Release Date: April 26, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: Can you discuss the impact of Medicaid redeterminations on volumes and any revenue benefits from the two-midnight rule?
A: (William B. Rutherford - Executive VP & CFO) It's challenging to quantify the exact impact of Medicaid redeterminations, but a significant portion of those losing coverage are moving to employer-sponsored or health insurance exchange coverage, which is a small positive. The two-midnight rule appears to be providing a modest benefit, although it's still early to fully assess its impact.
Q: What are the main factors driving the pressure on operating expenses, and how should we expect these to trend?
A: (William B. Rutherford - Executive VP & CFO) The year-over-year increase in operating expenses is primarily due to professional fee pressures and increased provider taxes related to supplemental payment programs. These factors have been consistent over the past quarters, and we expect the operating expenses as a percentage of revenue to remain relatively stable throughout the year.
Q: How is the payer mix, particularly the commercial mix, evolving, especially in light of Medicaid redeterminations?
A: (William B. Rutherford - Executive VP & CFO) The payer mix is improving, with managed care up by 12-13%, driven by a 50% increase in health insurance exchange volumes, likely influenced by Medicaid redeterminations. This shift is helping to offset losses from Medicaid and is viewed positively.
Q: Can you provide insights into the trends in labor costs and expectations for Valesco's performance?
A: (William B. Rutherford - Executive VP & CFO) Labor costs are aligning with expectations, with wage inflation around 2.5-3%. Contract labor costs have decreased by 20% year-over-year, and we anticipate further improvements. Valesco is expected to perform similarly to last year, adjusted for a full year of operation in 2024.
Q: What is the impact of new campuses and acquisitions on revenue, and how are these affecting margins?
A: (William B. Rutherford - Executive VP & CFO) New operations like Valesco and acquisitions such as the Wise Health System are included in non-same-store revenue figures. These additions are strategically important, although they may initially impact margins as they integrate and scale up.
Q: How are outpatient surgeries trending, particularly in the commercial segment, and what are the expectations for Galen College's integration and impact?
A: (Samuel N. Hazen - CEO & Director) Commercial outpatient surgeries are relatively flat, with overall outpatient volumes affected by calendar shifts. Galen College is progressing well, with efforts to integrate campuses and retain graduates in our system showing early positive signs.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
