Q2 2022 HCA Healthcare Inc Earnings Call
Which is generally consistent with the mix in the prior year.
Covid admissions dropped 70% from the first quarter.
Emergency room visits on a same facilities basis grew seven 3%, reflecting strong demand for this service.
Volumes across most categories exceeded pre pandemic levels as compared to the second quarter of 2019.
Many aspects of our business were positive considering the challenges we faced with the labor market and other inflationary pressures on cost.
Our teams executed well as they have in the past through other difficult environment.
Again, I want to thank them for their dedication and excellent work.
Labor metrics improved in the quarter as compared to the first quarter.
Recruitment was up <unk>.
Turnover was down and throughout the quarter, we lowered contract labor expenses in each successive month with June down, 22% as compared to April .
Overall operating cost per adjusted admission improved on a sequential basis as compared to the fourth quarter.
Because of these positive developments, we operated with more available capacity and we did in the first quarter and had solid volume growth sequentially. Additionally.
Additionally, we continue to expand our network offerings with new ambulatory centers and clinics.
We opened three Gayla nursing colleges in the quarter and two more scheduled to open later this year and lastly, we increased hospital capacity with targeted capital investments.
We look to the balance of the year, we see volumes returning to pre pandemic seasonal trends, but.
But we expect growth in inpatient admissions at a more modest level than previously indicated in our guidance and in line with guidance for outpatient categories.
We believe our labor and resiliency plans are appropriately responsive to market dynamics and the needs of our business and they should continue to generate improvements in our operations.
So let me close with this and have us and as I've mentioned this in the past HCA healthcare has an outstanding track record of responding to our reality by adjusting our operations in an appropriate manner that is a manner aligned with our mission to provide high quality care to our patients while also being proof.
With our financial management with that I'll turn the call over to bill for more details on the quarter.
Okay, great. Thank you Sam and good morning, everyone. Let me provide some additional comments on the quarter first as Sam mentioned, we are pleased with the overall results for the quarter. Our diluted earnings per share was $4 20 in the quarter. After excluding the <unk> 11 from the loss on sale of facilities and 'twenty from the retirement of debt.
Adjusted EBITDA was three <unk>.
<unk> 4 billion and adjusted EBITDA margin was 25%.
Non COVID-19 admissions were down <unk>, 6% quarter. However, non COVID-19 managed care admissions were up 7%, reflecting favorable payer mix.
Non COVID-19 case mix was up slightly from the prior year, maintaining the acuity gains we've made and overall our same facility inpatient revenue per admission increased three 3% from the second quarter of last year.
In addition to the Sam mentioned, we saw improvement in most all key operating indicators compared to the first quarter, including our labor supply and other operating costs on both an adjusted admission and adjusted patient day basis.
<unk> remained focused on our resiliency programs that have highlighted in last quarter's call, including our staffing and capacity efforts executing on our next generation of shared services and identifying best practices across HCA healthcare.
The advancement of our benchmarking and analytic processes.
These efforts continue to be an important focus for us as we respond to the current operating environment and we are pleased with our progress in these areas.
So let me transition to discuss some cash flow and balance sheet metrics.
Our cash flow from operations was $1 $63 billion in the quarter capital spending was $1 8 billion as compared to $842 million in the prior year period, and we completed just under $2 7 billion of share repurchases during the quarter our debt to adjusted EBITDA ratio was just <unk>.
Above the low end of our stated leverage range and we had just over $2 7 billion of available liquidity at the end of the quarter.
Lastly, I will mention that our full year 2022 guidance remains unchanged from what we highlighted last quarter. So with that I'll turn the call over to Frank who will open it up for Q&A.
Thank you Bill as a reminder, please limit yourself to one question. So that we might give as many as possible a chance to ask a question you may now give instructions to those who would like to ask a question.
At this time I would like to remind everyone.
A question Thats Star one.
First question comes from a J rice.
Your line is open.
Hi, everybody congratulations on managing very well through a tough quarter tough environment.
I just want to maybe.
Near term.
Okay.
Well.
It does seem to be confusion out there about what's happening with <unk> and I know you guys mentioned inpatient youre, a little more cautious about the back half doesn't sound like much but.
And it's about the same or are we sort of reminded of a new normal.
Speculation about outlook. Thank you Dan.
Oh good.
Positivity, maybe affecting People's Wells, a doctor are you seeing any of that.
Oh down effects on your business I guess.
But there is still a fair amount of deferral out there.
It needs to be worked through the system any comments on that and then more broadly on the.
Coming out of all of this I know the company said from time to time.
Not seeing anything that changes your view that you can grow mid single digits.
EBITDA long term with often being toward the high end of 4% to 6% target and I Wonder if that's still your thinking.
Yes.
A J. Thank you. This is Sam I believe when it comes to health care demand our overarching belief is that it's pretty durable.
And somewhat responsive to normal trends over time.
Obviously, we're still trying to sort out.
The implications of Covid and the pandemic on overall demand and make some judgments here again, it's only been really five months since the last surge when you consider a February March and then through the second quarter and so we're making some early judgments that we believe there will be normal seasonality.
<unk> trends with respect to how volumes behave over the balance of the year.
As it relates to long term intermediate term demand again, we're not seeing anything structural that would suggest that overall demand is reduced or necessarily increase beyond what its normal trends were and we think on the inpatient side.
Healthcare demand at least in our markets is somewhere between 1% and 2% and a little bit more than that on the outpatient side, so that lines up with our pre pandemic.
Sort of thoughts around overall demand.
So that's how we're seeing it again, we've seen incredible.
Incredible resiliency in our emergency room, which we were <unk>.
Thinking that may be disrupted our emergency room activity is actually up over 2019.
Many categories of our business as I mentioned on the call compared to 2019 have shown a nice.
Stable response.
We're still trying to sort out a few things with the pandemic and don't necessarily have great insights yet around some of those but we do feel confident that health care demand in general will revert back to normal patterns as we move through the.
The next few years.
Alright, Thanks, a lot.
Okay.
Our next question comes from Peter Chickering with Deutsche Bank. Your line is open.
Hey, good morning, guys. Thanks for taking my questions.
Also on the labor question too.
Two part question the first one is.
Do you think about your contract labor rates, how much visibility can have on what the rates you're paying on the third quarter.
He goes in the fourth quarter and can you sort of quantify what contract labor you paid in two key what you assume within guidance and then <unk> and then on the full time labor can you just give us any color on sort of what is your average hourly.
Nursing wages in first quarter, and how that sort of in the second quarter or are we seeing a downtick as you guys bring on the new notes.
Thanks, so much.
Yes, Peter This is bill let me start first with the contract Labor I think as we discussed last quarter. It was at a peak in the first quarter really due to the Covid surge.
And we anticipated to be able to see sequential improvement and indeed, that's what we saw we thought it would first start with being able to modify the.
The rates that we were seeing in the market in terms of the average hourly rate and indeed, we saw that and we were able to execute on that as the quarter went through we finished with June .
Estimates, we were anticipating when we reset our guidance after the first quarter and I think over the course of the year, we'll continue to see hopefully reduction in the utilization of that contract labor and again, we were encouraged by the sequential improvement. We saw we're encouraged by kind of how we ended the quarter in the month of June so.
That's pretty much in line with what we anticipated.
Yes, I think the MPW Sam.
The contract labor rate itself, we do believe there is still some room to go when we look at where we ended the quarter.
Don't have a specific number.
I think it makes sense to give you at this point, but we do anticipate some continued improvement on the rate and as Bill mentioned that utilization as it relates to our nurses.
And our full time nurses.
Last year about this time did a fairly sizable market adjustment across the organization and since then we've continued to do very targeted adjustments for our nurses as well as our non op, because we need lab tax radiology tax and other people to support the care delivery process again, we are making.
Another market adjustment this year I will tell you that our nurse wage increase is in.
The mid single digit it's manageable for US we believe we have been able to maintain productivity levels in certain instances and we've been able to arbitrage. If you will the very expensive contract labor and that's allowed us to.
Position, our workforce better in the second quarter than we did in the previous three quarters. So we continue to believe that there is opportunity on that front, we see the market for labor moderating some and normalizing our turnover as I've mentioned.
Down over 20% in the second quarter as compared to the first quarter, our hiring in our recruitment function, which has done a wonderful job is up 18% in the second quarter as compared to the first quarter. So these metrics early successes, if you will give us some confidence that the combination of our competency.
<unk> strategy, our retention strategy and then the mix of our labor.
Workforce should improve as we move through the balance of the year.
Our next question comes from Ann Hynes with Mizuho Securities. Your line is open.
Hi, good morning.
I know it might be early but how do you think we should think.
Think about key inflation compressions for 2020 to me versus historical trends, especially with <unk>.
This applies on the managed care side I know that you will eventually be able to pass on the base inflationary pressures through pricing can you just give us some timing on how we should think about that.
<unk>.
This is Sam let me speak to inflation generally obviously, we are seeing inflation as we've mentioned inside of our labor cost again I'll just give you an overview of how we think were managing.
Managing our way through that and bill can speak to some of the specifics on the supply side. Fortunately in many areas we have contracts that.
Have terms to them today, so it gives us some protection in the short run.
We think that protection.
Allows us to reposition some of our pricing as we move through the next few years to reflect more accurately the inflationary pressures that we're seeing and others are seeing in the provider system. We are seeing some early successes.
Recognition by the payers and we expect payers to appreciate.
The overall inflationary environment that the providers are in but we're seeing some early a recognition of that and some renegotiated contract.
<unk> more.
Escalation in pricing than what we had seen in our past trends.
As I mentioned on the last call, we're pretty much contracted for 2022, obviously, but as we look to 2023, we will start to see some uplift in our contracts and pricing, reflecting the new contracts and then on into 'twenty four we fully anticipate having a different trend on our pricing.
As a result of these renegotiations.
Our capital costs, we obviously experienced some inflationary pressures there I don't know that we have visibility at this point to give you any number on any of that as we think about 2023. So we will try to hone in on that a little bit more as we get ready for our guidance.
Next year.
Okay.
Our next question comes from.
FCB Securities Your line is open.
Hey, Thanks, Bill the <unk> jumped up again this quarter I'm, just trying to understand like what's driving that is that higher or claim.
Claim edits is there any underlying deterioration collection rates or just anything to put that into context, and if you could sort of describe how that tracked relative to your expectations and if I could also just get the I don't know if I got the cost per FTE number in the quarter, maybe you shared it but I missed it but that'd be helpful. Thanks.
Yes.
We have seen some increase in our days as we've gone through the year, Florida that is prior period. During Covid I think the payers have kind of turned off many of their bill edits we've seen some of those come back into play.
<unk> pretty much in line with what we anticipated were the kind of at a high Mark right now and we'll continue to see improvement as we go through the year, but we are seeing a little bit more kind of delays in the payment processing cycle and we're working through that with our payers in terms of the cost per FTE.
Sol against sequential improvement in the quarter compared to the first quarter recall in the first quarter, we ran pretty high I think it was seven.
7% year over year number for more now on the 45% for the second quarter and so it was tracking about what we anticipated is as we ended the first quarter.
Thanks.
Our next question comes from Gary <unk> with.
Okay.
Mail.
That was useful.
Gary Taylor.
Our next question from Gary Taylor with Baird. Your line is open.
Hi can you hear me.
Yes.
Okay.
Just a two parter both.
Both of which you've just touched on a little bit I just wanted to make sure I understood. If you'd provide a little more color I think we sort of triangulated in the first quarter.
Somewhere north of $600 million of contract labor spend and.
I know that's down and you said it was down you said.
In June but just wondering.
Where that ran for the quarter.
To help us sort of modeling the rest of the year and then the second parter is.
With the growth and also payables down you've done 3 billion cash from ops in the first half and the annual guidance, 9% to nine and a half so despite the payer edits and so forth do you still feel good about the cash from ops number for the year.
Gary Let me start with the cash for US This is bill.
We're continuing to look at that I think is probably going to be hovering around eight maybe $8 million of half level somewhere in between those who will continue to track that as the year goes on but I still think that's a.
A very strong number for us and allows us to kind of execute on all aspects of our capital allocation.
Philosophy, when you look at the contract Labor piece, we did see sequential improvement in actual dollars amount were down.
From where we were in the first quarter and we look at contract labor as a percent of <unk>. We finished at the end of the quarter in the month of June down just above 8% were in the first quarter, we were running 992.
Again, we saw I think nice improvement in the absolute contract labor number.
Okay.
Okay.
Our next question comes from Kevin Fischbeck with Bank. Your line is open.
Good morning, actually this is Joanna <unk> filling in for Kevin today, taking the question here.
Well I guess.
I guess.
First question and then I have a follow up too but in terms of.
And look I know you maybe it's early to talk about that in that regard.
Obviously kept your guidance with positive given the expectation here.
But this year has some benefits from sequestration phe being extended.
So how should we think about.
Please thank you.
Growing from here this year, a good base to global.
But the long term.
Kind of targeted growth rate and my follow up question in terms of.
The commercial pricing discussions that you.
In terms of the improvement.
Over time, so is it fair to assume when you look at the history of the company should we should we be expecting commercial.
That would be accelerated to four 5% at some point.
In the past during a period of high cost inflation. Thank you.
Well, let me, let me make sure I got that inventory relative to the 2023 and kind of the pluses and minuses as we go through the year yes.
We're anticipating as we move through the balance of these this year kind of a normal course of business has stabilized as Sam mentioned in his comments, we think we're going to see patterns returned to kind of the normal seasonal trend and so that should give us a good base to grow off of in 2023.
It's a little early to be talking about all the variables in 2023, we're going to be approaching our planning process right now, but most of them are now and I think as Sam mentioned in her comments, we think fundamentally there continues to be growing demand for health care in our markets and we are well positioned to serve that and I think that becomes a nice just to think about 2023.
And as we go forward relative to commercial pricing and as you said you and.
And as we mentioned before we are having those discussions with the payers. We've had some early success. There is a recognition of the inflationary pressures that providers are seeing so we will continue to progress those discussions as we go forward and hopefully we'll continue to roll those and get the benefit in 'twenty three.
Our next question comes from Justin Lake with Wolfe Research. Your line is open.
Thanks. Good morning, just wanted to follow up on a couple of numbers questions.
First.
Covid I know you had expected the phe earlier to expire.
The first half I think your number was about $150 million or above that.
But can you give us an updated number there in terms of what's in guidance, then I'll come back a little pricing.
It's early in your web there hopefully, but can you give us an idea.
I think within our 4% to 5% range historically.
Those contracts shake out.
Yes.
We do get.
They shake out in the high single digits or something a little bit lower than that.
And.
Okay.
Yes, Jason let me start with your first one relative to the various COVID-19 support.
Honestly very little did we recognized in the first quarter, probably $20 million to $25 million. If you look at last year, Youll, probably hovering around $100 million in a quarter pretty much in line with what our expectations were most of those programs are pretty much concluded.
And so we'll run this out I think it is probably $200 million year to date, so that's pretty close to what we anticipated when we turn the calendar.
Expectations relative to pricing.
I think it reasonable to assume that we were in the three 5% to 4% zone previously with our commercial pricing that we are going to be in the mid <unk>.
Single digits.
As it relates to our expectations, how all of those land.
Don't know yet we believe again with transparency and such that we are in a competitive positioning as a company globally and that allows us to negotiate based upon the inflationary pressures that reasonable escalator as I mentioned.
So that's sort of our targets, we're still early in our contracts come up for renewal.
And we need to understand what are the payers I think we are where they are.
We're planning as well and obviously our relationships will allow us to get to.
A number that makes sense for both organizations, but I do anticipate it being somewhere around the mid single digits.
Our next question comes from Omaha.
Leasing capital markets. Your line is open.
Hey, Thank you very much I just wanted to ask about capital deployment.
Question now ex these.
Hospital acquisitions, given the FTC challenge does this change at all your.
Strategy.
The strategy of accessing patient access points.
Market.
Could this potentially.
<unk> mean that you might look at some larger health system acquisitions in new markets, just any thoughts on that thanks.
I don't think.
Decision in Utah necessarily changes our overall outlook.
We will continue to look for opportunities there.
Our appropriate end market most of them tend to be ambulatory oriented where we're able to add.
Two our networks just this past quarter, we acquired another urgent care company and our our Virginia Division.
It has solidified our network capabilities offerings and that particular.
Just like we've done previously in Florida. So we will continue to look for outpatient network development opportunities.
A lot of that will be our own greenfield projects, but it may be some acquisition opportunities here and there.
As it relates to new markets clearly were interested in new markets. We think we have the organizational capability and the financial capability to create a lot of value in the communities.
Across the country and hopefully we will see some opportunities on that front, we're fortunate to be in a position.
Where we have solid organic growth opportunities given the markets that we serve and so we will.
To invest in those I think in general our capital allocation strategies will remain consistent.
Have a very diversified approach to capital allocation.
And we will continue to use that model for delivering shareholder value as well as making sure our networks are sufficiently.
Developed with capacity and different offerings.
Yeah.
Our next question comes from Brian <unk> with Jefferies. Your line is open.
Hey, good morning, guys.
You mentioned in your prepared remarks, how you opened three new Galen undressing schools. This past quarter. So there's a lot of chatter about how difficult. It is to add nursing school capacity here in the U S. Just curious in terms of how youre thinking about the ability to add more locations based on availability of carriers and <unk>.
Absent this too.
To add to the nursing capacity in Asia.
Thank you.
<unk>.
Acquisition of <unk>.
Has yielded sits.
We closed on that transaction, we've added eight new schools and in most circumstances. Those schools have started with enrollment that was ahead of our model part of our ability to expand and opened a new collagen.
<unk> it effectively.
And when it has so far is really reflective of the unique model they have where they standardized the.
Facility they standardized the curriculum in the delivery, what's unique about HCA and Galen together is that we can use some of our own staff to support faculty needs in some cases, and then obviously create a very efficient.
Active clinical rotations, we are up to 13 schools, we will open like I've said, a couple more this year and I think our pipeline has.
Six to eight over the following 12 to 18 months.
Our vision is that all of our major communities will have at least one.
<unk> College of nursing as part of the overall network offering some communities because of their size will probably have more than one.
So we are extremely encouraged visited myself three of our new schools. There is tremendous enthusiasm with the students there is tremendous enthusiasm with the faculty and there's tremendous enthusiasm with our nursing leadership across the company about the unique possibilities that the.
Integration of nursing education, with clinical operations and facilities at sort of an integrated model is something that is differentiated and it's going to create better nurses better value for the patient and we think its supply for HCA facilities, that's unique in most circumstances.
Our next question comes from cash and ask him with pardon me Sir Your line is open.
Thanks, Good morning.
Certain parts of the health care delivery ecosystem that you think are more attractive now that you are talking about this sort of new stabilization.
That just haven't been as attractive in the past are there areas of growth for HCA in the future that you just haven't looked at in the past.
I don't think Theres anything thats completely.
<unk> obviously.
Outpatient.
Facilities pre pandemic.
Very important aspects to our network, we have roughly 2500 outpatient facilities that are part of our hospital network ecosystem. So it's about what 12 to one in our company.
We were very intentional over the last decade in building out our outpatient network to support our.
Hospitals, which is sort of the core of who we are and that integrated network model, we think very effective and very supportive and our ability to go from 3% market share in 2011% to 28% market share today as we push forward into the future I do anticipate more.
More.
Velocity, if you will and the network development that we've had previously.
It really is across all aspects of outpatient development, our philosophy is to create convenience for the patient.
Efficiency for the agent with different price points, and then integration with a full system approach. So that the patient can get whatever services they need inside of our overall provider system I don't know that anything is uniquely differentiated in that though and I think it takes a comprehensive.
Ziv and complementary approach to be most effective and most responsive to our patients and our physicians.
Our next question comes from.
Flight with Bernstein Your line is open.
Yes, Thanks a lot.
Just wanted to understand a little bit about kind.
Volume constraints that have been in place.
During COVID-19 and including the labor supply constraints.
And maybe how you track those metrics.
See if those are starting to kind of loosened up a little bit.
The eating volume in addition to just normal resumption of volume trends out there. So how are you looking at it and what are some of the steps you're taking to kind of improve labor supply there.
Yeah.
Well, let me speak to our occupancy this is Sam again.
We ran about 72% and occupancy in the second quarter and as I mentioned in my prepared comments, we did open up more capacity than we can.
In the first quarter, we were a bit constrained with staffing we have surges, we were dealing with so our overall availability of capacity was not as much as it was in the second quarter in the second quarter. However, we did have periods of time, where our staffing constrained our capacity.
And we werent able to take transfers and through our transfer centers, which are a very important element of our network that I've just talked about with our network model.
We saw situations, where we couldn't take patients in certain facilities at certain times it wasn't structural but it was episodic in how much activity. We had at a particular facility at a particular point in time as well as the staffing.
Our overall.
Staffing supply agenda, I've spoken to that already around recruitment retention different care models that we're trying to use in managing our case management.
Our capabilities at a totally different level, we've seen improvement in every one of those categories and Thats helped us a stretch our capacity if you will and in appropriate ways.
<unk> deliver outcomes for patients that are appropriate. So we will continue to move on all of those initiatives and we think it will allow us over time to continue to open up more and more capacity, we've seen a lot of pressure in our behavioral health services, where we have a reasonable number of facilities that are operating less.
And at full capacity, we've had the same thing in our rehab services and we had the same thing in other aspects of our business, but again, it's improved sequentially and we think it will continue to improve as we move through the year does that significantly compromise our volume, but it does create some opportunities for more volume.
Volume as we manage through those initiatives.
Yeah.
Our next question comes from Scott Fidel with Stephens. Your line is open.
Hi, Thanks.
I was interested if you can give us your perspectives on the <unk>.
All being primary care environment, just with all the focus on value based care, and then and where the market's.
Some new players in the space I guess, including yesterday.
And then for HCA, how you think that could impact.
Congestion recruitment or network development longer term. Thanks.
Okay. Thank you.
Yes.
An interesting point in.
Health care generally speaking I mean primary care is a multi faceted.
<unk>.
It has.
Urgent care.
Women's services pediatric services telemedicine internal medicine, even the emergency room in some cases serves as a primary care platform for many people. So our approach is to have as many components.
The primary care offering set as we possibly can in some cases, that's employed we have employed physicians.
Our physician model, we have our urgent care offerings, we have telemedicine offerings, we have pediatrics offerings and so forth in many instances is a combination of employees and affiliate physicians or affiliate providers. It could be providers of other urgent care centers or other physicians and so forth.
Whats developed with the one medical is just another component of a possible affiliated network offering I don't know that it completely changes the paradigm that exist.
Across the multi faceted aspect of primary care and how people access care through those different dimensions. So we will continue to have a pluralistic approach to primary care and we think thats the model that works for us.
Bush through.
Our system approach to health care in these communities.
Our next question comes from John Ransom with Raymond James Your line is open.
Hey, good morning.
So bill you said on the first quarter you thought.
Kind of a short term margin.
In the 19% to 20% range with the new realities.
Youre thinking changed on that.
Yeah.
No John not really I mean, if you look we did I think we had a 97% in <unk> and 'twenty five.
Obviously, there is pluses or minuses.
There's a lot of variables that go into the actual margin number and we continue to focus to operate the company as efficiently as possible, but 2019 to 20 range is a good planning horizon for us. So I think there'll be periods, we're north of that some periods where within that so no I still think that that can hold.
<unk> holds today.
Thank you.
Yes.
Your next question comes from Steven Fox.
Wells Fargo. Your line is open.
Okay.
Yes, hi, with the commentary you gave on the non Covid admission metrics. It seems like Youre seeing growth in managed care, but I guess that implies declines on the government side of the business or the uninsured side of business.
Was hoping you could provide some insight into what you think is driving that differential and then as a follow up just wondering how we should be thinking about the growth of surgical volumes for the balance of the year. Thank you.
This is bill let me start with the Covid piece.
I think theres a couple of things at play there.
We did see growth in the non Covid managed care and that continued I think a favorable payer mix trend that we're seeing and again as I said in my remarks.
We also saw the acuity levels maintained so those are two areas.
We are a focus for us and we're pleased with the.
Relative to the governmental activity in a non COVID-19.
<unk>, we are seeing some growth in the Medicare which is still a.
Good thing for Us our total Medicare admissions I think were up 6%.
For the quarter, but we also saw growth in the managed care side. So.
I think ultimately what we expect to see is a return to historical growth patterns and pretty consistent among those those payer classes and as I've talked about in various settings and may see a return of both governmental payor classes as well as the commercial and net net those are still positive and productive for us.
Your next question comes from Andrew Mok with UBS. Your line is open.
Hi, good morning, given the footprint of your hospitals. It seems like you are well positioned to benefit from stronger ACA enrollment helped by enhanced premium tax credits can you help size the benefit in terms of revenue or volumes from those programs and how are you thinking about the impact to your business should those enhanced subsidies expire.
Yes.
A question and I wish you are paying attention to that and we have some hope that we will see those subsidies.
Have some continuation we will pay attention to that as the year goes on and we will try to assess any impact of that in 2023. There is no doubt we talked about that through 2021, we saw growth in the health insurance exchange activity across HCA, primarily due to the enrollment.
Creases that we saw on there so if the subsidies.
And up.
Being reduced.
Some impact on enrollment and could it have an impact on our volume we havent fully sized all of that we're going to wait to see how the various proposals.
Worked through Congress and houses and again helps us get some extension on there, but as we go into 'twenty three that's obviously a key area that we're going to have to focus on what has been assumed but we saw I think through the course of 'twenty, one our health insurance exchange growth, probably 20% to 25% in any given period and again I do think that was.
Primarily attributable to the increase in enrollment I think is attributable to the enhanced subsidy. So we'll just have to see how that plays out we're hopeful that a.
Find ways to continue those in.
Don't see a drop of people gaining cover to the health insurance exchanges, we go through the balance of the year.
Great. Thank you chip.
Your next question comes from Keith <unk> with Citi. Your line is open.
Great. Thanks, Good morning, just with year to date Capex, maybe close to 2 billion youre seemingly tracking towards your 'twenty two guidance of $4 2 billion, but I was wondering if your expectations on areas for Capex allocation for service lines, specifically has changed given trend so far.
Different service line build out just given the volume and labor backdrop any help there would be great. Thanks.
This is Sam.
We're going to see any material change in how we allocate capital we believe we have a sufficient allocation.
Around our technology agenda.
Outpatient development agenda, and then as I mentioned in my comments targeted hospital investments to support our growth opportunity or relieve a capacity constraint or really even created a better environment for our patients in some instances so I don't anticipate significant shifting of.
Categories, we will obviously.
But the overall market demand picture and such for one community to the other.
We are into that.
Inside of those categories primarily.
Yeah.
Your next question comes from Sarah James with Barclays. Your line is open.
Thank you.
So thank you.
And there are some things that can be graduating.
Hum.
Actually people full time.
H.
Like what's your capture rate.
Anything that you can be doing with tuition reimbursement.
Okay.
Hi, Jamie.
Well, that's a great question.
We are evolving our integration model is a patient with a nurse students and external and rotations and so forth and it's a little early to give an indication as to what the capture rate will be if you will.
Partly due to the fact that the schools are new and we arent seeing graduates just yet.
We only have two schools today in HCA markets, where they're graduating students and we're improving sequentially our capture rate to use your term.
And those two schools and Thats in Tampa and San Antonio.
Where we're seeing more gallons.
Land at HCA facilities, we have a very.
Robust academic partnership strategy, it's not just Galen Galen can't solve all of.
The nursing needs for the organization they can comp blend it in a very significant way as we've mentioned, but our broader academic partnership agenda is working with the other great schools out there that provide nursing here and we think what we can do is learn from our Galen experience integrate with other academic centers.
More effectively create a better experience for their students and maybe a better pathway forward into HCA facilities in the future. We do have numerous programs that support H.
<unk> colleagues and getting nursing degrees, we have tuition support we have other.
Programs that creep.
Create opportunities for our people inside of Galen and we're continuing to evolve those but I'm encouraged by some of the early indications of how many HCA colleagues for actually participating in Galen schools now so we will hopefully see some benefit from that in the future.
Thank you.
Your next question comes from Jamie <unk> with Goldman Sachs. Your line is open.
Hey, good morning, guys.
You commented earlier, just on your ability to flex and adapt and you said that this quarter and really the.
The last couple of years I'm curious, how you're thinking about a recessionary scenario or just lower growth overall constraint continuation of job growth how should we be thinking about that type of environment and what types of things that are in your playbook to adapt to a more challenging macro.
Okay.
Well, we have gone through numerous recessionary cycles, just as other companies have gone through and where we are preparing ourselves.
Four.
What that could be if it does develop.
In this cycle and bill alluded to a number of the programs that we have.
It's trying to make sure our efficiencies and other resiliency items are pushing forward, regardless of the circumstance, because we see value there and opportunities.
I think what is potentially different in a very significant and structural way now is how the affordable care Act and exchanges and Medicaid expansion play in a recessionary cycle, we have never had that safety net draws.
During that type of cycle.
In those past cycles.
Person was lost their job they went into an uninsured ranks I think what we have today is a unique safety net for those people and the affordable care Act programs that should provide some support by comparison to past cycles typically we lag as many of you.
You know and how demand behaves in a recessionary cycle, but it provides labor relief also for us. So there's a balance between the two HCA healthcare's performed well in past recessionary cycles.
I'm confident that we can perform reasonably well in future recessionary cycles as we get.
More adaptability and our business and then again as the Affordable Care Act provide some level of support that we hadn't seen in the past.
Okay.
We have reached the end of the question answer session I'll turn the call back over to Frank <unk> for closing remarks.
Chantelle. Thank you for your help today and thanks, everyone for joining our call who gave a wonderful weekend I'll be around today, if I can answer any additional questions you might have have a great day.
Sure.
This concludes today's conference call you may now disconnect.
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Yes.
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