Good day, and thank you for standing by. Welcome to the Universal Health Services third quarter 2023 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 the session, you will need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Steve Filton, CFO. Please go ahead. Thank you and good morning. Marc Miller is also joining us this morning. Welcome to this review of Universal Health Services results for the third quarter, ending September 30, 2023. During this 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, 2022, and our Form 10-Q for the quarter ended June 30, 2023. 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 $2.40 for the third quarter of 2023. After adjusting for the impact of the item reflected on the supplemental schedule, as included with the press release, our adjusted net income attributable to UHS per diluted share was $2.55 for the quarter ended September 30, 2023. During the third quarter, same facility revenues at our behavioral health hospitals increased by 7.6%, primarily driven by a 6.5% increase in revenue per adjusted patient day. The patient day growth in the quarter was greater at our acute care behavioral hospitals versus our lower acuity residential treatment centers, which tended to drive up the revenue per day beyond the already robust levels we've been posting for several periods. Additionally, as we have anticipated in our original 2023 guidance, we're beginning to see a negative impact of Medicaid redeterminations in certain states on behavioral health volumes. With 8.3% revenue growth, same-facility EBITDA for our behavioral health hospitals has increased approximately 10% during the first nine months of 2023 compared to the comparable prior-year period. Our acute hospitals experienced strong demand for their services in the third quarter, with adjusted admissions increasing 6.8% year-over-year. In part because the volume growth was skewed somewhat to lower acuity procedures, overall revenue growth was 7.5%. While overall surgical volumes increased about 3% from the prior-year quarter, there was a continuing shift from inpatient to outpatient. Additionally, we note that managed care behavior has become more aggressive in 2023 as it relates to denials and patient status classification changes. Meanwhile, the amount of premium pay in the third quarter was $69 million, reflecting a 15% decline from the amounts in the previous several quarters. The continued robust increase in acute volumes is the major reason the premium pay has not declined farther. It's worth noting that our average hourly rate, which includes premium pay, was slightly lower than in the third quarter of 2022 as compared to the comparable prior year quarter. Our cash generated from operating activities was $815 million during the first nine months of 2023, as compared to $699 million during the same period in 2022. In the first nine months of 2023, we spent $537 million on capital expenditures and acquired 2.7 million of our own shares at a total cost of approximately $367 million. Since 2019, we have repurchased approximately 26% of the company's outstanding shares. As of September 30, 2023, we had $721 million of aggregate available borrowing capacity pursuant to our $1.2 billion revolving credit facility. I will now turn the call over to Marc Miller, President and CEO, for closing comments. Thanks, Steve. Despite what remains a difficult operating environment, our consolidated results continue to track our revised earnings guidance. As we anticipated, acute care volumes have continued their recovery trajectory and have gradually begun to resemble the patterns we experienced before the pandemic. As Steve has previously commented, we recognize the need to counter the increasingly aggressive behavior on the part of our payers and seek appropriate price increases to offset the impact of inflation on our cost structure, and to seek further contractual protection to ensure we are properly reimbursed for the level of care provided to our patients. We previously highlighted the upward pressure on physician expense, which tended to run at a rate of about 6% of revenues pre-pandemic, but is running closer to 7.6% in 2023. ...In our Behavioral segment, we have been pleased with our strong pricing and related earnings growth to date, but acknowledge significant upside opportunity in our existing occupancy rates, particularly as we continue to improve our recruitment and retention metrics. As previously disclosed, we expect our operating results for the fourth quarter of 2023 to include revenues earned by our hospitals in connection with the Florida Medicaid Managed Care Directed Payment Program. In addition, it is worth noting that we continue to believe a new Nevada state-directed program, which we have previously disclosed, appears to still be on track for 2024 implementation, with a potentially materially favorable impact on our Nevada hospitals. We are pleased to answer questions at this time. Thank you. At this time, we will conduct the question-and-answer session. As a reminder, to ask a question, you will need to press star one, one on your telephone and wait for your name to be announced. To withdraw your question, please press star one, one again. Please stand by while we compile the Q&A roster. Our first question comes from Justin Lake of Wolfe Research. Your line is now open. Thanks. Good morning. Appreciate all the detail. A couple questions on 2024. One, just, you know, I know it's early to give guidance, but just wanted to hear your view, Steve, on headwinds, tailwinds, and specifically, Marc, you know, appreciate the comments on Nevada, you know, that it does sound fairly material. Wanted to get some color, you know, historically, when a state goes to CMS and tries to put one of these programs in place, you know, can you talk a little bit about timing and probability? Have you ever seen a state be unsuccessful? Have you ever seen CMS turn one of these down and say, "You know, I know you have the money, but we're not going to match," type of thing? Can you give us some color there, historical background? Thanks. Sure. Just, you know, in terms of sort of the first part of your question, in terms of 2024 guidance, you know, Justin, as you know, we won't formally give our 2024 guidance until our fourth quarter earnings call at the end of February. I think it's fair to say that, you know, we continue to believe that the underlying metrics of the two businesses, as Marc kind of alluded to in his remarks, you know, every sort of passing quarter continue to resemble, you know, more of our pre-pandemic, operating environment. And I think broadly, that's sort of the way we're thinking about 2024. I'm not going to go through a detailed list of puts and takes for 2024 at this point. Obviously, the most significant one is the one that you mentioned, this supplemental program in Nevada, which we've been disclosing, you know, in our Qs and Ks for a number of quarters now. We believe, you know, the program has been submitted by the state of Nevada to CMS. We believe that the state has been talking with CMS throughout, so that they believe that the program, you know, meets the CMS requirements, and I think they're anticipating CMS approval. Based on our experience with, you know, like programs, we don't believe there's anything in the program that, you know, CMS should fundamentally object to. But obviously, you know, it's not over until there is CMS approval. I think the state's expectation is that approval is likely forthcoming early in 2024. The program is supposed to be retroactive. It's created to be retroactive to January 1, 2024. We are still waiting for the state to publish an impact file, which would show their estimate of the impact on individual hospitals. People have been using a number to, I think, estimate the impact on UHS in total in Nevada in the $100 million-$150 million range, and based on our understanding of the program mechanics, that doesn't seem like an unreasonable estimate. So, again, the outstanding dynamic is CMS approval. We think it's probably forthcoming early in 2024, but obviously, we'll continue to keep people updated as we learn anything new. Thanks. Thank you. One moment for our next question. Our next question comes from Jason Cassorla of Citi. Your line is now open. Great, thanks, and good morning. Steve, I wanted to go back to your commentary on the Medicaid redeterminations impact on behavioral volumes. I guess, are you able to work with those patients to help get them back onto coverage like you can with the acute care business? And as a result, see that volume headwind as more of a transitory issue, or how should we think about the puts and takes on redetermination impact on volumes for behavioral specifically? Yeah, and to be perfectly candid, Jason, I think, you know, we're guesstimating to a degree the impact. What we have noticed during the quarter is that in certain states, and probably for us, most notably Texas, you know, certainly being the largest one, and it's, you know, been reported that I think there have been at least 1 million people redetermined off the rolls in Texas. But what we've noticed in a place like Texas is that the number of calls and inquiries that we're getting that qualify from both a clinical and, you know, financial perspective, meaning there's adequate coverage available, have declined a little bit in the quarter. We don't know, you know, I think precisely that that's related to Medicaid redeterminations, but, you know, we've sort of drawn that conclusion kind of based on historical trends and metrics. As has been reported, you know, it seems like a lot of these redeterminations are for administrative reasons, and a great number of these people will be able to get back re-enrolled, and when they reach out to us, we certainly can help them do that. We can also try and help them to get other coverage, but, you know, a lot of those things take a little bit of time. So I think our perspective on this is, it's probably in large part kind of a temporary dynamic. But, you know, I think we feel like there's a reasonable chance that our volume growth, particularly in our residential business amongst our child and adolescent population, might have been greater in the third quarter had it not been for the impact of Medicaid redeterminations, again, especially in Texas, but a handful of other states as well. Great, thanks, helpful. And then maybe just as a quick follow-up, just on capital deployment, it looks like share repurchase activity picked up in the quarter. I guess, just given the backdrop, how are you thinking about the uses of your free cash flow moving forward in areas where you perhaps see the best returns just at this juncture? Thanks. Yeah, I would just remind people that, you know, we had slowed our share repurchase a little bit in Q2. It seems like, you know, ages ago, but there was, you know, the threat of a government shutdown at the time, and, you know, we were concerned potentially about some short-term cash flow, you know, crunch issues. But obviously, you know, that got resolved, at least for the time being, and we resumed our sort of regular share repurchase activity in Q3. And I think, you know, we generally sort of think about using the bulk of our free cash flow for share repurchase going forward. Great, thank you. One moment for our next question. Our next question comes from Stephen Baxter of Wells Fargo. Your line is now open. Yeah, hi, thanks. Can you expand a little bit on the managed care environment? Any way to quantify, I guess, how much of a drag on your realized, you know, commercial rates you're seeing from these tactics? Like, if you thought you were getting a 5% rate increase, is that effectively now, you know, 4% or some other number, given, you know, the drag there? And would you say this is getting back to pre-pandemic practices as the environment's normalizing? I think you've talked to me about that in the past. Or do you think this is something that's kind of gone well beyond that? Thank you. Yeah, I think the way you framed the question, Stephen, is quite appropriate. I think that what we experienced or observed was, particularly early on in the pandemic, when healthcare utilization dropped dramatically, I think we felt like the managed care payers eased up quite a bit in what, you know, sort of with their, you know, historically more aggressive utilization review, you know, audits, denials, patient status changes, that sort of thing. I think as utilization picked up for the industry, you know, in 2023 and seemed to be getting, you know, more back to normal and I think created some pressure on the MLRs for the managed care companies, they got, you know, they returned to sort of what I would describe as their historical practices when it came to, again, you know, denial and claims reviews and, and that sort of thing. And I think that's what we're seeing. And I think the way it's reflected is, and, and it's difficult to quantify in a precise way, but our acute care revenue per adjusted admission, which was up only modestly in the quarter, I think we would have, would have been higher had it not been for this behavior. Now, I think to a degree, we view it as, again, relatively temporary in nature. You saw that our accounts receivable days outstanding ticked up in the quarter. A lot of this is, I think, sort of an extended process, meaning we'll, we'll, you know, appeal a lot of these claims denials. We'll work to collect a lot of these monies, and I think we will collect a substantial amount of them down the road. But again, in the current period, it did, you know, weigh, I think, somewhat on our acute care revenue per adjusted admission. Thank you. One moment for our next question. Our next question comes from A.J. Rice of UBS. Your line is now open. Hi, everybody. Maybe two things, just to put a finer point on your revenue for adjusted admission trend in acute. You're talking about MCO behavior. I think you also commented on volumes coming back tend to be a little lower acuity. Is there any way to parse that out? Do you think the underlying apples to apples pricing in acute, acute care is still in that sort of 2%-3% range? And how much are each of those being a drag? And then the flip side, on the behavioral side, it looks like it's more of a volume question. And you mentioned Medicaid redeterminations, but there's been times when it's been constrained somewhat by staffing challenges. And just maybe comment on the underlying demand. Is it still there to the same degree it has been historically on the behavioral side? ... Okay, quite a bit in your question, A.J.. I'll try, I'll try and cover it all. You know, again, I think on the, on the acute side, as you suggest in, you know, our prepared comments, and I think we've talked about this in previous quarters, I think the volumes are, particularly high in 2023 because we are experiencing, not just us, but the industry in general, some level of, recapture of procedures that were postponed or deferred, during the pandemic. And I think by their nature, those procedures tended to be the lower acuity, less intense procedures. Obviously, the emergent sorts of procedures that occurred during the pandemic, the heart attacks, the strokes, the accidents, trauma, you know, those were attended to immediately. But the more elective, lower intensity stuff were the things that were deferred, including, you know, as simply as visits to primary care physicians, et cetera. And so as those began to occur kind of in their more normal trajectory, they, you know, sort of create a cascade of demand as well. So somebody who hasn't seen their primary care doctor for a couple of years now goes and now has a visit to the cardiologist or has their routine colonoscopy or whatever it may be. And I think you're seeing that. So as our volumes, I think, are elevated, you know, our revenue per admission is somewhat more muted. And I think over time, we would expect our volumes to moderate a little bit, but also our, you know, revenue per adjusted admission to come up. you know, again, I think we have a view that, you know, the long-term model in this business has not changed dramatically. I think, you know, we imagine that revenue growth in the acute business over time for a long time, you know, historically has been in that kind of mid-single digit range, you know, 5%, 6%, 7%, and split pretty evenly between price and volume. And I think, you know, as time passes, we'll get closer and closer back to those historical norms. I think on the behavioral side, as you suggest, the sort of dynamic has been kind of the flip side of that, where pricing has been particularly strong. And again, that's a little bit of a mix issue. We've talked about some weakness in the residential business, in a handful of facilities that are challenged with some very specific issues, but also with Medicaid redeterminations I mentioned earlier. But again, I think over time, those beds will see an increase in residential business. That will naturally bring down pricing, but will also increase volumes. And the staffing issue just, you know, is a continuing issue. We remain constrained in some markets, in some facilities by a lack of staff. That could be nurses, it could be therapists, it could be mental health technicians who are, you know, non-professionals. Generally, I think, you know, we continue to improve our recruitment and our retention metrics, and I think those metrics, as they continue to get better, will drive greater volumes. Okay, that's great. Thanks a lot. Thank you, and one moment for our next question. Our next question comes from Jamie Perse of Goldman Sachs. Your line is now open. Hey, thanks. Good morning, guys. First on physician subsidies, can you just give us, you know, first, can you confirm whether that was in line with the expectations this quarter? And then secondly, just what are you seeing in terms of the market dynamics? Are you seeing the market start to settle, or do you see more disruption out there? And any comments on your prior comments from Q2 about that kind of flattening out into next year? Yeah. So, Jamie, the comment that we made in the in Q2 was that we had originally anticipated, and what we included in our 2023 original guidance, was that physician expense would be $55 million-$60 million higher in 2023 than it was in 2022. As it turned out, I think this has been a bigger issue than we anticipated, and I think virtually all of our peers anticipated around the country. And what we said is that we anticipated that the second half of the year would also reflect, like, another $55 million or $60 million increase over the second half of 2022. And we are tracking, you know, very closely to those numbers in the third quarter. So in other words, you know, I don't think we've had an, you know, a material sequential increase in our pro fees or in, in our physician expenses. Our expectation, what we said at the time, was we thought not necessarily that the physician expenses would absolutely flatten out in 2024, but certainly that the rate of increase, which is, you know, running in the, you know, 35%-40% range this year, would moderate significantly. You know, while I think we were not, you know, prepared to suggest exactly what it would be right now, I think, you know, something in the 10%-15% range of increase would be sort of more what we would expect. It's really a function of, you know, the industry, I think, has largely sort of had to reset itself since the No Surprise Billing Act passed and the impact of that on the profitability of these physician billing businesses or physician services, the impact of the, you know, the lower billings, you know, plays its way through the system. So you know, what we're finding is, you know, we're placing those contracts that are most expensive, we're putting them out to bid. We're, in some cases, insourcing the service. You know, we believe that we'll be able to, through those activities, you know, drive greater efficiencies. And that's why, you know, we have this general view that 2024 will not be as volatile and will not have as many material increases as we saw in 2023. But certainly, you know, as we get closer to our 2024 guidance, you know, we'll have a better sense of that and we'll give more detail. But again, at the moment, you know, we're tracking for the back half of the year, sort of exactly where we said we'd be last quarter. Okay, perfect. That's helpful. And then secondly, just on 2024, can you update us on progress with the three de novo hospitals, Nevada, Florida, and D.C.? Specifically, how should we think about the EBITDA drag as some of those pre-opening expenses wrap up next year? Thank you. Sure. So the only hospital that will actually open in 2024 is our West Henderson Hospital in Las Vegas, which I think at the moment is scheduled to open either late in Q3 or early in Q4. So, I think it will have a bit of a drag in our 2024 results. But, you know, given that it's relatively late in the year and given our historical success in opening hospitals in that market, I don't think it will be a tremendous drag. Again, as we get closer to our actual guidance, you know, we'll put some more concrete numbers around that. But, I don't think it should be, you know, terribly impactful to our 2024 guidance. Thank you, and one moment for our next question. Our next question comes from Pito Chickering of Deutsche Bank. Your line is now open. Hey, good morning, guys. Thanks for taking my questions. Can I go back to Medicaid redetermination again for a second? Is this primarily inpatient or is it residential? And looking at the referral channels in D.C. and Texas, are you hearing of patients in the ER that can't get discharged into inpatient behavioral because they don't have coverage, or any other color on which channels you're seeing the low referrals due to Medicaid redetermination in Texas? Yeah, Pito, so I think as I mentioned, and again, I, you know, I wanna be clear that, you know, I'm not sure that the data that we get and the experience that we have is sort of absolutely, you know, precise or, you know, that we can sort of correlate it to, to redeterminations in a very precise way. I think what we observed during Q3 was that the number of inquiries that we're getting, and that includes, as you suggest, referrals from third-party sources, it includes, you know, direct, you know, calls to our 800 numbers, it includes direct inquiries to our, you know, internet sites, et cetera. You know, we're not necessarily down in volume, but what we were noticing is that it was a greater number of patients who did not have appropriate financial coverage. We always have some patients who don't, but it seemed that number seemed to elevate in Q3, and it seemed to elevate in particular geographies in which Medicaid redeterminations were high. I've mentioned Texas a bunch of times, but I think Arkansas, Indiana, were also states where we saw an elevated, you know, level. But again, you know, I, I'm not sure that I can parse it between inquiries from referral sources or direct, you know, inquiries to us. And like I said, I don't know that we can also tie it directly to, you know, what we, you know, generally are asking patients is, what their current sort of financial coverage is. We're not necessarily getting their history of, "I had Medicaid," "I, you know, lost Medicaid." You know, we will talk to them about, you know, whether we can help them get Medicaid coverage, et cetera, but we don't necessarily document the history there. So it's a little bit difficult to, I think, give the level of sort of precise data that you're looking for. Okay. So just to be sure I understand that. So the number of inbound inquiries are basically the same, but the ability to pay is what's lower? Correct. Okay, got it. And then a quick follow-up to Jamie's questions on the, physician pressures. Thanks, thanks for giving us, you know, those numbers about, you know, 30%-40% increase for this year, moderating to 10%-15% for next year. I guess, what percentage of these contracts are locked in? These are typically multi-year contracts. So what percentage of contracts are already locked in for next year, or you've already gone and in-sourced, this group yourselves? Yeah, I think the truth is, you know, these contracts are multiyear contracts, but they all have short-term outs. So in other words, I mean, I think the reason this, you know, physician expense issue became a crisis in 2023 is that even though hospitals, I think, have long-term contracts with their physician, their contract physician providers, their ER physicians, their anesthesiologists, those groups were coming to hospitals and saying: Look, we're gonna give you 90-day or 120-day notice, whatever our contract calls for, unless you're, you know, able to increase our subsidy or, you know, change our contract in some way, et cetera. I'm not sure that the underlying length of the contract is all that determinant, because I think in most cases, for us, and I'm guessing for others in the industry, because otherwise this wouldn't have become the issue that it did, all have short-term outs. Okay, great. Thanks so much, guys. Thank you. One moment for our next question. Our next question comes from Sarah James of Cantor Fitzgerald. Your line is now open. Thank you. I wanted to go back and clarify two comments that you made. First, on, you know, what sounds like the low acuity, pent-up demand working its way through. You said you expect it to phase down over time, so just wondering if that means you expect it to still be a factor in 2024, if you're talking about phasing down through the end of this year? And the second clarification is just on the inpatient denials from the insurers. Can you give us a little bit more context? Are these procedure classes that the payers are saying should have been outpatient, or is it something about the number of hours spent or some other aspect that they're pushing back on? Yeah, I mean, so, you know, I've said before that it is virtually impossible for us to precisely say whether a particular procedure is a catch-up of something that was postponed or deferred, you know, during the pandemic. You know, so in other words, when, you know, we schedule an elective surgery or an elective diagnostic test, you know, we have no idea when that patient sort of originally contemplated that procedure or discussed it with their physician, et cetera. What we do know is that the volume of elective procedures clearly declined, certainly in the early stages of the pandemic, and they have been picking up since. And so we conclude, you know, I think it's a reasonable conclusion that there is some element of catch up. To be fair, you know, if you look at it, acute care adjusted admissions for us were up, like, 10% in the first quarter, which was really kind of an extraordinary number. It's moderated a little bit in Q2, down to like 8%, which is still a very high number, you know, moderated to a little less than 7% in Q3, which, again, still a very robust number from a historical perspective, but seems to be moderating a little bit. You know, your question about, you know, how quickly it continues, how much is left in the pipeline. The truth of the matter is, I'm not sure that anybody can answer that question with precision. I just don't know that that data is out there in a meaningful way, on, you know, that anybody can capture. So, you know, look, when we again give our 2024 guidance, we will make some guesstimate based on trends and, you know, how it's going, you know, what we think acute care volumes will look like in 2024. But I think broadly, our view is that those lower acuity volumes will continue to get caught up and moderate, and we'll get back to, again, you know, mid-single digit acute care revenue growth that ultimately will be split between, you know, price and volume pretty evenly. You know, whether that happens early in 2024 or late in 2024, I think that's yet to be determined. Your question about, you know, denials, particularly in the acute business, the issue that I think is probably first and foremost tends to be classification of patients between an inpatient admission and observation status, with obviously a patient who, you know, you know, and this is frustrating for us because a lot of these patients are in the hospital for multiple days, but from the managed care perspective, don't meet inpatient admission criteria, even though we're treating them for multiple days and maybe then getting paid for them as if they were simply in an outpatient in our emergency room. But that's the main issue. You know, we do get sort of flat-out denials where, you know, an insurance company will say that a patient shouldn't have been treated at all. The vast majority of issues that we have with insurance companies on the acute side are over patient classification between inpatient and observation. Thank you. Thank you. One moment for our next question. Our next question comes from Ann Hynes of Mizuho. Your line is now open. Hi, good morning. Can you just give an update on the behavioral hospitals that had some issues in Q2, how they are progressing, I'm sorry, progressing back to normal admission trends? And also maybe, to that same effect, I know in Q2, you hired a bunch of nurses that take a while to train and a while to ramp up. Can you talk about how that's going and when you think that group of nurses will be able to take on a full patient load that will be able to see it in the admission trends? Thanks. Thanks, Ann. So, you know, you alluded to the two items that we probably discussed at the greatest length in Q2, that was affecting you know, behavioral you know, volumes in Q2. One was a handful of residential treatment facilities that were challenged with, you know, very kind of specific and nuanced issues, with either regulators or referral sources, et cetera. They were working their way through. And then secondly, on a broader, kind of more macro basis, you know, absorbing a significant amount of new nursing graduates into the system, having to orient them, get them trained, et cetera. In both cases, you know, we talked about the fact that the sort of recovery from those things would take, you know, the better part of the year, but by the end of the year and early into 2024, we thought both those issues would be, you know, largely behind us. And I think that's true. You know, the first issue is a much more, you know, sort of identifiable issue. You know, those facilities will sort of return to their normal trajectory. The staffing issue is obviously an ongoing one. You know, we're constantly hiring new nurses and having to train them, et cetera. You know, again, I think it became an issue in Q2 in the spring, when a lot of new nursing graduates were coming out of school, where those numbers sort of crept up and were having sort of a, you know, a measurable impact on the business. I think the encouraging thing from our perspective is that overall, our hiring rates, as well as our turnover, our hiring rates are going up and our turnover rates are coming down, albeit in both cases incrementally, which should allow us to, you know, in our minds, get back to kind of what we think is a more normative, and expected level of volume growth in behavioral, you know, it's probably not terribly higher than the 1% we're running now, but maybe, you know, in the 3%-4%. You know, in terms of our model and our ability to generate incremental earnings and incremental margin growth, you know, that small increase in occupancy should make a big difference. All right. I'm not sure if you said this, but can you just provide the contract premium labor as a percentage of total labor for nursing and acute care? Yeah. So it was $69 million in Q3, which is about a 10%-15% increase over what we've been running the last few quarters. All right, great. Thank you. Thank you, and one moment for our next question. Our next question comes from Kevin Fischbeck of Bank of America. Your line is now open. Great, thanks. You may have just— I don't know, maybe I just missed, but you made a comment earlier about how, you know, lack of labor is restricting volume growth, but then on the RTC side, it sounds like, you know, you've got redeterminations potentially restricting volume growth, which seems at odds. I guess you're saying that the occupancy difficulty is on the acute side, and that it's not really a lack of labor on the RTC side, or else you'd just be able to refill that redetermination headwind, right? Yeah, I just think they're discrete issues, Kevin. You know, I think, you know, again, you know, Medicaid redeterminations, I think, again, in just certain geographies are creating, we believe, relatively temporarily, a bolus of patients who lack coverage, who didn't lack coverage, you know, let's say a quarter ago or two quarters ago. And so, you know, we seem to be turning more patients away in Q3 for lack of financial resources than we have had in the past. But again, we think that's sort of a temporary issue. The staffing issue, you know, tends to be more of an issue in the acute behavioral business, just because we rely more on RNs in that patient care model. Yeah, I mean, the staffing constraint and the deflection issue in behavioral tends to be more skewed to the acute behavioral business than the residential business. Okay, that's helpful. And then I guess on the professional fees, just wanna check. I think you said the number went from 6% of revenue to 7.6% of revenue. Was that, was that an acute care revenue number, or was that a total revenue number? And then is there any reason to think that this cost pressure is fundamentally different than any other cost pressure? Like right now, you're going back and getting better rates to match the inflation spikes you've seen over the last few years. Isn't this cost pressure just one more cost pressure that you would have to price in over the next few years, and maybe it takes three years to recapture the 1.6% headwind to margins, but you should, you would expect to catch that eventually? Or is there anything structurally different about this cost versus others? Yeah, so two things. Number one, in terms of the first question, yeah, I should have been clear. This is, the physician expense is really, as we've been discussing, it is really, you know, ER coverage, anesthesiology coverage, and by definition, is an acute care issue, and those percentages were meant to be percentages of acute care revenue. The-- your second question about sort of, you know, isn't this like any other expense? I mean, again, as I was, you know, mentioning, I think in a previous response, I think what, you know, really drove this sort of immediate pressure in physician expense and the timing of it was the passage of the No Surprises Act. What I think we all collectively learned was that these physician coverage businesses had relied on, on their profitability, in large part for their billings to out-of-network patients. I'm not sure, you know, collectively, we have, you know, a full understanding of that. When that ability was reduced dramatically by the No Surprises Act, those businesses, to the degree that they were run by third parties, or even to the degree that, you know, hospitals were insourcing that, you know, became much less profitable, and we had to absorb those costs. In our case, in almost all cases, we were just having to pay third parties more. I think, you know, once that gets reset, I'm not sure that that pressure, you know, continues. I mean, to me, that's a one-time reset. I think that's what you're seeing play through our numbers in 2023, et cetera. I do think there's also an element, I mean, you know, there is, I think, a finite, you know, there's a shortage of these kinds of doctors, you know, much like there was a shortage of nurses that, you know, we felt during the pandemic, and that exacerbated the dynamic a little bit. But again, you know, you know, I think that expense, you know, rose by 35%-40% for us in 2023. I can't think of another expense that, that rose, you know, by anywhere near that amount. And so again, I, I, I think we have a view that this is a largely kind of one-time notion. That's not to say that there won't be pressure on physician expense next year, that, as I said earlier, it couldn't increase by 10% or 15% above, you know, so something above the rate of inflation. But I just don't think we think that this is something that we're gonna have to face 35% or 40% increases multiple years in a row. But I'm sorry, maybe I'm just, but, like, it seems to me like you're not saying this 1.6% acute care margin pressure is going to reverse over time as you just price surgeries, everything higher to reflect, you're gonna have an increased cost in here. You're saying this is a new baseline, and we should kinda think differently about the long-term margin in acute, because- ... these pressures won't continue to get worse, but they're here to stay. Yeah, I, I don't think, I don't think anybody is suggesting that physician expenses are likely to decline anytime soon. I don't think that's anything we have suggested. Like I said, we said earlier, when people talk about, you know, what's it like, likely to be in 2024, we, you know, I said a 10% or 15% increase is not an unreasonable way to think about it. All right. Thanks. Thank you. One moment for our next question. Our next question comes from Whit Mayo of Leerink. Your line is now open. Hey, thanks. I know you guys are still going through the planning process for 2024, but I just wanted to sort of dial into maybe some of the top strategic priorities you have for the behavioral health business that might be different than some of the initiatives in prior years. You've covered your labor agenda pretty well on this call and the progress, the small progress, I think, that you're seeing there. But just anything else you'd call out, any organizational changes, anything that gets you, you know, excited or less excited about next year? Thanks. Yeah, I mean, so Whit, I think as we've discussed, obviously, staffing, recruitment, retention remains a top priority and focus, and honestly, I think will continue to be for the foreseeable future. And like I said, I think we feel like we've made a significant amount of progress, but you know, it continues to be a major focus because, again, I think we have a belief that to the degree that we can hire appropriate, you know, clinical personnel, particularly in, you know, very specific geographies, very specific hospitals, we absolutely have the ability to increase occupancy significantly. There are other initiatives I think we have to increase occupancy. I think broadly, increasing occupancy is sort of the most significant opportunity we see in our behavioral business, you know, in a business where pricing has been strong, where I think, you know, what Q3 reflects is that cost controls have been improving. We've been reducing contract labor, we've been reducing overtime. I think that increased occupancy is the most significant opportunity we have in behavioral going forward, and I think we believe it's a significant opportunity. Recruitment, retention is a big way to get there, but, you know, we're looking at, you know, broadening our continuum, you know, focusing on, you know, certain service lines like substance abuse and MAT and, you know, telehealth and outpatient, you know, and broadening sort of the continuum of care that, you know, we already, I think, offer a pretty broad continuum of care, but broadening that, you know, even more, you know, and broadening our, you know, payer mixes that we reach out to. We have a pretty strong presence in, you know, the, both the active and retired military, but I think, you know, have a number of initiatives to increase our penetration there. You know, there's a handful of important initiatives in behavioral, but all, I think, would fall under this umbrella of being able to increase occupancy. Got it. Steve, just looking at the guidance, I know that you're reiterating it, but, you know, by my math, if I just apply very simple, normal seasonality, looking at the DPP program in Florida, you can easily get to the high end of the range. And I know that you're very respectful of the volatile operating environment, but just sort of anything that I'm missing or any refresh views as you kind of look within the range and kind of how you feel like you're tracking? Thanks. Yeah, I mean, I feel like, and I will say that we don't pay a great deal of attention to consensus estimates, but the last time that I looked at consensus estimates, I think they were sort of in the midpoint of our revised guidance. That seems like a reasonable, you know, target at the moment. I think, as we've discussed on the call, the, you know, in my mind, clearly, the two upsides for us, number one, as we just discussed, is, you know, if we're able, over the fourth quarter to increase behavioral volumes and occupancy, I think that would be, you know, extremely helpful and create, you know, a significant amount of upside. And on the acute side, you know, being able to push that pricing number up, recapture some of the, sort of disputed amounts from our managed care payers, you know, increase acuity, that sort of thing. So I think we've largely discussed what the upsides, are, and, and that, you know, if we were able to achieve those things, you know, maybe we could get, you know, beyond where the consensus targets have us now. Okay, thanks. Thank you. One moment for our next question. Our final question comes from Joshua Raskin of Nephron Research. Your line is now open. Hi, thanks for fitting me in here. Just on the physician staffing costs, again, can you just remind us how much of the staffing, maybe for ED, anesthesiology, how much of that is outsourced or if any of it's insourced at this point? And then separately, how are your employed physicians performing? Is it really just an issue of, you know, specialists that we're billing for specific out-of-network issues, or are you seeing some of that internally as well? Yeah. So, first of all, for us, Josh, all of these contract services have historically been outsourced, at least, you know, ER and anesthesiology. We have, in the last, you know, three months or four months, brought some of those services in-house, where we thought it made economic sense to do it, but historically, they've all been outsourced. I think it's a very different dynamic, you know, from, you know, and I think, again, it's very specific to these house-based physicians, anesthesiology, ER being by far the highest ones, but we're seeing it some in radiology, some in, you know, intensivists or laborists or whatever, but clearly, ER and anesthesiology being the two largest. Our employed physicians who are just, you know, either regular primary care or specialists, I don't think they've been affected in a material way by the No Surprise Billing Act. You know, essentially, those physicians are in-network with virtually all of the payers that we're in-network with, so it's really not an issue with them. So this dynamic, I think, is, you know, very specific to the hospital-based physicians. That, that makes sense. And then just one last one on 2024. I know you're talking about this normalization, but when I look at some of the same-store revenue growth numbers, you know, mid- to very, you know, mid- to high-single-digits on the acute side, very high-single-digits to low-double-digits on the behavioral side, just seems like pretty tough comps. And so, you know, do you think this is just more of a catch-up reset year and that next year we'll be back in that, you know, pick a number, 5%-6% range overall? Yeah, and again, I think I made those comments earlier. I mean, I think, you know, yes, I think we think that, you know, in both cases, revenue growth, you know, whether, you know, it's exactly in the beginning of 2024 later, but I think we think it moderates to sort of more historically normative levels, and I would also say a more historically normative split. So on the acute side, I do think volumes are likely to come down over time, but I think acuity will come up, and again, we'll get back to kind of mid-single-digit pricing. I think in behavioral, we're likely to see pricing moderate a little bit, but also see volumes come up and again get to, you know, kind of mid- to upper-single-digit pricing, or upper-single-digit revenue growth. I think, you know, with the moderation in cost, with physician expense on the acute side coming into better control, with contract labor coming down and overtime coming down, it should put us in a position where, you know, we're back on that trajectory of getting, you know, being on a path to get back to pre-pandemic margins in both segments. Perfect. Thanks. I am showing no further questions at this time. I would now like to turn it back to Steve Filton for closing remarks. Thank you. I would just like to thank everybody for their time, and look forward to speaking with everybody next quarter. Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.