Q3 2020 HCA Healthcare Inc Earnings Call
[music].
Welcome to the H.T., a healthcare third quarter 2020 earnings conference call.
Today's call is being recorded.
Time for opening remarks, and introduction I would like to turn the call over to Vice President of Investor Relations Mr. Mark Kimbrough. Please go ahead, Sir Okay. Thank you Julie and good morning, welcome to everyone on todays call with me. This morning is our CEO, Sam Hazen, our CFO Bill Rutherford, along with our CMO Dr. John per one Sam and Bill.
We will provide some prepared remarks, and then we'll take questions Bill will start.
With some comments on the quarter and then sales will provide some broader commentary around some observations that we're making today.
Before I turn the call over to Bill and Sam Let me, let me remind everyone that should today's call contain any forward looking statements. They are based on managements current expectations.
Numerous risks and uncertainties and other factors may cause actual results to differ materially from those that might be expressed today.
More information on forward looking statements and these factors are listed in today's press release and our various FCC filings.
On this morning's call we may reference measures such as adjusted EBITDA, which is a non-GAAP financial measure a table, providing supplemental information on adjusted EBITDA EBITDA and reconciling to net income attributable to healthcare Inc. is included in today's release.
This morning's call is being recorded and a replay of the call.
Will be made available later today with that I'll now turn the call over to Bill.
Great. Thank you Mark and good morning, everyone I'll provide some additional information on the quarter you will note in our earnings release. This morning, our reported adjusted EBITDA was slightly better than our preview. So let me highlight some volume indicators and trends our same facility admissions declined 3.8% in the quarter within this.
Our Medicare admissions declined 7.6% from the prior year period, and our managed care admissions declined 2.7% from the prior year period.
Our same facility admissions declined 3.7% in July 5.2% in August and 2.6% in September.
Thus far in October we have seen continued improvement in our admission trend.
The cobot increases we saw in the quarter began in July and stayed elevated from most of August due to this and as we have mentioned in previous settings. The voluntarily suspended elective procedures and over 100 of our hospitals for some period of time during the July and August surges and this is.
Impacted our surgical volume statistics sales.
Same facility inpatient surgeries declined 6.8% in the quarter from the prior year period.
They were down about 11% in July down about 9% in August and were within 1% of prior year levels in September.
Same facility hospital based outpatient surgeries declined 7.5% in the quarter from the prior year period with about a 12% decline in both July and August but September saw some growth over prior year.
Our ambulatory surgery Center volume had a similar result, with a decline of 4.7% for the quarter, which occurred primarily in July and August while September's volume was about 1% over prior year.
The surgical volume results were influenced by business or surgical days in any given month end September did have one more surgical date in the prior year, but we wanted to share some of the results we saw throughout the quarter to highlight the impact of our voluntary suspension of elective procedures.
Where do you see room visits trends were consistent throughout the quarter, which declined 20.3% from the prior year period.
Our level, one and three business declined about 29% and our level four and five visits declined about 14% in.
Admissions to the emergency room were down about 2.5%.
The higher acuity and revenue intensity results, we saw in the quarter offset the impact of these volume declines our same facility net revenue per adjusted admission increased 4.8, 14.8% in the quarter compared to the prior year period.
There were three factors that contributed to this result.
One is the level of COVID-19 patients we served in the quarter as we previously mentioned we serve close to 40000 inpatient KOVA cases in the quarter or about 8% of our total emissions.
These patients have a higher acuity than average and a longer length of stay which resulted in a higher consumption of resources.
Due to this revenue per per admission is a little bit higher than our average.
Second within our non cobot patients, we saw higher acuity patient as those patients presenting for service have been in higher acuity areas, such as neurology cardiology and oncology and the lower acute services were slower to return our non cobot case mix index increased approximately 5%.
Over the prior year.
Lastly, as we mentioned earlier, our managed care mix of inpatients grew as our Medicare volume was slightly slower to recover.
Our teams continue to do an excellent job managing our cost structure. During these pandemic cycles, which benefited our performance in the quarter and our labor supply and other operating costs as a percent of revenue all showed improvement as compared to the prior year period.
Before I conclude let me speak briefly to some cash flow balance sheet and liquidity metrics.
As we mentioned in our earlier calls the company took a number of measures early in this pandemic to enhance our operational and financial flexibility.
Because of these actions and other factors, we were able to announce that we will return or repay early $6 billion of cares act funding, including $4.4 billion of accelerated Medicare payments and $1.6 billion of provider relief funds, we have received.
We are working with various government agencies to execute these payments.
We expect to fund the entire amount from available cash and future cash flows from operations.
As of September Thirtyth 2020, the company had approximately 6.6 billion of cash on the balance sheet and $7.7 billion of capacity under our credit facilities, our debt to EBITDA leverage was 2.67 times as of September Thirtyth 2020, after netting out available cash.
Cash flow from operations was $2.7 billion for the quarter, which includes the effect of approximately $300 million of stimulus payments that will be part of our repayment year.
Year to date cash flow from operations was $12.8 billion, which includes approximately 6.8 billion $6.1 billion of government stimulus funds.
Also as mentioned in last quarter's call, we have reduced the company's plan capital expenditures and anticipate our full year 2020 capital spending to be about $3 billion.
In short we believe even after considering the plan return of $6 billion of cares Act funding the cash flow liquidity and balance sheet position of the company provides us the financial capability and flexibility to navigate these unprecedented times and we will continue to look for.
Opportunities to create long term value for our shareholders with that let me turn the call over to Sam.
Good morning.
The disciplined operating culture of HC, eight health care and the ability to take full advantage of what our size and enterprise capabilities have to offer have produced remarkable performance for the company this year.
These attributes along with a great people, we have in our organization and a steadfast commitment we have to our mission have allowed us to deliver value consistently.
And at high levels for all of our stakeholders.
As demonstrated again in this quarters results, we continue to show resiliency, both operationally and financially while also enhancing our overall position across the communities we serve.
For the past couple of years, we've used the third quarter's earning call to provide some early thoughts about the upcoming year in those years, we obviously had a more stable environment economically politically and operationally.
While always difficult to predict our business with precision today's environment with all its uncertainty makes it particularly challenging.
We plan to provide you with more details in January when we complete our planning process for 2021.
By that time, we will have a few more months of experience that we can hopefully used to give a better indication of our thoughts regarding certain components of our business.
With that being said, we are beginning to formulate some preliminary perspective around a few aspects of our business and I want to share those with you. This morning.
With respect to volume given the unusual volatility we have seen in 2020 with COVID-19, surges mandatory and voluntary suspension of elective business and the intermittent recovery periods. We currently plan to use 2019 volumes as a starting reference point for early.
2021 planning purposes.
Since the pandemic began we have had very few months, mainly September and October that we believe are indicative of somewhat stable activity notwithstanding.
Notwithstanding we have some observations from these two months and we are using them to inform our current thinking.
First.
We believe we will continue to treat co at 19 patients throughout 2021 over the last two quarters COVID-19 patients have represented approximately 6% of our admissions rep.
Recognizing that there are many variables that could affect next year at this point, we believe it is reasonable to estimate around 4% to 5% of our 2021 admissions could be related to the var.
This factor suggest continued high levels of acuity and our overall mix of inpatient business, which should provide some support for current inpatient revenue trends.
It is difficult however to know if the various governmental reimbursement programs for providing care to COVID-19 patients will continue through 2021.
Overall, we believe demand for inpatient admissions next year will be down from 2019, approximately 2% to 3% but.
But again with the mix being more acute.
On the outpatient side as compared to 2019, we anticipate emergency room visits will be down in 2021 similar.
Similar to this year, but like our inpatient business, we expect it to be more acute which should drive higher revenue per visit.
Offsetting some of the volume decline.
For outpatient surgeries were expecting some recovery over current levels, but we expect volumes to be down slightly.
With respect to managing operating costs, which has been a key part of our solid results. This year. We have continued confidence in our team's ability to hold many of the games. They have made across the different expense categories.
In those areas, where we anticipate some pressure we believe we have future resiliency actions.
That can help offset some of these challenges.
Collectively these factors lead us to think that our preliminary expectations for adjusted EBITDA for 2021 could look similar to the company's original 2020 guidance, but likely with a slightly wider range of results.
Clearly there are additional factors that could influence these perspectives and expectations.
Including but not limited to the economy could worsen and impact payer mix deal.
The election results could bring adverse changes to healthcare policies and the pandemic could fluctuate or affect our results in ways that we cannot anticipate.
We will evolve our thinking accordingly, as we gain a better understanding of these factors.
We believe as I stated in my comments, a few weeks ago that we have proven we can meet the challenge of this pandemic we.
We also believe the company will be able to navigate successfully through future challenges as well.
Since the onset of this historic event, we have improved many clinical operational technology and organizational capabilities.
We believe these improvements coupled with the financial flexibility, we possess should provide us with a platform to drive long term growth and shareholder value.
Once again I want to thank our colleagues and our physicians for their incredible work. During this year. We are fortunate to have such capable people in our organization.
And with that I will turn the call over to Mark for questions. Thank you.
Thank you Sam Thank you Bill Julie.
Juliane, we're ready for questions now if you'll provide information on the Q.
And instructions of analyst. Please keep your questions to ones that we make is many people into the queue as possible. Thanks.
Thank you again, if I ask the question.
Star followed by the number one item.
Well Brian question for you.
Next question comes from now thank you.
Head your line is open.
Thanks, just wanted to get actually two part question I just want to be clear on the message for for 2021 I. Appreciate all the details just the current thinking is admissions down 2% to 3% in 2019 versus.
During 2021 versus to 2019 baseline in and also just wanted to.
Bill on the the 3 billion that you're spending on capital. This year. It implies kind of a step up in the first in the fourth quarter up to about 1 billion is that a good run rate to think about next year. Just was wondering if there's any comments on on 2021. Thanks.
Sam so on the.
Admission estimation Thats, our best thinking at this particular point in time with we are.
Believing based upon SEC September and October and maybe even June to some degree that we will not see some of the lesser acute inpatient admissions that we had seen in previous years, but we will continue to see acute more acute type patients who need.
Significant care throughout 2021, just as we've seen in many months this year.
As we've gone through this cobot period. So that's our that's our thinking obviously as we get deeper into the fourth quarter were hopeful that we will have months that are reflective enough of what we'll call stable activity that will allow us to inform that thinking even further and if we have adjustments to that thinking we will clearly update you in our.
Our fourth quarter call in January.
On capital with as you know our fourth quarter typically runs a little bit higher I don't necessarily think the fourth quarter alone is indicative go forward run rate. We're obviously in the 21 planning and we'll finalize our capital expectations I think it likely will land somewhere north of where we are in 2020, but less than what our.
Original historical spend was for this year. So we'll give you some detail as we get into next year.
Earnings per.
Appreciate it.
Our next question comes from Chickering from Deutsche Bank. Please go ahead. Your line is open.
Good morning, guys.
Thanks for taking my questions back on a 2021 EBITDA guidance assumptions for a minute you talked about for the volume trends were little profit in 2018 levels, but at higher acuity can let us know what payer mix you are assuming in that guidance out that refers to what you saw on third quarter and if you dig into the margin side you saw some pretty good margin leverage on Opex this quarter.
The two assumptions, you're making on salaries and benefits and opex within that guidance.
We don't have those details at this particular point in time to share pita, we need to finish our planning process as we typically do in the fourth quarter. We try to give you some general sense of where we see things Theres, obviously puts and takes on every line item on our income statement as always and as we get further into the fourth quarter and.
Refine our thinking on each of those categories. We'll give you some range of expectations around those metrics in our planning process in our fourth quarter earnings release.
Okay.
Your next question comes from Gary Taylor from Jpmorgan. Please go ahead. Your line is open.
Hi, Thank you. Good morning, two part question as well one bill wondered if you could tell us.
2019, what the emergency room was as a percent of either.
Either total revenue or our total outpatient revenue just so we can sort of think about the headwind that.
You've baked in there and then the other part is.
I guess clearly we've seen that.
The worst.
Financial results for 88 comes.
From when.
The facilities are are are empty, because you've deferred surgical business and there wasn't cove. It now you're.
Managing much better sort of simultaneously the co that ebbs and flows with your surgical business. So the question is as as investors look forward as as coli cases increases.
Do we think thats, a positive or negative for EBITDA or do we think thats still just allows you to manage your overall EBITDA trajectory in a in a fairly tight range.
Thanks, Gary Let me, let me answer a couple of questions here, Gary and ill hand, it over to Bill I think it's important to understand that two thirds two thirds of our E. R visit decline in the third quarter was either uninsured patients or Medicaid and the balance of our visits were patients who were more acute as one would it.
Spec.
In that they delayed possibly or deferred care and we're more more sick when they came to the emergency room. So I think is a very important element of our IAR business, we'll know exactly how thats going to play out but that has been the pattern throughout most of the pandemic.
So bill you want to answer the other question, yes on the Covance as you.
Identified volume will fluctuate you know, it's hard to isolate that population by itself. If you will because as we mentioned and intended to highlight in our transit also has an impact on some are reflective as it as a fluctuate, but we think we'll have a level of cobot patients that were going to serve throughout 2021 as Sam mentioned.
In his comments and I think we're prepared to manage through those those fluctuations as a present.
Your next question comes from AJ Rice from Credit Suisse. Please go ahead. Your line is open.
[laughter].
Thanks, Hi, everybody.
Just one point of clarification and then the question one.
So you say in the guidance you gave coming into the year for EBITDA sort of its general range, maybe a little wider.
Got various data points I, just want to make sure Im looking at the right number I had $10.25 billion to $10.65 billion was your original guidance and then pro.
The question I guess I'd, just add you mentioned future resiliency actions that could be taken at some of the other Bose.
The actions or other aspects of the business.
The benefits you've seen in the second half year fade, a little bit maybe expand a little bit on that and how significant are those opportunities as you look out into next year.
Hey, Jay first on your first one yes ill confirm your numbers are correct from what our original 2020 guidance was.
Okay, and then AJ on the question around the future resiliency bills, leading this effort, but I want to give you. Some strategic approach that were taking because we believe that there are significant opportunities inside of the approach and we are executing on some of those as we speak and we still have.
Capacity in these initiatives as we push forward, but we have.
Growing the organization over the last decade, I'll call it organically and through that organic growth it has yielded.
Results that we think are very powerful for the company over the past decade and have positioned the company very well as a matter of fact, our market share at the end of the first quarter right before cobot hit or.
Or even at the end of the March period is at an all time high we think our overall positioning in the marketplace has improved over the seven months in many circumstances.
And if we.
Moving forward, we should be in an even better position, but with respect to our financial resiliency program, we have looked and challenged ourselves at a number of areas, where we have redundancies and or duplications in our operations. Today. For example, we have multiple call centers, we think we have opportunity to Cree.
Consolidation in those areas and increase efficiencies better.
Outcomes for our patients.
And ultimately a better use of overall company resources, we have similar opportunities in our lab services throughout the pandemic, we've enhanced our lab.
Capabilities and its enlightened us on opportunities to advance our lab services in a way that we think can yield efficiencies and better access.
Two last services and so forth doing it more efficiently and so we have those type of examples were challenging how were structured to see again, if we have redundancies in our structure and whether or not there are better ways to service the field and produce outcomes on that front and then at what I'm. Most excited about is our technology.
Initiative.
Where we have opportunities to advance technology, even further in the company and ultimately deliver a better patient outcome, but at the same time support our physicians support our management and deliver our services more efficiently. So we think these work streams have opportunities for the company.
So that we can use to offset any pressures that might serve us in 2021 and on into 2022.
Thank you Jay Jay Okay. Thanks.
Your next question comes from now so coming from Citi. Please go ahead. Your line is open.
Thanks, Good morning.
Just one another clarification here. So you said inpatient down to these 3% on sort of the core 2019, then plus cobot of sort of that 4% to 5%. So net volume call. It up 2% just wanted to frame that if that that's right and then I want to go back to the competitive.
I just want to go back to the competitive positioning.
In terms of if you're able to figure out if you're if you're drilling for more of that acute population in your markets any more than before.
And if so why why that would be the case. Thanks.
Ralph on the first one I think the two to three percentage just broad guidelines that we wanted to provide you with that would include all all of our patients, including the cove and within that but obviously, we're going to finalize our planning here and share with you more more thoughts as we get into our year end call, but at two to three percentage abroad planning, including all patients.
Okay and this is Sam as it relates to the competitive positioning we don't have any data on the second and third quarter yet.
That would give us market share information and provide insights into whether we had more.
Patients in our hospitals than our competitors intuitively I don't think that was the case because all the systems. In these markets were under community pressures that respond to covance, what I'm reacting to his certain outpatient opportunity certain physician opportunities certain program development opportunities.
But we think.
Have evolved that positions our organization, we believe better than what it was at the beginning of this year and we will continue to as I mentioned on the preview call continue to move forward on those components of our development in order to enhance our overall position.
Okay. Thank you address your next question comes from Justin Lake from one thing Thats Cooper had your line is open.
Thanks. Good morning, just a few quick numbers questions here first on EBITDA similar to 2020.
That is kind of the EBITDA number you talked about should we assume revenues in general ballpark as well in terms of what you gave us for 2020, and then can you give us the overall payer mix numbers for Threeq, you and finally any October volume numbers, you can share I know you said volume improved there in terms of volume surgeries yard visits.
Thanks, Yes.
Yes, Justin this is bill on the revenue side, it's a little early we know the composition of the revenues changing as we've seen over these past couple of quarters. So I don't want to give you know parameters on the revenue yet till we complete our planning.
On on payer mix for the quarter very quickly or Medicare was roughly or inpatient pair mix was roughly 45% our managed care you know 24%.
In self pay was around 8% for the quarter.
And then what was the third one.
The the October volume numbers anything early on surgery volumes VR Big It is not business I'll just say these sales will improve a sequential improvement.
In our admissions issue as you saw we finished the September at 2.6, October's, probably 1.5% down little better from where we ended in September, but but obviously, it's still early in the cycle.
Thanks.
Your next question comes from Josh Raskin from Barclays. Please go ahead. Your line is open.
Thanks, Good morning.
So just again sort of hate to harp on this but the 2021 guidance.
So $10.45 billion at the midpoint.
That coming despite a pretty significant improvement on the margin side margins up 500 basis points, Excluding cares act in the quarter and so I'm curious is there some offset it doesn't sound like revenues are going to be materially different than what you guys were seeing and so is there some offset some costs that are coming back and maybe specifically in that.
Supply expense has been down.
More than 50 basis points. Despite this higher acuity. So is there some assumption that some of that comes back as well.
Hey, Thanks, Josh, Yes, Josh I think Theres, a couple points and there's obviously a lot of puts and takes with our.
Performances are thinking into next year, and we haven't finalized that one is we know we do have some other government funding relative to covert patients this year, whether it be the Medicare DRG add on or the hersha payments to recognize resources consumed by uninsured Covance and I don't think we see those continuing to long into.
2021, and again I think the purpose of our guidance was to give you our general thinking versus that we've gone through a lot of calcs on the on each one of those inputs and so as we complete that will go go forward and give you are implementing that I think again I'd reiterate we're confident in the team's ability to hold many of our costs.
That we've seen and as Sam mentioned in his comments to the extent that we have any new costs that may enter the system. We've got resiliency plans that I think we can execute to help offset those and I think given the profile. We're seeing we feel generally reasonably comfortable comfortable with our current margin performance.
Thank you Josh.
Your next question comes from Frank Morgan from RBC Capital markets. Please go ahead. Your line is open.
Good morning, Sam.
I think you said you didnt have any market share information yet around the different regions of the country, but could you just give us some high level perspective about the financial performance across 88 enterprise in different areas of the country. Thanks.
Thanks Ryan.
I don't have it for the the market share for the second and third quarter. We're obviously is processing in the first quarter I think.
We had one of the strongest portfolio performance in years across the HC eight.
185 hospitals, 76% of our facilities head year over year EBITDA growth, we had very consistent performance across all of our divisions save one we have a little bit of a challenge in the far West Division, primarily because of our California hospitals, and just the slow uptake and the activity in those come.
The entities, but our strength across the portfolio.
It's very.
Good consistent and I think it again reflects the power of our portfolio the diversification of our portfolio, including even the service mix that we have inside of it so very strong portfolio performance for the company.
Thanks Frank.
Your next question comes from Brian Tanquilut from Jefferies. Please go ahead. Your line is open.
Hey, good morning, guys congrats.
Just a two part question for me.
Think about your guidance again.
Is that given that the economy stays where it is where.
You're not expecting any further degradation in unemployment and then I guess just for bill.
With $6.6 million cash on the balance sheet.
How should we be thinking about buybacks and dividends assumption at some point that.
Yes, let me start with add on.
So again I think the as we mentioned in our comments on the balance sheet and our cash flow gives us a lot of flexibility and I think capability of managing through.
Different cycles. We've made you know haven't made any decisions on capital allocation at this point or resumption of the share repurchase or dividend, we will complete our planning and 21 and announce kind of what are what our plans are as we've said before weve I think we have a pretty long history of having a balancing this.
Supplement approach to deploying our capital and as we get some understanding of the market environment. We're looking for when is the right time and to resume some of that but we haven't made any decisions at this point, but the economy.
I'll take that this is Sam.
I think as I mentioned in my prepared comments.
We're making these judgments off of our current read of the economy and were not factoring in any kind of significant worsening of the economy. So obviously, if the economy were to worsen it could have an impact on our expected results as we've indicated here.
All right. Thank you Brian.
Your next question comes from Kevin Fischbeck from Bank of America. Please go ahead. Your line is open.
Great. Thanks.
I want to follow up on that one but.
First part being.
As far as the guidance are you assuming that cove. It starts off at about these levels at the beginning of the year and then kind of gradually goes away what business improved throughout the year or is this kind of a steady state kind of assumption then just to follow up on that last question about capital deployment.
Next year's EBITDA is going to be more or less the same as this is the data as opposed to be what are the markers you're looking for it to get back to a normal just normal capital deployment with normal EBITDA strong balance sheet you'd expect normal.
What are you looking for.
This is Sam I'll, let bill take the second question with respect to the Cove at assumption are experienced with covance throughout the pandemic has been that its choppy, they're going to be situations, where cove. It is up there is going to be situations, where cobot is down we're trying to give you some estimation of.
The average that we're expecting.
We are at this particular point in time bouncing off what I call the floor and were not nearly as.
Intense with the volume of patients.
Today as we did in late July and early August.
But we are seeing a little bit of arrive primarily in one market Thats El Paso.
And Thats created.
A significant challenge in that community, but we only have two hospitals there at at this particular point in time, we're able to support them appropriately and with the actions that the community has just recently taken as well as what the Governor has done to support that community we believe.
That that we should be in a reasonable situation. There. So we're not anticipating a month by month estimations around Cove. It we're just going to respond to it with the capabilities. We have developed and we're estimating what we believe to be an overall metric that is likely to occur in 2012.
And Kevin This is bill on the capital I don't think Theres any one unique triggers that we're looking for me. We're up we're obviously still going through these cycles. We want a couple of more stable months to kind of firm up our assessments that we've talked about and part of our normal normal routine as we go through any year is to make those assessments judge the.
You know the environment, we're in and make the right capital decisions is that that's what we're going to plan to do share with you our final thinking in our year end call.
Thank you Kevin.
Your next question comes from Matthew Larson bearing. Please go ahead. Your line is open.
Matt.
On mute.
Hey, Adam.
I'm here sorry about that.
Hey, I wanted to follow up on the resiliency topic and that technology capabilities. Sam mentioned that I think Sam said technology with potentially the most exciting area to enhance efficiency and just hoping you can expand a little bit in terms of what that means and if you had an example or or two to conceptualize it for us.
Well I'll give you a very specific example that we've been able to use on two fronts. This year, we have a system.
Called Nate.
Nate is a technology solution that gives us.
Individual insight into every patient in our hospital at right now and that insight provides clinical metrics. It provides a better location. It provides.
Certain.
Metrics around what.
Requirements. The patient has with respect to let's just say ventilator management and we've been able to use those insights from this particular system to improve our ventilation management of cobot patients in a way that has reduced their length of stay on it and provided a much more efficacious outcome.
So thats just one example that reduces up.
To you Dave it creates a lower length of stay for the patients and ultimately a much better outcome. So we see opportunities to advance. This system. The second aspect of nature has proved to be very productive for us is capacity management, allowing us to.
Positioned patients most efficiently within the facilities or even across our networks at time. So this insight into our capacity management has allowed us to be I think more efficient.
At managing our debt and the turnovers, if you will around those that providing better discharge planning and timing and then better utilization of existing assets. So those are just two examples we see opportunity beyond that as we've had experiences with clinical initiatives like our sepsis initiative in the past but go.
On forward, we see.
More on that particular platform.
Got it thanks a lot thank.
Thank you Matt.
Your next question comes from Lance Lumpiness.
I think perhaps your line is open.
Yes, thanks, Thanks for taking the call.
Quick question on capacity and just interested in getting some color on where you guys are doing as far as being able to expand capacity.
To kind of recapture those avoided or deferred cases, and then what's the net impact as you think about the qubic protocols that you are having to deal with.
Okay. Thanks Lance.
But on capacity.
I mean, we have.
Multiple capacity metrics that we use to determine needs for capital.
We have triggers around how many youre visits per bed, how many surgeries for surgical suite whats the occupancy in our eyes to use whats the occupancy triggers inside of our med surge bad in order to determine capital needs. Currently the company is running about 70% utilization of.
Inpatient beds, where we have capacity today, which was required the same level of capital at least in the intermediate Rod is in the emergency room with emergency room volumes being down some.
We find ourselves in a situation we're at a company level from one facility to the other we may have issues, but at a company level, we're running about 60% to 65% utilization of our IAR beds. Currently that's down from about 85% in 2019, So we have a situation where our yard beds are.
Flexible now, allowing us to accommodate.
More volume if in fact, it presents itself. So I don't see capacity as being a barrier to growth for us we do have capital still in the pipeline that will ultimately add capacity to institutions that we believe needed and those will be playing out over the rest of this year and on into 2021.
Yes.
And I think the company is in a solid capacity position today.
Generally speaking maybe into best capacity.
Position, we've been in a number of years given the circumstances.
And so from that standpoint, there's not any significant pressures.
I don't remember what the last question was built from the net effect of the co within the last of those business understates hard to really quantify the NAS why we tried to give you some of the trends we saw in the surgical volume, we do known as we've talked about before we recaptured some of that but we don't think we recaptured all of that and so the net effect is really hard to quantify but we'll.
Continue to to monitor our volume trends as they progress through the balance of the year.
Land spend Q. Thanks.
Thanks.
Your next question comes from now, Okay, and banking, who doesn't like your line is open.
Hi, This is Andrew Marc on for Steve just wanted to follow up on the slow volume recovery and expectations for a similar decline in 2021 do you suspect that some of the our volume, especially on the lower acuity that have left the hospital system permanently how does that scenario impact your strategy and resource allocation from here. Thanks.
Thank you.
This is Sam again, we don't know to be honest with you we're not anticipating a further decline in 2020, what we're we're anticipating that what the 20 decline as compared to 19 volume that's the metric that we're we're reflecting here.
As I just mentioned, we're running about 65% utilization of our emergency room beds across the company, which gives us ample capacity to absorb growth if growth resurfaces in this particular category of our business.
If it does that as I mentioned, we're anticipating that the our patient that we do see is one that is in fact more acute and so the revenue per visit will actually be supported by the acuity of those patients.
Whether or not they've been lost forever I don't know our business model is to have capabilities outside of the E. R. As we've been investing in.
Both urgent care platforms over the years telemedicine platform significantly during cobot and then our primary care platform as well. So we have multiple platforms to stay connected to the patients. That's the important objective for US is ultimately to stay connected with them and if they feel that it's better for them to use tell me.
Addison better to go the urgent care better to go their primary care physician, obviously, we're fine with that that's a great answer for them. It's a great answer for the payer and then ultimately they stay inside the HC eight system. So we see this net net as it's still being a positive scenario for us and one that we can.
Manager rail.
All right. Thank you Julian we've got time for two more questions and were going to call. It.
Great next question will come from outside Allison.
Go ahead your line is open.
Hi, Thanks, just interested in as you think about the mix of patients for next year. Some of the assumptions that you have around then just how you're thinking about the timing and efficacy of the vaccines going.
Going into the market and how that influences your thought side on some of this initial planning that you're doing for 2021.
Okay, I'm going to ask John Herlin, our Chief Medical Officer to answer that question. Thank you fix them.
I think it's really anyone's guess as to when the vaccines are currently available on.
Robust sort of continuation of what we see now clearly diseases that are spread for respiratory transmission increase in the winter on right.
I think.
I will anticipate some increase and drop after that there are number of vaccines would follow the initial too.
I think there is some speculation they may be even better and so I think next year is really the year, we'll see.
The introduction of vaccines larger scale uptick vexing potentially.
Greater effectiveness of excess.
Thank you John.
Operator last call. Please.
Certainly your last question comes from John Ransom Lindy. Please go ahead. Your line is open.
Hi, good morning, just to drill down into covered a bit if we look at the quarter.
Do you have a sense of kind of payer mix within that and then for your commercial coverage.
Are they mostly paid on a per diem basis or is it set up like the DRG with the 20% add on and maybe a little extra for the commercial break.
Hey, John Thanks.
Yes, John This is Phil our co Wouldnt mix is you know probably 50% running Medicare tend to 11% on Medicaid and probably close to 20% on just pure management and we have a few other categories. That's impacting that so it's it's fairly comparable to our overall with some changes.
That fluctuates from a market by market.
So that's the mix so on your commercial how do you get paid per person per day I had a follow up. Thanks Ray follows the contractual terms so whatever the contractual terms with our payer would be as one with follow so it's a mix of payment methodologies right.
John Thank you so much.
We're going to get another question.
There is no commercial add on say like.
The Medicare program is that whats his final yeah, I think that was where there is no co. It follows the terms as bill indicated.
I do and I think we can wrap it up.
All right. So you don't.
Have any closing remarks. This will conclude todays conference call. Thank you for everyone's participation you may now disconnect. Thank.
Thank you thanks.
Yes, okay. Okay.
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