HCA Healthcare, Inc. (NYSE:HCA) Q4 2022 Earnings Call Transcript

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Pito Chickering: Good morning, guys. Thanks for taking my questions. Focusing on the fourth quarter, you talked about 2% lower emissions via the transfers. Were those all surgeries? I’m just trying to understand why in-patient surgeries are so weak on easy comps, and why I didn’t see a bigger increase in outpatient surgeries. We’ve seen some med-tech companies report very strong U.S. surgical growth. So just trying to understand the delta? And also what are you seeing you grow in-patient surgeries and out-patient surgeries in 2023? Thanks so much.

Bill Rutherford: So Peter, this is Bill. I think our surgical volume, the most €“ the thing being pushed out was we had 1 less business day, 1 less surgical day, and so that could account for 1.5 points or 2 of that trend. And I don’t think there is any other trends that we observed in our out-patient or in-patient surgery or call out other than just 1 less operating day. Going forward, I would say that we would anticipate our surgical volume to reflect our longer term trends, which has historically been somewhere around that 2 point growth. And again, there is some variables that fluctuate on that, but that was the issue on the flat surgical volume for Q4, was nothing other than 1 less surgical day.

Operator: Our next question comes from Kevin Fischbeck with Bank of America.

Kevin Fischbeck: Great. Thanks. I appreciate you guys breaking out kind of how you thought about the core pricing in the quarter. Is there a way to do that in the 2023 guidance? Obviously, the COVID is a headwind 340B is a headwind, and then how to think about anything else that’s a moving piece there? I just want to understand the core trends in pricing, and then maybe talk a little bit about commercial rate growth of what you’re renegotiating today? Thanks.

Bill Rutherford: Yes, Kevin, let me start with that. So as I said in my prepared remarks, we are anticipating revenue per equivalent admission around 2%. That’s on an as-reported basis. Obviously, I called out some of those non-recurring revenue items we’ve had the benefit of in €˜22, we don’t expect to continue next year. If you adjust for those, that’d probably be pushing us towards closer to 3% number, which would be, historically, we would see 2% to 3% growth. So what really moves us back into our historical pricing trends, what we would see pre-COVID is just that we are having to jump over some of that loss of cohort. So that was a 2% guidance on a revenue per equivalent admission. If you adjust that, it’d be closer to 3%, which is in line with our long-term guidance. That’s contemplating both our Medicare rate updates with some improved commercial pricing that I think we’ve talked about in the past.

Operator: Our next question comes from Ann Hynes with Mizuho Securities.

Ann Hynes: Hi, good morning. I know some of your peers have noted that physician outsourcing services especially on the ER is a pressure point for 2023. Are you seeing that? And if so, how much of a headwind is it to EBITDA? And secondly, just on the merchant turnover, I know you said that while you had a big improvement, you’re still not where you want to be. Can you talk about where you were for nursing turnover pre pandemic, where you ended Q4, and maybe where you think you could end 2023? Thanks.

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