Q4 2023 Tenet Healthcare Corp Earnings Call

Operator: Good morning. Welcome to Tenet Healthcare's fourth quarter 2023 earnings After the speaker remarks, there will be a... If you would like to ask something, please press star one on. The confirmation tone will indicate your line is in service. You may press star two if you would like to remove yourself, and for participants using speaker equipment, it may be necessary to pick up.

Good morning, welcome to Tenet Healthcare's fourth quarter 2023 earnings conference call. After the Speaker remarks, there will be a question and answer session.

If you would like to ask a question. Please press star one on your telephone keypad.

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Before.

Operator: Tenet respectfully asks that analysts limit themselves to one. I'll now turn the call over to Mr. William McDowell, Vice President of Registration, and Mr. McDowell, he may be.

Sure.

Tenant respectfully ask that analysts limit themselves to one question each.

William McDowell: I'll now turn the call over to your host Mr World without Vice President of Investor Relations. Mr. Mcdonald you may begin.

William McDowell: Good morning, everyone, and thank you for joining today's call. I am Will McDowell, Vice President of Investor Relations. We're pleased to have you join us for a discussion of Tenet's 4th quarter 2023 results, as well as a discussion of our financial outlook. Tenet Senior Management participating in today's call will be Dr. Saumya Sutaria, Chairman and Chief Executive Officer, and Sun Park, Executive Vice President and Chief Financial Officer.

William McDowell: Good morning, everyone and thank you for joining today's call I am will Mcdowell Vice President of Investor Relations. We're pleased to have you join us for a discussion of Tennant's fourth quarter 2023 results as well as a discussion of our financial outlook.

William McDowell: Tenants senior management participating in today's call will be Doctor songs, Vitoria, Chairman and Chief Executive Officer, and Sun Park, Executive Vice President and Chief Financial Officer.

William McDowell: Our webcast this morning includes a slide presentation that has been posted to the investor relations section of our website, TenetHealth.com. Listeners to this call are advised that certain statements made during our discussion today are forward-looking and represent management's expectations based on currently available information. Actual results and claims could differ materially. Tenet is under no obligation to update any forward-looking statements based on subsequent information.

William McDowell: A webcast. This morning includes a slide presentation, which has been posted to the Investor Relations section of our website tenant health Dot com.

William McDowell: Listeners to this call are advised that certain statements made during our discussion today are forward looking and represent managements expectations based on currently available information.

William McDowell: Actual results and plans could differ materially.

William McDowell: Tenet is under no obligation to update any forward looking statements based on subsequent information.

William McDowell: Investors should take note of the cautionary statement slide included in today's presentation, as well as the risk factors discussed in our most recent Form 10-K and other filings with the Securities and Exchange Commission. One item that I would like to bring to your attention related to our disclosures is a change in our segment reporting. Effective in the fourth quarter of 2023, we have combined Conifer and the hospital operations into one reportable operating segment, Hospital Operations and Services. This change was made to reflect recent updates to the organizational and management structure of Conifer and the hospital operations. This change has no impact on Tenet's consolidated revenues, EBITDA, net income, margins, or cash flows.

William McDowell: That's yours should take note of the cautionary statement slide included in today's presentation as well as the risk factors discussed in our most recent Form 10-K, and other filings with the Securities and Exchange Commission.

William McDowell: One item that I would like to bring your attention related to our disclosures is it changing our segment reporting effective in the fourth quarter of 2023, we have combined conifer and the hospital operations into one reportable operating segment Hospital operations and services. This change was made to reflect recent updates to the organizational and management struck.

William McDowell: Conifer in hospital operations.

This change has no impact on tenants consolidated revenues EBITDA net income margins or cash flows the conifer business will continue to support and expand relationships with existing clients and generate new business. Both for comprehensive end to end services and point solutions.

William McDowell: The Conifer Business will continue to support and expand relationships with existing clients and generate new business, both for comprehensive end-to-end services and point solutions. To ease the transition for investors and analysts, we have included historical financial information under the new segment reporting structure on page 4 of our fourth quarter 2023 financial supplement. And with that, I turn the call over to Saum.

William McDowell: To ease the transition for investors and analysts we've included historical financial information under the new segment reporting structure on page four of our fourth quarter 2023 financial supplement.

William McDowell: With that I turn the call over to song.

Saumya Sutaria: Thank you, Will, and good morning, everyone. 2023 was an exceptional year for Tenet. We recorded net operating revenues of $20.5 billion and consolidated adjusted EBITDA of $3.54 billion, which translates into an attractive 17.2% adjusted EBITDA margin, underscoring our ability to drive profitability while maintaining our commitment to quality and innovation. We finished the year strong and delivered results in the fourth quarter that were well above the expectations we set. This was driven by continued volume strength as well as cost and utilization management.

Song: You will and good morning, everyone 2023 was an exceptional year for tenet, we recorded net operating revenues of $25 billion and consolidated adjusted EBITDA of $3, five $4 billion, which translates into an attractive 17.2% adjusted EBITDA margin underscoring our ability to drive.

Song: The ability, while maintaining our commitment to quality and innovation.

Song: We finished the year strong and delivered results in the fourth quarter that were well above the expectations. We set this was driven by continued volume strength as well as cost and utilization management.

Saumya Sutaria: Each quarter in 2023, we exceeded our performance expectations. As important as our performance, in 2023, we advanced our business transformation towards a more profitable, value-based care enterprise, building a leading specialty care platform, and furthering our corporate priorities to position us with lower leverage and enhanced free cash flow opportunities looking forward. Let's start with USPI, where we had a phenomenal 2023, a year where we finally escaped COVID disruption to the business. USPI generated $1.54 billion in EBITDA, which represented 16.4% growth over 2022 and margins of 40%. USPI had 9.2% growth in same-facility revenues in 2023, substantially above our long-term goal of 4-6% top-line growth. Joint replacement surgeries were up nearly 20% in the fourth quarter and over 15% for the year.

Song: Each quarter in 2023 we exceeded our performance expectations.

Song: As important as our performance in 2023 we advanced our business transformation towards the more profitable value based care enterprise building, a leading specialty care platform and furthering our corporate priorities to position us with lower leverage and enhance free cash flow opportunities looking forward.

Song: Let's start with U S. P I, where we had a phenomenal 2023, a year, where we finally escaped COVID-19 disruption to the business.

Song: U S. P. I generated 1.54 billion and EBITDA, which represented 16.4% growth over 2022 and margins of 40% U.

Song: U S. P. I had 9.2% growth in same facility revenues in 2020 three substantially above our long term goal of 4% to 6% topline growth.

Song: Joint replacement surgeries were up nearly 20% in the fourth quarter and over 15% for the year.

Saumya Sutaria: Throughout the year, we saw ongoing strength and recovery in GI, urology, and ENT procedures. This organic growth was driven by continued expansion of service lines and growth in our population of partnered and affiliated physicians, as well as the fundamental tailwinds of patient demand for safe and convenient surgical care options. In 2023, we added 30 centers to the portfolio, furthering our goal of creating additional lower-cost sites of care for patients and physicians while delivering superior value for our stakeholders. Turning to our hospital segment, we generated $2 billion of adjusted EBITDA in 2023, which represents a 12% EBITDA margin. CUNY remains strong, with fourth-quarter 2023 revenue per adjusted admission up 6.5% over the prior year.

Song: Throughout the year, we saw ongoing strength and recovery in Gi urology and E N T procedures.

Song: This organic growth was driven by continued expansion of service lines and growth in our population of partnered and affiliated physicians as well as the fundamental tailwind of patient demand for safe and convenient surgical care options.

Song: In 2020 three we added 30 centers to the portfolio furthering our goal of creating additional lower cost sites of care for patients and physicians, while delivering superior value for our stakeholders.

Song: Turning to our hospital segment, we generated $2 billion of adjusted EBITDA in 2020, three which represents a 12% EBITDA margin.

Song: Acuity remained strong.

Song: With fourth quarter 2023 revenue per adjusted admission up six 5% over prior year.

Saumya Sutaria: Additionally, non COVID same store inpatient admissions were up 2.6% in the quarter and 6.2% for all of 2023. Our investments in nurse recruitment and retention have paid dividends as we have strengthened our workforce and effectively reduced contract labor spend throughout the year. By the fourth quarter of 2023, contract labor accounted for just 2.8 percent of consolidated salaries, wages, and benefits, a 62 percent reduction from the fourth quarter of 2022.

Song: Additionally, non COVID-19 same store inpatient admissions were up two 6% in the quarter and six 2% for all of 2023.

Song: Our investments and nurse recruitment and retention of pay dividends as we have strengthened our workforce and effectively reduced contract labor spend throughout the year.

Song: By the fourth quarter of 2023 contract labor accounted for just two 8% of consolidated salaries wages and benefits a 62% reduction from fourth quarter 2022 <unk>.

Saumya Sutaria: This best-in-class contract labor cost management performance helped drive strong results in 2023, and we expect to continue to benefit from our operational discipline in the future. In summary, we are very pleased with the performance of our teams in 2023 and believe that we will carry the momentum into the new year. Now, let me transition to 2024 guidance.

Song: Best in class contract Labor cost management performance helped drive strong results in 'twenty, three and we expect to continue to benefit from our operational discipline in the future.

Song: In summary, we are very pleased with the performance of our teams in 2020 three and believe that we will carry the momentum into the new year.

Song: Let me transition to 'twenty 'twenty four guidance, we are projecting full year 'twenty 'twenty four adjusted EBITDA of 3.825 billion to $3 485 billion, which is an attractive 7% growth rate at the midpoint on a normalized basis.

Saumya Sutaria: We are projecting full-year 2024 adjusted EBITDA of $3.825 billion to $3.485 billion, which is an attractive 7% growth rate at the midpoint on a normalized basis. In addition, during our third quarter earnings call, we said that we would overcome various reimbursement headwinds to grow EBITDA in 2024, which this guidance reflects. First, in our industry-leading ambulatory surgery business, we anticipate adjusted EBITDA growth of approximately 9% at the midpoint of our guidance in 2024 based on our expectations of ongoing strength and demand coupled with great visibility into our pricing, 3 to 6% growth in same-facility revenue, continuous improvement in our operating efficiency, and additional sites of care joining the portfolio. As we have noted, we believe that in 2023 we saw recovery in demand that included Our initial assumption for volume growth assumes that volume will build as the year progresses, reflecting the historically high same-store case growth that we saw in the first quarter of 2023. We are very confident in the long-term growth rates of this business. USPI will continue its commitment to expanding its family of lower-cost ambulatory surgery centers.

Song: In addition, during our third quarter earnings call, we said that we would overcome various reimbursement headwinds to grow EBITDA in 2024.

Song: Which this guidance reflects.

Song: First in our industry, leading ambulatory surgery business, we anticipate adjusted EBITDA growth of approximately 9% at the midpoint of our guidance in 'twenty 'twenty four based on our expectations of ongoing strength in demand coupled with great coupled with great visibility into our pricing, 3% to 6% growth in same facility revenue.

Song: Continuous improvement in our operating efficiency and additional sites of care joining the portfolio.

Song: As we have noted we believe that in 2020 three we saw recovery in demand that included some impact from deferred volume, particularly in G. I N T services. Our initial assumption for volume growth assumes that volume will build as the year progresses, reflecting the historically high same store case growth that we saw in the first quarter of 'twenty.

Song: 'twenty three we are very confident in the long term growth rates of this business.

Song: U S. P. I will continue its commitment to expanding its family of lower cost ambulatory surgery centers, we've consistently acquired centers at attractive valuations and achieve post synergy multiples to below five times, while improving our quality and delivering a 96.6% overall patient experience score under our management.

Song: <unk>.

Song: We intend to invest approximately 200 to 250 million each year and have a robust pipeline to support that level of investment.

Saumya Sutaria: We have consistently acquired centers that attract evaluations and achieve post-synergy multiples below five times, while improving our quality and delivering a 96.6% overall patient experience score under our management. We intend to invest approximately $200 to $250 million each year and have a robust pipeline to support that level of investment. We also have a healthy de novo development pipeline of more than 30 centers currently in the syndication stages or under construction. We believe adding centers with strong margins and attractive post-synergy multiples remains the most effective use of our cash for investments to enhance Tenet's earnings and free cash flow. Turning to our hospital segment, we are expecting adjusted EBITDA growth of approximately 5% on a normalized basis at the midpoint for 2024.

Song: We also have a healthy de novo development pipeline of more than 30 centers currently in the syndication stages or under construction.

Song: We believe adding centers with strong margins and attractive post synergy multiples remains the most effective use of our cash for investments to enhance churn tenants earnings and free cash flow.

Song: Yeah.

Song: Turning to our hospital segment, we are expecting adjusted EBITDA growth of approximately 5% on a normalized basis at the midpoint for 2020 for.

Song: This projected growth is expected to be driven by 1% to 3% adjusted admissions growth and continued operating discipline.

Song: Having captured much of the value from contract labor rationalization last year in 'twenty 'twenty four we plan to continue to strategically open up capacity to meet growing demand in a number of our markets leveraging our previous capital investments.

Song: Additionally, our hospitals continue to enhance access to higher acuity services for the benefits of our patients and communities that we serve for example, our ABRAZO Arrowhead Hospital just opened its new neonatal intensive care unit. The state of the art expansion increases our bed capacity to support services for preterm babies and high risk <unk>.

Saumya Sutaria: This projected growth is expected to be driven by 1-3% adjusted admissions growth and continued operating disability. Having captured much of the value from contract labor rationalization last year, in 2024, we plan to continue to strategically open up capacity to meet growing demand in a number of our markets, leveraging our previous capital investments. Additionally, our hospitals continue to enhance access to higher acuity services for the benefit of our patients and the communities that we serve. For example, our Abrazo Arrowhead Hospital just opened its new neonatal intensive care unit.

Song: Eigner and seize by 75% at this facility. We are also particularly excited about the progress of our new West over Hills Hospital in San Antonio a project that reflects our strategic and disciplined approach to expansion. We expect that this facility will be completed and begin to serve patients in the second half of 'twenty 'twenty four.

Song: Located in a highly attractive and growing market [laughter] Westover Hills is another example.

Song: Our thoughtful expansion strategy that we've been executing for a number of years. This 100 bed facility will focus on higher acuity services, such as cardiovascular and surgical care for the people in that community.

Saumya Sutaria: This state-of-the-art expansion increases our bed capacity to support services for preterm babies and high-risk pregnancies by 75% at this facility. We are also particularly excited about the progress of our new Westover Hills Hospital in San Antonio, a project that reflects our strategic and disciplined approach to expansion. We expect that this facility will be completed and begin to serve patients in the second half of 2024. Located in a highly attractive and growing market, West River Hills is another example of our thoughtful expansion strategy that we've been implementing for a number of years. This 100-bed facility will focus on higher acuity services such as cardiovascular and surgical care for the people in that community. Finally, Conifer recently announced the continuation of its partnership with Dartmouth Health through a new multi-year agreement. Conifer will continue to serve as the exclusive provider of end-to-end revenue cycle management services for Dartmouth Health Hospitals, Physician Services, and other related entities.

Song: Finally, conifer recently announced the continuation of our partnership with Dartmouth health through a new multi year agreement.

Song: <unk> will continue to serve as the exclusive provider of end to end revenue cycle management services for Dartmouth health hospitals physician services and other related entities.

Song: We also added a new partnership with conifer's value based care business unit, which will be providing analytics and operational support services for capitate risk arrangements.

Song: All in all our full year 'twenty 'twenty four adjusted EBITDA guidance of 3.285 billion to $3 485 billion represents attractive growth following a very successful 2023.

Song: Okay.

Speaker Change: Before I turn the call over to Sun I'd like to highlight the continued progress that we've made transforming our portfolio of businesses.

Speaker Change: Building upon the highly successful and accretive sale of the Miami hospitals in 2021 in the past few months, we've announced the following transactions that demonstrate our agility and optimizing our businesses.

Saumya Sutaria: We also added a new partnership with Conifer's Value-Based Care Business Unit, which will be providing analytics and operational support services for capitated risk arrangements. All in all, our full year 2024 adjusted EBITDA guidance of $3.285 billion to $3.485 billion represents attractive growth following a very successful 2023. Before I turn the call over to Sun, I'd like to highlight the continued progress that we have made transforming our portfolio of businesses. Building upon the highly successful and accretive sale of the Miami hospitals in 2021, in the past few months, we've announced the following transactions that demonstrate our agility in optimizing our business. First, the completed $2.4 billion sale of three coastal South Carolina hospitals and expansion of our conifer services to Novant Health.

Song: First we completed $2.4 billion sale of three coastal South Carolina hospitals and expansion of our conifer services to Novatel.

Song: Next the formation of a joint venture with next care, which operates dozens of high quality urgent care locations.

Song: And the telehealth operation in Arizona.

Song: This immediately increases patient access to our network in this geography with low cost sites of care that are complementary to our health system footprint.

Song: And finally, the $975 million sale of four hospitals and related operations in Orange County, and L. A county, So you see I hope that we expect to close in the spring of 'twenty 'twenty four subject to customary regulatory approvals clearances and clothing closing conditions. The steel will also include a contract for conifer services.

Song: It is important to note that these sales were completed at very attractive EBITDA multiples evidencing the strength of our assets and the quality of care they provide in their communities.

Saumya Sutaria: Next, the formation of a joint venture with NexCare, which operates dozens of high-quality urgent care locations and a telehealth operation in Arizona. This immediately increases patient access to our network in this geography with low-cost sites of care that are complementary to our health system. And finally, the $975 million sale of four hospitals and related operations in Orange County and Los Angeles County to UCI Health that we expect to close in the spring of 2024, subject to customary regulatory approvals, clearances, and closing conditions. This deal will also include a contract for conifer service.

Song: Collectively these transactions will substantially improve our leverage position on a pro forma basis proceeds from these recent transactions have the potential to lower our leverage ratios by approximately 0.6 turns resulting in a debt to EBITDA ratio of approximately three three times or four point.

Song: Two times on an EBITDA minus NCI basis.

Song: This is on top of the post tax proceeds of $1.1 billion from our Miami Hospital transaction in 2020, one that we used to pay down debt.

Song: Tenet is entering a new era with a greater proportion of our performance coming from our highly efficient ambulatory surgical business and to reduce debt profile. We are well positioned to continue to expand free cash flow further over time.

Saumya Sutaria: It is important to note that these sales were completed at very attractive EBITDA multiples, evidencing the strength of our assets and the quality of care they provide in their communities. Collectively, these transactions will substantially improve our leverage position. On a pro forma basis, proceeds from these recent transactions have the potential to lower our leverage ratios by approximately 0.6 times, resulting in a debt to EBITDA ratio of approximately 3.3 times, or 4.2 times on an EBITDA minus NCI basis. This is on top of the post-tax proceeds of $1.1 billion from our Miami hospital transaction in 2021 that we used to pay down debt. Tenet is entering a new era.

Song: We're mindful of what got US here in the last five years operating excellence disciplined capital allocation with a focus on ROIC C and analytics, driven culture and a continuous improvement mindset.

Song: As a result, we will have significant financial and capital flexibility to increase shareholder value over the long term.

Song: And with that I will turn the call over to Sun to provide a more detailed review of our financial results and 2024 guidance Sun.

Sun Park: Thank you Tom and good morning, everyone. We are very pleased with the strong finish to our fiscal 2023 with fourth quarter adjusted EBITDA coming in well above the high end of our most recent guidance ranges for both the U S P I and the hospital segments.

Saumya Sutaria: With a greater proportion of our performance coming from our highly efficient ambulatory surgical business and a reduced debt profile, we are well positioned to continue to expand free cash flow further over time. We are mindful of what got us here in the last five years: operating excellence, disciplined capital allocation with a focus on ROIC, an analytics-driven culture, and a continuous improvement mindset.

Sun Park: In the fourth quarter, we generated total net operating revenues of $5 $4 billion and consolidated adjusted EBITDA of $1.012 billion.

Song: For full year 'twenty, three we generated $20 5 billion of total net operating revenues.

Song: Consolidated adjusted EBITDA of $3 five $4 billion.

Song: These results were driven by strong growth in U S. P. I same store volumes and net revenue per case.

Song: Strong patient acuity and overall revenue growth in the hospitals and very effective expense controls throughout the businesses with the management of contract labor costs is a notable example.

Sun Park: As a result, we will have significant financial and capital flexibility to increase shareholder value over the long term. And with that, I will turn the call over to Sun to provide a more detailed review of our financial results and 2024 guidance.

Song: Now I'd like to highlight some key items for each of our segments beginning with U S. P I, which again delivered strong operating results in the fourth quarter.

Song: U S. P S fourth quarter, adjusted EBITDA grew 14% compared to last year and its adjusted EBITDA margin continues to be very strong at 43% U.

Sun Park: Good morning, everyone. We are very pleased with the strong finish to our fiscal 2023, with fourth quarter adjusted EBITDA coming in well above the high end of our most recent guidance ranges for both the USPI and hospital segments. In the fourth quarter, we generated total net operating revenues of $5.4 billion and consolidated adjusted EBITDA of $1.012 billion. For full year 23, we generated $20.5 billion of total net operating revenues and Consolidated Adjusted EBITDA of $3.54 billion.

Song: U S. P. I delivered a nine 5% increase in same facility system wide revenues compared to fourth quarter of 'twenty two with same facility system wide surgical case volume up by 339% and net and net revenue per case of five 4%.

Song: Turning to our hospital segment fourth quarter same hospital inpatient admissions increased 1% with non COVID-19 inpatient admissions up two 6%.

Song: Revenue per adjusted admissions grew six 5% demonstrating strong payer mix and continued high acuity levels.

Song: Our fourth quarter results also reflect $52 million of favorable adjustments associated with Medicaid supplemental revenue programs in California and Texas.

Sun Park: These results were driven by strong growth in USPI's same-store volumes and net revenues per case, strong patient acuity and overall revenue growth in the hospitals, and very effective expense controls throughout the businesses, with the management of contract labor costs as a notable example. Now, I'd like to highlight some key items for each of our segments, beginning with USPI, which again delivered strong operating results in the fourth quarter. USPI's fourth quarter adjusted EBITDA grew 14% compared to last year, and its adjusted EBITDA margin continues to be very strong at 43%. USPI delivered a 9.5% increase in same-facility, system-wide revenues compared to the fourth quarter of 22, with same-facility, system-wide surgical case volume up by 3.9%, and net revenue per case up 5.4%. Turning to our hospital segment, fourth quarter, same hospital, inpatient admissions increased 1%, with non-COVID inpatient admissions up 2.6%.

Song: In terms of strong expense management, our consolidated S. W. V was 43% of net revenues in the fourth quarter, which was substantially lower than the 46, 2%. We saw in the fourth quarter of 'twenty two.

Song: And our consolidated contract labor rate was two 8% of S. W. B a material reduction from seven 3% in the fourth quarter of 'twenty two.

Song: On a per adjusted admission basis fourth quarter Hospital X WB was 160 basis points lower than fourth quarter 'twenty to these reductions over the course of the year reflect the disciplined approach that we take towards labor management.

Song: And finally fourth quarter medical fees were up $16 million sequentially and $40 million higher than fourth quarter of 'twenty, two consistent with our expectations.

Song: Overall these costs were up about 15% for full year 2023.

Speaker Change: Next we will discuss our cash flow balance sheet and capital structure.

Speaker Change: Our cash flow performance was very strong until 2023 with $1 $6 billion of free cash flow for the year.

Speaker Change: We finished the year with over $1 $2 billion of cash with no borrowings outstanding under our $1 5 billion dollar line of credit facility.

Sun Park: Revenue per adjusted admissions grew 6.5 percent, demonstrating strong payer mix and continued high acuity levels. Our fourth quarter results also reflect $52 million of favorable adjustments associated with Medicaid Supplemental Revenue Programs in California and Texas. In terms of strong expense management, our consolidated SWV was 43% of net revenues in the fourth quarter, which was substantially lower than the 46.2% we saw in the fourth quarter of 2022, and our consolidated contract labor rate was 2.8% of SWV, a material reduction from 7.3% in the fourth quarter of 2022. On a per-adjusted admission basis, 4th quarter hospital SWB was 160 basis points lower than 4th quarter 22

Speaker Change: During the fourth quarter, we repurchased one 6 million shares of our stock for $110 million and for full year 'twenty three.

Speaker Change: We repurchased three 1 million shares of our stock for $200 million.

Speaker Change: Our year end 2023 leverage ratio was 3.89 times, EBITDA, where 4.85 times EBITDA less NCI.

Speaker Change: It is important to note that these ratios do not reflect the $2 $55 billion in after tax proceeds.

Speaker Change: $190 million of associated tax benefits from our announced divestitures, which collectively will support our goals to deleverage the balance sheet.

Speaker Change: Also as of year end 2023, we have no significant debt maturities until the first quarter of 2026, and all of our outstanding senior secured and unsecured notes have fixed interest rates.

Speaker Change: In the aggregate, we believe we have significant financial flexibility and cash flow generation to support our capital allocation priorities.

Sun Park: These reductions over the course of the year reflect the disciplined approach that we take towards labor management. And finally, fourth quarter medical fees were up $16 million sequentially and $40 million higher than the fourth quarter of 22, consistent with our expectations. Overall, these costs were up about 15% for the full year 2020. Next, we will discuss our cash flow, balance sheet, and capital structure. Our cash flow performance was very strong in 2023, with $1.6 billion of free cash flow for the year. We finished the year with over $1.2 billion of cash, with no borrowings outstanding under our $1.5 billion line of credit facility.

Speaker Change: Now, let me turn to our outlook for 2024.

Speaker Change: For 2024, we expect consolidated net operating revenues in the range of $19 $9 billion to $23 billion.

Speaker Change: Our projected consolidated adjusted EBITDA for 'twenty four is in the range of three point to wait five to $3 $45 billion for clarity. These revenue and adjusted EBITDA figures for full year 'twenty four reflect the completion of the sale of our coastal South Carolina hospitals on January 31 2024.

Speaker Change: And it assumes that the sale of our four California hospitals will be completed on March 31 of 2024.

Speaker Change: Now as we've discussed previously there are a number of items that impact the comparison of our 23 results to our 24 outlook, which are outlined on slide eight of our investor presentation.

Sun Park: During the fourth quarter, we repurchased 1.6 million shares of our stock for $110 million. And for full year 23, we repurchased 3.1 million shares of our stock for $200 million. Our year-end 2023 leverage ratio was 3.89 times EBITDA, or 4.85 times EBITDA less NCI. It is important to note that these ratios do not reflect the $2.55 billion in after-tax proceeds and $190 million of associated tax benefits from our announced divestitures, which collectively will support our goals to deleverage the balance sheet. Also, as of year-end 2023, we have no significant debt maturities until the first quarter of 2026, and all of our outstanding senior secured and unsecured notes have fixed interest rates. In the aggregate, we believe we have significant financial flexibility and cash flow generation to support our capital allocation priorities. Now, let me turn to our outlook for 2020. From 2024, we expect consolidated net operating revenues in the range of $19.9 to $20.3 billion.

Speaker Change: Let me summarize the primary drivers as follows.

Speaker Change: First we recognized $16 million of grant income in 2023, and second we recorded income of $34 million associated with cyber security insurance proceeds in 2023.

Speaker Change: Third there are $98 million of headwinds for 'twenty for rising from the termination of Covid related government funding programs in 'twenty three.

Speaker Change: New regulations related to workers compensation and personal injury reimbursement in Florida.

Speaker Change: And changes to health care wages due to recent minimum wage laws in California.

Speaker Change: Fourth the closing of our South Carolina Hospital sale on January 31 creates a year over year EBITDA headwind of $140 million.

Speaker Change: And finally, our California Hospital sale is assumed to create a year over year EBITDA headwind of $55 million.

Speaker Change: After normalizing for these items, our full year 2024, adjusted EBITDA is expected to grow 7% over 23 at the midpoint of our range.

Speaker Change: Our 24 outlook assumes continued organic volume growth strong patient acuity better than historical contract negotiations and effective cost management with a specific expectations for additional contract labor savings on a full year basis, partially offset by incremental medical piece.

Sun Park: Our projected consolidated adjusted EBITDA for 2024 is in the range of $3.285 to $3.485 billion. For clarity, these revenue and adjusted EBITDA figures for full year 2024 reflect the completion of the sale of our Coastal South Carolina hospitals on January 31st, 2024, and it assumes that the sale of our four California hospitals will be completed on March 31st, 2024. Now, as we discussed previously, there are a number of items that impact the comparison of our 23 results to our 24 outlays, which are outlined on slide eight of our investor presentation. Let me summarize the primary drivers as follows.

Speaker Change: We also assume that we will have contributions from M&A and de Novo center openings at USPI, given its robust pipeline.

Speaker Change: In addition for 'twenty four we're also assuming the following.

Speaker Change: Hospital admissions growth of 1% to 3% adjust.

Speaker Change: Adjusted admissions growth of 1% to 3%.

Speaker Change: Same facility USPI surgical case growth of 1% to 3% and USPI net revenue per case growth of 2% to 3%.

Speaker Change: At a segment level, we expect adjusted EBITDA to grow eight 7% at USPI and four 5% for our hospital segment at the respective mid points of our guidance ranges on a normalized basis.

Sun Park: First, we recognized $16 million of grant income in 2023, and second, we recorded income of $34 million associated with cybersecurity insurance proceeds in 2023. Third, there are 98 million dollars of headwinds for 24, rising from the termination of COVID-related government funding programs in 23. New regulations related to workers' compensation and personal injury reimbursement in Florida, and changes to healthcare wages due to recent minimum wage laws in California.

Speaker Change: As Tom stated, we believe our guidance range represents attractive growth for tenet following a very strong 2023.

Speaker Change: Finally, we would expect first quarter of 'twenty for consolidated adjusted EBITDA to be in the range of $800 million to $850 million.

Speaker Change: We anticipate that U S. P. I EBITDA in the first quarter. This year will be 25% to 22% of our full year 2024 U S. P. S EBITDA guidance at the midpoint.

Speaker Change: Turning to our cash flows for 'twenty four we expect free cash flow in the range of $875 million to $1 $1 billion to $5 billion, which includes the payment of $635 million in net taxes related to our announced divestitures before.

Sun Park: Fourth, the closing of our South Carolina hospital sale on January 31st creates a year-over-year EBITDA headwind of $140 million. And finally, our California hospital sale is assumed to create a year-over-year EBITDA headwind of $55 million. After normalizing for these items, our full-year 2024 adjusted EBITDA is expected to grow 7% over 23 at the midpoint of our range. Our 24-Hour Outlook assumes continued organic volume growth, strong patient acuity, better-than-historical contract negotiations, and effective cost management, with specific expectations for additional contract labor savings on a full year basis, partially offset by incremental medical. We also assume that we will have contributions from M&A and De Novo Center openings at USPI, given its robust pipeline. In addition, for 24, we're also assuming the following: the same hospital admissions growth of 1 to 3 percent, and adjusted emissions growth of 1 to 3 percent.

Speaker Change: Before these tax payments. This represents 163 $5 billion of free cash flow at the midpoint of our 24 outlook, which demonstrates continued strong performance from twenty-three even after the loss of EBITDA from the divested hospitals and 24.

Speaker Change: We also note the $635 million of taxes paid is comprised of $825 million of taxes associated with the gains on sales, partially offset by $190 million of tax benefits due to a reduction in your interest expense limitations.

Speaker Change: In addition.

Speaker Change: For 2024, we're also assuming capital expenditures in the range of $775 million to $875 million distributions to noncontrolling interests, and the range of $650 million to $700 million and our intention to retire the $2 $1 billion of senior secured first lien notes.

Speaker Change: In 2026 in the first quarter of 2024.

Speaker Change: Our cash flow performance has improved substantially over the past several years and we continue to demonstrate the ability to generate this cash flow. While also deleveraging our balance sheet maintaining investments in our business and executing on key growth plans, we expect.

Sun Park: Same facility, USPI surgical case growth of 1 to 3 percent and USPI net revenue per case growth of 2 to 3 percent. At a segment level, we expect adjusted EBITDA to grow 8.7% at USPI and 4.5% for the hospital segment at the respective midpoints of our guidance ranges on a normalized basis. As Saum stated, we believe our guidance range represents attractive growth for Tenet following a very strong 2023. Finally, we would expect the first quarter of 24 to have consolidated adjusted EBITDA in the range of $800 to $850 million. And we anticipate that USPI EBITDA in the first quarter of this year will be 20.5 to 22% of our full year 2024 USPI EBITDA guidance at the mid. Turning to our cash flows for 2024, we expect free cash flows in the range of $875 million to $1.125 billion, which includes the payment of $635 million in net taxes related to our announced divestiture.

Speaker Change: This performance to continue in 2024, which will create additional opportunities to de lever and grow our business.

Speaker Change: And finally as a reminder, our capital deployment priorities have not changed first we plan to allocate $250 million of capital annually to grow USPI.

Speaker Change: Second we expect to invest in key hospital growth opportunities, including our focus on higher acuity service offerings.

Speaker Change: Third we will evaluate opportunities to retire <unk> refinance debt and finally, a balanced approach to share repurchases, depending on market conditions and other investment opportunities.

Speaker Change: And with that we're ready to begin the Q&A operator.

Speaker Change: Thank you at this time, we will be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad.

Speaker Change: A confirmation tone will indicate your line is in the question queue. You May Press Star two if you would like to remove your question. Thank you for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star.

Speaker Change: Again tenant respectfully ask.

Speaker Change: The analysts limit themselves to only one question each.

Speaker Change: Our first question comes from the line of Sterne <unk> with JP Morgan Chase and company. Please.

Sterne: Please proceed with your question.

Sterne: Okay.

Sterne: Good morning, and thanks for the question and congrats on a really strong 2023.

Sun Park: Before these tax payments, this represents $1.635 billion of free cash flow at the midpoint of our 24-hour outlay, which demonstrates continued strong performance from 23 even after the loss of Eva Doss from the divested hospitals in 24. We also note the $635 million of taxes paid is comprised of $825 million of taxes associated with the gains on sales, partially offset by $190 million of tax benefits due to a reduction in the interest expense limitation.

Speaker Change: I wanted to dig into the 1% to 3% case growth for USPI. It sounds like demand is still strong and this is more of a comp headwinds just given the strong growth in 2023 is that the right way to think about it or is there anything else in terms of mix or demand thats influencing your 2020 for outlook and then if you could also give some color on the level of demand.

Speaker Change: Dissipating across categories like ortho cardiac Gi and some of the others just compared to what you saw in 2023 that'd be really helpful.

Speaker Change: Hey, its Tom Thanks for the question Kyle No. Your interpretation is is right I mean, we we anticipate continued strong growth in AR.

Sun Park: In addition, for 2024, we're also assuming capital expenditures in the range of $775 to $875 million, distributions to non-controlling interests in the range of $650 to $700 million, and our intention to retire the $2.1 billion of senior secured first lien notes due in 2026 in the first quarter of 2024. Our cash flow performance has improved substantially over the past several years.

Sun Park: In the ambulatory surgery segment, I mean, 2023 was a very strong year and it was across service lines as I as I pointed out you know Gee I urology E N T orthopedics ophthalmology I mean, we had strength across the board.

Speaker Change: We had physician additions across the board a total joint surgeries grew significantly in the fourth quarter or even above what we were running.

Sun Park: During the course of of the year. So we feel very good about that going forward. Yeah look I would say that first of all the comp in the first quarter.

Sun Park: And we continue to demonstrate the ability to generate this cash flow while also deleveraging our balance sheet, maintaining investments in our business, and executing on key growth plans. We expect this performance to continue in 2024, which will create additional opportunities to delever and grow our business. And finally, as a reminder, our capital deployment priorities have not changed. First, we plan to allocate $250 million of capital annually to grow USPI.

Speaker Change: Is is you know really really strong based upon the recovery. We saw in you know we're you know we're very analytical analytically driven and the way we look at this I mean, our Gi physicians over the course of 'twenty three performed more than 15% more procedures than they did in.

Speaker Change: The prior year as individuals you know, that's a pretty big leap and we think it's sustainable I mean, one of the things that we're doing with some of our more innovative Gi physician group partners is focusing on how we hard wire, our operating efficiency and the a S sees to allow them to be more productive on a sustainable basis going forward.

Sun Park: Second, we expect to invest in key hospital growth opportunities, including our focus on higher acuity service offerings. Third, we will evaluate opportunities to retire and or refinance debt. And finally, a balanced approach to share repurchases, depending on market conditions and other investment opportunities. Operator?

Sun Park: So that that recovery volume whatever proportion of that may be becomes their norm and.

Sun Park: That's a really really good lesson learned from 'twenty three about our ability to actually deliver a case volumes at that high level of productivity. The fact is if you look back over time long periods of time 15, 20 years. When you have notably strong growth years, you often have just based on comps.

Operator: Thank you. At this time, we will be conducting... If you would like to ask something, please press star one; a confirmation tone will indicate that a line is. You may press start, too, if you would like to remove it.

Operator: Some slightly lower volume rates, but you know look we've we've developed a pattern now of being mindful of what we see in the environment, but if the business outperforms raising our guidance just like we did in 2023. If in fact, it's warranted again, I I'm very optimistic about 2024 and Theres really.

Operator: Thank you, and for participants using the speaker equipment, it may be necessary to pick up your handset before pressing the start button. Again, Tenet, Raskin, respectfully ask questions, and others limit themselves to only one. Our first question comes from the line of Kyle Osternick with JPMorgan. Please proceed with your question. Morning, and thanks for the question and congrats on a really strong 2023. I want to dig into the one to three percent case growth for USPI. It sounds like demand is still strong, and this is more of a comp headwind just given the strong growth in 2023. Is that the right way to think about it, or is there something else? Page 4, Hey, it's Tom.

Tom: No other way to interpret that other than what we just talked about.

Operator: Yeah.

Tom: Great. Thanks.

Speaker Change: Our next question comes from the line of a J rice with UBS. Please proceed with your question.

Tom: Thanks, Hi, everybody.

J Rice: Obviously, the headlines around the last couple of divestitures.

Operator: <unk> grabbed some headlines.

Tom: Maybe I thought I'd ask you about.

Tom: Two aspects of that.

Operator: Price tags on the deals I know these are growth areas and what youre selling these hospitals, but seem unusually high by historic standards is there any dynamic in the marketplace.

Tom: Thanks for the question, Cal. No, your interpretation is right. I mean, we anticipate continued strong growth in the ambulatory surgery segment. 2023 was a very strong year, and it was across service lines, as I pointed out. You know, GI, urology, ENT, orthopedics, and ophthalmology.

Tom: You see that nonprofits are bringing to bear I don't know whether it would be their ability to implement a 340 <unk> program or something like that it's causing them to be willing to.

Tom: Yeah.

Tom: Relatively high valuations and then.

Tom: I mean, we had strength across the board. We had physician additions across the board. Total joint surgeries grew significantly in the fourth quarter, even above what we were running during the course of the year. So we feel very good about that going forward. You know, look, I would say that, first of all, the comp in the first quarter is, you know, really, really strong based upon the recovery we saw. And, you know, we're very analytically driven in the way we look at this.

Tom: To that is your.

Tom: Your national strategy of contracting hospitals, getting the leverage of both hospitals and surgery centers.

Speaker Change: Do you think there is any issues with divesting hospitals that would lessen your ability to get the pricing you want on the surgery centers or that's not really a question mark.

Speaker Change: Yeah, Hey, Jay Thanks, Thanks for the question look on the first point.

Tom: I would say that and I can't put myself in the shoes of of.

Tom: I mean, our GI physicians, over the course of 23, performed more than 15% more procedures than they did in the prior year as individuals. You know, that's a pretty big leap, and we think it's sustainable. I mean, one of the things that we're doing with some of our more innovative GI physician group partners is focusing on how we hardwire our operating efficiency in the ASCs to allow them to be more productive on a sustainable basis going forward so that that recovery volume, whatever proportion of that may be, becomes their norm. And, you know, that's a really, really good lesson learned from 23 about our ability to actually deliver case volumes at that high level The fact is, if you look back over time, long periods of time, 15, 20 years, when you have notably strong growth years, you often have, just based on comps, some slightly lower volume rates.

Tom: You know not for profit health system partners, who are looking to acquire assets, but what I would say is that these two transactions demonstrate that.

Tom: The work we've done over the last five years to <unk>.

Tom: Generally high quality, well performing solid quality safety service.

Tom: Hospitals with a with a higher acuity procedure based platform can generate a premium because you know it's a lot of work to get them into that position of not only having a high degree of profitability, but also.

Tom: You know, having a quality service profile, that's attractive from a starting standpoint, so they're they're high quality assets. The other factor of course would be that these assets are coming forward in as multiple assets in a market, which again are relatively rare in our point of view is that we recognize that value.

Tom: But, you know, look, we've developed a pattern now of being mindful of what we see in the environment, but if the business outperforms, raising our guidance, just like we did in 2023, if, in fact, it's warranted. Again, I'm very optimistic about 2024, and there's really no other way to interpret that other than what we just talked about. Great, thanks. All right, next, and John A. J. Rice with UBS.

Speaker Change: And we hold out for that type of value.

Speaker Change: In order to ensure that we're doing the right thing from a from the standpoint of our capital structure and shareholders. Remember we've said all along we're very comfortable operating the entirety of this portfolio and doing well with it and we still are.

Speaker Change: That doesn't that doesn't change.

Speaker Change: On your second question.

A.J.: See you. Thanks. Hi everybody.

Speaker Change: All of our.

Speaker Change: Divestiture activity that we would entertain would be consistent with our strategy of remaining very high on the list of being a value based care contributor to the stakeholders, whether government or private pay that engage with our system and that's definitely the case based upon our lower cost.

A.J.: Obviously, the headlines around the last couple of divestitures have grabbed some headlines. I thought I'd ask you about two aspects of that. The price tags on the deals, I know these are growth areas in which you're selling these hospitals, but they seem unusually high by historic standards. Is there any dynamic in the marketplace? Did you see the non-profits are bringing to bear, I don't know whether it would be their ability to implement a 340B program or something like that that's causing them to be willing to pay these relatively high valuations? And then second to that is your national strategy of contracting with hospitals, getting the leverage of both hospitals and surgery centers. Do you think there's any issues with divesting hospitals that would lessen your ability to get the pricing you want on the surgery centers, or is that not really a question?

A.J.: Stimulatory profile. It's also definitely the case based upon the very desirable high quality acute care assets that.

A.J.: That we have so our point of view is that we will remain consistent with our stated strategy on the portfolio, but we also will continue to put effort into making sure that we are delivering solid value for our payers stakeholders again, both government and private.

Speaker Change: Okay sounds good.

Speaker Change: Thank you.

A.J.: Okay.

A.J.: Thank you. Our next question comes from the line of Brian.

Jefferies: With Jefferies. Please proceed with your question.

Speaker Change: Hey, good morning, guys and congrats on the quarter, maybe just Tom just to follow up on the divestiture question right. I mean, this seems to be more opportunistic than not in terms of the assets that you've sold so how are you thinking about maybe maybe longer term leverage targets or your willingness or interest to look for other opportunities such as south.

A.J.: Yeah, A.J., thanks. Thanks for the question. Look, on the first point, um... I would say that, and I can't put myself in the shoes of, of, um.., you know not-for-profit health system partners who are looking to acquire assets but what I would say is that these two transactions demonstrate that, The work we've done over the last five years to.., generate high-quality, well-performing, solid quality safety service, hospitals with a higher acuity procedure-based platform can generate a premium because you know it's a lot of work to get them into that position of not only having a high degree of profitability but also uh... you know having a quality service profile that's attractive from a starting standpoint. So they're high quality assets.

A.J.: And southern Cal.

A.J.: Yes, they're both both of these opportunities are where we're opportunistic as you say we were not in the marketplace looking for those although as I just mentioned to a J.

A.J.: We have a strategic sense of what we would entertain at what values and again, we remain opportunistic but most importantly, we remain.

A.J.: We remain committed to the portfolio that we have in running it at a high quality.

A.J.: With with solid earnings from from that standpoint that we can deliver so I mean I'm.

Speaker Change: I'm not sure how to answer the question on a go forward basis other than to say.

A.J.: The other factor, of course, would be that these assets are coming forward as multiple assets in a market which is again relatively rare, and our point of view is that we recognize that value, and we hold out for that type of value, uh... in order to ensure that we're doing the right thing from the standpoint of our capital structure and shareholders. Remember we've said all along we're very comfortable operating the entirety of this portfolio and doing well with it, and we still are. On your second question, you know all of our divestiture activity that we would entertain would be consistent with our strategy of remaining very high on the list of being a value-based care contributor to the stakeholders, whether government or private pay, that engage with our system. And that's definitely the case based upon our lower-cost ambulatory care profile.

A.J.: You know we have demonstrated thoughtful divestiture activity.

A.J.: In a way that remains consistent with our strategy and enhances not just our leverage position, but our belief in our ability to generate free cash flow going forward.

Speaker Change: Okay. Thank you.

A.J.: Thank you. Our next question comes from the line of Justin Lake with Wolfe Research. Please proceed with your question.

Speaker Change: Thanks, Good morning, I appreciate all the detail and consolidate and conifer I think it was a good idea I appreciate that too.

Speaker Change: My questions were one the bigger question is just a you know theres been some discussion out there that ahead of the two midnight rule bunch of hospitals might have tightened up how they report observation versus impatient curious if you've seen any of that internally how are you prepared.

A.J.: Did you see any benefit this year, what do you think the benefit US next year and then just a quick numbers question.

A.J.: How many de Novo openings. This year do you expect to I apologize if I missed that previously thanks.

A.J.: It's also definitely the case based upon the very desirable, high-quality acute care assets that we have. So our point of view is that we will remain consistent with our stated strategy on the portfolio, but we also will continue to put effort into making sure that we are delivering solid value for our payer stakeholders, again, both government and private. Okay, sounds good.

Speaker Change: Thanks, Justin.

A.J.: Obviously, we're very cognizant of the.

A.J.: The impact of CMS is commentary on the two midnight rule.

A.J.: Medicare advantage is very important to us and being a good partner to our Medicare advantage.

A.J.: Health plans and also our.

A.J.: Medical groups and organized medical groups that participate in Medicare advantage is is something we actually are quite focused on operationally because.

A.J.: We are focused on delivering good throughput, we only admit patients through the emergency department when appropriate we have high standards for that so we ended up we ended up being in a position where being focused on MAA is important now look you know we we also believe strongly that when people.

Operator: Thank you. Thank you. Our next question comes from the line of, "Pleased to see you."

Sam: Hey, good morning, guys, and congrats on the quarter. Hey, Sam, just to follow up on the divestiture question. Right, I mean, this seems to be more opportunistic than not, in terms of the assets that you've sold. So how are you thinking about, you know, maybe maybe longer-term leverage targets or, you know, your willingness or interest to look for other opportunities, such as South Carolina and Southern Cal? Yeah, both of these opportunities were opportunistic, as you say.

Sam: We are in the hospital and our second half and their condition warrants it based upon the.

Sam: The admitting physicians judgment to be inpatient versus in an alternative outpatient based status.

Sam: That is the appropriate thing to do and and we very much agree with the guidance from CMS that that should be tightened up. So operationally we're focused on it remember we also through conifer have the ability to focus on it for us and our clients in.

Sam: We were not in the marketplace looking for those, although, as I just mentioned to AJ, we have a strategic sense of what we would entertain at what values. And again, we remain opportunistic, but most importantly, we remain committed to the portfolio that we have and running it at a high quality with solid earnings from that standpoint that we can deliver. So, I'm not sure how to answer the question on a go-forward basis other than to say, "You know, we have demonstrated thoughtful divestiture activity in a way that remains consistent with our strategy and enhances not just our leverage position but our belief in our ability to generate free cash flow going forward." Thank you. Thank you. Our next question comes from the line. Please proceed. Thanks, good morning. Appreciate all the detail and consolidating Connor. The, my questions were, one, you know, the bigger question is just, you know, go to, you know, https://www.youtube.com or the link in the description below.

Speaker Change: In terms of ensuring that we have the appropriate documentation.

Speaker Change: In order to defend that position. So we're going to we're going to keep at that.

Speaker Change: We haven't quantified any potential.

Speaker Change: Outside from that although you know we have considered it obviously in our in our guidance.

Speaker Change: We haven't specifically called out anything from that perspective the.

Speaker Change: The de Novo number for 'twenty 'twenty four I'd have to yeah I'd have to go take a look at an exact number but it's north of 10.

Speaker Change: Potentially approaching 15, I'm, sorry that I don't have an exact number for you.

Sam: Yeah.

Sam: Thanks.

Sam: Okay.

Sam: Thank you. Our next question comes from the line of Kevin Fischbeck with Bank of America. Please proceed with your question.

Speaker Change: Great. Thanks, I, just wanted to dig in a little bit into the the view.

Speaker Change: You about the hospital business.

Speaker Change: Guidance for 2024, where youre talking about.

Speaker Change: Four 5% normalized performance and three 6%.

Justin: I'm curious if you've seen any of that internally, how have you prepared? seen any benefit this year, what do you think the benefit is next? Quick number. How many DeNova ones?

Sam: Organic.

Speaker Change: There, which seems a little bit low based upon it looks like you're looking for pretty solid volume growth because he didn't get pricing but.

Speaker Change: Solid volume growth.

Speaker Change: Our view that labor is going to continue to improve I'm just trying to figure out if there's any other offsets that you already kind of backing out the rate pressure and labor changes in there I would've thought that number would've been higher than 3% to 4%.

Justin: Thanks. Thanks, Justin. Well, obviously, we're very cognizant of the impact of CMS's commentary on the two-midnight rule. You know, Medicare Advantage is very important to us in being a good partner to our Medicare Advantage health plans and also our, medical groups and organized medical groups that participate in Medicare Advantage is is something we actually are quite focused on operationally because you know we we we are focused on delivering good throughput we only admit patients through the emergency department when appropriate we have high standards for that so we end up you know we end up being in a position where being focused on MA is important now look you know we we also believe strongly that when people are in the hospital and are sick enough and their condition warrants it based upon the admitting physician's judgment to be inpatient versus in an alternative outpatient-based status, that is the appropriate thing to do. And we very much agree with the guidance from CMS that that should be tightened up. So operationally, we're focused on it. Remember, we also, through Conifer, have the ability to focus on it for us and our clients in terms of ensuring that we have the appropriate documentation in order to defend that position.

Justin: Yeah, Hey, Kevin It's Tom Let me start I you know.

Justin: Look I think a couple of points that I made first of all we had an outstanding year.

Justin: The hospital segment.

Justin: As you know every quarter, we exceeded our expectations there.

Justin: Look for US I mean, we took a lot of the benefit from contract labor reduction in 'twenty. Three now don't get me wrong, there's an annualized <unk> effect that will improve in the coming year. The volume strength was also you know very good during.

Justin: During the year and so I think that.

Justin: We believe that will continue to see acute care recovery in in 2024 like we saw in 2023, and if we're able to open up capacity.

Justin: Effectively to service the demand that we want which again is consistent with our high acuity strategy.

Justin: That's what gets us to the upper end of our guidance right, it's really the volume.

Justin: So we're going to keep at that. We haven't quantified any potential upside from that, although we have considered it, obviously, in our guidance. But we haven't specifically called out anything from that perspective. The de novo number for 2024, I'd have to go take a look at an exact number, but it's north of 10, potentially approaching 15. I'm sorry that I don't have an exact number for you. By

Justin: <unk> there and then we're mindful of the fact that there are you know some things in the operating environment to think about we did very well, but did have cost increases in 'twenty, three and medical fees were anticipating.

Justin: Some impact of that again, but we think manageable and in the guidance.

Speaker Change: From that perspective, I don't know if you want to add anything yes. So just on your last point I would also add on the medical fees. We did see about 15% total increase in fiscal 'twenty three.

Justin: Thank you. Our next question comes from the line: I'm Ralph Fischbeck with Bank of America. Okay, thanks.

Justin: For 24, we are assuming some moderation in the rate of growth here. So our 24 assumption is in the 8% to 10% range for that piece.

Justin: Okay.

Kevin: I just wanted to dig in a little bit into the view about the hospital business. Guides for 2024, where you're talking about four and a half percent normal life performance and 3.6 percent organic growth there, which seems a little bit low based upon, you know, www.kenhub.com a view that labor is going to continue to improve. I'm just trying to figure out if there are any other offsets that you're already kind of backing off on the rate pressure.

Ralph Fischbeck: Thank you. Our next question comes from the line of Whit Mayo with Leerink Partners. Please proceed with your question.

Speaker Change: Hey, Thanks, Good morning, I just was curious on how you feel about the target for 575 to 600 centers for it for 2025, you need about 50, new centers a year over the next two years to get there about a 20% increase I just wanted to take your temperature on.

Kevin: Are you feeling about that target. Thanks.

Speaker Change: Yes, Thanks, Amit I mean first of all the pipeline is very robust at this stage and and healthy.

Kevin: I would have thought that number would have been higher than 3-4%. Yeah. Hey, Kevin. It's Tom.

Tom: Let me start. I, you know, look, I think a couple of points that I made. First of all, we had an outstanding year in the hospital segment. As you know, every quarter, we exceeded our expectations there. You know, look, for us, I mean, we took a lot of the benefit from contract labor reduction in 23. Now, don't get me wrong.

Tom: Ziv of both single centers then.

Tom: You know platforms that have multiple centers within it a good mix of acuity across different services, meaning orthopedics and other things. In addition, so look I mean, the $5 75 to 600 is a.

Tom: The range that we put out there as a target by that standpoint, one of the things that we're going to be disciplined about is we're going to do good deals high quality assets.

Tom: There's an annualization effect that will improve in the coming year. The volume strength was also, you know, very good during the year. And so I think that we believe that we'll continue to see acute care recovery in 2024, like we saw in 2023. And if we're able to open up capacity... Thank you for joining us. And in the guidance, from that perspective, Son, I don't know if you want to add anything

Son: Attractive multiples not overpaying.

Son: And ultimately being able to deliver earnings growth in those facilities and organic growth in those facilities in a way that we go so we're not going to chase a number but you know our pipeline at this point.

Son: It makes me feel good about the fact that if you know things.

Son: Things come together, the right way, we could reach that target by the end of 'twenty five.

Son: Hey, thanks.

Son: Thank you.

Tom: Next question comes from the line of Ben Hendrix with RBC capital markets. Please proceed with your question.

Son: Yes, just on your last point, I would also add on the medical fees. You know, we did see about a 15% total increase in fiscal 23. For 24, we are assuming some moderation in the rate of growth here. So our 24-month assumption is in the 8% to 10% range for meds. Thank you. Our next question comes from the line of Whit Mayo with Lyric Partners. Hey, thanks. Good morning.

Son: Hey, Thank you very much your ambulatory net revenue per surgical case outlook two years to 3% seems consistent with what we think of as longer term steady state growth I'm. Just wondering if there is potential for upside there from continued acuity migration within the same store base or is acuity something you're pursuing through just more thing.

Whit Mayo: A function of new development. Thank you.

Whit Mayo: Yeah, Hey.

Whit: I just was curious how you feel about Target for $575,000. Take your temperature, how you're feeling about that. Yeah, thanks, Whit. I mean, first of all, the pipeline is very robust at this stage and healthy, inclusive of, you know, both single centers and, you know, platforms that have multiple centers within them, a good mix of acuity across different services, meaning, you know, orthopedics and other things in addition. So, you know, look, I mean, the 575 to 600 is a range that we put out there as a target from that standpoint. One of the things that we're going to be disciplined about is we're going to do good deals, high-quality assets. You know, attractive multiples, not overpaying, and ultimately being able to deliver earnings growth in those facilities and organic growth in those facilities in a way that we haven't before.

Whit Mayo: Couple of thoughts here, I mean, 2% to 3% is kind of our long term long term estimate we have obviously as I indicated.

Speaker Change: Somewhat purposefully very high degree of visibility into our managed care.

Whit: Pricing and obviously, the Medicare pricing for <unk> for 2024.

Speaker Change: The acuity and mix potentially represent some upside there.

Speaker Change: If you think about 2023, where we saw a lot of recovery in Gi and Ian Tk's is even a relative mix shift could impact the acuity in 2024 and you know that that's you know that's got pluses.

Whit: <unk> and minuses associated with it right if the mix shifts.

Speaker Change: From that perspective, but strategically our plan is to continue to increase our high acuity services.

Speaker Change: Look we're also mindful of the fact, and we don't we don't spend a lot of time talking about it anymore, but we are still doing some work to move you know slightly higher volume very very low acuity work out of our S sees it into other settings in order to make room for higher acuity are we're doing it in a more measured.

Whit: So we're not going to chase a number, but, you know, our pipeline at this point makes me feel good about the fact that, if, you know, things come together the right way, we could reach that target by the end of 2025. Thank you. Our next question comes from the line of Ben Hendricks with RBC Capital Markets. The Bulletproof Executive 2013, Thank you very much.

Ben Hendricks: Way than we perhaps did in 2022, but we're still doing it and so that also represents upside if we're successful in refreshing refreshing those partnerships, but we think that will service well for the longer term.

Ben Hendricks: Your ambulatory net revenue per surgical case outlook, 2 to 3%, seems consistent with what we think of as longer-term steady-state growth. I'm just wondering if there's potential for upside there from continued acuity migration within the same store base, or is acuity something you're pursuing through just more as a function of new development? Thank you. Yeah, hey, a couple of thoughts.

Ben Hendricks: Thank you.

Ben Hendricks: Thank you. Our next question comes from the line of Josh Raskin with Nephron Research LLC. Please proceed with your question.

Speaker Change: Thanks, and good morning, when it stick with USPI can you speak to the revenue per case growth in the ASC segment that we saw in <unk>. It seems like the same store revenues were more case driven earlier in the year. So I'm just curious if <unk> was higher acuity cases or or mix related as you were just talking about and then I'm just curious related.

Tom: Yeah, I mean, 2 to 3% is kind of our long-term estimate. We obviously, as I indicated somewhat purposefully, a very high degree of visibility into our managed care pricing and, obviously, Medicare pricing for 2024. You know, the acuity and mix potentially represent some upside there.

Speaker Change: Are there any differences in the trends on the same store.

Speaker Change: Relative to those that had been acquired or newly consolidated versus those that you've had a little bit longer I'm thinking about some of that.

Tom: You know, if you think about 2023, when we saw a lot of recovery in GI and ENT cases, even a relative mix shift could impact acuity in 2024. And, you know, that's got pluses and minuses associated with it, right, if the mix shifts from that perspective. But strategically, our plan is to continue to increase our high-acuity services. Look, we're also mindful of the fact, and we don't spend a lot of time talking about it anymore, but we are still doing some work to move, you know, slightly higher volume, very, very low-acuity work out of our ASCs into other settings in order to make room for higher acuity. We're doing it in a more measured way than we perhaps did in 2022, but we're still doing it. And so that also represents upside if we're successful in refreshing those partnerships. But we think that'll serve us well for the longer term. Thank you. Thank you. Our next question comes from the line of that fund. Thank you for watching. Good morning. I want to stick with USPI.

Speaker Change: Assets that may not have been.

Speaker Change: As mature and thinking about.

Speaker Change: As those move into the same store revenue number is that going to keep that sort of total same store revenue number growth higher.

Speaker Change: Yeah, Hey, Josh. Thanks. Thanks for the question, let me start with your second question and then.

Speaker Change: Pass over to Sun for the first one.

Speaker Change: No I don't.

Speaker Change: Don't think we see a major difference across the board I mean look theres a lot of centers. Obviously, some are more mature than others and it's a portfolio right. So summer off of course, you know, there's a bell curve and some are growing faster than others of course from that standpoint, but I wouldn't necessarily say or break it down by <unk>.

Speaker Change: <unk> segments I think the most important segmentation in 23 was that you could clearly see the G. I only centers grew faster than others on average, but but but the growth was pretty strong you know in segments.

Speaker Change: <unk> Gi, but it was definitely faster than the G. I only centers, that's probably the most obvious trend.

Josh: Can you speak to the revenue per case growth in the ASC segment that we saw in 4Q? It seems like the same store revenues were more case-driven earlier in the year, so I'm just curious if 4Q was higher acuity cases or, you know, mix-related, as you were just talking about. And then I'm just curious, relatedly, are there any differences in the trends in the same store relative to those that have been acquired or newly consolidated versus those that you've had a little bit longer? I'm thinking about some of the, you know, SED assets that may not have been as mature and thinking about, you know, as those move into the same store revenue number, is that going to keep that sort of total same store revenue growth higher

Josh: That I've noticed.

Josh: And your first question, yes. Thank you Hey, Josh This is John Thanks for the question on the net revenue per case and.

Josh: In the ambulatory space in Q4 of 23 I think you are right. We did see elevated net revenue per case was about five 4%.

Josh: Higher than the previous four Q4 in 'twenty, two but if you take a step back.

Josh: It looks the rest of 'twenty three.

Josh: Those rates were a little bit lower right. So that for fiscal 'twenty. Three overall are in RPC was about three 4% higher than 22. So I think it's partly what Sam mentioned.

Josh: Mix of different procedures.

Josh: Astro or if there was some of the other ones and I don't know that I would read too much more into into that and then as we said our guidance for fiscal 'twenty four assumes a 2% to 3% range, which compares reasonably well to the three 4% that I just mentioned for all of fiscal 'twenty three.

Josh: Yeah, hey Josh, thanks for the question. Let me start with your second question and then pass over to Sun for the first one. You know, I don't think we see a major difference across the board. I mean, look, there are a lot of centers, obviously some are more mature than others, and it's a portfolio, right? Some are off, of course; there's a bell curve, and some are going faster than others, of course, from that standpoint.

Sun Park: Alright. Thanks.

Josh: Okay.

Speaker Change: Thank you. Our next question comes from the line of Sarah James Gerald.

Josh: Gerald.

Speaker Change: Please proceed with your question.

Speaker Change: Thank you.

Sun Park: As we move past the pandemic most of the provider peers have been talking about kind of re pricing on the commercial side and then the mid single digit range for for hospitals can you give us an idea with given the timing of your repricing how much of that how much of your.

Tom: But I wouldn't necessarily say or break it down by particular segment. I think the most important segmentation in 23 was that you could clearly see the GI-only centers grew faster than others on average. But the growth was pretty strong, you know, in segments beyond GI. But it was definitely faster in the GI-only centers.

Tom: Buck with already at the higher rate in for Q.

Tom: How much do you expect to be in the rate for 'twenty four.

Tom: That's probably the most obvious trend that I've noticed. Your first question. Thank you, Tom. Hey, Josh.

Tom: And.

Speaker Change: Is there.

Tom: Any.

Son: This is Son. Thanks for the question on the net revenue per case. You know, in the ambulatory space in Q4 of 23, I think you're right. We did see elevated net revenue per case of about 5.4 percent, higher than the previous Q4 in 22. But if you take a step back and look at the rest of 23, you know, those rates were a little bit lower, right? So for fiscal 23, overall, our NRPC was about 3.4 percent higher than 22. So I think it's partly what Sam mentioned, a mix of different procedures, you know, gastro, ortho, some of the other ones, and I don't know that I would read too much more into that.

Tom: Aspect of that that includes covering some of the unreimbursed physician fees for the third party anesthesia, Alan Jeff says that being worked into the rates at this point.

Speaker Change: Yes, hey, thanks for the question.

Son: Again in a little bit of reverse order I mean, obviously, we take into consideration all aspects of inflationary pressures.

Son: Whether that be contract labor physician.

Son: Physician partnerships supplier I mean, all of it right I mean into the way in which we approach our negotiations with our with our health plans and I mean that.

Son: As we've indicated in the past.

Son: As we've indicated in the past.

Son: It's not like you know somebody's come forward in the last few years government or private pay and just offered up CPI rate, but the thing is we have annual escalators in all of our contracts. We're mindful of the fact that to deliver value. Obviously, we need to have annual escalators given inflation, but it is also.

Son: And then, as we said, our guidance for fiscal 24 assumes a 2 to 3 percent range, which, you know, compares reasonably well to the 3.4 percent that I just mentioned for all of fiscal 23. All right, thanks. Thank you. Now, our next question. Thank you. As we move past the pandemic, most of the providers have been talking about repricing on the commercial side in the mid-single-digit range for hospitals. Can you give us an idea, given the timing of your repricing, how much of your book was already at this higher rate in 4Q? And how much do you expect to be in the rate for for 24? Is there... Any aspect of that that includes covering some of the unreimbursed physician fees for the third-party anesthesiologist, so it's not being worked into the rates at this time? Yeah, hey, it's Tom.

Tom: Partially our responsibility to continue to find efficiencies in our business in order to remain.

Son: Valued partners to our stakeholders again, both government and private pay so that's how we think about it in.

Tom: And that's how we've been able to expand our margins.

Tom: Over this.

Tom: Over this period of time, Yeah look my view is we're generally pretty well contracted for 24 and the bit of tailwind that we see from the.

Tom: Thanks for the question. Um, again, in a little bit of reverse order, I mean, obviously, we take into consideration all aspects of inflationary pressures, whether that be contract labor, physician, uh.., physician partnerships, you know, supply, I mean, all of it, right? I mean, the way in which we approach our negotiations with our health plans. And I mean, you know, as we've indicated in the past. As we've indicated in the past... It's not like, you know, somebody's come forward in the last few years, government or private pay, and just offered up CPI, right?

Tom: Recent higher than average contract negotiation should be and as part of our guidance in 'twenty four and my guess is it'll flow a bit into 'twenty five as well right and then we will see when the next round of negotiations come up.

Tom: How that how that goes.

Tom: It's really important to understand that.

Tom: Part of our strategy.

Tom: In our net revenue per case improvement overtime also relies on our ability to continue our acuity of case mix in our hospitals, so that together, we're giving ourselves an opportunity to.

Tom: To generate that that net revenue per case improvement over time, and I think the fourth quarter represented you know a lot of acuity that we saw in the quarter, which is why the number was so attractive.

Tom: But the thing is, we have annual escalators in all of our contracts. We're mindful of the fact that to deliver value, obviously, we need to have annual escalators given inflation. But it is also partially our responsibility to continue to find efficiencies in our business in order to remain valued partners to our stakeholders, again, both government and private.

Speaker Change: Yes, so I would just.

Tom: To confirm kind of what you said.

Tom: We've said historically, we're seeing commercial rate increases in the 3% to 5% range and going into 2024, we're about 90% contracted I wouldn't try to segment that too much deeper than that only to say that those rates are kind of what's embedded into our 24 guidance that we provided.

Tom: So that's how we think about it, and that's how we've been able to expand our margins, over this period of time. You know, look, my view is we're generally pretty well-contracted for 24, and the bit of tailwind that we see from the.., recent higher-than-average contract negotiations should be and is part of our guidance in twenty four and my guess is it'll flow a bit into twenty five as well right and then we'll see when the next round of negotiations come up uh... how that how that goes It's really important to understand that, Part of our strategy.., in our net revenue per case improvement over time also relies on our ability to continue our acuity of case mix in our hospitals so that together we're giving ourselves an opportunity to generate that net revenue per case improvement over time. And I think the fourth quarter represented, you know, a lot of acuity that we saw in the quarter, which is why the number was so attractive.

Speaker Change: Thank you.

Tom: Thank you. Our next question comes from the line of Peter Chickering with Deutsche Bank. Please proceed with your question.

Speaker Change: Good morning, guys.

Tom: On the hospital labor side, what are you guys modeling for full time wage inflation for 'twenty, four and how much more savings can we get from from contract labor, because you're including conifer and this segment now can you tell us what revenue per adjusted admission is guided to be for this year and is it safe to think about conifer EBITDA growing faster than hospital EBITDA for 234.

Tom: Yes.

Tom: Yes, So hey, Peter This is John let me try to take some of those.

Tom: From a base wage standpoint, obviously, we've been managing base wages sufficiently overall as evidenced by our <unk> metrics I would say 23 was still elevated compared to our historical rates that's more in the 2% to 3% range.

Tom: We are assuming more normalized rates in fiscal 'twenty for guidance, but probably not fully back to those historical rates yet I would just add we're continuing to make investments into our workforce in the right areas on our base wages and then on a contract labor to your point I think as Tom mentioned earlier, we do still expect.

Tom: Yeah, Sam, I would just, you know, to confirm kind of what you said. We've said historically, we're seeing commercial rate increases in the 3 to 5% range, and going into 2024, we're about 90% contracted. I wouldn't try to segment that too much deeper than that, only to say that those rates are kind of what's embedded into our 24-month guidance that we provided. Thank you. Thank you. Our next question comes from the line, https://www.kenhub.com, Hey, good morning, guys. On the hospital labor side, what are you guys modeling for full-time wage inflation for 24? How much more savings can we get from contract labor?

Speaker Change: Some savings from contract labor going into fiscal 'twenty for guidance.

Speaker Change: That would probably primarily be in the first half of 'twenty four because if you look at our Q3 and Q4 rates of 23, there were about 3% and two 8%. So I think the room for improvement in the second half of the year for 'twenty four is much lower.

Speaker Change: And then I'm sorry. Your question on conifer now that we've changed our reporting segment methodology I don't know that we will we will provide that level of detail.

Speaker Change: Alright, great. Thanks, so much.

Pito Chickering: And because you're including Conifer in that segment now, can you tell us what revenue per adjusted emissions we have got to be for this year, and it is safe to think about Conover-EBIDA growing faster than possible. EBIDA for 2024. Yes, so, Pito, this is Sun. Let me try to take some of those.

Speaker Change: Thank you.

Speaker Change: Thank you. Our next question comes from the line of Jason <unk> with Citi.

Speaker Change: <unk>, what's your question.

Speaker Change: Great. Thanks, and congrats on the quarter, maybe a question on cash flow. It looks like you will still generate enough free cash flow less NCI cash distributions with self fund that $250 million investment target for 'twenty four even with the tax payment from the divestitures, but I guess moving beyond this year that should be in a position to generate.

Sun Park: From a base wage standpoint, you know, obviously, we've been managing base wages sufficiently overall, as evidenced by our SWB metrics. I would say 23 was still elevated compared to our historical rates, but that's more in the 2 to 3 percent range.

Sun Park: Well north of <unk>.

Sun Park: Billion of free cash flow less cash NCI and you haven't meaningfully reduce your leverage profile. So I guess as you think about the capital deployment priorities right. Thank.

Sun Park: We are assuming more normalized rates in fiscal 24 guidance, but probably not fully back to those historical rates yet. I would just add, you know, we're continuing to make investments in our workforce in the right areas on our base wages. And then on contract labor, to your point, I think Tom mentioned earlier, we do still expect some savings from contract labor going into fiscal 24 guidance. That would primarily be in the first half of 24, because if you look at our Q3 and Q4 rates for fiscal 23, you know, they were about 3 percent and 2.8 percent. So I think the room for improvement in the second half of the year for 24 is much lower. And then, I'm sorry, your question on CONIFER. Now that we've changed our reporting segment methodology, I don't know that we will provide that level of detail. Script.

Speaker Change: Thank you.

Sun Park: Positioned to increase that $250 million target is industrial and the divestiture slows down or how would you frame that.

Speaker Change: Yes, no listen I think first of all the capital allocation priorities in terms of the four categories that we've talked about obviously USPI.

Sun Park: Again, I can't emphasize enough being.

Sun Park: Importantly, supportive of our acute care hospital portfolio to maintain them strong and very desirable assets by all stakeholders is really critical to our overall strategy.

Sun Park: The deleveraging that we've talked about and then obviously the share buyback program that we have authorized all remain absolutely important priorities to us.

Sun Park: As we look forward now you pointed out are really you know really it's a really important point, which is a little bit of my commentary you know my commentary at the end of my prepared comments about.

Sun Park: Thank you. Thank you. Our next question comes from the line. Great, thanks, and congrats on the quarter.

Sun Park: We're entering a new era for us, which is which is important for us to collectively think about and you know if you think about on this call and what I've alluded to it has raised the question about where are we thinking about leverage targets, which we have not given specifically in the past what are our capital deployment priorities going.

Tom: Maybe a question on cash flow. It looks like you'll still generate enough free cash flow, less NCI cash distribution, to fund that $250 million investment target in the ASCs for 2024, even with the tax payment from the divestiture shares. But I guess moving beyond this year, Tenet should be in a position to generate well north of a billion of free cash flow, less cash NCI, and you have meaningfully reduced your leverage profile. So I guess as you think about the capital deployment priorities, right? Do you think you'll be in a position to increase that $250 million ASC target as it does from the divestiture sales down, or how would you? Yeah, no, listen. I think that, first of all, the capital allocation priorities, in terms of the four categories that we've talked about, obviously, USPI. Again, I can't emphasize enough how important it is to be importantly supportive of our acute care hospital portfolio to maintain them as strong and very desirable assets by all stakeholders is really critical to our overall strategy. The deleveraging that we've talked about and, obviously, the share buyback program that we have authorized all remain absolutely important priorities to us as we look forward.

Tom: Look like and how will they be different.

Tom: There are some people that would ask and we certainly would consider are there.

Tom: Enhancements.

Tom: In our capital allocation into our acute care portfolio in our more high return markets that we still have with us that makes sense and then obviously the USPI question of deploying additional capital into that segment and I think we will have more to say about that as the year goes on frankly, but those things are all on our mind.

Tom: Specifically on USPI, we talked about it historically 200 to 250 now closer to $250 million in capital allocation every year, but the fact is if you go back over the last five years and just look at what we've spent.

Tom: And average it out over those five years, it's been quite a bit quite a bit higher than $200 million to $250 million, we will continue to seek opportunities.

Speaker Change: To add.

Tom: High quality ASC is two are our platform and obviously are comfortable going above the 200 to 250, if those opportunities exist.

Tom: Now, you point out a really, you know, it's a really important point, which is a little bit of my commentary at the end of my prepared comments about, We're entering a new era for us, which is important for us to collectively think about. And if you think about this call and what I've alluded to, it has raised the question about where we are thinking about leverage targets, which we have not given specifically in the past. What are our capital deployment priorities going to look like, and how will they be different?

Speaker Change: Great. Thank you.

Tom: Thank you. Our next question comes from the line of Stephen Baxter with Wells Fargo. Please proceed with your question.

Speaker Change: Yeah, Hi.

Tom: I was hoping you could talk about your expectations for payer mix on slide 24.

Tom: Sure.

Tom: Got it.

Tom: I think there is growth coming on the exchanges I'm wondering if that's okay.

Tom: Explicitly consider either from a volume perspective or insight.

Tom: The payer mix guidance.

Tom: We have a better payer mix good thank you.

Tom: There are some people that would ask, and we certainly would consider, are there... enhancements in our capital allocation to our acute care portfolio in our more high-return markets that we still have with us that make sense. And then, obviously, the USPI question of deploying additional capital into that segment. And I think we'll have more to say about that as the year goes on, frankly. But those things are all on our minds. Look, specifically on USPI, you know, we talk about historically 200 to 250 million, now closer to 250 million, in capital allocation every year. But the fact is, if you go back over the last five years and just look at what we've spent and average it out over those five years, it's been quite a bit higher than 200 to 250 million.

Tom: Your guidance range. Thanks.

Tom: Hey, Stephen Good morning, it's Dan Thanks for the question.

Tom: Yes, 424 first of all in 'twenty, three our payer mix remains quite strong.

Tom: I've said previously with managed care steady around 70% and Thats, what were sort of expecting in our 24 guidance to stay pretty steady. Your question on the exchange volume Yeah, We we are tracking that as well and.

Tom: It could potentially be a.

Tom: Tailwind or an opportunity in 'twenty, four, but we're not assuming anything material from that and our 24 guidance.

Tom: I mean, the other the other thing I would say in particular with the exchange growth is that.

Tom: I just would remind remind the group that we feel pretty good about how well were contracted in the exchange.

Tom: And the exchange environment and in the states.

Tom: We will continue to seek opportunities to add high-quality ASCs to our platform and are obviously comfortable going above the 200 to 250 if those opportunities exist. Great. Thank you. Our next question is with Wells Fargo. Yeah, hi, thanks.

Tom: That we operate in both applicable by the way to the acute care portfolio of course, but also.

Tom: Applicable to our USPI platform. So just just as a note on that.

Tom: Thank you our.

Tom: Next question comes from the line of Jamie Paris with Goldman Sachs. Please proceed with your question.

Stephen Tanal: I was hoping you could talk about your expectations for Pay Your Mex in 2024 and how that's been factored into your guidance, growth coming on the exchange, so I'm wondering if that's... Especially considered either from a volume-group perspective or inside of your payer mix guidance and how you think about, you know, a better payer mix could materialize in your guidance range. Hey, Stephen. Good morning. It's Sun.

Wells Fargo: Hey, Thank you good morning.

Sun Park: Wanted to get your assessment of the current ASC landscape in terms of competitive activity.

Sun Park: Competitive activity and new competition and in states as well as on on the funnel just new new procedure categories that are moving in.

Sun Park: Moving off the inpatient only list them and and eventually out to ASC, just any perspective on what youre seeing in the market and sustainability of ASC.

Sun Park: Thank you for the question. Yeah, for 24, you know, first of all, in 23, our payer mix remains quite strong, as we said previously, with managed care steady around 70%. And that's what we're sort of expecting in our 24-hour guidance to stay pretty steady. Your question on the exchange volume. Yeah, we, you know, we are tracking that as well, and it could potentially be a tailwind or an opportunity in 24. But we're not assuming anything material from that in our 24 guidance. I mean, the other thing I would say, in particular with regard to exchange growth, is that...

Sun Park: Over the medium term and then just any comment on if theres, a surgical day impact in the fourth quarter. Thank you.

Speaker Change: Okay I'll leave the surgical day.

Speaker Change: Question till the end because I honestly don't know.

Speaker Change: Look on your first on your first set of questions.

Sun Park: A few things okay. So one is that we have been obviously, we spend a lot of time talking about orthopedics generally speaking.

Sun Park: And obviously, the more traditional things like Gi and Emt and and things of that nature ophthalmology, but the fact is we have been focused on diversification of our platform for a long time I mean, it take as an example shoulder surgeries we have.

Sun Park: I just would remind the group that we feel pretty good about how well we're contracted in the exchange environment in the states that we operate in. Both applicable, by the way, to the acute care portfolio, of course, but also applicable to our USPI platform, so just as a note on that. Thank you. Our next question comes from the line. Hey, thank you. Good morning.

Speaker Change: Had for over a year now and an innovative program that has helped us grow.

Speaker Change: And develop all the protocols for our <unk>, where we do orthopedics to add shoulder surgery to that now the numbers are not as big as hips and knees for example, but we're well prepared to do that and part of our physician recruitment strategy has been to focus on physicians with shoulder interest in shoulder surgeries in the ASC setting are just as.

Tom: I wanted to get your assessment just of the current ASC landscape in terms of competitive activity and new competition in states, as well as on the funnel, just new procedure categories that are moving in, moving off the inpatient-only list, and eventually out to ASCs. Just any perspectives on what you're seeing in the market and sustainability of ASCs over the medium term. And then just any comment on if there's a surgical day impact in the fourth quarter? Thank you. Okay, I'll leave the surgical day question until the end because I honestly don't know. Look, on your first set of questions, a few things, okay? So one is that we have been, obviously, we spend a lot of time talking about orthopedics, generally speaking, and obviously the more traditional things like GI and ENT and things of that nature, ophthalmology, but the fact is we have been focused on diversification of our platform for a long time. I mean, take, for example, shoulder surgeries.

Speaker Change: As an example, I think you guys are well aware of our urology.

Speaker Change: Our strategy, where we think there's a very nice opportunity, especially.

Tom: Especially with high quality groups to move further into the ambulatory surgery setting.

Speaker Change: We had been growing and expanding some of our bariatrics capability, there, which again is in the ASC setting has been reasonably stable. Despite the G. L. P.

Speaker Change: Hoopla over the last over the last year and so our and then obviously you know growing and expanding some of what one might consider vascular cardiovascular but in a measured way as we as we look forward from that standpoint, I feel pretty good about the fact that our business development and strategic teams.

Speaker Change: Our thinking you know steps ahead from a clinical standpoint, what we want to do.

Tom: The competitive landscape in the ASC segment.

Tom: We have had for over a year now an innovative program that has helped us grow and develop all the protocols for our ASCs where we do orthopedics to add shoulder surgery to that. Now the numbers are not as big as hips and knees, for example, but we're well prepared to do that, and part of our physician recruitment strategy has been to focus on physicians with shoulder surgeries in the ASC setting, just as an example. I think you guys are well aware of our urology strategy where we think there's a very nice opportunity, especially with high-quality groups, to move further into the ambulatory surgery setting. We had been growing and expanding some of our bariatrics capability there, which, again, in the ASC setting, has been reasonably stable despite the GLP hoopla over the last year.

Speaker Change: Is active and intense and I think that will that will certainly continue you know look we think we have a lot of advantages.

Tom: Based upon our scale, our physician relationships our ability to deliver.

Tom: Deliver synergies and also just the you know consistent demonstrated operating excellence over a long period of time.

Tom: And now we add to that what we think is the best in class revenue cycle capability that we've built inside of USPI separate from conifer inside the U S. P. I that is.

Tom: Is is starting to do work even for non USPI centers, which is an exciting development. So we're doing a lot to innovate in that business to continue to maintain our leadership position. So I feel very good about where we are competitively there.

Tom: And then, obviously, growing and expanding some of what one might consider cardiovascular, but in a measured way as we look forward from that standpoint. I feel pretty good about the fact that our business development and strategic teams are thinking steps ahead from a clinical standpoint about what we want to do. You know, the competitive landscape in the ASC segment is active and intense, and I think that will certainly continue. You know, look, we think we have a lot of advantages based upon our scale, our physician relationships, our ability to deliver synergies, and also just the consistent demonstrated operating excellence over a long period of time. And you know, now we add to that what we think is a best-in-class revenue cycle capability that we've built inside of USPI, separate from Conifer, inside of USPI that is starting to do work even for non-USPI centers, which is an exciting development. So we're doing a lot to innovate in that business to continue to maintain our leadership position. So I feel very good about where we are competitively there. And Jamie, just on your final question, yeah, there was no impact of a surgical day basis on our growth in Q4. It was 3.9% overall case growth.

Tom: And Jamie just to on your final question, Yes, there was no impact of a surgical day basis on our growth in Q4 was three 9% overall case growth.

Speaker Change: Okay, great. Thank you.

Speaker Change: Thank you and we have reached the end of the question and answer session and this also concludes today's conference.

Speaker Change: You may disconnect your lines at this time, thank you for your participation.

Tom: Yes.

Tom: [music].

Tom: Yeah.

Tom: Yes.

Tom: Yeah.

Tom: Okay.

Tom: Yeah.

Tom: [music].

Tom: Hum.

Tom: Okay, great. Thank you. Thank you. We have reached the end of the question and answer. You may disconnect your line, for Europe.

Tom: Mhm.

Tom: [music].

Tom: Uh-huh.

Tom: Okay.

Tom: Hum.

Operator: Thank you, www.thevenusproject.com The Bulletproof Executive 2013, and others. Thank you for watching. I'll see you next time.

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Operator: Transcribed by https://otter.ai, The Bulletproof Executive 2013, The Bulletproof Executive 2013. The Bulletproof Executive 2013,...... The Ultimate Parody Site! www.charlesboyk-law.com The Bulletproof Executive 2013,...

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