Sentiment Analysis of the earnings transcript to help figure out if there are any bullish or bearish sentiments that could be gathered from it. We're doing ML and AI based analysis on the earnings call to get some more insights.
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| Statement |
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| We believe demand for our behavioral services remains robust and our same-store adjusted patient day growth in 2024 is forecasted to exceed the 2.1% growth we experienced in 2023 |
| Marc Miller Our acute hospitals continue to experience strong demand for their services in the fourth quarter |
| I would say that if we’re able to achieve the revenue targets that we’ve set in our guidance, we’d be hopeful that we could do better than the margins that are embedded in guidance |
| Overall surgical volumes were solid as well, increasing 4% year-over-year |
| For the full year 2023, our strong acute care revenues were largely offset by elevated expenses, especially physician subsidies, which resulted in flattish margins for the full year |
| So, as Marc commented in his prepared remarks, I think, what we saw in Q4 was improved revenue per admission -- per adjusted admission in the acute business, which I think we attribute to a combination of increasing acuity, but also at least stabilizing pressure from payers |
| In both our business segments, we were pleased that measures of patient satisfaction and quality of care increased in 2023 and we are focusing on continued improvement of these metrics in 2024 |
| So that’s improving the efficiency of our patients and in our behavioral facilities as well |
| We expect continued improvement in premium pay labor trends and general cost trends that will remain largely stable in 2024 |
| But yeah, we certainly see our competitors expanding as well, and again, our whole sort of view is we don’t want to chase what our competitors are doing, we want to really take advantage of the strong franchise positions that we have and build on those and earn greater returns by investing where we’ve had success |
| The -- specifically, Nevada ends up at the high end of the range you gave before, obviously, a great tailwind, ex that, it looks like EBITDA growths at the midpoints in the 4% range, too |
| With 8% revenue growth, same-facility EBITDA for our behavioral hospitals has increased approximately 9% for the full year of 2023 compared to 2022 |
| That’s on the heels of opening Henderson Hospital five years ago, if I’m getting my chronology correct and that’s been a very significant success |
| Pricing for behavioral has been very robust the last few years |
| A significant driver of behavioral volume upside is due to our success in filling vacant positions |
| The patient day growth in the quarter was greater at our acute behavioral hospitals versus our lower acuity residential treatment centers, which tended to drive up the revenue per day to relatively robust levels consistent with our year-to-date experience |
| During the fourth quarter, same facility revenues at our behavioral health hospitals increased by 7.2%, driven primarily by a 6.1% increase in revenue per adjusted patient day |
| And obviously, as I think we commented in our remarks as well, a significant amount of capital has been devoted over the last five years or six years to share repurchase, because we think that that’s been a compelling return and opportunity for us, and we’ll continue to look at that as well |
| And one of the things when Steve talks about the portfolio rationalization that we’ve done on the behavioral side in the last few years, what that also allows us to do is spend less time on facilities that are not growing and really spend more of our time figuring out how to do programmatic growth, not just beds, but just changing program offerings at certain facilities and changes like that that we think will have a positive effect |
| I mean, obviously, anyone who looks at our financials, you can see that we are in a higher margin in the behavioral business, I think, probably, higher returns |
| With adjusted admissions increasing 5.6% year-over-year |
| I believe that our view is if we can achieve the revenue targets that are embedded in our guidance, we’d be hopeful to bring out more efficiencies and therefore higher margins from the business than are currently reflected in the guidance |
| And one in the DC market where we’ve had a significant amount of historical success |
| Las Vegas is a great example, we’ve invested a tremendous amount of capital, hundreds of millions of dollars of capital over the last decade or more in Las Vegas and I think for the most part, it has earned a significantly sort of outsized return |
| We’ve continued to expand our presence in South Texas and Riverside County, California, where we have significant market positions |
| Net revenue per adjusted admission, which has lagged for much of the year, increased by 3.7% as compared to the fourth quarter of 2022, as acuity trends and pressure from payers have started to stabilize |
| I think that premium pay has remained a little bit higher than we originally anticipated because acute volumes have been as strong as they’ve been |
| So again, I think, as we’ve commented, the strong behavioral pricing I think has really been driven in 2023 by two things |
| I think that would probably on its own be like a $30 million, $40 million improvement, because I think in the first half of the year, we were running about $85 million a quarter |
| And so I think more of them are being presented to us, and again, if we think that there are good returns there and that they make sense for increasing our success in our markets, we’ll continue to look at those and deploy more capital to outpatient, maybe at a greater percentage than we did historically |
| Statement |
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| On the acute side, excuse me, on the behavioral side, in contrast, in a number of cases, we’re simply unable to fill our positions over the last several years and it has curtailed our volume growth |
| What I would say is, I do believe that, after a couple of difficult years and difficult operating environments and elevated costs, again, in labor, physician costs, just general inflation sort of across the Board, we’ve been a little bit cautious about our ability to expand margins |
| But we acknowledge that specialty workforce shortages in certain markets continue to be an obstacle to even more volume growth |
| I mean, I think it’s an acknowledgment by the states and by CMS that Medicaid reimbursement, again, in specific states, has really been inadequate and -- has really been inadequate over the last several years in an elevated inflationary environment with significant expense pressures, particularly in labor |
| One is actual sort of softness in our residential and that’s where a lot of the child and adolescent businesses is |
| But we acknowledge that in some markets, in some hospitals, there are positions that we still have difficulty filling |
| But we’re certainly concerned about that popping again or happening again in some other areas |
| We’ve seen a softness, I think in the last six months of 2023 in our child and adolescent business in the behavioral business that we attribute to a large extent to these redeterminations |
| So I could see that happening where the rate of growth slows, but it strikes me that once these programs are implemented, the safety net hospitals that they are really designed to target become so reliant on them that it would be extremely difficult for the states and/or CMS to stop the programs or curtail them in a terribly material way |
| Additionally, as we discussed last quarter, we continue to see a negative impact of Medicaid redeterminations in certain states on behavioral health volumes, although it appears that impact has also begun to stabilize |
| And then you mentioned, I think in the press release, sort of a 10-K, that Medicaid redeterminations were a headwind for the behavioral business |
| But I will say again, back to the comments that I made in response to a question that Justin asked, I do think that the volatility in that area is one of the reasons why we’ve been a little more cautious in our overall guidance in 2024, because I think, all hospitals would say, that was a cost that really surprised us in 2023 |
| And what we found were because of changes in the operating environment, in particular, the No Surprise Billing Act, et cetera, that made those businesses far less profitable |
| I mean, so as we’ve said, I think, throughout the last several years, it’s been a very tight labor market and I think it’s affected the two businesses differently |
| I mean, and again, though, particularly the comparison that you’re talking about, Kevin, I think it’s wholly inappropriate to exclude the $150 million of Nevada supplemental from a comparison to 2019, because I think what we would say in Nevada is we’ve had virtually no Medicaid increases for this period of time, and as a result, and we’ve been questioned about this, our margins in Nevada have declined, et cetera |
| So I think we’ve been prudently cautious about how we look at the profitability growth in both businesses |
| Although, as we indicated in our prepared remarks, those numbers have declined significantly |
| You talked about in your prepared remarks that the labor shortages are still impacting volume |
| Despite the continuing shift of services from inpatient to outpatient settings and pressure from payers to restrain reimbursement increases in a variety of ways |
| And I think what that really means is, we’re being a little conservative about volumes, which have sort of been running hotter than that, but we’re being a little bit more aggressive about pricing, which has been running less than that |
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