Q2 2020 HCA Healthcare Inc Earnings Call
Theres second quarter 2020 earnings conference call today's call is being recorded after the speaker's remarks, there will be a question and answer session at that time, if you would like to asked a question over the phone lines. Please press Star then one on your telephone keypad at this time for opening remarks, and introductions I would like to turn the call over to Vice President of Investor Relations Mr.
Mark Kimbrough. Please go ahead Sir.
Thank you and good morning, and welcome to everyone on today's call on her webcast.
With me this morning, as our CEO, Sam Hazen, and CFO, Bill Rutherford as well as Dr., John Herlin, our Chief Medical Officer.
Sam and Bill will provide comments on the company's second quarter results and then we'll open up for questions before I turn the call over to Sam Let me remind everyone that should today's call contain any forward looking statements are based on management's current expectations numerous risks uncertainties and other factors may cause actual results could differ materially.
From those that might be express today more information all forward looking statements and these factors are listed in todays press release and in our various FCC filings.
On this morning's call we may reference measures such as adjusted EBITDA and net income attributable to date, CA healthcare inc., excluding losses or gains on sales of facilities, which are non-GAAP financial measures a table, providing supplemental installing the net income attributable to date.
Health care Inc. to adjusted EBITDA is included in today's second quarter earnings release. This morning's call is being recorded in a replay of the call will be available later today I will now turn the call over to sale.
Good morning, and thank you for joining today's call.
The second quarter was a remarkable 91 days for the company.
Possibly the most remarkable I've experienced in my 37 years with the organization.
It started with a level of uncertainty and uneasiness that was very high as the pandemic began.
In the Middle part was filled with example, after example of people inside our company stepping up and delivering for each other and delivering for our patients all the while strengthening our culture of taking care of others in the right way whenever we are needed and finally it ended with the prowess of our teams on display.
Hey, showing their abilities to manage relationships with their employees respond to the needs of their physicians.
Deliver on operational adjustments that were necessary given the circumstances and build clinical capabilities that not only give us more confidence in responding effectively to the ongoing challenges in resurgence of this pandemic, but provide us capabilities to improve our services and create even more value in the future.
I have never been more proud to work with this company that I am now as a shareholder I hope you are equally as proud to be associated with health care.
From day, one we address the pandemic with two clear objectives. The first was to protect our people that is keep them safe and keep them employed giving them the assurances they needed both at work and at home. The second was to protect the company and that is protect its financial position. So we.
We can continue to serve our communities for years to calm.
Both of these objectives endured a day and directed by the guiding principles, we laid out at the beginning of the pandemic they allow us to provide the care patients deserve.
Thus far we've been able to achieve these foundational objectives because of the partnership and hard work of our 280000 colleagues and 45000 physicians.
I want to thank them for their unwavering commitment and tremendous sacrifices in the midst of this global health crisis.
In addition, thorough planning solid execution appropriate resource allocation and focus leadership all contributed to numerous positive outcomes. We also had strong collaboration with our partners health plans flap companies suppliers post acute providers and others.
His who also want to thank.
Every quarter of this organization has come to that come together to do what's right in times of great uncertainty our people continue to show up and pursue the path forward, we press on in that journey now.
In pursuit of the first objective, we implemented a number of pandemic pay programs to support our colleagues, including a program that continued income for them that otherwise would have ceased due to stay at home orders and reduced patient volumes.
145000 colleagues benefited from these programs at a cost to the company of approximately $110 million as a result, and I'm proud of this fact, not one employee and ha healthcare has been laid off or furlough due to the pandemic.
The Ha Hope fund raise $4.5 million during the quarter, an unprecedented level of contributions from employees, our board and the first foundation.
This year. The fund has provided almost $2 million in grants to employees, who needed emergency support.
Our mission is to care for and improve human life, which primarily revolves around our patients, but but it also revolves around our employees truly we care like family.
To date Ha healthcare is taking care of more than 33000 Cove at 19, inpatients, including over 5000 patients who are currently in house.
Throughout this pandemic, we have developed more enterprise capabilities to respond to this crisis, giving us greater confidence as we addressed the resurgence and in many challenges that exist in the communities that we serve.
Examples of these capabilities include enhanced clinical management protocols for patients on ventilators.
Increase lab testing capacity and improved turnaround times for results currently 90% of Cobot 19 lab results are produced in less than 48 hours.
More sophisticated supply chain systems, and logistics management, we've distributed over 20 million pieces of personal protective equipment to caregivers.
Additionally, we rapidly developed and deployed applications that managed capacity in case management requirements.
Increase tele medicine product offerings and capacity, we performed over 500000 telemedicine visits in the quarter, which was well above prior levels and finally.
We initiated various clinical research projects that should improve patient care in the future.
Now, let me transition to the earnings report.
Like the first quarter, our business was significantly limited by governmental policies that restricted.
Elective procedures and required communities to shelter at home as many of our markets begin to reopen in may patient volumes improved as our teams exit executed their reboot plants.
Over the course of successive two week periods, we saw sequential improvements in most categories ending the quarter with modest growth in admissions for the quarter admissions were down almost 13%.
April is down 27% may was down 12% in June was up 1%.
Outpatient volumes across most categories also improved sequentially during the quarter, but we did not reach last years level for any service emergency room visits and outpatient surgeries were each down 33% in the quarter.
On the revenue side, the qualitative aspects of our inpatient and.
Specifically the following two factors drove a 10% increase year over year in inpatient revenue per admission.
First the overall acuity was higher with case mix index growing 3% and second payer mix was better with commercial business, representing 28% of admissions as compared to 26% last year.
As a result inpatient revenue was only down around 4%.
Outpatient revenue declined 30% and in total revenue decreased 12% as compared to the second quarter last year.
The improvement in our financial result was generally better and broader than we expected.
But we believe it is too early for us to make any conclusive statements about the future or provide any guidance for the rest of the year as we manage the company through these remarkable times, we're mindful of our mission as well as the many uncertainties that remain with respect to the broader recovery of the economy uninsured.
Third levels.
Government regulations state budgets, and the resurgence and duration of coded 19.
In my comments last quarter I spoke about the three stage cost reduction plan, we developed to respond to the different scenarios, we had modeled.
During the second quarter, we implemented first stage items and also many second stage items.
Our teams did a masterful job and executing these plants in the quarter salaries and benefits supplies and other operating expenses collectively declined approximately 11% as compared to the prior year.
For the quarter, we recorded pretax government stimulus income from the cares act of $822 million, which reduced expenses further and increased diluted earnings per share by one dollar and 73 cents in some our overall performance was better than we expected.
With diluted earnings per share of $3.16, an increase of 46% as compared to the second quarter last year.
We continue to maintain a close watch on the macro economic factors that influence our business again as we get further into the year end gain a greater visibility into these factors and the performance of the company, we hope to be in a better position to evaluate the capital and operational decisions that we made.
Earlier in the pandemic.
Currently we are dealing with the resurgence of coated 19 in many of our communities and particular, Texas in Florida.
We made the decision across both states to restrict elective procedures, where appropriate freeing up capacity and staffing while preserving pp.
We continue to work with state and local governments to coordinate communitywide efforts.
Thus far we have been able to manage the situation and also provide non elective care to non cobot patients who need it.
I mentioned in my comments last quarter that I had faith in our teams abilities to adjust their operations and I believe they would once again respond to this challenge and deliver results as you can see they did it again, we are fortunate to have can do teams im confident they will continue to deliver.
For all of our stakeholders.
Even though the second quarter felt a lot longer to me the 91 days I'm reminded once again, what an incredible and resilient organization. We have one that is driven by common purpose to do the right thing for others.
As I've highlighted today, we accomplished a lot during this time across multiple dimensions of our business. These accomplishments I believe will position us well for long term success and continue the great legacy that is healthcare now let me turn the call over to Bill referred for more details on our fun.
The annual results.
Okay.
Thank you Sam and good morning, everyone. Let me provide some additional information on the quarter.
As we expected the second quarter saw progressive improvement each month of the quarter as we evolved from the initial response phase early in the quarter and then entered the reboot phase during the second half of the quarter.
We saw improvement from the Middle of April which was our low volume point throughout the quarter. In most every volume statistics are same facility admissions declined 12.8% in the quarter compared to the prior year period, and the monthly progression as Sam mentioned in his comments on admissions occurred with most of our key volume indicators.
Same facility inpatient surgeries declined 15.7% in the quarter with April decline in about 38% May was down 12% in June was up 3% over the prior year.
Same facility hospital based outpatient surgeries were down about 27% in the quarter.
The April down about 65% may down about 19% in June was up 4% from the prior year.
Our outpatient surgeries in our ambulatory surgery centers were down about 40% in the quarter with April down, 85% may down, 32% and June was up 1% over the prior year.
Our teams did an incredible job managing our cost structure. During this period, a significant volume and revenue fluctuation during the quarter.
We began adjusting most of our discretionary and variable expenses in late March and April when the volume declines were most pronounced.
We were able to sustain many of the expense improvements throughout the quarter as the volumes began to improve in May and June.
As reflected in our financial statements are reported revenues declined about 1.5 billion or 12.2 person in the quarter from the prior year period, our salaries and benefits supplies and other operating expenses collectively decline approximately 1.1 billion or 10.5% during the quarter compared to the prior year.
Hi.
This is a testament to our management teams across the company and highlights our ability to adequately adjust to the sudden volume declines as well as efficiently serve the increased volumes we saw during the reboot phase.
Let me highlight a couple of other important items in the quarter, starting with the care Zack.
As we discussed last quarter. The company is very appreciative of the government's recognition of the significant impact. This pandemic has had on health care providers across the country.
As I alluded to previously our revenue was significantly impacted during the quarter due to his pandemic and the subsequent stopping a most elective procedures. In addition, we experienced significant cost in the preparation and response phase, including our pandemic pay program other employee assistance efforts as well as secure.
And adequate supply chain items.
We believe the cares act funding was developed to account for this volume disruption and to offset some of these costs both of which began impacting us in the first quarter and to ensure healthcare providers across the country to continue to offer critical services to the communities they serve.
As noted in our release and financial statements. We recognized 822 million of government stimulus income from the cares act during the quarter.
This equates to about 590 million on an after tax basis.
As of June Thirtyth, we had received approximately 1.4 billion of cares acts stimulus funding.
We have not recognized any of the targeted distributions in our TNL as of June Thirtyth. As we are still performing that required analysis and attestation process. The evaluation period and guidance related to the relief fund continue to evolve and as a result, we recognized 822 million.
Of the 920 million in general distribution funds received in the quarter.
Subsequent to June Thirtyth, we have received approximately 300 million and additional targeted distribution funds.
Before I conclude let me speak briefly to some cash flow balance sheet and liquidity metrics.
As we mentioned in our first quarter call. The company took a number of measures early in this pandemic cycle, including entering into a $2 billion short term credit facility suspending our share repurchase program and quarterly dividend as well as reducing planned capital expenditures. These were in addition to a number of operational adjustments.
We mentioned earlier.
All of these efforts have enhanced the company's liquidity and capability to manage through these uncertain times as of June Thirtyth 2020. The company had 7.7 billion of capacity under our credit facilities and 4.6 billion of cash on the balance sheet.
Our debt to EBITDA leverage was 2.7 times as of June Thirtyth 2020, after netting out our cash on the balance sheet.
Cash flow from operations was 8.72 billion for the quarter, which includes the following components.
We received approximately 4.4 billion in advance Medicare payments during the quarter. These amounts are scheduled to be repaid over an eight month period beginning in August of 2020.
Cash flow from operations was also favorably impacted by the approximate 1.4 billion of cares Act funding received during the quarter I mentioned earlier as well as a deferral of estimated income tax payments to the third quarter of approximately 200 million and payroll tax deferrals that will be paid in late.
2021, and 2022 of approximately 200 million.
As we mentioned in our first quarter call, we have reduced the company's planned capital expenditures at this point, we anticipate reducing our capital spending to approximately 2.8 to 3 billion for 2020 as compared to our original plan of approximately $4.2 billion for the year.
This remains subject to further evaluation of operating trends and opportunities.
In short we believe the steps that we implemented have enhanced the companys financial flexibility as we navigate these unprecedented times, we continue to believe the strengths scale and resiliency of HCV, our longstanding and critical attributes that served us well not only during this past quarter, but we'll continue to see.
Service as we can go through the future cycles of this pandemic.
So with that let me turn the call over to Mark and we'll open it up for QNX. Okay. Thank you Bill.
We will now start the question and answer session. Ian would you. Please give instructions to those we'd like to get into the Q.
At this time, if you'd like to ask a question of the phone lines. Please press Star then one on your telephone keypad, we will pause for a moment to compile the two when they roster.
Your first question comes from line of Justin Lake of Wolfe Research. Your line is open.
Thanks, Good morning.
Wanted to.
You asked about in decremental margin and what you're seeing in.
Over the effect agency going below 18 in each satellite. So appreciate all the color decremental margins were incredibly.
Strong this quarter I think the only down about 30, new about 30% just curious if that's something that you.
Annabelle going forward and then can you give us any color on what's happening in floating absolutely in late June into July AG.
The volume ailments al.
We've seen the pickup in in the overall.
Yes.
Thank you Joe Hey, Good morning, just let me start with that out past Sam to add and so as we mentioned I think the acuity of the patients that return were higher than they were pre pandemic. As we saw you know some of our higher acuity patients in cardiology Neurosciences and orthopedics.
Return and the lower acuity patients were maybe than ones that will take a little bit longer to return. In addition, we had favorable kind of I see you and Nick you days. It was a higher that contributed to the acuity and so I do think that the margin generation of those higher acuity patients as as they return were higher than north.
And what they were pre pandemic as we've mentioned throughout our prepared remarks, we're very pleased with the response of our operating teams and the efforts were able to make around discretionary cost and and managing the variable cost and we're very pleased with how we finished the quarter on that.
On seem to want to give any comments on in line going forward well, let me speak to Texas and Florida. Those are the two states, where we have seen cobot 19 resurgence edits great. Its level we have other.
Components of our company, where we are seeing cobot volumes, but they're not to the level that we had seen in Texas and are seeing in Florida and Texas.
Which was a little bit ahead, a floor. If you will with respect to the resurgence I think the company has done an incredible job at responding to the needs of our communities as have our competitors and I think it's a testament to the healthcare system in the country and its ability to respond to these challenges from one.
Place to the other what we've seen in Texas is that our volumes were covered patients have peaked and actually started to decline, whereas in Florida, we've seen a flattening out in a very modest growth rate over the last week and we hope for is maybe a week behind what's going on inside of Texas in total.
Our activity levels.
Our up slightly in July as compared to.
June with respect to overall inpatient census, clearly with our decision to restrict elective care to manage our response to the community we have seen slowdown in surgical activities.
But we anticipate recovering that at some point in the future as we get better visibility into the co bid cases in the different communities. Our teams have done incredible job as I mentioned in my comments are physicians have supported our teams incredibly well and then our corporate.
In other teams have made capabilities available to our institutions, allowing us to respond very appropriately. So I'm really pleased with our outcomes and we do believe that we're going to have to manage.
Through co vid again, it's not something that's going to go away necessarily but our ability to.
Scale up scaled down scale up I think has now been proven we've gained greater confidence in our ability to run our business and at the same time respond to surges and so the execution and the agility that our facilities and our teams have showed over this period of time helps us.
In developing learnings that we will be able to advance as we go forward on into this year.
Right thank adjustment.
Next question please.
Your next question comes from line of Gary Taylor of JP Morgan Your line is open.
Hi, Thank you Gary really impressive.
<unk> expense management and order, it's really a commendable I guess I just want a follow up.
A little bit and understand what.
What you're saying I think I understand too. So if we look at this improving trajectory of of revenue and volume.
Through the quarter and we get to July.
You are saying inpatient senses.
But I guess cobot is fueling some of that.
And surgical volume is down is that really.
I mean, just really happening sort of in Texas, and Florida, and the hot spots as their diversity of that experience even in those dates and then when we look at the rest of the portfolio.
Perhaps you know isn't being hit by the resurgence as much.
Are you still generally seeing an improving trajectory out of out of June into July. So I guess, we're trying to get it.
Is is there any sort at pent up demand that's now diminishing or is it really just the virus, that's causing some of the surgical activity to slow down in some of those hotspot.
Hi, Thank Gary while we have not restricted.
Elective procedures are surgeries in markets, where we don't have a need to respond to coated.
So obviously in Texas It started out in Houston in the Valley and those were the first markets, where we implemented our elective procedure decisions that as it expanded the San Antonio with market. So it's sequenced the based upon the circumstances and it will on sequence if you.
We'll based upon the circumstances so in Dallas Fort Worth for example, which has not affected by cobot. We have started to relax some of our procedure requirements in restrictions in order to deal with the circumstances in those communities.
So we're going to see some natural ebb and flow in Florida. Similarly, and then if we were to see it somewhere else. We would use those experiences that we learned in Texas in Miami as an example to manage the situation and this is what were required.
Possibilities as community infrastructure, we take it seriously and and we think we've been able do.
Proved to ourselves improved to the community that we can respond effectively.
To the needs of our patients with.
So at a level that's a much greater than what we were seeing in April and May and we had some of this activity in June in some markets where.
Are we had cobot surge going on is what it was in Texas and Florida again, we were managing through that within our portfolio Similarly, and learning from that Gary and putting those loss in them.
Confident that we will continue to learn and gain greater capabilities in managing.
The volume requirements in the ups and downs of this protect.
Yes.
Thanks, Gary.
Next question please.
Your next question second comes from the line of AJ Rice of Credit Suisse. Your line is open.
Hi, everybody.
Yeah, great job on another great quarter.
Maybe just dance.
For the pent up demand I don't know, whether there's any way that you're able to.
That's that's maybe through your doctor practices, what that looks like.
Is that somebody that's going to go through the rest of the year could that spill over into next year and there's been this discussion about rebid.
I had not just working through the backlog.
Can you talk about your sense of people do in the primary care to build the.
Kate backlog for surgeries in orthopedics and all that stuff.
And then I could just slip one other end Bill mentioned that Capex decline can you comment on what.
Where where you're pulling back on Capex and should we assume that you have to do more next year as a result of pulling back. This year. These days and will permanently go away. So thanks fair. Thanks Ajay.
Okay Jay is Sam.
Thank you for the question what I'll give you some observations, it's really difficult for us to pinpoint.
Precisely what's going on in these circumstances.
But we believe that approximately four.
There are cases during the six to seven week period, where most of our company was restricted on what we can do as Ben.
Recaptured and by recaptured I mean, either Don for scheduled.
So the other 40% to 50% that.
Hasn't been recaptured we don't have visibility into that physicians continue to.
[noise] build back their practice is just as we are building back our business.
In a way that.
Recapture some of that gap that I, just mentioned, but we don't have great visibility into that as of yet.
What I will tell you also is that our ambulatory surgery centers were slower in their ramp up because they were at a complete stop.
Versus our hospitals, which were continuing to run during the pandemic period.
And so they have ramped a little bit slower as bill alluded to in his comments, what we saw within our surgery were procedures orthopedic and spine.
Quicker and stronger.
We also saw.
A slower recovery NRG opera seizures in certain diagnostic categories, which started to ramp significantly at the end of June which gives us a belief that downstream those diagnostic patients inning encounters will ultimately require some level of therapy whether.
It's surgery or something else, so, which we have some insights into it we believe we'll need through the third quarter. It probably through the fourth quarter to have a better sense of what the full recapture was of the cases that were in fact deferred.
In cardiology components of our cardiology business recovered really well, mainly electoral physiology and the procedures in that particular category. So we had a mixed bag.
Bag of events in the second quarter and there are some indications of decent recovery in certain service line still more to come in others, and we will continue to monitor and.
Try to gain insights from within our physician practices, whether they are affiliated or employed and within the different markets that we think are more advanced in their recovery period than others and led that informed with some of our off surveillance further as we go into this next quarter.
And we'll talk about capital Yes, A.J. This is bill you know we think it was prudent at the time to reduce our capital spending as we've talked about last quarter and updated on this quarter. Most of those projects were either deferral or slowing down some activity that was in the pipeline as well as some deferral of our IP capital. We don't believe any of those decision.
As of compromises strategic or growth initiative for us at this point actually during the quarter. We turn on a couple of projects that we felt you know there was compelling opportunities out there as far as next year, we'll have to see what the what the marketplace in the environment is I don't think just because we defer these that we'll have to.
Substantially increase over what we ordinarily would a plan, but we'll continue to evaluate that as we go through these different cycles.
Thank you AJ okay.
Next question please.
Your next question comes from line of Peto Chickering of Deutsche Bank. Your line is open.
Good morning, guys. Thanks for taking my questions and excellent job on a very challenging environment to the whole team over at HCP. So the question here is.
On the cost.
Through the revenue ramp throughout the quarter.
But can you walk us through the sustainability of the cost control leverage the put in place in April.
Other revenues continue into July.
Cost controls they put in place.
Yes. This is.
Our to that I think generally speaking we can hold.
Much of the cost.
Thanks.
Controls that we put in place as we said most of those were around adjusting as well as some of the variable cost make as Sam mentioned in his comments. We do know this recent co which surge we're having to make sure we have the appropriate labor to serve that surge at May result in some increased use of.
Either contractor premium labor, but I think as a whole our teams have done a nice job. We continue to have opportunities to continue to look at other discretionary spending that we have so I think we've got a little bit of a track record of being able to manage to the environment managed to the revenue that we have.
We're very pleased with the results and we'll just going to have to see how the volume returns and what are the the variable costs that were going to need to support that both what we feel more for the most part we can hold much of the the expense quarter.
Thanks Peter.
Your next question comes.
Yes.
Baird Your line is open.
Hey, Thanks for the question I was hoping to get an update on the competitive landscape and maybe the potential for some M&A and that in the future on I know the industry is obviously working very collaborative way right now but are you seeing any.
Yes health systems that will be attractive partners from for HCV struggling at all and you think you'll have more shots on goal from an M&A standpoint, as you look out over the next one or two years.
Thank you Matt.
This is Sam Emad I'd I don't know that we have any insights yet market insights into.
Competitor.
Issues or opportunities that might exist.
I think everybody is scrambling in many markets to deal with.
Coven 19 in discharge their responsibilities appropriately and the likelihood of any strategic decisions being made during this particular period in time I think is probably.
We will continue to.
Explore we have a very robust pipeline for outpatient FIS.
Silty development and or acquisitions that were very excited about.
And there are complementing of our existing networks and we'll continue to look for Ajay cincy with Jason sees within that platform as it relates to new market opportunities and so forth and what does have to be.
I think aware and open to those but very conservative and appropriate in how we think about them and capital allocation is bill just alluded to.
In our in our there on their planning.
I don't know, though at this point in time that we're going to see anything in the short run I think it's going to take a systems a while to get through this period and then start to determine what they are appropriate steps are but as we've done in the past we have been opportunistic with respect to certain acquisitions, and we will continue to maintain that philosophy and appropriately.
Move forward.
Your next question. Please your next question comes from line of Whit Mayo of U.S. Your line is open.
Hey, Thanks. Thanks, Good morning, maybe it's too early to tell but any color around payer mix them in any help on any internally developed framework to think about what the impact could be on each year going forward and I know you've done a lot of time too.
To address this and just wanted to get an updated view because my sense is that you're probably not seeing any meaningful change and I guess color. Your core payer mix now and maybe just an update on your self pay and and balance after reserve just where those are.
Yeah with this is bill you know as we.
See you know some favorable and the payer mix as our commercial.
Declines were a little less than our Medicare declines, which makes sense that that the Medicare population may take a little bit longer time to return to a health care facilities.
Our uninsured volumes remain consistent with our overall volumes that we havent seen any material kind of differential with our self pay.
The volume going forward, that's obviously an area that we're paying attention to we're doing a lot of study market by market to track various factors whether that be unemployment for coverage I think it is too early to be able to predict.
How that may unfold, but clearly some of those factors will.
Contribute to some of the uncertainty as we faced the future and factor into some of our decision, but we havent seen a play out right now, but as we go forward. It's an area that we continue to monitor and we have you know some data that were.
Trying to track to give us some insight as we cycle.
Right. Thank you.
Your next question please.
Your next question comes from line of Steven Valiquette of Barclays. Your line is open.
Great. Thanks, Good morning, everybody. So generally speaking I think most investors are have been thinking about twoq, you 20 likely being a trough for the hospital industry profitability than sequential improvements in Threeq and Fourq you.
And I guess my question is if we just ignore the stimulus money and look at your strong 1.85 billion of operational EBITDA generated in Twoq you just operationally should the investment community generally assume that operational EBITDA will continue to improve sequentially.
At least in Threeq you from the 1.85 billion base that we see things right now despite the fluid situations in Florida, and Texas or is it too hard to make that call right now just on the the quarterly cadence.
Steven This is bill let me try I mean I.
I think the reality is there are still many unknowns relative to the duration and impact US pandemic. We'll have one of the reason we are cannot up date or guidance at this point, it's unclear the longer term macroeconomic impact how this might change the overall landscape, including patient behavior the economy.
Employment and coverage and alike. So you know these are kind of a somewhat unprecedented times four so it's really hard to so really project on a quarter by quarter basis, what we might see well. We do know is that we've demonstrated and I think as we demonstrating this quarter. We have plans in place to respond I think to a range of.
Scenarios that might unfold and we have different stages, a management actions based on how he there's volume returns or what the mix may be and alike. So we'll continue to assess the market. Let you know what we're seeing as we go through the year, but right now we're just unable to convert that to any type of a financial guidance going for.
We're in and we're just have to wait to see how the marketplace unfolds.
Okay, all right appreciate the color.
Thank you Stephen.
Your next question.
Our next question comes from line of Kevin Fischbeck of Bank of America. Your line is open.
Hi, Kevin Great. Thanks, I guess, just trying to go back to the pace and timing of a volumes and that you guys. Obviously operate in a lot different markets across the country I don't know if you have.
Any experience about markets that maybe got hit a little bit earlier from Covidien and have since rebounded and weather.
Elective procedures coming back are coming back a lot quicker in those markets or if it's more balanced I guess in the past you've given some data about procedures by the different regions that you guys are divisions that you guys have maybe color there maybe on as far as time goes how many of those 14 or are going to add or or above.
Where they were select universal's up but.
And as regions are saying above average volumes.
Kevin Thank you.
Sam you want so here's how we looked at the recovery, we baseline everything off of April and we looked at May and June and highlighted within our portfolio. What the revenue growth was in each of those months vis-a-vis April and for them.
Always part we had remarkably consistent performance across the divisions with the exception of a couple of spot.
Those two spots where out west in California, primarily and then in Miami secondarily and that was because of.
Releasing the restrictions a little bit slower in parts of California, then, Texas, and Tennessee and places like that as an example in Miami was dealing with Cove it.
And in a totally different scenario and their restrictions were released a little bit differently, but within those two brackets.
Most of our divisions ramped a reasonably consistent.
As it relates to their revenue growth over April and so that's how we judge that again, it's very difficult for us to get very specific observations from one category to the other within procedures and so forth, but looking at the revenue recovery as the better metric we were able to see.
Remarkable consistency across the rest of the company.
With respect to gains over April.
Okay.
Kevin Thank you for the question.
Ian we're ready for another one.
Your next question comes from the line of Frank Morgan of RBC capital markets. Your line is open.
Good morning, it sounded like in your comments that you are you really are more prepared as an enterprise for ebbs and flows in covert volumes and I'm just curious.
Do you think that plays out with doctors with physicians as well as patients in that overtime. If we do have another flare up in the in the fall that I mean do basically we all become more desensitized ideas, we figured out how to operate in the whip solves that we see become less noticeable in the future.
I guess related that you did talk about on this current surge an increase in.
Thanks, I premium labor contract labor in the likes.
Maybe just any color you can tell us about general profitability of these koby patients are they use it actually your prop profitable business. When you bring it in and then last just any DC DC perspective, Bill made some comments about.
Yes, the funding you've received when you've got lost revenue and higher cost. It's all trying to additional really funding for the hospital industry. Thanks.
Life, Ryan got three questions area.
Yeah.
So Frank let me speak too.
The ability to respond downside upsides in respond again, I think we've proven to ourselves into that as I mentioned and ability to manage through that operationally as at the facility. It as a company also think.
Government. Many state governments have learned how to respond and to dial up dial down maybe some of their policies I think my judgment only that individuals understand how to dial up dial down their social activities in a way that is responsive to what's going on.
Good.
In their communities as well so I think all of this is creating a bit of muscle memory. If you will with with respect to covert 19, it's our belief that we're going to have to maintain that memory use that memory again, and I and be able to deal with the potential flare ups that might occur until.
We have a vaccine or a different kind of therapeutic remedy that would allow for less cobot activity in our communities. So I think it's not just us it's it policies it's business as individual all taking advantage of these learnings and applying them to the situation.
That we believe I will still exist in the future until there are some vaccine the bill Yeah. Frank I think it's too early to talk about the profitability of co with patients what what we do know early on is that our co bid patients that we saw you know did have a generally a higher acuity than our typical medical patients just.
Kevin a longer length of stay a higher proportion in intensive care units. So and there were some add on payments by Medicare as we know, but too early really convert that to profitability. Our focus is really making sure that we've got all the resources to be able to care care for those patients.
Right Frank Thanks much.
Yeah again next question please.
Your next question comes from light of Ralph Jacoby of Citi. Your line is open.
Great. Thanks, good morning.
First first just wanted to clarify you said June inpatient admission was about 1% and July inpatient was running ahead or was that commentary just on on Texas and then more specifically on the E. R volume.
Hi, I know down 33%, what what are some of the initiatives a you're working on to get maybe people more comfortable to come in if Fannie and then you've been talking for a while on access point.
An increasing those access points, where are you with that and how does the backdrop sort of change or accelerate that thanks.
Route so what I mentioned this is Sam what I mentioned on July was that our inpatient census was off over June we haven't finished the month, yet so it's difficult to say exactly where admissions are going to be with respect to emergency room activity again, we saw sequential improvement.
In the rate of decline in our emergency room business in the second quarter with June being down maybe half of what it was down.
Or third or less what was the third 15% down here versus a roughly 40% down from I think it wasn't april's we saw significant improvement if you will from the rate of decline. What we also saw inside of our emergency room business was greater acuity, we had said.
Similar to our inpatient a bit business greater acuity in our E R.
Patients, who visited our facilities and that yielded revenue per he our visit that was slightly above our expectations for the business that we're losing is the lower acute business, which you would expect we saw within our freestanding emergency rooms slightly quicker ramp up than we do.
At our hospital based E ours again.
Some of that could be due to patient concerns with respect to co of it we have a very aggressive campaign, both operationally from a patient safety standpoint, as well as a communication standpoint with our patients on.
Demonstrating to them the safe environment that they deserve when they come to one of our facilities as it relates to developing our outpatient platform in order to support our hospitals. We continue on that pathway. We think it's an important part of taking the care experience to the patient, creating a more efficient.
A better price point for them and we will continue to invest in that platform. We currently have a number of our outpatient facilities that are reopening as a result of.
The the Covanta pandemic closures that took place so each week, we opened more of what we had previously closed were not up to 100% reopening of our freestanding ers in some markets or urgent care centers and other markets on top of that will be tele medicine.
We have as I mentioned in my comments developed rather quickly telemedicine capability, which is critically important we think two furthering our access strategies for our patient and creating convenient for them and efficiency for our physicians. So we will continue to invest in that and build capabilities that supports that.
To wrap around platform, so I'm very.
Encouraged about what we have done I'm encouraged by what we're seeing in the recovery in these outpatient activities and as we move forward I anticipate that we will continue to develop.
These wrap around capabilities that support our facil, our hospitals in a way.
That make it easy for our patients and then if they need deeper care. They can get a more sophisticated deeper care inside of our hospitals.
All right. Thanks, so thanks Ralph.
Your next question please.
Your next question comes through in line of John Ransom of Raymond James Your line is open.
Hey, good morning, I'll add my congratulations that's remarkable job.
And in unprecedented situation.
I'm curious as we look at July and you've got at least temporarily some inpatient capacity constraints in Texas and Florida.
Or have you been able to either through flexing capacity or moving.
Thanks to outpatient have you been able to move a material amount of maybe what would have been an inpatient elective a year ago into a different setting or is it kind of looked like it did before.
Thanks, John.
Well I think this is Sam again, what we have done with capacity management.
To deal with Cove. It is quite remarkable we've developed.
Technology capabilities to give us real time insights into our patient population into every bad in the facility.
At any point in time also giving us an indication of their clinical condition, allowing us to think about and work with our their physician to possibly placed them in a different settings.
That has allowed us to increase the throughput in many respects versus what we were able to do in the past. So that that's an outgrowth of what happened during co bid that we think is going to create value for our patients create better use of our assets in the future and create more value for our payer partners.
In the future as well the other thing that we've done during Cove. It is we have been able to what we call level load patients across our.
Network and by that I mean getting patients into the right facility, even when we know we're going to have a pressure point at a particular facility because of the community issues that are going on so moving patients to where we had staffing or moving patients to where we had beds that was another piece of.
Capability that I think we advanced we do that all the time with Hurricanes as we deal with Hurricanes, but we took our hurricane learning and apply that to co bid situations, where we had stress.
The area, where we've seen slight acceleration of inpatient to outpatient over what we saw pre cove. It is it some of our surgical cases, mainly orthopedic total joints, where there was a natural progression of inpatient to outpatient it's slightly higher.
Post co bid that it was pre cove it.
It's not significantly harp, but it is higher and is that something thats going to continue we believe that it will be there we anticipated in our planning or multi year planning that orthopedic total joints would continue to migrate to more outpatient activity, but were built for that.
We collaborate with our physicians on making sure that we're dealing with the patient in the proper setting we have an ambulatory surgery center platform that if thats. The best setting. They can go to that so we have prepared ourselves for this migration outside of total joints I wouldn't submit that theres anything material that's taken place.
Yes.
That's been part of our overall capacity management it needs to be clinically driven not capacity driven and as long as its clinically effective for the patient and will support that and hopefully accomplish that in a way that's a productive for the capacity and at the same time appropriate for the patient.
Thank you John Great. Thank you. He then we got time for two more questions.
Your next question comes from line of Joshua Raskin of Nephron Research. Your line is open.
Hi, Thanks, and appreciate that and you know the work you didn't but also taking the question here. So my then the cares acts funding you know you received I think it's all at 1.4 billion plus an additional 300 after the quarter you recognized 822 in and I understand the difference between the general distribution of 920 and then.
The more targeted but seems like 750 million or south. So I guess the question is do you think you're going to be able to actually recognized even that incremental 100 million a $98 million general distribution or any of the targeted distributions are you just not seen that level of impacts either volumes are costs.
Yeah, Josh This is bill let me try to highlight data as you might know the terms and conditions and the general guidance for these funds continue to evolve and update and for the most part you have a 90 day or longer period to go through an analysis and attestation process and we're in the mid.
It'll have our analysis and validation procedures for those funds right now so it's really too early to talk about when and how much we might recognize in the future. We continue to monitor the guidance that comes out from various government agencies, and which continue to do our analysis for the two.
Targeted funds, we have till mid to late third quarter aim in July in the fourth quarter. So we'll continue our analysis and and ER and go forward and we'll discuss with you what what that results when we go through a future periods.
Thank you Josh.
'cause it we're ready for last question.
Your last question comes from line of Scott Fidel of Stephens. Your line is open.
Hi, Thanks, and thanks for fitting me in here I just had one other carriers question as well and just relating to the Medicare advance payments that you and the others have received at the industry and I know those payments are supposed to.
Get started to get paid back in August and over the course of eight months, obviously still a lot of virus intact and it seems like a lot of other hospitals in the industry are facing a lot. It financial pressure still so just interested if you're hearing any or you have any line and discussions with with CMS in terms of that may be looking to delay in terms of when facil.
These are required to start repaying those Medicare advance funding that was I paid attitude you tax yes. Scott. This is Phil I know, there's been some discussion, but I don't have any insight into how those have progressed as as you probably know it's scheduled to be repaid and offset against Medicare claims in the future beginning in August.
So we'll just have to see what that cadence goes but I know there's been some discussion we read about some of the to potential altering how those bonds and want to time period may be but but I don't have any insight on what ultimately may come from those discussions.
Thank.
Got it. Thank you for the question appreciate it.
Alright listen thank I want to thank everybody, who who have joined us today and participated on the call.
As always we're here to answer your in any of your questions and so give or.
Take care have a good day and we say thank you.
This concludes today's conference call you may now disconnect.
Yeah.
[music].