CYH
#We've got the reserve on the balance sheet of the first CDRs, $260 million, roughly.
And I think that <UNK> said there's been no update to that, really.
<UNK>, those eight hospitals are ---+ the problems with those hospitals are one of three or four or five things.
Competition in a couple of markets certainly is an issue.
HMA got behind the curve and we didn't move quick enough in terms of doing some things in those markets that we should have, so competition is an issue.
One particular market, which is well-known, is that we had a physical plant problem and we've been able to solve the physical plant problem but unfortunately, it created a lot of issues in that particular market.
We've got a couple of markets where there are physician issues; these are not necessarily competition issues.
I'd say the competition issues are some of which are also physician issues.
But these might be issues with groups that we may had a relationship with that we decided that the relationship wasn't working the way we thought it should work and we made some changes there.
Or we decided from a compliance standpoint, there might be an issue.
So it is a number of different issues, but there's no question about the fact that it's taken us much longer to resolve these issues than we've anticipated.
It's a mixture of sole providers and some of competition.
Some of both, <UNK>.
They were down pretty much the first quarter, and there's suspected improvement in those over the remainder of the year.
Well, the fourth quarter will be the best quarter of the year.
We've had this uptick in demand as a result of the (inaudible) and co-payments; that would be the best quarter.
And then we're coming off a quarter of $633 million, so there will be some improvement next quarter.
But clearly, the fourth quarter would be the best quarter.
Yes, we were $633 million for the first quarter and probably if you go back, the last three quarters averaged better than that, at $661 million for the third and $696 million for the fourth.
But looking at the first quarter, a run rate and we had about $56 million ---+ had about $18 million of HITECH, which brings it without HITECH $615 million.
And the Quorum is $56 million, so that reduces it, and then we're probably going to reduce roughly $15 million to $18 million for the Las Vegas investment.
Gets you a quarterly number.
Generally speaking, it's all of the above.
But having said that, we've done a good job of recruiting.
We've done a lot of recruiting in Florida and for these hospitals as well.
And a number of physicians did leave.
It's taking a long time to get these physicians up and going, the new ones that we recruited.
But look, it's all of the above.
Every possible scenario here has happened in terms of these facilities.
But having said that, I think there's a couple things here I think important to talk about as well.
There are a lot of good assets that were in HMA.
We will end up with a lot of very good facilities from HMA when we get through this.
As we said, we can point out the ones that are not performing very well and I think we're on track to get those problems resolved.
The other thing that I'm pretty excited about that we haven't really talked about ---+ and we have a slide on, slide 8 ---+ is our new Management group that's working hard now and they are just getting in place.
But we have a very good sound group of people that will be operating our divisions now going forward.
We have three new Division Presidents.
One has only been there for a short period of time.
So I think we're moving ---+ I think we're headed in the right track in terms of all of the things we're doing, but time will tell.
Clearly, the Florida [lip] program, which cost us $10 million this quarter, $10 million in the third and the fourth quarter, and cost us another $10 million this quarter, was not helpful.
And I think the challenges of managing physicians there is part of the HMA markets has been more than it has been in the CHS legacy markets because we've had to recruit so many.
It's all of the above.
We had solely issue, we had ---+ there's some markets that aren't great markets.
There's some markets that are great markets.
There's some facilities that need work, that the work hasn't been done on them.
You name it ---+ there are a number of those kinds of things.
Having said all of that, there are still a lot of very good facilities within HMA that will perform well over the years going forward.
If you go back to the third quarter, we had a physician salary issue and a lot of physicians; and clearly, we've added a few more physicians in the fourth quarter that are a little better.
But we were down on physician practice results.
We had a drug issue also, and I think our volume results were not as good, especially in Florida, with the seasonality goes on.
We had a negative admissions, I believe, of about 3% in the fourth quarter.
And we had about a negative adjusted admissions by 1.2%.
So actually, we improved 250 basis points from the third and first, but we had another drug issue we also called out that activity.
This quarter, we had some operating expense issues that popped up on us.
Our revenue per unit and our payer mix wasn't as strong as we'd hoped it to be.
It was still positive, but we were about a 1% revenue per adjusted admission this quarter.
Last quarter, we were 2.5%.
The quarter before that, we were 2.2%.
So our revenue per unit, which is something we have got to continue to work on to get a better revenue per mix, and we'd anticipate that to get better.
So from that perspective, that got worse in the quarter.
I think the expenses were a little bit better managed probably in the fourth quarter than they were in the first quarter.
We've had a really tough January, which we didn't recover from quite as well.
In the next two months, the managed care utilization, managed care rates have been pretty good all throughout it.
Yes, first of all, we're going to recruit less physicians this year than last year, I believe.
So it will be less starts because we had a really good year last year.
Two, we're going to improve the productivity to ones we've got, especially the ones that have been around for awhile and I've been there.
There may be some ---+ and there will be some contract changes to make them more interested in that result.
We're going to manage the revenue growth better.
We've got four or five initiatives around chronic care management and other activities.
Star rating around Medicare Advantage business that we've got underway to try to help that.
And also, some of the Medicare wellness activities.
So, hopefully get more volume there.
And then become more known.
The physicians that we started out with in the third quarter of 2015, have been around now for another six months.
They will be much more productive now than they were then, so that will be that.
Plus, we'll bring less in.
So one of the things we're trying to accomplish in terms of our physician practice improvement is standardization.
Everything from schedule management, standard hours, online scheduling, all those things that ---+ and we continue to look at the contracts and all that, as <UNK> said, in terms of revenue improvement, we're working hard in a number of areas.
We're also bringing a lot of technology to our physician practices that we did not have before.
As we standardize everything from supply and staffing, we're getting much more sophisticated in terms of how to go about managing these practices, including helping the physicians in terms of coding improvements and all of the things that physician practices need.
So we've stepped it up quite a bit in terms of our ability to manage practice.
We should see the result of that by the end of the year.
Yes, on the Quorum, we had an internal budget and we pulled out our internal budget for the first five months.
And of course, I think they had an actual in first quarter also.
But it's more like $225 million we're pulling out of Quorum.
And again, there's a difference between our budget ---+ our internal budget ---+ and what they are going to perform as a separate company.
So there are some differences.
As it relates to UHS investments, probably $35 million to $40 million.
They had a good first quarter---+ and again, this is our numbers.
It may not be Steve's numbers.
But $35 million or $40 million going forward.
And then about probably $30 million to $35 million ---+ probably $35 million to $40 million off the group of assets unnamed, the 10 hospitals and other operations that we expect to remove in the third quarter.
So, said another way, most of the shortfall in the low end of the guidance relates to changes for those assets used in our internal budgets for those facilities.
And then on the high end, we did reduce it $50 million and they're at a range from $150 million to $100 million.
So the high end was 2.7.
Yes.
That's correct.
I think they were $275 million, $265 million, but I'll let them speak to their exact numbers.
But we took out what our budget was and again, there are costs that they've got that we don't have and there are all kinds of different allocations to go along with (multiple speakers).
They've got an income statement that may be different than our internal budget that we're looking at.
There's new contracts, a lot of them in Florida.
I think we had six or eight new good-size contracts that went in place January 1.
And we've got another similar number going in, in the second and third quarter for Florida because we're working to improve the Florida revenue.
If you look at the midpoint of our volume growth, it would be 1.5% and we were at 1.3%.
If you start to consider the flu and Easter offset, Leap Day, and if we do about a 1% volume growth, we were about less than a 1% revenue growth than we thought for the year.
Our revenue per unit growth would be somewhere around the 2% to 2.5%.
Again, we ran that pretty much last year.
So if we get the 2.5%, we also had about a 90 basis-point increase in our managed care utilization last year.
I think it was a flex bottle on that this quarter of 10 basis points or 20 basis points.
And that's basically where the $100 million comes from, is doing a much better job holding the volume for the rest of the year in the 1.5% range and being more like a 2% revenue per unit would get us a much more revenue than we got off the first quarter.
You're looking at just EBITDA, <UNK>.
And clearly, as revenue goes away, EBITDA goes away, interest expense gets reduced, depreciation gets redone, there's less demand for CapEx.
But from an EBITDA perspective, you've probably got about $65 million to $70 million probably of Quorum that won't be there.
And you've got probably $15 million to $20 million on Las Vegas.
And you've got the remaining portion of the first year.
But based on where we will be looking at, you'll have less interest expense for a whole year.
You'll have less depreciation and less needs for CapEx.
And actually, I'll probably ---+ these facilities other than the Universal, which I guess we have $35 million cash last year, although we had about $50 million of EBITDA ---+probably the 10 hospitals and the other investments are probably not that cash flow-positive for us.
So that helps our cash flow next year.
Yes, I'll take the first one.
I think what we've got done, we clearly were not pleased for where the first quarter was, and so there's new cost initiatives to bring costs back down.
I think I mentioned in the first month, the quarter was not that good and we didn't react fast enough throughout the quarter to get back where we needed to be.
So there's some cost initiatives under way to help some in the second quarter, a whole lot better in the third and fourth quarter.
I think I've mentioned some of the other operating items that we'd called out that we served up and at least half of those who think will go away on their own.
It shouldn't be something that repeats itself.
As it relates to the physician recruitment activity, <UNK>.
Yes, <UNK>, I think what we're doing is trying to enhance and improve the practices.
Hopefully, it will improve volumes instead of creating a problem with volumes.
So I don't think we're concerned about losing much volume in terms of the activity that we are ---+ the issues that we have in activity, we're doing in terms of correcting some of the productivity.
So I think it's a positive, not a negative.
It should be going forward.
We may lose a few along the way, but anybody that we lose probably is not a big volume physician anyway.
You know, <UNK> we've done similar things about looking at the employed physicians in the past, and when we've done that, we still have been able to grow earnings and volumes as a result of it.
And I think we'll be able to do that to the same thing here.
Thank you again for spending time with us this morning.
We are focused on the execution of our strategies that we have outlined today and improving our leverage ratios.
And we want to specifically thank our Management team and staff, hospital Executive Officers, hospital Chief Financial Officers, Chief Nursing Officers and Division operators for their continued focus on operations.
Once again, if you have a question, you can always reach us at 615-465-7000.
Thank you.
