Community Health Systems, Inc. (CYH) Earnings Call Transcript & Summary

Hi, everybody. Welcome again to the next presentation for the Credit Suisse Health Care Conference. I'm A.J. Rice, the health care services analyst here at Credit Suisse and we've very pleased to have up next presenting is Community Health Systems. We've got Tim Hingtgen, CEO; we've got Kevin Hammons, President and CFO; and we've got Ross Comeaux, Vice President of Investor Relations. We're going to do this as a fireside chat format, but I know Ross was hoping to read a disclosure statement as we begin. I will say that the way we handle questions would be if someone in the audience wants to ask a question, they'll need to e-mail me that question, and I can then read it on their behalf. And that would be -- e-mail me at [email protected]. With that, let me turn it over to Ross.

All right. Thank you, A.J., and thanks for hosting us at the Credit Suisse conference again this year in this virtual format. But before we begin, I'd like to mention that some of our comments today may include forward-looking statements, so we would encourage everyone to read our risk factors in our various SEC filings. And with that, A.J., I'll turn it back to you to kick things off.

All right. Great. Well, I appreciate you guys doing this again. Tim, you've been in the CEO role. You've been at the company for much longer than this, but you've been in the CEO role for the last 3 quarters or so. And as I said, you were at the company almost 14 years, I believe. But what has your experience been? You decided to step into the CEO role at a very interesting time. Give us -- how has your focus at the company changed between roles? How do you see the opportunities for community at a high level going forward?

Yes. Great. Thanks, A.J., for hosting us, and it's a good question out of the gate. I ask myself that same question quite often, especially as I transitioned into the CEO role earlier this year. You're right. I'm in my 14th year with the company, started out in division operations. So a good portion of our portfolio that's still with us today in the company, I know very, very intently. I worked with them for many, many years. And about 4 or 5 years ago, I moved into the COO, got a chance to learn the rest of the portfolio as we work through the divested program, focus on the markets where we wanted to go deep and go long, which is the remaining portfolio that we're working with today. So over my time as COO, fortunately, we finished the divestiture program. But throughout that whole process, we introduced new strategies, we call them our strategic imperatives with a focus on safety and quality, on improving our operations through standardized measures and approaches, embracing consumerism through connected care and then really doing everything we can to invest in our communities and our markets to grow our competitive position. And I think by all accounts, you see some of those favorable trends working through our portfolio in the last several quarters of performance as we've seen the improvements. But again, finishing the divestiture program, working with a great leadership team here at community as COO and now as CEO. Being able to improve the capital structure has given us a lot of great opportunities to reinvest back into the business. We speak I think about where we're putting our money, how we're expanding the access points, where we're adding beds. At this point, I think we've added over 300 new beds to our ongoing portfolio, over 50 procedural suites and that tends to grow every quarter. Again, so all those things really forward a stronger level of performance. And what we always knew was a stronger underlying group of hospitals. Fast forward to the beginning of this year with Wayne stepping into the Executive Chairman role, fortunate to be named as the CEO. My evolution then goes, I guess, to being a little bit more forward thinking in terms of strategy, how we advance the portfolio, how we forge stronger alignment with all of our caregivers, our constituents and our communities. And with that, again, just very, very pleased that we've announced some de novo joint venture opportunities for us to run our markets, some nuances there that we haven't done a lot of in the past. Looking at more innovations, telemedicine, telehealth. Leveraging our transfer center that we've invested in over the last several years to growing out new services, all those things, advancing this core group of hospitals. And by the way, at some point, being opportunistic to saying where can we start investing into acquisitions again, perhaps not in the new markets, but to broaden our service areas from those hubs and spokes that we've been building out through this last couple of years. So all in all, again, the transition, I think, has positioned me to look again a little bit more into the future, to give me more latitude and liberties to do so with the support of Wayne and the Board and the entire management team. And we're pretty excited about where we can take this group of hospitals.

No, that's great. That's great. We'll go from a very high-level question to a very granular one. We seem to, on these conferences, probe the companies throughout this pandemic about what they're seeing in very recent trends. Obviously, you just reported not too long ago your Q3 results. But is there anything you can say as the surge has sort of winded down? Are you backfilling with non-COVID cases? Or is there sort of a transitional period as those surge-related cases subside before you can gear back up with the other cases? How should we think about all that?

Sure. I'm happy to take that one, A.J. And as you know and as we've talked about coming out of the third quarter, which we just reported less than 2 weeks ago, we saw our peak surge of COVID cases kind of in that September timeframe. Throughout October, we've been seeing a decline in COVID cases, and we're certainly past the peak and seeing those cases come down, I think, pretty consistently with what's being observed around the country. That being said, we still have an elevated number of cases still in the hospitals. But with that, we're starting to see some pickup in some of the deferred procedures, some of the non-COVID cases. We did an exceptional job, I think, throughout the third quarter, which is a little bit unique or different than the previous surges that we had experienced by being able to maintain more of the non-COVID business albeit at levels below pre-pandemic levels. But still, we were able to maintain a higher level of non-COVID business throughout the surge compared to the previous surges. And now we are though still seeing some of that deferred care starting to come back. Still too early to tell at this point how quickly this most recent surge continues to decline and how quickly all of that deferred business comes back, likely to come back through the -- throughout the fourth quarter and into the early part of next year.

Okay. Okay. And in the midst of all of this, there's give and take on market share positions and you guys have done well in your share. Do you think when you come out through the pandemic, do you think you'll -- that will be a permanent share increase for you as you come out on the other end of the pandemic? Any way to track that?

It's real hard to track market share at the moment because of COVID and the number of COVID cases. And it is a lagging indicator. Also market share is really just a measure of inpatient. But all that being said, with the investments that we've made, particularly over this past year, but over the past couple of years and under Tim's leadership and the direction we're going, absolutely are confident that we will come out of the pandemic with higher market share in our markets. We're focused on both inpatient, as Tim just mentioned, inpatient beds where we've added over 300 beds in certain markets as a result of demand. We're focused on outpatient services, service lines, access points, service lines, all of the things that very targeted investments. And as those continue to take hold, as deferred business comes back, I absolutely believe that we'll capture more market share.

I think if you layer on the COVID surge, A.J., with our investments in that transfer center, at the end of the day, I agree with Kevin, we have more insights. I think we've proven ourselves throughout the course of the pandemic to some of the perhaps smaller hospitals in the regions, not even our own hospitals, but smaller hospitals in the regions we serve that we can provide very high-level tertiary care, intensive care services. So we do plan to work very hard to keep those relationships moving forward.

Interesting. Okay. What's happening in managed care contracting? Are you -- where do you stand relative to just your normal contracting cycle for '22, '23? And we hear a lot about value-based contracting. Are the terms on those contracts changing much?

So we are kind of in the normal cycle of our managed care contracting. We're approximate -- of course, we're done with 2021. We're about 80% complete with 2022. And we're seeing rate increases in the 3% to 5% range, which very similar to what we've seen over the past couple of years. Not doing much yet beyond '22, but we'll start getting into that in the relatively near term.

Yes, in terms of value-based care.

Value-based, yes. On value-based care. That's a very small piece of -- probably less than 1% of our business. So still not -- although I think we're positioning the company very well with the work we're doing with our ACOs and some of the bundled payment initiatives that we have, but still a very, very immaterial component of our business.

Okay. A hot topic, obviously, in the quarter has been around labor dynamics. And we've heard now that the quarter is over and we sort of heard all the different types of providers present, there was discussion about nurses and clinicians out on quarantine. There's discussion about the tightness of the labor supply just generally. That suggests it may continue for a while, whereas the concern about the quarantine nurses seems to be more of a -- tied to the surge. As you sort of assess what you're seeing in the market, how would you describe the labor dynamics that you're dealing with?

Sure. There's certainly a tightening in the labor force, and we're seeing some inflationary pressures above what we have historically seen. There's been a movement, particularly during the surge to nurses going to traveling positions and the rate at which not only utilization but the rate at which you pay traveling nurses, significantly increase during the surges. But I would say that, that cost is very directly related to COVID. And what we experienced in the previous surge and then afterwards as the COVID cases come down, the rate at which you're paying contractors comes down significantly, albeit with a slight lag, but it comes down very proportionally to the case -- COVID cases. And then many of those nurses come back into their home hospital and come back into the kind of an employment model. Certainly, with COVID, you're seeing increased payments for overtime, premium pay, shift differentials. And we would expect that as there's some normalization in care and we're past COVID and past the pandemic, there'll be some moderation of those tight costs as well, bonuses and stay bonuses of things that were being done during COVID to really deal with some of the shortage, I think that all moderates kind of post the pandemic.

So if -- go ahead, Tim.

No, I was just going to say, we're trying to kind of shift on the offense on that. Even before this latest surge, we were investing in centralized nurse recruitment programs, leveraging our size and our scale like we do for physician recruitment on the nursing side. And by the end of the first quarter of next year, we'll have every hospital stood up on that. Right now, we have about 2/3 of the portfolio, where we're centralizing the nurse recruitment. Also have broadened our affiliation with nursing schools, existing relationships as well as a direct relationship with Jersey College, where about half of our portfolio will have direct access to nurses that we're training in partnership with Jersey College. So again, that's just something that we were doing, understanding that there was, I guess, more retirements due to the pressures of COVID, understanding that health care demand, especially with what we're investing in, was going to grow. We knew we had to really start doing more to actively build our own nursing workforce. Then the search had kind of exacerbated a few of the dynamics that you just referenced. But we feel we're well positioned once we get through the other side of this surge to continue to escalate and invest in those nursing development opportunities.

Okay. When you think about the use of retention bonuses or sign-on bonuses, are you typically getting a multiyear commitment of 2 years or something from the nurse that does that? Or is it typically just the 1 year? And I guess, if it's 2 years, are you amortizing the cost over the 2 years? Or are you booking it when it's paid?

Yes. Those are typically multiyear agreements and the cost would be spread over the period in which they are committed to staying.

Right, right. And then when you look at like what's happening in the permanent wage base, I know we saw it when we talked about 3% or 4%. Would you say -- you're saying that once we come out of this, and a lot of companies are, that the retention bonuses, hopefully, leads to sign on bonuses? Are we at a higher level from the 3% to 4% historic to something higher than that? How would you describe that?

Yes. We are currently on that permanent employee base. We are seeing higher base wages higher than the normal historical inflation. But again, I think that starts to moderate. And we're doing some things to help offset those costs as well by investing in various programs to support our nurses, improve retention. And -- although in the near term, I think that inflation stays kind of at the current level. We will see that being offset by some of these reductions of bonus payments and overtime and shift differential. So there will be some offsetting costs. And then to the extent with our improved centralized nurse recruiting and improved retention, we're able to offset some of that kind of headwind on those costs going forward.

I think Tim mentioned, which we've heard from others, people coming out over the last 15, 18 months and saying, look, I'm burned out. I've been postponing retirement. I'm going to do that. I'm going to start a family, expand a family. I'm going to do other things. What's sort of the trend in the turnover rate in the last 6 months, say? Has that been pretty steady? Or is that stepped up here in this latest Delta surge?

I'd say, for us, it's been relatively steady. Slight increase in nursing turnover following each one of the surges for likely the reasons you mentioned. The way to mitigate that is exactly what Kevin mentioned, repatriating nurses back upon completion of their travelers, Simon asking them to come back and work with us, get them back with perhaps their seniority and their [ bits ] intact. So again, that's kind of from our standpoint, we can maybe reverse some of that increased term or by bringing them back in and reduce that lost nurse from the stats in the initial wave.

Yes, A.J., I might just bring up 2 other points here. If you think about our current cost structure around labor, with the increased utilization of contract labor and the rates we're paying those, as we look out further into the future and past the pandemic, certainly, there's less utilization of contract labor. And those rates come down. So even though we may be bringing them back into an employment type model, the rate at which we're having to pay those nurses when you compare to the exorbitant contract labor rates that we're paying now significantly less. So kind of all in, when you think about the cost structure, I think there's opportunity for us there. And then some of -- if you noticed our other operating expense line item this third quarter where we have our contract labor rate, although we had significant increase in contract labor, that line item was flat because we were able to step over that contract labor increase with some improvement in other operating expenses. And we think those are more sticky and should -- we should be able to hold those decreases on a more permanent basis. So we should see some pickup there.

I see. I'm getting a few e-mail questions. Let me ask one more. I've got plenty, but I'll ask one more and then you have a couple of e-mails. I think the company has laid out 3 midterm goals: execute on revenue growth opportunities, 15% plus EBITDA margins and leverage at 6x or less. I guess you dipped in the latest quarter below the 6x. Can you sort of talk about where you're at with respect to realizing those goals and how -- what timeframe do you think? And what are -- how are you -- what incremental do you need to do to realize that?

Sure. So we put out those goals just 10 months ago in January of this year. And we put those out with a time horizon of kind of 2 to 4 years. We're certainly ahead of schedule on those -- on achieving those goals. Of course, we're going to continue to drive revenue growth. Our margins this year, if you think about our guidance at the midpoint, would be about 15.7%. So just shy of 15%. Continue to work to improve those margins into next year. I think we were able to make some extremely good progress on the leverage side. Some of that, we had a little bit of help from some Cares Act money this year that -- at least over the trailing 12 months. As we anniversary the fourth quarter and the first quarter, we'll anniversary some of that Cares Act money that will come out of that trailing EBITDA run rate. That takes that up back around the 6x -- or just over 6x. But as we continue to improve EBITDA, we think we'll be right back below 6x. And from that point, we're going to continue to try to drive leverage lower and try to drive margins higher. A little early yet. We haven't come out with '22 guidance. And with those goals only being out there less than a year, we've not updated those yet. But we'll have opportunities to do that here in the future.

Yes. And I said I would do the e-mail questions. I will. But when you think about '22, I know you haven't formally given that, but what are, in your minds, the biggest open questions or swing factors in terms of thinking about next year, probably COVID, I would assume and how much -- or how well with COVID? But I'm assuming you probably guide fairly conservatively toward that. But when you think about the broad dynamics, what are the open questions? And I would think a lot are pretty -- the bandwidth around them is pretty narrow, but what are the big open questions?

Yes. COVID, you hit the nail on the head. That's a big one. The speed at which some of the deferred procedures come back, it is one -- right now, what we've seen during the pandemic is particularly in the emergency rooms, the decline of low acuity business and some of the lower-paying business in the emergency rooms. There's a theory, and we believe that some of that won't come back. The pandemic has gone on long enough that people have found other sites of care. And in fact, we've picked up some of that care ourselves. We've invested in urgent care clinics, walk-in clinics, primary care, telehealth, all other sites of care where those patients are still being treated, and we're still treating them. But we're able to do it in a lower cost of care setting, which is margin accretive. So to the extent that continues to stick and hold into the future, it's a little bit of an unknown. We don't have perfect insight into that, but we believe our investments are going to help us there.

Okay. Here's an mail question says, can you ask if they expect to have a traditional year-end seasonality before deductibles reset again in January? Also where are non-COVID volumes relative to 2019?

I'll start with the seasonality question. And the answer to that is we do expect some of that seasonality to come into play this quarter especially when you see some of the deferred procedures from the third quarter being orthopedics related, getting those on the books by the end of the year has historically been something patients and providers have done a nice job of coordinating. We believe we're creating the capacity and the channels to do that same thing this year, again, on that service line in particular as well as some wellness screenings.

And on the non-COVID business, coming at the end of the third quarter, through the third quarter, we were kind of low to mid-single digits behind 2019 on our volume indicators. But as COVID cases come down and we start to recapture some of that deferred business, we certainly expect that to continue to improve.

Do you have a sense of how much deferred activity is out there? Or this is sort of the new normal, just a little bit below the pandemic or 2019 level?

It's hard to assess exactly how much of it is deferred and how much of it is structurally changed. We think some of the, I guess, I'll say, wellness procedures, colonoscopies and what have you, there may be a loss gap there for those that were pushed on. Obviously, they're not going to do multiple ones, they're just going to miss a cycle. But in terms of cardiac procedures, orthopedic procedures, we have a pretty good grasp as to where those cases are and how we can move those back into our systems of care.

And when you think about those cases, do you think about midyear next year you'll be pretty much to a normalized run rate? Or any way to peg how long it will take to work through whatever backlog there is?

Yes. I think we worked through the backlog from the previous surges relatively quickly. So I think the middle of next year, barring another big surge like we just experienced, that would be a reasonable estimate.

Okay. I got another question coming in here. Did Community have to delay any procedures because of staffing issues?

I'll take that one as well, and feel free to chime in, Kevin. But the short answer is yes, but more because we had to preserve inpatient bed capacity for COVID patients. So I would say the limitation being staffing in most cases, not always a physical bed, just because we ran, as you saw higher occupancy levels in the third quarter than we've traditionally run. Again, as Kevin has pointed out, we've supplemented that with contract labor when available, when possible. And as patient days for COVID decline, getting that inpatient surgery business back in is key to us getting some of that elective care back into our systems as well.

Okay. And then another one is, what have you seen with respect to the flu season so far? Have you seen any flu activity to speak of?

I'll say it's relatively minimal. But when you look at the flu tracker by the CDC, it looks like it's slightly elevated over last year. But really, there's very few hotspots in the country right now.

Okay. And Tim, you mentioned the telehealth opportunity. I wonder whether when you're sort of in secondary markets as communities historically focused on, is the way you approach that telehealth opportunity different? Are you on the receiving end with behavioral health or capabilities that maybe are in a bigger urban market where you wouldn't necessarily have a psychiatrist and you loop them in through telehealth? I don't know. Is there any way to describe a little more what you're doing in telehealth?

Yes, sure. We had invested in telehealth very early, I'll say, 3 or 4 years ago, putting some considerable resources behind the readiness for telehealth. And this would be more for the outpatient business, telemedicine would be more for the hospital-based business. We've invested in both ends of it, as a matter of fact. But on the outpatient side, I think our physician practices, because we have about 2,000 providers especially with the onset of COVID initially with the shutdowns, we ramped up to hundreds of thousands of visits from hundreds just preceding that in a month or 2 prior to March of last year. So we're really well equipped to manage telehealth on our own as a leader, if you will, with our primary care physicians. Through the last surge, again, every time we see a surge, we do have some patients who prefer to shift some of their care to a telehealth visit. So we saw our case counts go up in the third quarter as well, but nothing near to where we were at in the second quarter and third quarter of last year.

Okay. And you mentioned that the divestiture program was complete. I know I think you had divested 5 hospitals earlier nationwide, but you also done some significant expansions, Naples, Birmingham and the de novo campus in Fort Wayne. Can you just sort of tell us where you're at with respect to the portfolio and where the opportunities are? I mean will you still potentially look at selective divestiture opportunities to redeploy capital? Are you really truly done or -- and how much incremental expansion opportunities are out there?

That's a really good question. And as we've said, we continue to get inbound interest, but that's not what our strategy is. That's not where our focus is. Our focus is really on taking this core group of hospitals and demonstrating the strength underneath that portfolio. The de novo hospitals, again, something new for Community Health Systems, bringing on one campus in Tucson last year, another one opening up in the first quarter of next year. So we'll have 4 hospital campuses in that market. We see great growth and market share opportunities as a result of those investments. You mentioned the bed additions, Naples, Birmingham, Knoxville, Fort Wayne, we've put beds into all of those markets. Cedar Park, which is outside of Austin, Texas. And each one of those projects has just demonstrated that with the right focus on medical staff development, physician recruitment being the key part of that, the transfer center, investing in capital. We've been able to bring in patients to our hospitals or our health care delivery systems in ways that perhaps even surprises us sometimes on how quickly that capacity is filled up. So we have a very deep pipeline of more de novo campuses, rounding out our markets with more microhospitals, freestanding EDs, the things that drive some of the higher acuity services. Leveraging the data from the transfer center so we know where we're missing opportunities. It really does help us position ourselves to make smart capital investments with information showing that we're already missing out in the core part of that market share opportunity. So with all that being said, again, we see a lot of strength in the core portfolio and our ability to grow it. And as I said earlier, being opportunistic if there is a way to push our boundaries out even further and acquire other acute care facilities or ambulatory assets, we're certainly open to that opportunity as well as long as it's well priced and a right strategic fit for that market.

It seems like emergency room, there's been a lot of discussion about what's been happening in the emergency room. A significant dip in the lower acuity cases. Some people, as you said, have picked up with freestanding emergency rooms or urgent care centers or whatever. Where are you guys -- I don't know, how much of your capital dollars -- I know some of the other companies talk more about putting a significant investment in an ER historically the last few years pre-pandemic. And now or talking about potentially rolling that back. But where does that shake out? Do you think we've seen a permanent shift in the emergency room, and therefore, you'd prioritize dollars elsewhere?

We still see opportunities on the freestanding ED side of the business, opening up our 17th location in November in Bentonville, Arkansas. Again, some differences in the model. We're looking at some combo tracks, urgent care, freestanding EDs where the patients don't have to make the determination whether it's lower acuity or higher acuity ED visit, we can kind of triage that and care for them and that same site of care. We opened up one of those locations in Cape Coral, Florida. The one in Arkansas will be the same type of model. We're also going to be announcing soon some new freestanding EDs based upon our market intelligence showing that we have opportunities to put on that higher acuity access point into certain geographies that would serve our broader acute care populations, our main campuses of our hospitals.

Would you -- is the investing in the ERs that are affiliated with the hospitals themselves, is there a little less priority on that because maybe lower volume going forward? Or is that still a significant target?

We have been more selective about expanding our EDs on the main campus because of the opportunities to decentralize the care for the convenience and the safety of the communities we serve. It doesn't mean we're not doing any, but it used to be probably a bigger portion of our capital spend. We're now redirecting more of that to the ambulatory locations.

Yes. And the other thing I'd point out there, and Tim's absolutely right, it used to be a little bigger percentage of our overall capital spend. But I also think that reflects our refined portfolio of hospitals where we have fewer -- the rural hospitals and the markets we're in right now. One, we've touched many of them already with ED upgrades and expansions. And then to Tim's point, I think there is some shift away from the hospital-based EDs.

Okay. And we talked about nurse staffing issues. I wonder, because physician recruitment has been a big part of your story over the years, has the pandemic made it easier to recruit? Tougher to recruit? Are doctors more or less willing to make a move? What are you seeing out there with physician recruitment?

It's funny. To our surprise, I don't think it's dampened the appetite for physicians to take a look at really good practice opportunities. We actually, on a year-to-date basis, are up about 25% from last year, and we're beating 2019 recruitment numbers on a year-to-date basis. So again, pre-pandemic run rate. So I think the right recruitment system, which I believe we have at Community Health, with the right service line opportunities, which we're defining through the transfer center data, being able to show that to providers, I think it's proven to be a really successful combination of getting doctors excited about joining our systems.

Okay. It almost sounds like maybe they're more willing to move now, I don't know if that's too much of a stretch and the pandemic environment made them rethink some of their current situations. Or is it -- will you sort of describe it as status quo and you're just putting more resources behind recruiting?

I think resources and again, I'll say, a broader, better-positioned portfolio, better in some cases, markets that are more attractive for doctors coming out of fellowship and residency, that could also be one of the drivers for us.

Right. And I did want to go back to something you said in the prepared remarks about nurse recruitment. So you're saying that you're centralizing. That means that the corporate office is having more of a hand in how you go about recruiting. And what do you think that will do for you in the coming months and years?

That's exactly what it is, similar to how we recruit physicians from a corporate centralized service. We've taken that same type of model. We now have about 35 nurse recruiters on the corporate payroll, if you will, using all of our standard systems. And since most recruitment for nurses is now digital versus having them come to a hospital and filling out an application, we can scale our message, our approach so much more effectively from a centralized nurse recruitment model than we could in the historical traditional model of running ads and papers locally and what have you. So we just took advantage of, I think, the digital explosion and recruitment. And in terms of where we see ourselves expanding this model. As I said, we'll have it up in all of our hospitals by the end of first quarter next year, about 2/3 of it as of today. But we are seeing quarter-over-quarter improvements in our new nurses signed through this model. Obviously, as Kevin pointed out, it's important that we recruit nurses, but we also have a lot of initiatives on the retention side as well. We really do want to build a stable core long-term group of nurses to support our communities and our hospitals for the long run.

And that -- by digitizing it and centralizing it, so are you picking up nurses in other geographies that are willing to make a change that you might not have otherwise known? Is that the main opportunity that you pick up that way? Or is there something else about doing that, that results in a bigger catcher's mitt as it were?

Yes. I think it's -- again, I guess the options are limitless, frankly, when it comes to the digital marketing aspects of it. And I've learned a lot about geofencing and all these things I didn't think I'd ever have to become an expert in. But we do some of that within our counties where we operate, but we can also run more broad across the country for some rapid growing areas. I mentioned Knoxville, Naples, Birmingham, you can cast a wider net than what you could traditionally do during -- through local advertising channels in a market specifically.

Okay. And maybe just last, asking about the outpatient area, ASCs, and it seems like there's -- continues to be a push by the Medicare program. And certainly, there has been by the commercial payers for some time, to move cardiovascular procedures, other things to the outpatient side and reimburse for them there. Talk about how you're expanding that capability, I'm assuming it's one of the priorities. And just give us an update on what you're seeing on that side of the business.

Certainly. As we've called out before, we try to have a very balanced growth focus, meaning as much focus on ambulatory or outpatient revenue growth as we do on the inpatient side. We think there's a lot of opportunities to build out strong markets by having that balanced approach. We have a very full pipeline of ambulatory surgery development projects underway. We announced that we've opened up 2 new locations in the third quarter. We have another location under construction in Knoxville proper. So pretty excited about those. In terms of cardiac procedures, we have 2 joint ventures under pursuit right now and a long list of potentials for ASCs and cardiac ASCs as a result of some of the legislative shift that you've referenced a few moments ago. So again, our pipeline and the opportunities, I think, are still out there. Again, good feeding ground, if you will, getting into the outpatient side of the business. Taking care of the lower acuity cases on that side, partnering with doctors so that when they need the higher acuity services, there's a relationship, a trust and the value and the relationship for the hospital side of the business as well, which is why we like our balanced growth objective.

Well, that's great. Well, I really appreciate you guys taking the time with us this afternoon. It was a very helpful update. We sort of covered the waterfront there. And I wish you the best, and look forward to hopefully doing this in person next year.

Thank you, A.J.

Thank you, A.J.

Take care. Thanks a lot.

Take care. Thank you.

Bye-bye.