, but I think you get a little bit of both. I mean, I think, as I talked about, you know, we're getting a return of that elective and surgical volume that had largely been crowded out, particularly during the various COVID surges. Those patients are not necessarily the highest acuity patients. They may be, frankly, lower acuity than the COVID patients themselves, who were very high acuity patients. I also feel like the profitability of those patients, both from a payer mix and a procedural sort of perspective, tend to be better than the COVID patients they're replacing. I think that's a plus on, I'll call it, the pricing side, not specifically the acuity side. On the other hand, you know, I think what you saw, again, during the pandemic, particularly, I would say, you know, the first half of the pandemic, was a really dramatic decline in the lower acuity procedures. You know, again, people deferring, you know, routine sorts of things, et cetera. You know, they were still obviously coming to the hospitals for a heart attack or a stroke or whatever, but, you know, where, you know, for a knee or arthroscopy, et cetera, something that could be deferred, that sort of thing was being deferred. To the degree that those procedures, those sort of lower acuity procedures, are coming back, I think that dampens acuity a little bit. Again, in the end, I think our expectation is that over the next several quarters, absent another COVID surge, which I don't think too many people are expecting at this point, I think you're going to see sort of a return to that kind of more traditional trajectory and model of, again, I'm going to call, you know, mid-single digit same-store revenue growth. Okay, let's turn to reimbursement and payers. On the commercial side, I think you said 150 basis points of reimbursement above prior trend lines. I guess what I want to know here is the first quarter, you know, Like, have you renewed enough contracts that that's a good baseline from here, or are you still renewing enough contracts that we should see incremental, you know, benefit from reimbursement, commercial reimbursement, as the year progresses, that momentum building? Yeah, I think it's reasonable to expect, and I think we now have enough of a track record, because I would say we've seen these increased contractual pricing concessions, if you will, from our managed care payers. I'm going to say the middle of last year, maybe July of last year, when it became apparent that inflation had, you know, really taken hold, was not likely to, you know, moderate or reduce anytime soon. I think in, you know, the bulk of the contracts that we've been renewing since then, we're getting, you know, as you alluded to, 150- 175 basis points, you know, more in increases than we had been getting pre-pandemic. I think, you know, again, unless there's a you know, really dramatic change in the sort of economic arc that we're in right now, that's likely to continue and sustain as we continue to renew contracts. You know, and the average length of our contract is somewhere between two and three years. I think, you know, you're looking at, you know, at least another 12 or 18 months of, you know, relatively elevated contractual price increases. These contracts all have escalators in them, so you're locking in. Right. the rates look like over the next few years. Are the escalators also going up by that similar magnitude, or are those closer to trend? No, I think the escalators are anticipating the fact that this inflation is likely to be, you know, somewhat sticky or stubborn. You know, I mean, you know, there might be a little bit of moderation, but it's certainly not like we're getting 150 basis points more in the first year, and then it just is regressing back to where it was. Okay. We can be quick on this next question. Medicare, I mean, good rate update for fiscal 2023, you know, a little over 4%. The proposed rate went right back to trend line. Do you have a view on that? They're just going to tell us the rates, so we don't have to spend too much time. Yeah, no, and look, I think the industry has lobbied hard. I think that the fact of the matter is that the industry writ broad, you know, including the, you know, 80% of the industry that's not-for-profit, you know, has really struggled through the last several years. You know, I do think there's a lot of pressure on, you know, CMS to, you know, acknowledge that and, you know, acknowledge the pressures that, you know, providers, again, writ broad, are under, and we'll see. You know, I think last year, if you recall, the preliminary rate was lower, and then the, you know, the final rate was about 100 basis points higher. You know, there's certainly no guarantee we're going to see that same pattern in the, in the future, but certainly there's, I think, a lot of pressure on CMS to acknowledge that. Okay. What are you seeing on payer mix and the new variable being introduced here is redeterminations. Do you have any, you know, early data points on what you're seeing in your markets in terms of people losing coverage and how that's impacting what's walking through the door? I think it's still pretty early in the process. You know, I think we've been a little more sanguine about redeterminations than some of our peers. You know, there's, I think, been a lot written and a lot of analysis done, and I think most of it suggests that ultimately, redeterminations are likely to turn out to be maybe a modest positive, maybe a little bit more of a positive for providers, because in the end, there will be a sufficient number of people who are removed from the Medicaid roles, who will be able to get other coverage, you know, generally exchange coverage, that frankly, will be a better paying coverage for the provider community. I don't think we dispute that sort of kind of fundamental thesis. I think what we don't know, you know, what everyone in the industry is, you know, gonna have to experience over the next couple of quarters is: How does this play out? You know, we're just starting to see people getting removed from the Medicaid roles. It varies in, you know, different states, how quickly it's happening, how quickly they're able to re-qualify or, you know, with our help, re-qualify for other coverage. Again, you know, I think we've made the point when we talked about our initial 2023 guidance, that in our 2023 guidance, as we thought about pricing dynamics in both of our business segments, we presumed that redeterminations would be sort of a modest drag, maybe 50 basis point drag on our overall pricing. You know, we've, I think, been very candid about the fact that that was a pretty broad, you know, kind of stroke that, you know, wasn't based on, you know, really detailed analysis, et cetera, because I don't think that was available to us. Again, you know, I would say right now, you know, and we're asking this question all the time and trying to, you know, go through the numbers as carefully as we can, but I don't think we're seeing, you know, much of an impact just yet. I think that's probably still likely to occur over the next several quarters. Okay, that's helpful. let's go to behavioral, do top-line drivers here for a minute. on the volume side, I mean, you sort of explained the labor bottlenecks. From here, is it just as simple as the rate at which you can rehire and add staff that's gonna drive volumes? Is it that simple, or, you know, how would you? I think it is generally that simple. I think that most of the macro, data and measures and just anecdotally, what you have read about over the last several years is that demand for behavioral care, and I think that spans all sorts of diagnoses, all sorts of age groups, all sorts of payer groups, but demand for behavioral care has really only increased during the pandemic. I think there's a lot that's been written that suggests that the pandemic itself probably exacerbated, you know, a number of, behavioral illnesses, you know, increasing, you know, isolation and levels of depression and therefore, you know, subsequently, you know, addiction, issues and that sort of thing. you know, our... By the way, I guess our own, you know, microdata, the data that we track in terms of what we describe as inbound activity, these are people who are contacting us and our hospitals, you know, on 800 numbers or over the internet, you know, inquiring about care and this and that. All those, all that data suggests that demand has been increasing. Yeah, I think our view, and we've said this from the beginning of the pandemic, is to the degree that we can fill our labor vacancies, we have every expectation that, you know, volumes are on this sort of upward trajectory that should be sustainable for, you know, at least the, you know, the immediate or in and intermediate future. I think you see that in our results. I think you see that in our results beginning, you know, in the third quarter of last year, fourth quarter, and first quarter this year, behavioral volumes are starting to climb back to where they were pre-pandemic, and it's really, and, you know, in our minds, directly a function of our ability to fill those labor vacancies that we struggled with, you know, in the early part of the pandemic. Okay, if it's just that simple, how are hiring trends going now? I mean, they continued to improve. I think we've said that really ever since... I'm gonna say April of 2022, COVID volumes had, you know, been in decline for a couple of months at that point. You know, for, you know, we'll call it the 12 months since then, our net hires have been positive. We predicted that would be the case once COVID volumes declined. We're, you know, generally, you know, proving that to be true. It's still a tough environment. I think, you know, hospitals, and particularly hospitals and their efforts to hire nurses, and particularly RNs, you know, still struggle, and RNs are at a premium, you know, we're making progress. We're also, you know, making changes in our, you know, care treatment protocols, so, you know, trying to rely less on RNs, which is helpful. Yeah, you know, I think our expectation is, again, absent another COVID surge or some other unexpected disruption in the labor market, we should continue to make incremental progress. Again, I caution that it's still a pretty tight labor market. Okay. I'd also suggest that if we do experience a little bit more economic weakness, if there's a, you know, a modest recession or whatever, historically, that has generally been helpful to us. You know, in a softer economic environment, the supply of nursing hours, in particular, tends to increase. On pricing here, you guys have made some pretty clear, strong comments about what you're asking the payers for. Similar question to the acute side, I mean, where are you in terms of getting the pricing up to the levels that you expect? I think the dynamic on the behavioral side is a little bit different because the behavioral business has really experienced this issue of, you know, reduced labor, capacity or, you know, more scarce labor, and as a consequence, we've had to turn away more patients because we simply didn't have the appropriate staff to treat them. We have, I think, optionality with our payers and leverage with our payers on the behavioral side that we just don't have on the acute side. You know, we're able to go to our lowest-paying payers, who tend to be, this is not exclusively, but tend to be Managed Medicaid payers, and say, "Look, if we're gonna turn patients away in any event, we may as well turn the patients away who are paying us the least." I mean, it's a pretty straightforward sort of calculation. When we make that point in a negotiation and where the payer does not have a lot of other options because there either are not a lot of excess beds in the market or there are not other providers willing to take these lower rates, we've been reasonably successful at getting these higher rates. While I think the situation is improving, as we talked about, as we're hiring more people and admitting more patients, it's not a seismic change. I mean, I think those dynamics still exist, that there are still large numbers of patients that are having to be turned away because there just simply isn't enough capacity in the behavioral space. Certainly in certain markets, as a consequence, the payers are, in, again, in certain markets, in certain situations, under some pressure to make sure they're paying an adequate enough rate so that their subscribers can be adequately treated. Okay, let's go to labor costs and margins for a minute. First, on contract labor, you said you thought you could reduce it by 1/3 this year. Maybe progress in the first quarter sequentially was a little bit slower than expected. Is that still the right target for this year, just based on what you're seeing? I think so. I mean, again, that assumption or that premise was really based on the fact that as COVID volumes declined, the ability and opportunity for nurses to make these sort of extraordinary premiums and pay that they were able to make during the heights of the pandemic would be to continue to be reduced. I think we've clearly seen that. I think we saw a little bit of an interruption in Q1 because the volumes were so strong, particularly on the acute side, that we didn't reduce premium pay quite as much as we thought we would. I think we still think that the overall target that we set for 2023, which is, like you said, about a one-third reduction in premium pay, you know, should still be achievable. Okay. Where do you think all this settles over the medium term, long, long term, in terms of utilization and rate on the, on the contract side? Can we, how close can we get back to 2019 levels? We have talked about the fact that pre-pandemic, our acute care segment was generally spending on average, about $35 million a quarter on premium pay. I think our view, and at least in our, I'm going to call it sort of near and intermediate term forecasting, you know, we're thinking we maybe those numbers get down to $55 million, you know, something like that. Not quite back to pre-pandemic levels. I think part of the reason why we don't get back there is that there is, I think, a universe of the nurse population who, during the pandemic, has grown accustomed, maybe more accustomed to working in the temporary or traveling nurse milieu. Because there's a limit, you know, a limited number of nurse supply to begin with, if there are nurses who moved into that milieu, it's harder to fill all those full-time vacancies. You know, my sense is we wind up, you know, maybe a third above where we were pre-pandemic in terms of the use of premium pay. Okay, I guess the more important piece is what long-term inflation looks like for full-time. Let's go there. You know, how much progress are you making getting back towards those low single-digit trends? What are you seeing in the markets in terms of hospitals still kind of competing and outbidding each other for nurses? Yeah, I mean, as I said in my previous comments, I mean, the labor market remains quite tight, obviously, we're in more of an inflationary environment post-pandemic than we were pre-pandemic. I think we've talked about the fact that our base wage rate inflation at this point is probably, again, 150- 175 basis points higher than it was pre-pandemic. Again, if there is, I think, an economic downturn, I, you know, I think that rate of acceleration could decline some. I think, you know, that's, you know, again, in our two, three-year forecast that we're doing now, I mean, we're generally projecting wage inflation at, again, somewhere in the 150 basis point range above where it was pre-pandemic. Okay. Okay, I think embedded in guidance was roughly flat margin expectations for the acute care segment. You actually started to turn the corner in the first quarter, margins, you know, starting to move higher. You didn't change guidance. Is that to say the, you know, that's not sustainable, what you saw in first quarter, the margin profile for the acute care business? Or, you know, that's just, it's early in the year, and we're not changing guidance? I think, again, you know, we sort of touched on this at the, at the outset, I mean, I think part of the really strong performance in Q1 was the very robust acute care volume numbers. Again, you know, on a year-over-year basis, adjusted admissions 10% over the prior year. That rate of increase, as we've said, you know, I think is likely to slow. Yeah, I mean, you know, look, we made the point. Our first quarter was a strong quarter, you know, above our expectations. Maybe not quite above our own expectations, but we were above consensus. We generally would not think about, you know, changing guidance after Q1. That's just sort of not our practice. You know, we would obviously hope that the trends in Q1 would continue. As your, I think, initial questions, you pointed out, we'd like to see how this sort of develops, you know, to what degree we're going to look back and think about some of that volume as being catch-up or pull through. You know, certainly feel very comfortable with our overall projections for the year in terms of whether we can exceed them. I think we'd like to see maybe another quarter or two performance before we would conclude that. Okay. I mean, the big medium-term question for me is: What is the cadence of acute care margin recovery look like? I think you said you think you can get back to your pre-COVID margins over time. How should we think about the cadence in light of, you know, where you guys are? One piece I want you to address in this, I know it's not the whole margin recapture story, but you've had some startup losses this year. Those will continue to ramp and be good guys next year. How much does that kind of further the margin recovery next year? Yeah, I mean, reemerging from the pandemic, I think, is, you know, more challenging for the acute business than it is for the behavioral business, in the sense that the acute business had some benefits during the pandemic that, you know, were helpful to the business, that it has to effectively replace. You know, the acuity of the COVID patients, the special reimbursement that the government offered, you know, directly for COVID patients, the 20% add-on for Medicare COVID patients, the reimbursement, HRSA reimbursement for uncompensated COVID patients, the sequestration waiver, all those things were helpful to the acute segment and not in inconsequential numbers over the last several years. The acute business, I think, is in a bit more of a, kind of a climb-out trajectory from the pandemic. You know, in my mind, 2023 is sort of a transition year in that climb-out. We lose some of those good guys, although, to your point, you know, we replace it a little bit with some of the, you know, some of the drags that also, you know, we experienced last year, like the startup losses in Reno, you know, should become much less of an issue this year. Yeah, I mean, again, I think what our overall guidance and, and assumptions for this year presumed was that there'd be sort of a quicker, steeper sort of climb out and recovery from the pandemic margins on the behavioral side, you know, a little bit more, you know, muted on the acute side. That's sort of the way the first quarter played out and kind of the way our guidance for the year plays out. We obviously would hope to do better on both, you know, in both segments. We're encouraged by the first quarter results, but sort of, you know, a little bit cautious, you know, over the next couple of quarters. Let's touch on behavioral margins for a second. you know, it sounds like you're getting better pricing, endless sort of demand in a way, as you described it. It's hard to think margins can't expand from here. I mean, would you walk us back from that assumption? No, I think we would, you know, thoroughly agree with that assumption. You know, I think the question in our mind is, and, you know, if there's a debate internally, it's over how quickly, you know, what's a reasonable expectation of what that upward curve looks like. Yeah, I think there's no question. You know, again, I think the first quarter was, I'm going to say, extraordinary from a historical perspective, in that I think we had, you know, 10%+ same-store revenue growth and margins expanded, if I'm recalling correctly, maybe 270 basis points. It's hard to put that up quarter after quarter. Broadly, I think our view is that as long as we can record same-store revenue growth in behavioral in the mid- to upper-single digits, 6%, 7%, 8%, and that certainly seems very achievable in terms of, to your point, demand and pricing, you know, really doesn't seem like a significant stretch. You know, we feel like margin recovery and behavioral probably occurs more quickly than it does on the acute side. Okay, changing topics just real quick. I mean, your CapEx budget last year, I think it was down 25% versus your initial expectations. How should we think about where you're trimming and what the implications are for the medium term? Does that impact your, you know, competitiveness with, the latest equipment, you know, facilities? Where are you cutting and what does it mean? Yeah, I think, you know, as long as, you know, a provider is sort of tapping the brakes a little bit on CapEx in the short run, it probably has little, you know, kind of permanent or ongoing effect in the business. As you might imagine, the places where we're cutting are places that are probably non-revenue producing, you know, bed replacement, lab equipment replacement, that sort of thing, that I think, you know, can easily be deferred, you know, for a year or two. Obviously, if it extends out a lot longer than that, now I think it can really start to affect the business. On the behavioral side, I think we just slowed our pace of bed additions, and it was really with the fundamental premise that we were struggling to staff the beds that we had. What was the point of building new beds? I don't think we really lost anything during that period because we would've been unable to staff those beds. As we continue in the success of being able to fill more of those full-time vacancies, I think we'll resurrect a lot of those building and bed expansion plans that we had pre-pandemic. Okay. Well, I think with that, we're out of time. Thank you. Okay. Thank you. Thanks, everybody.