LPNT
#So, <UNK>, as we look at some of the pieces or look at the different components of margins, we have not historically reported EBITDA on a same-store basis.
As you know, we have been evaluating a number of things in our reporting.
It's something we are considering as we go through the end of this year.
So, we did give a number of data points that I think help point to directionally how we are performing in those metrics.
So, walking some of those including salary, wage and benefit, first we talked about reform.
In that $13 million, the incremental piece year-over-year is about $5 million to EBITDA so it is about a 50 basis point benefit.
Partially offsetting reform, we had about a 20 basis point headwind from year-over-year meaningful use declines.
And then, in operations and specifically to salary, wage, and benefits that you mentioned, we were up slightly 10 basis points in the SWB line.
If you looked at it sequentially, it is very consistent, and a lot of that has to do with some of the hospitals that we have acquired rolling into same-store now and working through that progression of margins that I just described with A.
J.
We look at the same-store supply costs that I mentioned, down 20 basis points, and we look at the same-store other operating expenses down 60 basis points.
The total of all of those you can get to a very favorable effect in same-store that's about 80 basis points.
So, we have created a very strong engine through these acquisitions that are now rolling into our same-store results year-over-year, and so we will be evaluating the presentation of that as we look through to the remaining quarters in the year.
The only thing I will add to <UNK>'s comment, specifically to salary and benefits.
The new hospitals rolling in is clearly a driver.
It gives us opportunities over time to continue to integrate those hospitals in, but also the continued physician employment.
Bringing on new physicians into the organization or aligning with physicians that are already in the market, that their salary costs are rolling into that number.
Very strategic decisions that we are making, and we will continue to do that when appropriate.
<UNK>, we don't comment on specific pieces within our discount group, our commercial group.
We have historically seen price increases of 4% to 6%.
We see those that ---+ we see contracts that renew throughout the year.
As we look at and evaluate pricing adjusted for some of the lower acuity ED volumes, we are seeing pricing consistent with the guidance range that we had talked about, overall up 2% to 2.5%.
And, pricing in that commercial bucket that is very consistent with historical trends including the negotiations that were completed in the first quarter and contracts that were extended and renewed in the first quarter.
As we look at the finalization of some of the fee schedules on the Medicare side, very consistent with what our expectations were.
<UNK>, as we look at the quarter and evaluate the quarter, our results were very consistent with our expectations.
I think as you look at our consolidated EBITDA margin, there is a fairly significant weight that is put on that as a function of the $0.25 billion in revenue that is in our new store operations that are in a mid-single-digit range.
But, as I walk through on the same-store metrics, being up close to 80 basis points on a period-to-period basis for the quarters is very consistent with what we were trying to accomplish from an operational perspective.
<UNK>, let me give a little more detail to make sure that I was clear in how I described the impact of reform.
So, the $13 million that I described is the total impact of reform that we experienced in the first quarter of 2015 as compared to really the fourth quarter of 2013.
So, it is the impact from our self-pay that is now secured coverage under either Medicaid or insurance exchange products from the beginning of reform.
When I talked about the $5 million incremental benefit, that benefit is the incremental that we saw from the first quarter of 2014 to the first quarter of 2015.
And, if you recall, the first quarter of 2014, we were at the high end of what we had expected to see, but we were about $8 million in benefit from reform that first quarter of last year which then we saw sequentially improve in the second, third, and fourth quarter.
And so, sequentially from the fourth quarter, we are at a very small amount, but not to the degree that we were up from the first quarter of 2014 and the first quarter of 2015.
Now, in terms of your comment about Pennsylvania, that is exactly right.
We have not included the impact of Pennsylvania in that $13 million number, and we've done that to make sure we remain consistent in how we've described the impact on a same-store basis.
If we were to peel back what we believe we have seen in Pennsylvania, it's about a $2 million to $3 million annual benefit associated with reform there.
And, we're working to make that benefit more significant as we work through enrollment opportunities, et cetera.
As we sit here right now, that's correct.
That's right.
Yes.
<UNK> just to be clear, too, as we've talked about our quarterly benefit from reform of about $10 million to $15 million, and we provided a range like that because you really can't predict ---+ are you going to have an exchange patient that comes in or Medicaid volumes and the rest of it.
Inside of that $10 million to $15 million a quarter is about $3 million to $5 million coming from the exchange.
And so, the impact of the exchange because of the smaller number of patients in our markets that have been exchange eligible, it has not been as impactful as perhaps it is in a more urban environment.
Now, we are hopeful that, that exchange benefit will have grown because our enrollment experience as we went through year-end and the quarter was very solid.
And, the receptivity to our outbound calls was materially different than it was going into 2014 with all of the issues around Obamacare, the issues with the website, et cetera.
It's still early in the year there.
I think our reform estimates have been very consistent with what our experience has been, but we remain optimistic that we could see some more out of that.
Yes.
We're in the process of rolling out a national quality program with Duke.
That we have developed alongside Duke.
It is an outgrowth of our experience as a partner in the partnership for patients, the hospital engagement network that we've talked about in the past.
As you remember, LifePoint was the top performing hen in that partnership of patients, and so what we're doing is were taking that experience and we are spreading it out across the country with our partner, Duke.
So, they bring a great deal of data analytics, they bring a great deal of help to us that we have the ability then to put into all of our hospitals.
It's an exciting opportunity for us, and one that we will be working hard on to just further deepen the culture of safety that we have created in LifePoint.
Yes.
This is more focused operations, is the way I think about it.
This is what we are calling out as being important within our hospitals to work on in order to reduce variation, if you will.
In order to bring more standardized processes and procedures across the hospitals in order to be able to care for patients the same way every time.
So, it's a lot about that.
No.
There hasn't been anything noticeable, <UNK>, on reduction of services or driving in patient, outpatient.
We do think it is just industry trends and practice patterns.
For the quarter, we did experience significant growth as you can see in the press release in outpatient surgical volumes.
Roughly 20% of our surgeries are inpatient.
80% are outpatient.
Across the outpatient, every product line saw growth during the course of the quarter.
It has been a while since we've seen consistently across every service line that kind of growth, but that's what we did experience in the quarter primarily driven from really strong general surgical volumes happening throughout the country.
There is always some end-market-type transactions that we're looking at, and those obviously are centered around outpatient practices whether they are oncology practices or ASEs in some markets.
You will not see us build a greenfield ASE.
We have plenty of capacity inside of our hospitals, but where there are ASEs in communities or communities that are close [to ours], we want to stretch out our borders a little bit more.
We will go and put those stakes in the ground.
There is no significant [cash flow] investments that aren't contemplated in our guidance for CapEx for this year.
<UNK>, consistent with our past practice, you should expect us to update guidance at the end of the second quarter.
We've always believed it's too early at the end of the first quarter to start making extrapolations or changes, particularly when we are as consistent with our results as we were here in the first quarter.
No.
So, very consistent in terms of the core operations as we look at and evaluate net revenue per AA, you have reform that provided an impact as we look at it year-over-year.
So, you've got $5 million in there that relates to that, and then we have the low acuity ED volume activity which is ---+ it's a core part of the growth.
I think that we are hopeful that it is very reflective of all the operational things that we have done.
There has been a lot there in terms of length of stay, left without treatment, and the time between arrival and medical screening exam that have moved remarkably well as a function of the initiatives that are there.
But, it has had a dilutive effect on the overall revenue per adjusted admission.
There are no other pieces.
And, remember as we purport the same-store piece, it backs out the divestitures from the base year and from the current period so that it provides an accurate comparison between the two periods.
Yes.
If you look ---+ we will disclose here later today when we file the 10-Q, net revenue per equivalent admission on a consolidated basis and on a same-hospital basis, and you'll see that they are very consistent with one another.
So, it just depends on the particular hospital and the service lines that are being offered there, and it also depends on the degree to which outpatient services are being provided relative to inpatient services in the particular community.
But, as you'll see between our new-store and same-store operations, there is not a meaningful difference in the total on a revenue per equivalent admission between continuing ops and between same-store.
So, they are fairly consistent.
We finished the first quarter of 2015 with one-day stays at 15.1% of total, and when we look at it first quarter of 2014, they were 16.2% of total.
So, that's down 110 basis points on that metric.
So, <UNK>, in terms of the magnitude, I will start at the back and work forward.
In the first quarter, gross, it's about $65 million.
So, the net number that we recognized is about $28 million, and so really everything in between in that 56% that we deemed uncollectible is opportunity.
There are a number of strategies that we are working hard on around point-of-sale collections, around our reimbursement strategies that should help us on that front.
In terms of where do we get to on that front, I think that is to some degree a slow progress, but it's one that we are focused on through the remainder of 2015.
The absolute number in the first quarter is always higher because you've got January 1 renewals of folks' deductibles.
So, as an absolute dollar amount, it won't be as big as we move into the second quarter, the third quarter, and the fourth quarter.
And then, if we separate for a second from point-of-sale collections and look at it in the metric I shared, which is as a percent of the net collectible revenue we booked, it's down at 2.3%.
And then, importantly, when we look at our overall revenue per AA up in a 2% without the impact of reform, shows that we are still after bad debt compounding the increases that we've seen historically.
So, even though we are seeing more shifted to the patient level, we're still able to capture at the top end in our rate negotiations some of what we lose at the bottom with the patient.
So, there is more we can do.
We're working hard to try to get that done, but as you can see in our overall revenue per adjusted admit numbers, we're still comfortable with our ability to compound increases like we have seen in the past.
<UNK>, last year we began to deploy standardized technology and practices in our hospitals, and we currently have almost every hospital with the exception of just a couple of the new hospitals have come in on this technology platform.
We're seeing increases in upfront cash collections.
Part of that, clearly in the quarter, is driven from volume, but even when you carve out the volume increases that we experienced primarily for the ED, we're seeing increased dollars being collected at point of service, at registration.
And, as <UNK> pointed out, there is still room to continue to improve that.
So, very specific strategies deployed in our hospitals to get at your question.
I don't have the absolute percentage drop, but I can give me something that I think shooting from a memory number.
Our self-pay admits in the fourth quarter of 2013 were over 8%.
So, over 8% of total, and now they are at 3.8%.
And, our ED visits were north of 22%, and now they are 14.1%.
Now, we've only got eight of our states that have expanded.
At nine now with Indiana that went live February 1, but our presence in Indiana is limited to one hospital in Scottsburg until we complete this Jeffersonville transaction.
So, the numbers have a long ways to come down, but it is going to require additional expansion to get there.
So, part of it has to do with the improvements in our day sales outstanding.
So, as we look at our accounts receivable in the period, there is some accounts receivable that we acquired as a function of transactions.
But then, we have also improved the collection cycle, and we've completed our transitions to Parallon which had us hung up in transition with some of our days.
So, you look at it from year-end, we're down from 56 or more days on a consolidated basis to under 55 so that has freed up a little bit of cash.
And then, just the overall operations growing and the dollar amounts that are being contributed from the incremental acquisitions we completed in the second half of last year.
I think also our tax teams have done a really good job.
Our effective tax rate came in at under 38%.
We've always talked about 38.5% being a good effective tax rate to use.
We'll give more color on expectations when we provide guidance in the second quarter, but our guys are doing a real good job on the state tax planning side.
No, it is very consistent.
So, the trends that we saw in the first quarter are very consistent with the trends that we saw through the course of last year.
Our continued physician recruiting, filling out the service lines, executing our strategic plans, that's what has driven the growth versus significant changes in service offerings or elective versus non-elective procedures.
Let me just add to that I think it also is important that we are making investments in our hospitals that are typically impacting the outpatient side of business.
So, that's where people want to come.
We are intentionally making those investments which is impacting that, and coincidentally, it's typically our highest margin business.
Absolutely, we are making investments in areas that we expect will allow people to stay close to home for care.
And, we will continue to do that.
Gearing the response around rate and as you defined it, we definitely saw benefit in rate year-over-year from reform.
And frankly, from the first quarter of 2014 to the first quarter of 2015, a lot of that did have to do with some of the acuity experience and the increased enrollment that we saw sequentially through the year, last year.
The sequential impact from the fourth quarter of 2014 to the first quarter of 2015 was not as much, but there is a clear $5 million benefit year-over-year that went into our rate benefit.
As we have worked on the health insurance exchange side from a contracting perspective and gotten perspective on the renewals of these participating ---+ our participation in these different products, they are consistent with our experience last year which is consistent with our commercial reimbursement overall.
So, we are not seeing any dilution as a function of participating in the exchange products so as patients enroll from another commercial plan, we have not seen an adverse effect from it.
And, as self-pay patients have enrolled in those products, we've seen a positive effect which is reflected in that impact of reform number.
As we look at the overall rate side of things in the ED piece that you mentioned, the dilutive effect there is just a function of the weighted average, in averaging in incremental volumes at significantly lower rates for that lower acuity piece.
That's just a good [bolt] to what was a soft flu season last year and is a more normal flu season as we look at this year.
And so, it disguises a bit the commercial reimbursement rates which is what I've provided.
The update in the absence of that, that we would have seen 2.5% overall net revenue per equivalent in admit.
Both.
It's reflective of level one, two, three-type ED visits, which are lower reimbursed, so you are picking up the volume at a lower price point.
Great.
Thank you, Operator.
We are very pleased to have reported a solid start to the year.
Our focus on the strategic priorities we have shared with you is unwavering.
They are delivering high quality patient care and service and growing both organically and through acquisition, continuously improving our operating efficiency and developing high performing talent.
We are confident that our success in these priorities is what has and will continue to allow us to deliver long-term shareholder value.
We thank you for joining the call today, and we thank you for your interest in LifePoint Hospitals.
We will see you out on the road and on the next call.
