HCA Healthcare, Inc. (HCA) Earnings Call Transcript & Summary

Good morning. We use videos here at the corporate office to remind ourselves of the sacred responsibility we have to our patients. And I think in these videos that you're going to see today, you're going to see the power of our purpose as an organization. I think you'll see the power of our plan in executing on that purpose and then the power of our people as they do what they do day in and day out. We also remind ourselves of the responsibility and accountability we have to our shareholders. We believe that we can harmonize both objectives and accountabilities and ultimately produce value for both. So we're happy that you're here. Good morning. Welcome to the 2023 Investor Day. Somebody asked me last night, they said, Sam, why did you rush to have an Investor Day? You just had one. I said, yes, a little over 2 decades ago, we had one. But we felt that there was a lot going on in our company post-pandemic. And we wanted to share that with you today to give you a better picture of our organization and give you a sense of what we get to see throughout our company in our day-to-day interactions with our teams and physicians and so forth. So we have 3 objectives here today: The first is to show you the endurance and durability of our business. We think it's important always to look back and understand what happened in the past and how to carry that forward. And what I think you're going to see is a unique business with incredible endurance; the second thing we want to do is provide you with an overview of our plans to grow and deliver shareholder value. Again, I think you're going to see patterns and what we've done. It's our job to find new patterns and drive the company to future growth; and then the third objective is to introduce you to our management team. We have a wonderful management team and Bill Rutherford and I get to spend a lot of time with you all throughout the year, but we want you to get a sense of the depth of talent that we have as an organization. So just to give you a sense, over the past 10 years or so, we've invested heavily in our business to improve it. These investments have gone toward our people. They've gone toward augmenting our medical staff. We've invested in our facilities, programs, outpatient facilities, hospitals and so forth. We've competed in the marketplace with differentiation, innovation and scale. And we've had tremendously good execution from our team that performed at a really high level. These efforts, these investments, coupled with the organizational learnings we've gained from COVID, have helped us, I think, organizationally. It strengthened us competitively, and it certainly strengthened us financially. What I think in many areas is misunderstood about our business. We view our company as a hospital-centric health care system. And a hospital-centric health care system has unique staying power. And I think for me, I've been with the company now for 41 years. I can roll all the way back to the early '90s in Hillarycare. I can roll into the early 2000s with managed care and capitation. I can power through a couple of great recessions. And then I'll look to the Affordable Care Act in the clutter that was in the industry around the Affordable Care Act with respect to population health, value-based care, hospital is going to be a cost center and so forth. And I think what you see on this slide is an incredible staying power. I called it endurance. And I think when we looked at our business ourselves, we saw a unique capability with respect to hospital-centric networks. As you look at this slide, you can see certain metrics on here, which I think support that. Our admission growth over this time period is up 22%. The acuity levels or the intensity of the patient population that we take care of is up 25%. Importantly, our inpatient census up 27%, and you can see some other stats on the left. What this has done is translated to the right side of this graph, where you see significant financial metrics. Our revenue is up 91% over this time period. Our net income is up 192%, diluted EPS up almost 400% and the stock price up 650%. I get that this is in the rearview mirror, but it sends a message as to once again the sort of durability and endurance as I mentioned a minute ago. For us to be successful, we have to build networks that have local scale, they have to have a local scope of services and facilities, and we have to integrate them into a cohesive network, which we believe creates value for our patients. It creates value for our physicians and it creates value for the payers. This model, our provider system of choice model has produced market share gains and leading positions in major U.S. cities. We now represent significant healthcare infrastructure in many major U.S. cities. For us, this infrastructure position creates relevance. It creates brand recognition. And these are important ingredients for successful business relationships in our industry. Also, in midsized cities, this model works equally as well. We have a strong position in many midsized cities across the company as well. Since 2012, we have gained share in 3 of the 4 markets represented on these 2 slides, 31 markets. Now we have 43 markets domestically. In the U.S., we have 1 international market in Central London. We don't have good data with some of those, so we didn't put them up here, but we have an equal representation of our systems in those communities as well. I think another important point here is the diversification of our portfolio. Geographically, not 1 market represents more than 10% of the earnings of the company. That diversification provides market insights for us that we're able to carry across the organization. We're able to extract best practices from this diversified portfolio. And in many instances, it provides a bit of what I'll call it, a defense mechanism against something that happens in 1 market. It doesn't always happen in another because we tend to compete against only a system within that community. So the advantage of our diversification serves multiple purposes for us. So we studied the past, and we're looking forward to what's the forecast for the future with respect to demand. For us, we believe where you compete is just as important as how you compete. And we believe we are competing in the right markets, markets that have strong macros, averages and growth metrics above the national average. So when we look back since 2012, inpatient demand in almost 80% of our markets has grown. As we look to the future, we believe the demand curve for health care is going to continue to shift to the right. Population growth, aging baby boomers, in chronic conditions, yes, such as diabetes, obesity and so forth, put pressure on the demand curve. We estimate that the total inpatient market will grow in excess of 10% over the next 7 years to an estimated 8.3 million inpatient admissions in HCA's markets. This is a slightly accelerated rate of growth over the past period that we've studied. On the outpatient side, we expect demand to be even greater than what we see on the inpatient side. And this is especially true for our emergency room services and outpatient surgical services. As I previously mentioned, we've had success in growing market share. We set a new target for 2030 of 29%, which is continuing the path of growth. So we looked outside to see if our internal forecasts were, in fact, reasonable. CMS recently published and some of you may have already seen this, their estimates of healthcare spending in the U.S. And for hospital services, they're actually forecasting an accelerated rate of growth of almost 6% for the next 8 years. That's greater than the previous decade or so, where it was a little bit under 5%. So it tends to reinforce our thinking internally. So the strength that we've built, we believe our core business has even more potential to grow. We've gone through a fairly thorough assessment of our business, our assets, our organizational structure and believe we can go from strength to strength. And it's primarily because of the 3 opportunities that you see in front of you. The first opportunity for us is to expand our networks into the growing demand that we see. This expansion will involve similar patterns to what we've done in the past. Facility expansions, outpatient facility expansion, service line expansion and so forth. We have opportunities with network integration where we can integrate our networks more effectively. The second piece of our network expansion is geared toward workforce development. We need people as much as we need facilities in order to accomplish our objectives with our network expansion strategy. And I think you will hear from our team today on both around our network configuration and how we think about growth with respect to that component, and then you'll also hear from our team as we speak to the workforce development. The second part of our growth potential, we believe, is extracting the embedded value that we see inside of our company today, and we haven't been able to get after it until now. We have because of an evolving technology agenda, an opportunity to mine that value, if you will. And so we are investing heavily in a digital capability within our company. This opportunity will allow us to take advantage of the patterns that we see and give us better visibility into process, give us better standardization across the organization and deliver greater value, higher quality for our patients, more efficiency for our organization and better tools for our management teams. So we are very excited about the potential of what we're calling our operations transformation agenda. And again, you will hear from our team today around the areas that we're focused on to deliver on this. And then the third opportunity that we see is to continue to lean on the financial strength and cash flow production that we generate as a company and create value for our shareholders. We will invest heavily in our network expansion strategy. We will invest significantly in our technology and care transformation strategy but we will have the ability to deliver shareholder value in ways that we think are going to be productive for our shareholders. And Bill will cover that in his presentations later. Just as the U.S. has a constitution, HCA has a constitution. We design our strategy, we allocate resources, and we drive execution around this constitution. Again, you'll see some of this in our videos. But throughout all these different cycles that I mentioned earlier, I think our adherence and focus on our constitution of giving our patients what they deserve, of partnering with physicians to leverage their talent to produce better outcomes and then to use the distinct elements that no other healthcare organization in our space has or if they do have it, is willing to use it to the benefit of our organization so that we can improve performance. Again, I think this focus on our constitution and not deviating from our core has driven success for us. Inside of HCA, we also have our own form of federalism. I'll stick to the U.S. analogy for a moment. This is our flywheel. This is how we plan, this is how we resource. This is how we drive execution as a company. Inside the flywheel is the local piece of our organization. We have 16 geographic divisions that have responsibility to make the inside of the flywheel turn. They have been structured organizationally around each of our markets in a way that gives us the opportunity to develop networks within the communities that we serve and ultimately execute on the operational agenda that we have. The federal part of our flywheel is the outer ring. The outer ring is the enterprise capabilities that HCA has with respect to supporting each one of our healthcare systems. So our approach at the corporate office is to find scaled initiatives that can support the execution and the capabilities within the inner part of the flywheel. So you will see us with capital, clearly, with compliance, with other components, workforce development, graduate medical education and so forth, the components of the corporate initiative or the federal initiative, if you will, within our company, geared toward scaled solutions and scaled resources that we can bring to each of our facilities in each one of our health care systems. We think this flywheel can continue to turn both inside significantly well over the next few years. And then with the support that we have with our technology agenda, our resiliency agenda and other components of the enterprise capabilities that we're putting forth to deliver value as we push into the future. Internally, we talk about the HCA way. You see it here on this slide, it's simple concepts with really powerful implications for our business and overall performance. This operating model has helped make it possible for us to navigate through different challenges. It was how we approach the pandemic, and I think we were able to learn from this even more in the pandemic, and it's allowed us to really adapt to industry challenges. As we look to the future, we have designed our next-generation growth plan to build upon the unique strength we have developed and to take advantage of the opportunities in front of us. We believe it's a coherent plan. We believe it's a winning plan and it will allow us to provide even better care to our patients, respond to market dynamics and deliver sustained value for our shareholders. So as you go through the day to day, I hope you will see what I call the power of HCA. And I think that power has demonstrated an incredible wherewithal to deliver value to all of our stakeholders. We believe as a management team that we can continue to push in a direction that will carry this company to even greater heights. And I want to thank you all for joining us today and for your continued support of HCA Healthcare. Thank you.

Please welcome Executive Vice President and Chief Operating Officer, Jon Foster.

Good morning. It's a pleasure to have you here today and to provide a closer look into the strategy and the operations of our company. My presentation as well as the next 3 after me, will delve a bit deeper into how we think about the development and the expansion of our local networks and the services that we provide in them. Now while there are certainly similarities across our different markets and our network expansion strategies, as you might expect, how those strategies are executed and how they're influenced by local dynamics can and do vary from market to market. As a result, we systematically and continually evaluate our competitive position, and we invest as we see opportunities to expand our networks. As we're going to show, our networks are robust. They're durable, and they've been designed to meet the needs of our patients where they want it, when they want it, how they want to access it and how to navigate through it. Now Sam referenced our strong presence in major and midsized markets. And he's right. We've been very selective about where we operate, and that's been an important component of our success, certainly. But how we build, how we operate and how we expand our local networks is what we'd like to share with you in this morning's session. We think about the general geography of our networks in 2 basic ways. The in-market network and the outreach network. And we generate 85% of our admissions from the more urban in-market geographies. Our networks, they're anchored by our hospitals, as Sam mentioned, and they are the hubs where we generate most all of our EBITDA. Now those hubs are supported by an expansive network of access points, that are positioned throughout the urban markets that service outpatient sites to our hospitals that are fully integrated and aligned with our hubs. Our networks are comprised of access points like urgent care centers, freestanding emergency departments, primary care practices and multi-specialty clinics, and also imaging centers as well. In addition, we have services for patients that are being discharged from our hospitals that need downstream services like rehab, home health, hospice and behavioral health. We also have stand-alone outpatient locations like our ambulatory surgery centers that offer a convenient cost-effective venue for patients that need outpatient surgical care. So collectively, today, if you roll it all up across our system, we have roughly 12 outpatient access points for every 1 HCA hospital. And over the next few years, you'll see that easily growing to a ratio of 20:1. We're meeting patients where they want to be served. We're making it convenient for them and offering them a broad range of clinical services so they don't need to seek care outside of our local networks. Now 15% of our admissions come into our hubs from the nonurban areas or what we refer to as our outreach markets. An interesting fact is that the admissions that we receive from these in-migrating patients carry a contribution margin that's 47% higher than the average admission that we receive from our urban market admissions. This is due to the higher acuity of the patients that are transferred to us because there are certain services not available in their local rural market. So naturally, we focus on that part of the geography as well. Our networks in the outreach markets, they look a little bit different. They take varying forms from formal clinical affiliation relationships with rural hospitals, the management agreements with rural hospitals, outpatient specialty clinics where HCA physician specialists are located. And occasionally, we'll place HCA-owned freestanding ERs in sort of the border areas of urban and rural geographies. We expect this particular segment of patients to grow as well as rural hospitals continue to struggle. Sometimes to offer or maintain certain services or in some instances, they close altogether. Now in addition, we've also developed a set of what we call wraparound network optimizers that help to facilitate patient access and in essence, supercharge our network growth. We have air and ground transport programs. As you might expect, also, we participate in the vast majority of all commercial payer contracts across our markets and in fact, have over 6,000 hospital or physician contracts so the patients can have access on an in-network basis to our services. We have 330 physician liaisons that call on doctors to facilitate patient access to our services. We have 2,900 case managers that manage the length of stay inside of our hospitals so that we can ensure adequate capacity for patients that are requiring inpatient services from us. Our CRM team, they handle doctor appointment scheduling for patients that are being referred out of our hospital ERs, our freestanding ERs and our urgent care centers. Our telehealth services, they connect our networks to the referring hospitals and the physicians that send us patients. And we have patient navigators that for certain high-touch clinical services like cancer, perinatal, cardiology and the like. And then we have our transfer centers, they facilitate the transfer of patients from one location to another. And these things all working together. Our hub hospitals, that are integrated with an extensive network of patient access points and supported by a wide range of optimizers, forms the impressive healthcare ecosystem that is well orchestrated to provide care to patients when, where and how they want to access it. These various components, they work in a complementary fashion to retain and internalize patients inside our HCA local networks. And we believe this approach to building local integrated networks, as Sam mentioned, is value to the patient, it's a value to the physician, and it's value to our payers. Now the breadth of our provider network, as you'd expect, is extensive. 46,000 doctors, 310 urgent care centers, 137 freestanding ERs and 1,400 outreach programs collectively form the networks nationally that drive 41.7 million patient encounters to our organization per year. And as you might expect, that level of scope, it gives us tremendous perspective. It gives us perspective about what works and what doesn't work. An essence, providing us a continuous learning laboratory to seek higher levels of patient care and service over time. What has this produced? This approach to developing and expanding comprehensive networks has helped us grow our market share since 2012 by 360 basis points. It's also positioned us to be the #1 or the #2 market share leader in 81% of our markets. Now by way of a specific example, let's look at the Austin market in Texas. Now back in 1995, we formed the St. David's HealthCare partnership. And when we did that, there were 4 hospitals and 1 ambulatory surgery center in the primary service area or what we would call the in-market geography. And over time, in that immediate service area, we've added 3 more hospitals, 4 freestanding emergency departments, 25 urgent care centers, 11 ambulatory surgery centers, 75 outpatient clinics, and it's all supported by a 2,900 member medical staff. Now in the outreach market, we've added affiliated hospitals, we've added clinics, freestanding ERs, telemedicine sites and [indiscernible] operations. And in addition, we also have 2 de novo hospitals that are in the planning stages for the Austin market over the coming years. So all told, this has formed the largest, most comprehensive healthcare network throughout Central Texas and frankly, one that is perennially recognized nationally for its quality. And in fact, in 2014, was recognized as Malcolm Baldrige National Quality Award recipient. Our network in Austin, it's representative of our omnichannel approach, our omnichannel model, if you will, to providing care when, where and how patients want to receive it. Austin is, of course, just 1 example. Our efforts to capture patient volume migrating into our urban markets has been fruitful across our national platform. Our 1,400 outreach programs span 472 counties and have driven up our in-migration market share by 450 basis points since 2012. And we believe there is still significant opportunity to penetrate this market additionally. Now as I mentioned earlier, our networks are all supported by what we refer to as network optimizers. And just to give you a sense of the volume of the patients that are being served, we have a few statistics here, our transfer centers. They handle 175,000 inbound patient transfers from non-HCA hospitals annually. Our physician liaisons, they make 455,000 visits per year to physicians to help connect them to the services that we offer. Our telehealth team, they handle 400,000 telehealth visits annually across 425 different locations. And we handle 2.9 million patient navigation encounters per year and believe there is still significant opportunity to grow that even more. I mentioned our transfer centers. Let me just stop there for a second. We have 7 of them located regionally throughout the country. They're staffed by a team of 700 employees that coordinate not only the 175,000 inbound patient transfers from non-HCA facilities that I mentioned, but also the 490,000 patients that require transports between our facilities or to a location post discharge. It's a great team that offers a great service to our patients and referring doctors and hospitals. Our investment, as you might expect, in our networks has been and continues to be significant. In fact, right now, we have $5.3 billion in approved projects in the pipeline that are scheduled to come online in the next 2 years. As you can see, roughly half of this investment is for expansion and renovation of our hospitals with the rest being split between de novo hospital development and outpatient facility development. Here is a high-level summary of how our networks have grown over time. And I think you'll agree that this is quite impressive growth. And it's something that we are proud of. It's something that will continue to grow. And the growth of our networks, we believe has been impressive. It's positioned us to serve an even greater number of patients in our growing markets. So with that, I'm going to wrap up my presentation in this section of the session, but the next 3 presentations are going to delve a bit deeper into certain critical components of our networks. And they're going to showcase how we think about our emergency room strategy, how we think about our clinical service offering strategy and how we think about our partnership strategy. With that, I'll turn it over to the next presenter, and I thank you again for being here today.

Please welcome Atlantic Group President, Richard Hammett.

Good morning. The emergency room. It's among the most important and vital assets there is in any community that it serves. They're massively complex, highly regulated and always available. They offer a full array of specialized people, technology and organized services designed to meet a need in an instant. It's people thrive on the possibility of providing life-saving care. Its proximity to you and I can mean life or death. During most hours of the day, it's the only source of acute medical care for miles. It's the safety net. And it's the entry point for the clinical capabilities that reside inside the hospital. And it has 2 doors, a front door to walk in and be triaged and a restricted entrance backdoor, restricted for the EMS, emergency medical services. Those 2 doors represent the largest source of revenue for HCA because 75% of the total admissions to HCA come to the emergency department and 1/2 of all the inpatient surgeries in our hospitals are performed on patients who come to the emergency room. And over the 9 million ER visits that we provide in our hospitals and our freestanding ERs, we use that information at massive amount of patient -- across a massive amount of patient volume to optimize all elements of the patient experience, safety, speed, our clinical capabilities, our community responsiveness to drive our consistent growth. Now let's take a look at the demand for emergency services in our markets. Demand for ER services has been a stable and predictable source of new patient volume for years. Shown on the left is a 10-year run of emergency department visits to HCA hospitals. The average annual growth rate of emergency visits to our hospitals is growing at 3.7%. And our strategies are growing managed care ER volume at a faster rate than this overall average. We know the demand and we know our market share at a very granular level. In many cases, when it's available in markets at a ZIP Code level. And in our markets, there remains about 24 million ER visits of opportunity. So the fundamentals of our demand are very strong. We remain well positioned to satisfy the rising demand in growing markets and to also compete effectively in the markets that we serve. So how are we going to do that? So I'm going to highlight 4 major areas in which we drive competitive advantage in the emergency department: Number one, operational excellence. Work that we do inside the box, people, process, technology, accountability systems; the second is through our relationship with EMS, emergency medical services, the local 911 ambulance service providers; third, the level of clinical capabilities that reside beyond the front door of the hospital within the hospital; and fourth, our capital allocation strategies to the emergency room. So let's talk about operational excellence. We know that time is a critical factor in the experience of the patient. It drives patient safety, and it drives patient trust with us. And HCA's comprehensive knowledge base in emergency services is a competitive advantage for us. Our process design and our process improvement mechanisms are all informed by the most comprehensive suite of ER data analytics in the industry. There's 3 foundational elements that I'll hit on, and there's a lot here. The performance monitoring. We're driven in the monitoring of this 1 department of a hospital across 300 metrics, 13 reports at the shift level and at the day level. Every division President, if you met them last night, of the 16 markets has a daily set of e-mails about ER metric sitting in their inbox right now, just as an example. [ We're pushed ], we have dashboards of accountability. We use these insights to drive accountability reviews at the daily -- yes, daily, weekly level and monthly level within our hospitals. If you look at the suite of data, it would feel like an obsession and it is. Our performance monitoring is at the core of what we do to drive efficiency in the ER. The second is real-time analytics. So the best example here is a tracking system technology we use in the emergency department. So on the desktops of our -- in our emergency department, it's on wall-based monitors in the emergency department. Increasingly, it's on our staff, our registered nurses phones. And so think about when a physician makes an order -- emergency physician makes an order in the ER or changes an order or a radiologist makes a read or an interpretation of the CT scan of the brain or a lab test has been delayed. That information is instantaneously posted on patient level detail on these monitors through the tracking technology. So the teams know immediately and can pivot accordingly. And the third area I'll highlight is predictive modeling. And I think the best example to use here is how we try to predict the unpredictable, which is the daily volume in our ERs. Because there's no scheduled work in the ER and you can't close the door when it just gets too busy. So we know through our deep data that day shift is the busiest shift of the 24-hour day and Mondays are the busiest day of the week, and Novembers are the busiest month of the year, true. But that didn't help you staff or plan resources and staffing within the emergency department. Market variability, individual hospital variability, the resourcing needs within the hospital driven by volume can fluctuate by more than 20% any given day. And so we use our deep analytics to predict the right amount of staff resources on a daily basis. And all of this is structured and supported by a dedicated team of process engineers or PI experts, and they reside in our 16 division offices and in our corporate offices. They're the people engine, and this is all that they do, is ER. They're behind the insights and within the data and the performance mining we provide, they're supporting our teams and their reviews. They're also harvesting best practices, merely cascading those throughout the company. So they're shared learning immediately. And indeed, everything and more that I just shared with you has come from within our company and how we scale our improvement efforts within the emergency departments, largely through these teams. And the third area is you can't put all this together without leadership. And when you think about this important and massively complex department, it requires leadership. And the best example here, I would say, is if you've been tapped to be emergency department leader, you're going to go through a 7-month development program to get you ready to lead this complex organization with such high expectations. So you also heard Sam talk about an ER revitalization effort on previous calls. That's just a very important thing to hit on because basically, what we did post COVID is acknowledged the need to rebase, so to speak, or refresh this entire agenda across all of our leadership teams and systems and to ensure a consistent level of knowledge, confidence and accountability. And that process is going on right now, starting earlier in the year. What's the result of all this? The result is we lead. We benchmark. We hold ourselves out against the scrutiny and performance of others aggressively within our culture and company. And this is one area where we do that. We benchmark against 2,900 other hospitals, and we lead in 9 key ER throughput measures. Two key throughput measures I've highlighted here. How long does it take when you walk in the door to see and begin getting served by a doctor, 10 minutes or less -- 2 minutes is our average right now across our main hospital emergency departments. And that important metric, the treat and release time, when you walk in the door to the time in which you leave. For treat and release patients, we're half hour faster than our peers in this benchmarking alliance. Now that -- this is one reason why most of our benchmarking we do is holding ourselves up to the scrutiny within our own company. And we believe we can continue to get better. Let's pivot to EMS. Again, as I said, the emergency medical services, or local 911 provider. Our goal is to be their choice of hospital care. And this is one of the largest customer groups in all of HCA because these ambulance -- local ambulance services represent a substantial percentage of ER visit volume to our hospitals. And from experience, because of that, we incorporate a number of different practices to relate and engage our EMS. One is we have incorporated paramedics, an important role in their care model for pre-hospital care. We've incorporated paramedics into our care model in the ER so we can do a better job integrating people from their team and to our team. We also utilize extensive ER protocols and plans within our hospital to do a better job of receiving patients who come in through that back door and offloading patients. Now why are we so focused on time and efficiency? Well, in all markets, there's contracts between EMS providers in the fire department and/or a local municipality. And by typical contract, they've got a response time for 911 calls in the range of 4 to 7 minutes. So for them, they need to get their patient into the hospital and then get back on service. And so for them, time really matters. How do we do? Well, when you think about just that wheels in, wheels out element, how fast between they come in, they receive and then we assume care from them, and then they can leave. We're averaging under 10 minutes. We average 9 minutes or less. And again, we're still driven to do better. The third element of our strategic growth agenda is what we call clinical capabilities. We believe this has a multiplying effect on ER growth. Now examples of ER -- excuse me, examples of clinical capabilities are stroke capability. Like the example you saw in the video earlier today at Swedish Medical Center in Denver or a trauma capability, pediatric capabilities or the ability to take care of advanced -- complex heart attacks or burn program. These capabilities may cause a patient to self-select 1 hospital or ER versus another. But the clinical capabilities inside of a hospital will always be a factor for the EMS and their decision around where they go with the patient in the back of their rig. Just as a rule of thumb, the combination of stroke, trauma patients and patients with a cardiac condition can be more than 20% of the EMS runs that are handled by an EMS agency. So where they go to how they match the patient in the back of the rig to the hospital's clinical capabilities matters to them greatly. And our goal, obviously, as you heard earlier, is to prevent the loss of patients from our HCA network. Nashville is a great example of where we do this really well. And so this is a map of the city that you're in right now. And I think by context, we have hospitals that are well located across the growing geography of the city. We also have these internal patient transport teams, and you heard Jon Foster talk about that just a minute ago, where when a patient is in one of our freestanding ERs or one of our hospitals with maybe more limited capabilities, we have the ability to transfer within ourselves to a higher level of care using our own internal transport, and they do that quite well. But Nashville has also done something else really well. They've matched the patient demand in Nashville for the clinical capabilities that are needed very well. And so when you think about the fact that they have 52% ER market share in the city -- in a growing city. It's very impressive. But more impressive is the fact that 8 out of 10 patients who need a higher level of care, don't leave our network. They actually stay within the HCA network and it's because of the combined effect of all these things I mentioned. Last example I'll give you is capital allocation. And this is an area where we have accelerated our spending into -- investment into emergency services. Over the last 10 years, as you'll see on the top right, we've added almost 2,500 ER beds, and we've added over 100 freestanding ERs. So many of those beds have been freestanding ERs. We've continued to make investments into freestanding ER sites because we've seen such massive demand in our markets that we serve. And the freestanding ER, I think it would be helpful if I pause here just to define that, if you look at a main hospital ER department and you physically pulled it out, out of the building and moved it 10 miles away to a street corner, that's in essence, a freestanding ER because it is tethered to a main hospital. It's a department of -- but it meets all the patient care and regulatory requirements of the main hospital ER. It is truly an ER. And the advantages are clear. For us, it's the fastest way for us to get emergency beds up and going, so to speak. It can tap into an area of significant unmet need for us in a geography that they have a lot of distance between where patients need to see -- looking to seek ER services. They proven to have provided unmatched patient experience, and they have unbelievable patient efficiency and throughput metrics. Our freestanding ER volumes are growing faster than our overall ER volumes as a whole. And about half of our hospitals have at least 1 connected to them. And they can be successful for different reasons. We have freestanding ERs that are in high need, high-demand rural markets. We have also placed freestanding ERs in close proximity to one of our own main hospital ERs. With the express desire and strategy of patients self-selecting to that nearby freestanding ER because the main hospital has such physical capacity constraints. And so this is a faster, cheaper way than expanding a main hospital department by doing such a strategy. And the third is penetrating and going into new suburban markets that have high need. And we know consumers have at the top of their list, the reason why they would choose one ER versus another is proximity. And so as you can see below, under development, you have over 51 freestanding ERs in the pipeline and other additional investments in our emergency departments going in the future. Now finally, I'd like to give you 1 example of the market where I think all 4 of these elements come together. Now Sam let me write my presentation today, put all the slides together. And so it should come as no surprise that when I think of like -- where this most successfully comes together, well, of course, it would be a market that rolls up under me. So this is Ocala, Florida. It splits between Gainesville, Florida and Orlando, Florida. It serves a population of about 400,000 people. And we have 2 hospitals there. And about 7 years ago, we had a new leadership team, and they began to focus more on the operational excellence, the integrity of the work that they do inside their ERs and become better and more efficient and patient oriented. They took what was already a good relationship with Marion County, EMS and made it great. They made strategic investments into 5 freestanding ERs over the course of the subsequent years, four of them were in those suburban growth corridors. One of them was one of those close by main hospital offloading techniques to take -- to reduce the capacity constraints of their main ER, also an EMS satisfier. And when you think of their clinical capabilities, they advance their cardiac capabilities, they became a trauma center. They became stroke capable similar to the Swedish Medical Center you saw earlier. And a combined effect is this they drove outsized emergency room volume, emergency emission volume, and it drove the overall market share of the hospital. A great success in one of our most successful hospitals in the Sunshine State. Thank you very much. It's been great to be with you. Have a great morning.

Please welcome National Group President, Tim McManus.

Good morning. I'm going to be talking to you about how we expand clinical capabilities to drive growth. HCA has developed a deliberate and systematic approach to attracting complex high acuity patients to our hospitals. Our goal is to broaden and deepen our services through both horizontal and vertical expansion. We want to be all things to all people. We want to make sure these patients are able to stay within our system. This high acuity you've heard about all day is actually a force multiplier. We get more revenue per patient on the same fixed [ chassis ]. What's driving this high acuity? It's the aging population that Sam referenced. Between 2000 and -- 2010 and 2020, this population over 65 grew 22%. Remarkably, by 2030, it's going to grow another 31%. That 75 million people over 65 years old with more advanced comorbidities than ever. We want to be there to serve them. These are patients with congestive heart failure, end-stage renal disease, advanced kidney disease. You can imagine the complexity of caring for those patients. In this graphic here, I show you this service line innovation. This happens at the regional and local level. Our teams find physician partners who are interested in advancing their own skills and working with our platform to take it to a new level. We wrap around that, the important part of what HCA's corporate support and infrastructure. This is about leveraging HCA's scale. HCA scale brings not only expertise on the actual subject manner but it really takes 43 major markets and look at who's done it before, and we learned from the past integrations of these complex programs. And then we infuse capital, technology and innovation. Through this -- and then, of course, scaling and replicate -- scale and replicate. You're going to hear that through my story today. And this obviously drives increased complexity of our patients. Sam referenced the diversity of our portfolio. We're not dependent on any 1 single service line for greater than 14% of our inpatient hospital net revenue. This mitigates risk, risk from having new drugs to market that may prolong a patient getting treatment or that shift from inpatient to outpatient we've been talking about for 10 years. This contribution margin, as you might expect, is higher than our average contribution margin for these complex patients. One reason we go for that. What I will show you today is our approach to high acuity. It's a disciplined approach in 4 key service lines I'm going to run you through. But we do this where we program these services at scale. We created a competitive edge or first to market, and we increased market share. You've heard discussions today about case mix index. This is a measure of acuity or complexity. It grew 25% over the last 10 years. We built these complex care hubs, which allow our community-based hospitals to have that safety net and support these acute destinations. When you think about getting care, if you need care, you want to go to a place that does a lot of it. You don't want to be in a place that's just doing a handful of months. And so we drive those patients into complex hubs where our staff are better trained because they do a lot of it. And of course, we have those physicians doing a great job. There's also a halo impact from this. The best and the brightest physicians want to go somewhere where these complex services are offered. In the old days, those physicians would probably have been attracted to an academic medical center. We're faster, we're more nimble. We give them voice. We are less bureaucratic and physicians love that. These academic centers without our scale are at a competitive disadvantage. And so this growth in CMI has generated net positive growth on our revenue. The first example I want to give you is our neuro. In 2016, we took a very deliberate approach to building the infrastructure by building out these comprehensive stroke centers. These high acuity patients often require surgery or intervention as that first video you watched. This impacted both our case mix and our market share. We added 10,000 incremental admissions over this time period, 121% growth in our stroke surgeries. How did we do that? First and foremost, through our quality. We have a door-to-needle time of half the national average. That's coming to our ER with a stroke, and we're giving you a clot-busting drug in 33 minutes. We did it through our technology. We invested in this AI technology, which identifies patients earlier who are great candidates for a surgical intervention. That's what you want. And we did it through our research. Right now, we have 19 clinical trials going on. This is also a terrific attractant to those high-quality doctors I talked about. In my Denver example up here, Denver is large -- this service area I show you here is larger than the country of France. This is showing you 65 hospitals that are feeding their complex patients to those regional hubs because of the talents of those teams. It's really important because they're using those network optimizers that Jon Foster talked about. He talked about telehealth, he talked about ground and air transport, and we're getting those patients faster to us so we can treat them. Minutes matter. And over the last period of time, we've actually got a 1,300 basis points. I want to reemphasize that, 1,300 basis point competitive advantage in market share over the #2 competitor in Denver. Trauma is another great example. In the trauma space, this is not just about trauma. This is about taking a comprehensive integrated network view and investing. So we're U.S. largest provider of trauma services with over 11% of those highest acuity patients across the country are being cared for in one of our Level 1 or Level 2 centers. Over 200% net revenue growth since 2013, and the next 10 years is projected to grow a CAGR of 9%, it wasn't just about trauma. Burn was a terrific adjacencies, and we think about adjacencies on every one of these services I will talk about today. We can clearly with the platform of trauma layer on the burn specialist, and we put -- we tripled the number of burn centers and that was really important because this filled gaps in geographic coverages that people -- we saw those gaps and we filled them. And we created a model that we can replicate across the country. The rehab space is really a tremendous catch all. Those stroke patients, those trauma patients, those burn patients many of which needed to have post-acute care for speech therapy, occupational therapy, physical therapy at the inpatient level. And so we invested over $0.5 billion over the last decade building more beds for rehab. It was a service that we couldn't get patients through our system fast enough because they were sitting in there ready to get out of hospital, but weren't ready to go home. We did it better. 80% to 90% of us sitting in this room today will require inpatient rehab at some point, largely because you're going to live longer than your parents did. And you're going to be treated for more clinical care along the way to manage those comorbidities. Cardiac care is another terrific example. In 2013, we took a deliberate approach in expanding and deepening our CV service lines. The outcome of that was that we grew our 120 programs for ECMO, for ventricular assisted devices, for ablation across our platform. So this is about broadening and deepening. The examples I gave you on the right is just showing you the sheer growth that happened during that time period. Right here in Nashville. In 2008, our Centennial Heart, which is our flagship hospital here in Nashville had 6 cardiologists. Today, there are 41, serving 4x the access sites, they grew the CMI by 50% and expanded our network. And finally, cancer. In cancer space, we did -- and over the last 10 years, HCA experienced 92% growth in our transplant and cellular therapies. This makes HCA the nation's leader in bone marrow, CAR-T and gene therapy research. We served patients from 36 states to 7 transplant centers as shown by the blue lines on the graph. We perform more transplant from the academic medical centers of Mayo, MD Anderson and Dana Farber. The exciting thing that happened in the last year is that we did a partnership, a joint venture with McKesson. This brought together 2 community care assets and created this care closer to home. If you are a cancer patient, that's what you want. You want second to none quality and you want it right in your backyard, and we've successfully done that. We put 250 -- with McKesson, we got 250 research locations, we embedded the 1,500 medical oncologists under the U.S. oncology brand that this was about not just doing research and doing cutting and medicine, which we all get really excited about, but it's doing care. It's doing care for our patients and our families. Another great example of an adjacency here was our solid organ transplant. We show in the Orange lines here that we are the nation's #1 provider for doing solid organ transplants. So in conclusion, where do we go from here? We believe in our high acuity methodology. We are forecasting a high acuity impact services ranging between 6% and 36% over the next decade. So our strategies are actually simpler than I just suggested. This is about continuing to invest and deploy clinical complex programs at scale, structurally creating physician partnerships to support these programs, investing in leading technology and delivering strong clinical outcomes. Thank you.

Please welcome American Group President, Erol Akdamar.

Good morning. Jon talked about the power of the network. Richard talked about the importance of the emergency room, and Tim talked about advancing high acuity services. Integral to all of this is how we partner with our physicians. Physicians play a key role in expanding our network and growing our share. Because physicians are partners and a key dimension of our operating model, our goal is to be the provider system of choice. Sam shared this flywheel earlier. And as you can see, one of the components is attracting exceptional physicians. But physicians cut across all dimensions of the flywheel. We work with physicians to develop comprehensive services, as Tim described. We work with physicians to staff the access points of which Richard described the emergency room, but we also work with physicians to coordinate better patient care and to deliver operational excellence. This model works for the patient. It works for our physicians, and it works for the health system. Let's take a look at the physician landscape. HCA has a robust network of physician partners represented by the 46,000 physicians on our collective medical staff. We partner with physicians in many ways. As you see here, employment and independent status. We do employ physicians, but predominantly, HCA is an independent model with 81% of our medical staff being independent. We have seen a move towards employment, and I'll give you 2 examples. There are some specialties that have moved more towards employment because of the hospital-centric nature of their business like cardiovascular services where they're desiring to be tethered to a health system. There are also markets where the market has moved more fully to an employment model. For instance, Kansas City for us, where 37% of our medical staff is employed, contrasted with Dallas-Fort Worth, which is more of an independent market, where only 7% of our medical staff is employed. Generally, there are 3 types of physicians on our medical staff. They are specialists, they're hospital-based physicians and they're primary care physicians. We have a higher portion of specialists which makes sense because they deliver high acuity care, they admit patients to the facility, and they are more procedurally oriented and they do more surgery. Our hospital-based physicians, pathologists, emergency room doctors, radiologists, support generally the business that's coming to the hospital, and our primary care physicians are more upstream and provide care on an outpatient basis. At HCA, we take a pluralistic approach to primary care. In addition to the primary care physicians you see on our medical staff, we have another 1,100 primary care providers that are in our urgent care platform creating greater assets to primary care for the communities we serve. HCA is also the largest sponsor of residency and fellowship programs in the country. GME is vital for developing the physician workforce for the future, again for the communities we serve. In order to attract physicians, we've developed a value proposition. As I mentioned, a number of our physicians are independent. So generally, they are selecting where they admit their patients and where they choose to practice. The key elements of a value proposition that we've identified are giving physicians voice, creating capacity, both physical capacity, but also efficiency in their practices, helping them grow and then wrapping it around exceptional clinical capabilities. We strive to give physicians voice to ensure that they are heard. Jon talked about the physician relations representatives that are out in the field, interacting with our medical staff, understanding what we do well, so we can do more of it, understanding where the challenges are in our health system so that we can carry that back to our operators, and we can continuously improve. We also have physicians that serve in leadership capacity at the facility level, medical staff leadership, quality leadership, even strategic leadership. There are counsels and committees that they serve on. That also exists at a market level where we leverage exceptional physicians to help lead our markets, again, in clinical and in strategy. We even have that at a company level where we've tapped into world-renowned experts in their field to help us lead at a company level. Our management teams are exceptional in engaging with our medical staffs and building that trust. In a recent survey, 90% of our physicians are committed to investing their thoughts and ideas in our hospitals and 90% believe HCA is a favorable place to practice. We put time and capacity back into a physician schedule. For instance, an orthopedic surgeon who we're able to allocate 2 operating rooms to in a given day is able to minimize the downtime between cases, create more efficiency in their day, do more surgery and get back to their office and create opportunities for further care. We also assure that there's medical office building space on our campus or adjacent to our campus. Again, this creates efficiency in the physician's practice as they move from their office space setting to an inpatient setting and minimizes the drive time and the travel time that essentially is downtime for them. We provide access to clinical capabilities, and we have provided a platform for growth that I'll talk more about in future slides. Basically, physicians want access to high-quality care for their patients and a network that will help them grow. An example of leading capabilities, clinical capabilities and growth is our robotic platform. HCA has invested over $800 million in robotic technology, and we are the largest producer of robotic cases in the country. Not only do we invest in robots, but we also invest in training our OR teams to be best-in-class and in clinically supporting the physicians with this new technology. From 2019 to 2022, we've purchased an additional 340 robots, and we've aligned with an additional 600 physicians. And in 2022, 91% of our elective net revenue growth was in robotic surgery. Successfully executing our clinical agenda is foundational to creating these world-class programs. We also invest capital in infrastructure and aligning on a common vision with our physicians. We have a proven track record for attracting and partnering with physician groups to create marquee programs. Here are a few examples. The hospital for endocrine surgery in Tampa, Florida was developed in 2020 through a joint venture with a renowned physician group, the Norman Clayman Endocrine Institute through a common vision, a $50 million capital investment and the relocation of the world's leading endocrine experts, we opened a world destination for endocrine care and research. In Dallas, Medical City created 2 destination hospitals on an adjacent campus, the Medical City Heart and the Medical City Spine hospitals. Through a partnership with elite cardiologists and spine surgeons from various groups aligning on a vision, we developed these 2 destination hospitals. The results have been impressive. The hospital for endocrine surgery has indeed become a destination with 90% of the patients coming from over 100 miles away and almost 10% of the patients coming from outside the country. It performs more thyroid, parathyroid and adrenal operations than any other hospital in the world, twice as many as Mayo Clinic, Johns Hopkins, MD Anderson and Cleveland Clinic combined. They are also the leader in research with over 1,000 research publications. The Medical City Heart and Spines Hospitals have now brought together 90 spine and cardiac physicians around the vision of these destination hospitals. Medical City Heart Hospital is in the top 2% in the country for CV surgery, and Medical City Spine performs the highest and complex scoliosis and spine surgery. We've seen an outsized growth in market share and case volume in just a few years. Next, our urgent care platform. It's creating greater access for patients and is a vital source of network growth as well as a source of patients for our physicians. For less acute needs, patients need access to convenient care that's close to home and its high quality. Today, we serve over 3.4 million patients in our urgent care platform. Over the last 8 years, we've grown from 20 clinics to end the year with over 345 urgent care clinics. Primary care is generally underserved in most communities and urgent care is meeting those needs. Our pluralistic approach to primary care has been driven by aggressive expansion and acquisition in our urgent care platform. You'll see to the left, the Dallas-Fort Worth Care now has grown from 24 clinics to 57 clinics. It now serves 1/7 of the population in Dallas-Fort Worth. We had another strategic large acquisition of MD Now in Florida, with 59 centers growing to 76. These access points complement our network and provide a full continuum of care for our patients and ultimately expand our network to grow share. Again, the results have been impressive. Our urgent care network creates convenient access for our patients while also creating downstream business for our network and affiliated physicians. In 2022, our urgent care clinic produced 220,000 referrals, primarily to specialists in the emergency room setting. From these urgent care clinics, HCA was able to retain 56% of the patients going to specialists and 61% of the patients going to the ER. While those numbers are best-in-class, you can obviously see there's more opportunity for us there. Our urgent care platform will continue to be a key source of growth, likely moving from predominantly acquisition to de novo of development and building out our network. Our model ultimately strengthens physician partnerships helps us grow and meet the community needs. These local networks paired with enterprise capabilities are attracting physicians which drives growth for the physicians, for HCA Healthcare and ultimately delivers the care our communities need. We believe this model should drive market share growth and allow us to meet our growth targets in the future. Thank you.

Thank you for your attention this morning. We'll now break for 20 minutes. Refreshments are being served in the foyer. [Break]

Please welcome Senior Vice President, Finance, Mike Marks.

Good morning, everybody. It's my great pleasure to be here and to introduce this block of our time together. You can see we're going to be talking about resiliency and benchmarking, and how we're going to drive our efficiencies to the next level. And I'll start this block, and then there'll be 2 speakers who follow me. My mission is to tell you about resiliency in benchmarking. And then Shannon Dauchot and Ed Jones are going to talk to you about how we leverage our shared service platforms. Collectively, we're really focused on how do we enhance our margins and how do we take our cost management efforts to the next level. You can see our focuses are not only on driving efficiencies but elevating performance and creating future value. We use our shared service platforms to do that, and then we also use a lot of digital transformation tools. And throughout my time with you today and through the time that Shannon and Ed will spend, you're going to have an opportunity to see how we use our digital transformation tools and some really interesting work that we're doing around advanced benchmarking and analytics. So let's dig in. So what is a resiliency program? For us in HCA over the last several years, really kind of coming out of the work from the COVID pandemic, we've started building a platform and a program that finds new ideas that can help us drive efficiency and take those ideas and putting into a program. So think about this as kind of a big project management effort. Right now, we have 28 workstreams that are focused on the areas you see on the right side of your screen that have start times, end times. They have business cases that are funded, and they have dedicated multidisciplinary teams that are focused on delivering the value for the company. These programs all leverage the capabilities that you see on your left. So we've talked about digital transformation. We're scaling best practices. We're using benchmarking and analytics, and we put a lot of time and energy in how we build our structure to align our resources to accomplish these objectives. Our first focus is this idea of revenue yield completion. And I think you're aware, the revenue cycle in health care is actually very complicated and complex. And so we have to make sure that for the services that we render to the patients that we serve under the contracts that we signed, that we're able to collect that revenue. Now we don't want to get paid $0.01 more than we have earned for those services, but we also don't want to get paid $0.01 less. And so you're going to hear in Shannon's presentation how we're using our resiliency program to deal with these complexities and make sure that we collect the revenue that we're earning. The second area that we're really focused on is this idea of cost. And now I think you guys know HCA very well. We are already industry leading in both our fixed and variable cost performance. It's really a hallmark of the company, and it's one of our big competitive advantages as a company is our cost structure. But using the capabilities that you see here, we are still finding significant opportunities to drive additional efficiencies, both in our fixed cost and our variable costs. And you're going to see through today's presentation several examples of that, that give us a lot of encouragement that we can take our cost management structure to even higher levels of efficiency in the future. And then lastly, I want to mention our patient throughput and capacity management and is a really key part of our resiliency program. And it's going to be a big part of today's presentation, super important. So let's talk about speed and execution. HCA is big, and it's kind of part of our scale and part of our size, but we can be big and sometimes big companies can feel slow. And so what we're trying to make sure of, with the discipline and structure that we put around our resiliency program, is this idea that we can be both big and fast. And we like to use an analogy that resonates with me. You're in Nashville, the Tennessee Titans is our local pro football team, and they have a running back named Derrick Henry. Derrick Henry is 240 pounds, he's 6'3. He's big. Now Derrick Henry also runs 22 miles an hour. So he's fast. And so what we're trying to do is be the Derrick Henry of health care and be both big and fast. So I want you to hold me to a challenge as we go through the rest of this presentation, are we able to use our scale and size but also do it in a very fast way? So I want to use an example of case management to really kind of highlight one of these resiliency programs. It's 1 of the 28 workstreams that are in flight right now. And so what we're trying to do is invest, and we are in a multiyear effort right now to invest in case management. We've added service line leaders and support resources at our division and corporate offices to really focus on driving case management. And we're trying to accomplish 4 goals with this program. And the first one is improving care and outcomes for our patients. And what we've learned is this, is that the discharge process in dealing with the really complex variation in care processes and dealing with a lot of the administrative burden that comes with getting a patient through the continuum of care and getting them out to their next step in the continuum of care is complicated and a lot of times gets delayed. And so we are convinced that if we can do a better job reducing this variation, removing the barriers to a safe and timely discharge, that it is better for patients. Our patients expect of us a sense of urgency and a focus in helping them get the care they need and be ready for discharge as soon as possible and then efficiently and effectively helping them get to that next place of care. And that improves their care and outcomes. Now the good news for us is that same process of getting patients ready for discharge and then out to their next spot in their continuum of care also has financial benefits. And the first one is this idea of reducing variable costs. You guys are aware, we take care of our inpatients, inpatient beds, staff our care teams with supplies and drugs and physicians in the whole bit. So when you're able to reduce the number of days of patient stays during their admission, it frees up and reduces your variable cost per case. It also helps us to free up capacity, and we're going to talk about that further as we go through the next several slides. But when you reduce a patient day, that allows that next patient who's sitting in the emergency room, waiting to come upstairs or that next patient that's out in another facility that needs to come to an HCA hospital for a higher level of care, it allows us to take that patient in earlier and quicker. That same factor helps us really improve our staffing demand. So think about all the nurses and the techs and the doctors that are taking care of patients. And when you can reduce length of stay, it frees that same care team up to take that next patient faster. So that's what we're working on, and this is how we're going about it. So the most important thing that we're doing is you think about our investment in case management is we're investing in our people. So we've added these support and leadership resources at our division and corporate office. We've invested in training and education and staffing support for our 3,000 case managers in the hospitals. These are nurses and social workers. And we're really investing because what we've learned is this, when great people are well organized and supported, they produce great results. So that's the first platform on how we're going out in trying to reduce our length of stay. The second is this idea of leveraging process improvement, technology and automation. Think about case management as a decentralized service, right? So we have these 3,000 people. They're embedded in 183 hospitals. In the past, this was a very not only decentralized but unstandardized process set. And so through process improvement and through the adoption and rolling out of technology and automation, we're able to take what is a decentralized function and produce support through standards and through investments, that elevates the performance of this across the company in a scalable way without having to centralize resources. The third leg of this stool is this idea of using advanced analytics, real-time support through reporting and high-level benchmarking to really give our case management teams in the field much better insight into their performance gaps and in their compliance with our standard processes. All of this work then leads us to being able to really focus on reducing our length of stay and increasing capacity. So what are the results? In September year-to-date 2023, when you compare our business to the same period in the prior year, we've been able to grow our admissions by 3% over prior year. And at the same time, our census is flat. And so that happened because we were able to reduce our length of stay by 3%. Now what is the impact of that? The impact of that is the equivalent of building 500 beds of new capacity. Think about building a 500-bed hospital with no capital. That's the first benefit. The second benefit is this idea of staffing demand. So we were able to free up the equivalent of 1,500 members of our care team to take that next patient in, get that patient out of the emergency room, allow that transfer to happen. And you can see this result also with almost a 60% improvement in transfer declines this year versus last year. So we're excited about the results of our case management program this year, and we believe that it's going to continue to fuel performance for us as we go through the next 5 years. All right. So now we're going to use some examples of how we're using both advanced benchmarking and analytics and technology tools to really power this case management agenda. And this is a dynamic discharge dashboard that we have created. We've rolled it out to all 183 hospitals in the last 2 months ago, 3 months ago. And I want to tell you a story from 21 years ago when I was a hospital CFO in Ocala, Florida. And I used to meet every day with me and my hospital case management director and our chief nurse, and we would take a printout of our census list to every patient in the hospital. And my case management director would have different color of highlights. And we would ask and find certain patients that needed a focus so that they will be more ready for discharge, and a couple of examples. Patients that are in hospital beds that have a patient discharge order but they're still there. So we would go through this list of patients and we would find those patients and we would highlight them in yellow. Then we would try to find patients that if they could just get the laboratory test results back or an imaging study result back, we would be able to get that result to the physician and get them cleared for discharge. We would find those patients, we would highlight those in orange. There are 7 or 8 other drill paths, is what we call them, that really help us find patients who are most ready for discharge. And we built those drill paths into this system, and this system is real time. And so every time a transaction occurs in our electronic medical record or any of our transactional system, it updates this system in real time. It's drillable. So if you think about our case management teams that are at the corporate office all the way through the groups and divisions and hospitals, you can take all of these questions that we're answering with this data and you can start drilling. You can go from corporate to group, to division, to hospital, to the nursing unit, to the patient. And you can do that in reverse and go to different drill paths in real time. This tool has freed up our managers and our leaders. Instead of them finding the patients that they can accelerate and prioritize their work on, it in effect give them the work list that's going to allow them to focus their time and energies on the right patients at the right time to help us really get patients out safely, appropriately and timely for discharge. So that's the 3D tool. We couple that with NATE Tempo. And NATE Tempo has been out in our facilities for about the last 2 years. This is an example of a response to COVID. Right in the middle of the COVID pandemic, we were really struggling with capacity in many of our markets. We had a division in Central West Texas division, which is in Austin, who had developed the beginnings of what NATE Tempo was. And in a matter of weeks, we took that idea, we fleshed it out and built it into a system, and we rolled it out to all 183 hospitals. And now what we're doing is taking it to the next level. And so what NATE Tempo does is it gives us a technology workflow tool to help support something called a multidisciplinary round. So a multidisciplinary round happens every day in all of our hospitals on a targeted group of patients, and it's a meeting. And this meeting includes the patient's doctor, typically a hospitalist, this patient's nurse that's on staff at that shift, the case manager assigned to that patient and then a team of our ancillary and support leaders. And they go through a review of this patient and they go through the medical records, and they talk to each other about what are the barriers that we are seeing that's keeping us from being able to progress this patient's care through the continuum and get them ready for discharge. And as they find the barriers in the care process, it's keeping that patient in the hospital, they document those in a standardized templated way. And then those barriers become work list for the key departments in the hospital to make sure that we are prioritizing our work and getting patients organized and ready for discharge. So when you think about coupling, the dynamic discharge dashboard is a top-down management tool with NATE Tempo, which is a technology-driven workflow support tool, it powers this process of really improving our ability to manage our length of stay and improve capacity. The next step for NATE Tempo and for the dynamic discharge dashboard is the implementation of various data science algorithms that will make these tools even smarter. And we're working now on things like prediction engines that will tell us the anticipated data discharge, anticipating and predicting what status the patient will go to; for example, will they go home, will they go to a skilled nursing facility. If we can know where the patient is likely to go earlier in the stay, it helps us take the time to get organized for that and prevent discharge barrier delays. So these data science elements will be weaved into these tools over the next year, and I think will make them even stronger. Okay. In the beginning part of this presentation, we talked a little bit about how we use advanced benchmarking and analytics as a key part of our resiliency program. And I wanted to take a minute and use the hospital benchmark tool as one of the examples of this work. And this tool was rolled out company-wide last year. It's been very powerful. And what it does is this, it takes 169 key performance indicators across 7 domains of performance. So think labor management, human resources, physician cost, et cetera. Each of these domains have a landing page that looks like this. And for every one of those metrics, the hospital management team knows how they rank in the company. So think about being a hospital C-suite member: a CEO, a CFO, a COO. And they are able to use this report, and they know where they rank in the company against their key performance indicators. And I mean literally, like they get a rank of I'm #1 of 183 or I'm #183 of 183. And no one really wants to be 183, right? That's the anchor person. And so there's a lot of competition that we create in the field for people, and our teams are competitive of making sure they understand their performance gaps and then start taking action against them. Now our data also curates for each hospital a curated group of peer group hospitals. Because if you're an HCA hospital, your best comparison is another HCA hospital that looks the most like you. Think about it, standard systems, standard data, standard processes. And so when you're thinking about your performance gaps, having this peer group set of hospitals that you can see their data and you know that they're the most like you, it gives you the opportunity to find someone who's doing it better than you are. And it's kind of like Phone a Friend, if you remember that game show. This gives you who to call to find out who's doing it better. You also get 6 months of trending that you can see on your right for each of the metrics so you can test yourself against yourself. Now what do our teams do with this? This data updates daily, weekly and monthly depending on the metric. And our hospital management teams are using this tool to find their biggest performance gaps. We even make it easy. We use an algorithm to find their biggest areas of opportunity quantified in dollars. And that goes on an executive summary tab for them. We take those performance gaps areas, and we help them create an action plan at each hospital. And that action plan is embedded in the hospital benchmark tool, and that action plan has dates and deadlines, responsible parties, and it has corporate support from the company through the groups and divisions to make sure from an accountability standpoint that we're achieving the action plans that we set forth. This work has allowed us to not only reduce variability in the performance of our hospitals across the company but reduce variation in a really significant way. Now this is just one example of how we're using benchmark. It's a good one, and we are using this as a capability, and you're going to hear more and more about benchmarking as you go through today. You've already heard Richard speak about it in the emergency room, and it's a powerful part of our overall resiliency program. So the laboratory service line is another example of a resiliency workstream. It's 1 of the 28 resiliency workstreams that I found really interesting. And so we -- if you go back over the last 20 years, we've had a big integrated regional lab in our South Florida market in our East Florida division. It's called IRL or integrated regional lab. And what we've realized over the last several years is that the performance of laboratory services in that division were way better than our other markets, because this division has created a market-scaled capacity lab for the high-volume lab test, pulled those out of the hospitals and really capture the efficiencies of having a scale laboratory in a marketplace. And then the hospitals in that division had stat labs for these labs that they couldn't send to the market lab and still process locally. We surround this idea of building market labs, which we're now rolling out to our other markets that have enough density of assets to justify a central lab, and then we're surrounding that with experts. And so this becomes a supported service line in the company under Dr. Michael Cuffe, and they've got pathologists, they have laboratory experts. And so in addition to capturing the value of centralization of our high-volume lab test, we can support that with subject matter expertise and standards. What lab test can you eliminate as being unnecessary? How do you standardize clinical reporting? And you can see that what we learned through this best practice in one market is that this was a better way. We believe, and you can see, we spend about $1.2 billion a year in our lab function. We believe that this is worth about 10% to 15% of pure cost savings as we roll this out over the next 3 to 5 years. And it also has clinical and operational benefits to be. So great service line, a great example of I've taken an idea like shared services, that we generally think of as being back office and administrative and operational support, but applying that as a capability to even things closer to the clinical core. You may not realize, but HCA has a long track record of leveraging global capabilities, and I'll give you a couple of examples. Our Parallon revenue cycles operation has been using global partners to do coding and other functions for many years. Our information technology group has been using global partners for over 2 decades to help really support big applications for the company. But in 2024, we're going to take the next step forward with global capabilities. And we're going to build a global capability center in India, starting with our IT group. And the nexus of this or the hypothesis that we're trying to prove with this is really based on three ideas. The first one is we believe that this will give us better access to global talent. And when you look at the competitiveness of trying to hire the number of IT professionals and software developers that we need as a company, the ability to kind of cast a wider net and hire globally and bring really talented professionals into the company, and where we can have 1 team that works in 2 countries, is going to be powerful because we struggle often to find those roles and fill those roles now. The second benefit, we believe, of a global capability center is this idea of powering automation and innovation. These teams are going to be integrated with our automation center of excellence to give us more resources faster to really drive what is a really important part of our overall resiliency and business platform, which is driving automation through our systems. And the good news, it also produces a significant cost reduction. So we're excited about where we've been with global capabilities, and we think we're going to take a good step forward in 2024, and we will continue to evaluate additional functions for global capability building as we go through the future. Okay. So I want to apologize for the small font, and I know that's really hard to read. But we were challenged to be able to articulate what we think this collective work. We have all these multidisciplinary teams working across these 28 workstreams. We have our management teams out in the field always looking for new ideas, for best practices, for big pain points, and they're bringing those in to our resiliency program. So we felt like we wanted to give you a sense of what we think it's worth. And we are targeting annual incremental cost savings over the next 5 years of $600 million to $800 million through this work. I'll end with this and then turn it over to the following presenters. We're really encouraged with our resilience and benchmarking effort. The support that we get from our senior management team, the engagement that we feel in our hospital and support service leaders and staff to really not only identify these workstreams, these ideas to get more efficient, but then be super engaged and executing against those ideas, we believe are really creating a momentum for the company and will help us as we go through the next cycle in this business cycle to drive our efficiencies to the next level. Thank you for your time today.

Please welcome President and Chief Executive Officer of Parallon, Shannon Dauchot.

Good morning. It is my great privilege to speak with you today about the Parallon story. Over 2 decades ago, Parallon began as one of the original shared services initiatives for HCA Healthcare. At the core of our business is full-service revenue cycle management end to end. For us, this includes the responsibility for patient access in the hospitals, functions like scheduling, insurance verification, registration, all the way through to final account resolution. And these processes are highly complex, probably the most complex revenue cycle of any industry and getting more so by the day. Over the years, we have delivered superior performance, cash flow stability and predictability in a highly efficient manner. Once we demonstrated our ability to consolidate and transform administrative functions at scale for the company, we leveraged those learnings to expand the reach of our capabilities beyond core revenue cycle. Over time, we have added a number of other administrative functions to the platform like payroll and project services, and later, credentialing of our physicians and clinical data registry abstraction. And more recently, we executed an initiative around contact center activities across the company as well for both patients and colleagues, performing customer service functions through phone and digital capabilities and then have seen great results. With each new administrative function that we bring on, we're adding value to the enterprise. Our operational delivery takes many forms with an on-site presence, of course, for our patient-facing responsibilities. But largely, our services include those not required within the walls of the hospitals. So we have a very flexible workforce, highly remote and dispersed globally as well as across the country. This has allowed us to become more functionally organized over time rather than just geographically structured and is a key part of how we have evolved, allowing us to be more efficient and targeted with where and how we accomplish our work. Our 4 main revenue cycle service centers each serve over 40 hospitals. But we've also specialized in certain areas where a focused approach makes more sense like payer-specific teams, a dedicated Medicare service center, our physician revenue cycle, coding services and other functional areas I mentioned before like payroll and our contact center. As you can see from some of the examples in front of you, we have a tremendous scale with massive volumes of transactions. We also have cash flow responsibility for most care settings across the HCA Healthcare enterprise: hospitals, physicians, urgent care centers and specialty services as well. And in one form or another, we touch every colleague. But size alone is not what drives this kind of performance and efficiency. We follow a model that has served us well throughout our history. People, processes and technology, pretty basic, right? These are the elements that have enabled us to get where we are today. We start with our people. This is an area where we, like other industries, are facing changing workforce dynamics. We continuously invest in our team of highly experienced resources, providing them education, extensive career paths. And whether physically on-site or virtual roles, our workforce is positioned for the future. Our processes are centered on being highly compliant, organized, analytical with change management and continuous process improvement principles will have been throughout. We approach technology with an automation mindset, and we're proud to lead the organization in a number of ways through the development and deployment of workflow tools, integration, bots, digital transformation and more, often aimed at accelerating how we elevate the patient experience. This foundational model produces our competitive advantage, which ultimately is providing best-in-class results with a cost structure well below the industry average. There's a long list of ways we add value through our model and a few of the highlights are here for you. Scale, which leads to our cost advantages through the elimination of redundancies. We have the ability to fund meaningful investments, and we have payer influence and relationships. Another benefit of our model is focus, the ability to specialize where it makes sense at scale as well as growing deep subject matter expertise. And I think, and this is very important, that because we do what we do, local markets can focus more on patient care and growth initiatives and less on administrative functions. Compliance is one of the original reasons for the parallel model. With a dedicated infrastructure, particularly in the government payer space and standards backed by policies, we are able to have a very predictable, reliable, known operating framework. We further support compliance with an investment in legal resources and regulatory compliance efforts for all states. With the analytics that we produce, we create transparency, identification of trends and opportunities. And with our automation of very routine tasks, using analytics, we become monitors instead of doers and can better adjust with those shifting workforce dynamics. And last, our foundation drives our overall performance, operational excellence, longevity and the expertise that comes from that as well as an operational alignment and continuous process improvement. So our capabilities are what drive us to deliver unparalleled value and evolve with the needs of the HCA Healthcare enterprise. So what's next? Our evolution involves 3 main areas of emphasis over the next several years. Let's start with additional services. We plan to continue to leverage our administrative platform and prowess by continuing to in-source functions that are currently outsourced today with external partners. We're building new support models for divisions and hospitals to enhance their charging completeness, accuracy and net revenue realization through a new enterprise revenue integrity organization. We will be centralizing and optimizing delivery of patient navigation services in conjunction with our patient contact center organization. And of course, we know there are other growth areas not yet even on the road map. Innovation. We will continue our advancements in automation and leveraging emerging technologies. And a bit later, I will share some more highlights around this work with you that we're really excited about. And operational integration. With a tight focus on collaboration with other operational areas, we're moving beyond our typical transactional focus and exploring new ways to expand our value. This includes even better revenue cycle management performance. One way to accomplish this is through the creation of our integrated revenue cycle. More to come on that. So when thinking about automation and innovation, we don't stop at the traditional, transactional back-office activities. We're also trying to push boundaries when it comes to how we serve patients directly. Virtual registration is one of Parallon's latest innovations, delivering a safe, contactless, patient-centric registration. By ensuring a fast, friendly and confidential patient experience, this very self-led process reduces the number of nonclinical team members entering a patient's room. The tool initiates by scanning the patient's arm band. And if we've seen them before, it will leverage the existing data that we have to pre-populate all of the fields, saving time on data entry and avoiding frustration for patients that could be experienced in providing personal information to us multiple times. If a patient needs assistance at any time during the process, they can choose to be connected to a live virtual registrar via a video call. The patients complete all of their forms and information using the tablet at their pace in the care setting. When asked for feedback, our patients remark how efficient and easy this process was for them during what can typically be a very stressful time. Virtual registration is just one example where we're finding solutions to have the right resources and information at the right time. And yes, we're challenging the status quo of the way things have traditionally been done. By digitizing these functions that historically have been completed in person, we can further deliver efficiencies by streamlining processes and ensuring we can respond to patient volume fluctuations, all while giving patients more autonomy, privacy and a better experience. Now one of the keys to success for HCA Healthcare is a predictable, reliable cash flow for funding of operations. After some fluctuations due to the pandemic, our accounts receivable days have remained stable for the past 7 to 8 years, and we've maintained our level of working investments in capital. This is the result of a significant effort and initiative across our organization. While we've been expanding our scope of services provided to the enterprise, we've been maintaining strong AR performance despite the increasing complexities and challenges presented in the revenue cycle space. Now I talked about revenue cycle and for us, that starts at patient access. But really, when it comes to the true revenue cycle, patient access is not the beginning. The establishment of rates and contract language with our payers is. And when that process works as designed, the cycle is fairly streamlined, and we get paid what is expected. And most of our claims follow what we call the happy path, from pricing through all the way to payment in that it all aligns with our expectations. But for some that hit a barrier at some point in the process, that can cause friction, rework and administrative cost in order to be sure we get paid. So when it doesn't go as planned, and those friction points occur beyond cost, our bigger opportunity for improving the revenue cycle is getting paid for the services our facilities provide. And it probably comes as no surprise to you that we experienced payer actions that add some complexity to our model, like underpayments and denials along the way. And unfortunately, that has increased. We have a very complex book of accounts receivable that Parallon is charged with resolving. Medicare, over 20 different state Medicaid programs, thousands of payer contracts, and each of these has different processes and different account life cycles. And in order to address this and stay on top of it, we have to keep advancing our approach. Opportunities exist for us when we have payment barriers. We'd like to prevent them all together. Not only are we focused on driving business process value, but if we can excel in this area, we're really pleased to work to improve the patient experience, value for them by less confusion, fewer delays, less friction on their part. So they don't need to worry about the financial side of their care. Because of this, revenue cycle management, our core, still has opportunity. And in light of the current environment, we know we can't do it alone. So throughout a patient's claim journey, we know that often inputs influence the revenue cycle long before Parallon picks it up to begin the claims processing activity. Where denials and other payment barriers arise, often the teams responsible for resolving these issues do their work independently with eyes on their part of the problem, but not necessarily seeing and talking about the whole picture. Despite each of our teams excelling in their specific efforts and collaborating really well already, we know we can do better and ensure that we can eliminate missed opportunities and any fallout. And with the growth in denial and underpayment activity and overall complexity, we knew we really needed to refine our approach. It requires us to be even more sophisticated, more coordinated, and we have found some opportunities to tighten that circle even more. Recognizing the importance that all of our teams play in addressing these challenges, we come together formally to create our integrated revenue cycle or IRC. The goal is to drive real change to the outcomes of our revenue cycle functions through true collaboration across our teams, connecting both the clinical and the strategic. From payer contracting to utilization review to documentation improvement and case management, hospital operations to Parallon and legal. Here, in the IRC, we address the issues and obstacles, share big and small ideas, get organized around meaningful projects, initiate process improvements and find as many ways as possible to reduce our ARDs outstanding. In the IRC, we have a long list. We prioritize. We challenge each other, get in the room together without fail, remove all the barriers, make decisions about investments, set measurable goals and accountability. We get consensus. We go big and we go fast. I have a few examples shown here on some of the key opportunities that began with general denial mitigation strategies, and that continues to be our primary focus. We've identified wins with internal handoffs and tracking of escalation of our most egregious issues to arbitration and litigation, better feedback loops and where to deploy automation. The IRC initiatives also include some expanded services. I mentioned before, enterprise revenue integrity is one of those. We've also developed a centralized physician adviser organization to proactively tackle denials during a patient's stay through a peer-to-peer conversation with clinical decision-makers at the payers. And who would we be if not focused on how we can use data and analytics to drive our performance into the future. Here are a few examples. One of the ways that we're addressing denials is by unifying our data, layering on advanced technologies like generative AI and using that intelligence to transform our processes. We have immense amounts of data from multiple systems and for seemingly different purposes that we're bringing together in the cloud. And that's harder than it sounds because you have to standardize and map all the data together, but it's so worth it. Imagine the power of having a patient's clinical information and financial information and payer contract details and language as well as [ deets ] and time stamps on every activity all in one place. With this, we know we should be able to expose more subtle signals and patterns that will help us better understand the true drivers of the results we're seeing. Our new denials dashboard activity is one example. So now by putting all that data together, we can view denial drivers from the very beginning, starting with insurance authorization through those peer-to-peer reviews with those physician advisers, all the way to billing and final resolution. By bringing together all these data sources and using AI to populate a new robust clinical summary, gathering important parts of the medical record for us, we can also create a more effective medical necessity appeal process, more complete and faster. And in that AI will point us to ways we can target to prevent those denials in the first place. And this is just one use case. In the revenue cycle space, we have accomplished a lot, and you can see here the trend line of our cost over the years. Over the past 2 decades, we have chipped away manual tasks and fixed costs, evolved our workforce dynamics and have continuously improved upon efficiencies across the board. But as good as we are, we are hungry for ways to evolve and improve. You will notice our cost reduction curve has begun to get tighter. So looking ahead, we're addressing bigger opportunities like net revenue capture, staying focused on driving increased value through our integrated revenue cycle efforts. We are confident we will achieve more efficiencies and performance improvement by expanding our administrative services platform as well as exploring the power of new and exciting technology solutions. Thank you.

Please welcome President and Chief Executive Officer of HealthTrust Performance Group, Ed Jones.

Good morning, everybody, and it's a real pleasure and honor to be here. And looking forward to taking the next 20 minutes to give you an inside look of what sits inside of HealthTrust and how HealthTrust creates value for the company. But I did want to start with HealthTrust started back in May of 1999, and it was just a group purchasing organization. And its primary focus was to build a contract portfolio that had breadth and depth. You roll the tape forward to February of 2000, and we launched our first shared services initiative and supply chain, along with our revenue cycle that Shannon just covered. So back in 2000, we had a GPO and we had a supply chain organization. Over the last 2 decades, we've added other capabilities to the organization and to that platform to create value for the company. So let's take a look. So HealthTrust, as I mentioned, is the operation support platform for the company. It gives us the ability to scale capabilities across the company. And every day, we wake up and we focus on 4 key areas: supply expense, operational excellence, clinical labor and purchased services. And if you look at the center of the screen, all of those things are capabilities that we either built or acquired that are focused on driving performance in each one of those areas. So when you start with supply expense management, we have a GPO, and we have a supply chain organization. So those 2 components' primary focus is how do we drive performance there as well as how do we support nursing and other caregivers to make sure we have the right product in the right place at the right time. If you think about operational excellence, it's our shared services platform. And then more importantly, how do we integrate those capabilities clinically with our caregivers. And all of that is geared to how do we drive a more effective operating platform for the company. As we think about clinical labor, we own and we run a staffing business. We have one of the largest managed staffing providers in the space. So basically think about that as a general contractor that manages contract labor for the company, and then half the shifts that we fill are all internal employees. And then the other half, we buy through other staffing agencies. But we're able to buy that at scale, which gives us a cost position in the marketplace that's very strong. The other 2 components of clinical labor is our Galen College School of Nursing. You'll hear more about that today by Dr. Sammie Mosier as well as our clinical education capability. So think about contingent labor, how do we help develop new nurses and then how do we train our nurses, not only in the first part of their career, but as they continue through their journey. And then purchased services defined really as all the nonlabor and all the nonsalaried spin, and then a subset of that is about $4.2 billion. We have a couple of capabilities around that. One was an acquisition around technology that gives us line of sight of how we're spending our money around purchase services, and I'll talk about that in a minute, and then as well as our supply chain organization. And all of this is geared towards how do we support our hospitals. So I thought I'd take a moment just to show you kind of where we sit. So if you look at the footprint of HealthTrust, and this is all the capabilities, everything from our distribution centers to our Galen campuses to our centers of clinical education, and we're pretty much sitting in the markets where our hospitals are. So no surprise there. But I did want to draw your attention to a couple of things. When you think about the GPO, there are 7 owners of the GPO. And of that, HCA is the largest owner as well as the general and managing partner of that. What that does for us, it allows us to buy at a scale of $50 billion. If you think about HCA, we spent about $9.5 billion of supplies. But through the GPO, we're going to market with a line volume of $50 billion. The other thing to note is we have right now about 33 campuses and sites, all dedicated to either developing new nurses or training them after they graduate. And then the last call-out on the slide that I think is worth mentioning is that we do have a sourcing office in Shanghai, China. We've been located there since 2010. And that's been a very valuable capability, but it really revealed itself during COVID. And why was that important? It gave us eyes and ears on the ground as things started to unfold with the supplier base in Asia. Having been there for 10 years, we have developed a lot of relationships with suppliers. We knew which suppliers had 510(k) approvals from the FDA, which suppliers are the ones you want to stay away from, et cetera. And what it allowed us to do is get ahead of starting to make some decisions around supply procurement decisions that helped us start to recover the supply chain more quickly. And that really served us well during COVID. If you think about the actual capabilities, if you look at the top 3 to the left, those are all the GPO capabilities. So think about sourcing and building contract portfolios for people to access. The HealthTrust GPO, all targeted around IDN acute care systems. AdvantageTrust is focused on the non-acute and obviously, a significantly growing segment of the market. So we have a capability specific to that. We also have HealthTrust Europe and it really has 3 purposes. One, it supports our HCA assets. Number two, it does support several NHS trusts. And third, we also support several elements of the private sector. As I mentioned, Valify was a capability that we acquired. It was a software capability that allows us to provide an access line of sight to things like how much do we spend in neuromonitoring, dialysis, elevator maintenance, lawn care and everything in between. And then it allows us to benchmark that across the enterprise. So if you think about supplies being about $9.5 billion, it allows us to put the same type of rigor around this other area of spend. If you take your eyes to the bottom of the screen of the 2 -- 3 capabilities around labor, I already mentioned workforce solutions and the labor management capability that we have and Galen College School of Nursing as well as clinical education. The only thing I'll say on that is the Galen College School of Nursing is a tremendous capability in itself. What we're doing on the clinical education front is a powerful capability in itself. But what you'll hear from Dr. Mosier is how when you start to think about those 2 things together, it's not only just the nurse starting school. But it's a progression through their educational journey, ultimately landing in HCA, being whatever they want to be. And that where I think there's a lot of power in the future. And then supply chain and supply chain has really evolved over the years. So it's really everything from procure-to-pay, inventory management, every element of supplies, even pharmacy. So all the employees, pharmacists, people who work on the dock, procure-to-pay, distribution, et cetera, all sit inside of the supply chain organization. And so it's, in essence, an outsourced in-source model. And then I'll also touch on some of the next generation of shared services that we believe will not only create value in the future but will continue to free up capacity for our management teams locally. So one of the key metrics that we're focused on is supply expense as a percent of net revenue, really important metric. And through a very strong clinically integrated sourcing process, we've been able to contribute to margin expansion over the last decade. And if you think about the key capabilities in doing it, you can read across the screen. And I want you to think about these enablers, these capabilities as enterprise capability. So these are things that we're managing at the corporate level, and all of these things have been able to help contribute to a strong performance over the last decade. So as we think about supply expense of $9.5 billion, we really think about it in 4 key categories: pharmacy, medical devices, commodity and blood. And that really drives our contract strategy because we do track several raw material indices and other trends in the marketplace. So we know where we need to go long in contracts, where we may need to go short, where we may need to lock in pricing, et cetera. We typically move about 1/3 of the book a year, and that really helps us diversify our risk. So pretty much, we have a little bit over half our book locked on supplies for 2024. If you think about the balance sheet, we carry about $2.1 billion on the balance sheet, and you think about the cost of capital, how powerful that could be if we're able to reduce that inventory balance. And we've got line of sight right now. We believe we can reduce our balance sheet by over $200 million and free up that as working capital. We think through our benchmarking and analytics and our next generation of warehousing capabilities, we can drive that another 15% to a total of 25% or $0.5 billion of inventory reduction. So think about that in terms of power of working capital on the balance sheet through these initiatives. So one of the things we talked about and you've heard a lot about is analytics and benchmarking. And what I wanted to do was just take a moment and give you a real-life example of what that means inside of HealthTrust and how we do our work. And it's really in the area of pharmacy. And I know the slide is hard to read, but I'm going to walk you through it. So the first thing we're able to do is we now can identify drug variance costs at a DRG level with a click of a button. We can then click again and down on the bottom left of the screen, we can then see what the actual drugs are that are in that case, and they're stack ranked by opportunity. In the top right, it kind of shows where the facility is. And then the bottom fourth click really shows you the position. So in a matter of 4 clicks, we're able to see the variance at an enterprise level, drive all the way down to an episode of care, hospital and physician. And we're able to do that at speed, and Mike talked about speed. And everything we're doing now in our analytics and our benchmarking agenda is all about how do we identify opportunities faster, how do we work with our clinical teams to build the right clinical plan and protocol, and then how do we create that plan and how do we execute it within our organization through our platform. And so this is just one example, and it's a 7-figure opportunity for us in this one instance. Our second area of focus using the same methodology is in medical devices. So imagine the ability for us, at over 183 hospitals, being able to look at medical devices, find the variance, click down to a specific device, specific hospital, to a specific physician. And so the speed in which we're acquiring and identifying opportunities allow us to really accelerate our performance. So we're really bullish on this capability and how that's going to accelerate our ability to harvest value. So the one thing I want to talk about was expanding our shared services platform. Obviously, we've been doing it for 20 decades. You heard from Shannon all the work she's doing there. Here are kind of the next 4 that we're tackling on -- that we're tackling. And we're going to talk a little bit about distribution centers. We're going to talk a little bit about equipment management. But I first thought it would be important to kind of level set what makes a good opportunity for a shared service capability. And whenever you have a decentralized function, you typically have variation in process, which then drives variation in results. And everything we do in shared services, the way we like to think about it is how do we create management capacity at the local level on the ground so they can focus on more strategic things. They don't have to worry about collecting bills. They don't have to worry about processing orders. They can focus on growth, deploying capital, they can recruit physicians, focus on creating the right work environment, and ultimately drive a better patient experience. So if you think about shared service as an enabler to create management capacity on the ground locally where the action happens, that's what shared services does. So when I think about distribution, and we'll drive that in a minute, we think there's tons of opportunity that will drive additional value in the supply expense line as well as the inventory line. I'm not going to talk in detail about [ EVS ], food service and facility management, but I did want to just touch on it for a moment. If you think about [ EVS ] and [ fans ], so basically, our hospitality agenda, all that's decentralized. Some's outsourced, some's in-sourced. We have a variation in the way -- the food we buy, the menu sets, et cetera. We think there's a lot of opportunity in that not only to create a better cost platform but create a better patient experience. And we have pilots underway today. And right now, the early returns are this is really positive. And we'll gauge '24 as the pacing process to roll this out even further. If you think about facility management, we spent about $1.2 billion in repairs and maintenance. If you think about all the infrastructure to run hospitals between cooling towers, boilers and the like, if you think about all the trades, painters, electricians, plumbers, et cetera, we think there's tremendous variation that happens on the ground. And we think there's a lot of opportunity for us to bring a lot of rigor and structure around that area. And then equipment management, which I'll go really deep on, is really about how do we create a better experience for the nurses to access the equipment they need. You may think when you look at those capabilities and you think about Galen and you think about clinical ed, you may say, how in the world and why does this sit under HealthTrust? And I really think it starts with organizational structure. We have built an organizational structure that parallels the operating structure of the company. So we have a corporate team, we're integrated at the group level, we're integrated at the division level, we're integrated at the hospital level. What that allows us to do when we go to execute is we're at the important places of the organization where decisions are made and execution drives -- is driven. We have a proven methodology and approach. You heard Shannon talk about people process technology. That's the winning formula, and we've been able to prove that. All that rolled up has allowed us to execute with speed and precision. So let's talk about distribution for a moment. If you go back in 2000, we built out 22 distribution warehouses, mentioned warehouses. And think about them in terms of more franchises, some general guidelines on how to run them, but they were really run independently to serve that local market. But what we learned during COVID is that there was tremendous power in viewing these distribution centers not as individual places where product were stored, but as a network that was spread across the company. And so during COVID, what it allowed us to do is move products and equipment through the company to meet the patients where they were during these COVID waves. And what we decided was there was tremendous opportunity. We have not built the platform for that, but we could build a platform for that. So the first thing we did is in Florida. We had 3 distribution centers in Florida. We've collapsed those into one in Lakeland, Florida. And we'll go into a little more detail in just a second. The second phase of this is we're looking at Texas. We think there's tremendous opportunity in Texas to do the exact same thing. You can see on the map, there's other natural kind of clusters of warehouses, and we think there's opportunities to further rationalize the assets and even maybe create micro inventories, leveraging inventories across individual facilities and investing in the technology to bring visibility to that. But let's talk about Lakeland. So Lakeland is about 90 miles from the Atlantic Ocean, about 60 miles from the Gulf Coast. It's 713,000 square feet. It's one of the highest points above sea level. It's fortified to withstand winds of over 140 miles an hour, so it's very, very durable for us. Interesting note. It's located less than a mile from several of our strategic partners. So the discussions we're able to get into now, given the size and scale of this operation, is how do we start to take structural costs out of the supply chain? How do we become easier to do business with? So rather than maybe partial truckloads, we go to full truckloads. Rather than full truckloads, we go to containers. So we think there's so many opportunities to start identifying raw materials, subassembly, production, finished goods and all the layers of distribution that takes place in the industry. And we're building a platform that allows us to take a lot of that structural cost out. And that's going to do 2 things for us. One, we believe it will help us lower our supply expense. But it will also help us hit our inventory reduction targets as well. It not only services hospitals, but it also services a lot of our other points of care. The one thing that this has been able to do for us, because of its size, we've been able to invest in a lot of automation. I know it's hard to see on the screen, but we've got a tremendous amount of automation in this facility. Some of it's just automatic pick and sort. Products come to you based on what the order is, and the person just pulls it off out of the system and packs it and picks it. We have what we call cobots. They actually work alongside a colleague, and they allow us to pick at a more efficient rate. And we're seeing 2x labor productivity improvements there. There's sorters and then ultimately, there's shipping lanes that are prebuilt based on optimization of truck routes. And this has been something that we have been really, really bullish on as we move forward. And the last piece is it's a key component in our business continuity strategy, not only from a pandemic perspective, but also in responding to hurricanes or other natural disasters. So let's talk about equipment management. So equipment management is really about how do we enable nurses at the bedside to spend more time taking care of patients. And as you know, we've had a staffing crisis now for the last few years. Back in March of 2021, we wanted to understand what was taking nurses away from taking care of their patients. The #1 issue was their inability to find the equipment they needed to take care of the patient. So what type of equipment? IV pumps, monitors and the like. And so we started a pilot and we were focused on 3 things: improve the availability of equipment for our nurses; reduce our short-term rental expense; and then third, how do we think about life cycle management as we replace the fleet and right-size the fleet. So here's what we did. We basically installed a platform, and you'll see where it says identify, that's actually a map of a real nursing unit. And within that nursing unit, we tagged all the assets with low voltage Bluetooth, which now gives us the ability to look at a specific nursing floor, and we can see every IV pump that's available, every monitor that's available, et cetera. The second thing that's important is the ability to locate it. So nurses can either go through their handheld or a desktop and say, tell me where the nearest IV pump is, and they can go to it. And then lastly, there's a management component on this on how do we manage and understand utilization, time out for repair, et cetera. If you look at the results from these pilots, I'm not going to read all of them, but you can see they're quite impressive. But I will touch on the last one. Those nurses that took place -- took part in this pilot, over 80% of those nurses said, this capability met or exceeded their needs. And so we're in the process now of rolling this out. And by the end of second quarter, this capability will be rolled out across the company. So what I want to do is end kind of where Mike began. Over the last 60 minutes, you've heard from Mike, Shannon and myself talk about advancements that we're making in our analytical capability, the things we're doing around benchmarking, how we're building on our existing administrative support platform, our operation support platform, all geared towards driving stronger financial resiliency for the company, not only today, but in the future. We got a lot of momentum. We got alignment and commitment across the organization to execute the plan, and we're confident we're going to drive results in 2024 and beyond. Thank you for your time. Enjoy the rest of your day.

Please welcome, Senior Vice President and Chief Information Officer, Marty Paslick.

Hello, everyone. Well, as the CIO, you can tell I don't have to say a whole lot. If we had a word cloud for this morning, I'm pretty sure the word analytics would be one of the largest words in that cloud. And we will talk about some of the next-generation capabilities. But really, our analytics background goes back nearly 2 decades. And it was big data that led many Fortune 100 companies into a new era of analytics that profoundly altered how they operated their businesses. Companies such as Apple and Walmart were quickly moving to a new wave of technology for data warehousing called NCR Teradata. And joining them in that pursuit was HCA Healthcare. The result was the largest collection of clinical data by a provider and the ability to take advantage of data at scale. Now as data began to fuel operations, the emergence of mobility began to play an important role in companies that had a highly mobile workforce. FedEx was a leader as they placed a mobile device in the hands of their drivers. Recognizing the mobility of our clinicians and operators, HCA Healthcare has invested heavily in mobility. As one of the largest users of Apple devices in the enterprise, HCA Healthcare manages more than 190,000 Apple devices for the purpose of improved communications, collaboration and maybe, most importantly, last-mile data delivery. As we envision the future health care delivery environment, two key technology partnerships will serve as our next-generation catalyst. First, we believe our partnership with Google will fundamentally improve our ability to use the cloud's best attributes, speed and elasticity. We also expect our close partnership will also provide us an accelerated glide path with both generative AI and our next generation of analytics. Our second key partnership is with MEDITECH. We believe our enterprise adoption of a new foundational electronic health record will not only serve as our transactional clinical system of record, but will increasingly become the method by which insights identified by the HCA Healthcare Intelligence Net, which we are developing with Google, will be delivered into the clinical workflow real time, providing our care teams access to profoundly differentiating clinical decision support. We expect HCA Healthcare's adoption of advanced technology will enable better patient care to be delivered more efficiently, more consistently and more transparently. In fact, we strongly believe that there's never been a time when we have seen more potential, more commitment or more opportunity to unlock the multiple sources of embedded value that exists across HCA Healthcare today. Our history and our partners set the stage for a new frontier of clinical and operational capability and scale. So it's now my privilege to introduce you to Dr. Michael Schlosser, the Senior Vice President of Care Transformation and Innovation, to define the impact advanced technology will have across our enterprise.

All right. Good morning, everyone. It is truly a privilege to be up here with you today and to share a piece of the story of this technology and transformation agenda and mission that HCA is on. There's really 3 things that I hope you take away from my portion of the presentation today. The first is just how wide and deep the ocean of opportunity is, in particular, in the care transformation space, so in applying this type of technology to care delivery. The second is how HCA Healthcare has really, I think, ideally positioned ourselves to be one of the, if not the, leader in this space -- in the health care industry. And then third, we'll dive into a couple of examples of how this work is already underway and the impacts that it's already having across our organization. So you can see that this is not just planning and strategy and ambition, but it's actually work that is already in flight and underway, and we're beginning to see the impacts that it can have. I can truly say there has never been a more exciting time, at least in my lifetime, to be in health care. The technology that Marty just shared with you that we are heavily invested in gives us the ability to transform health care delivery in a way that's never been possible before. And the outcomes that we can achieve through that transformation, I think, are a multitude: improved outcomes for our patients and our care team members, improved experiences for all of those that deliver care, and really a step change in clinical and financial performance for the entire company. But if we're going to understand how we get from where we are today to that preferred future that I just described, we do have to really sort of understand on a deep level the current opportunities and the current way care is delivered in our hospitals. So the care delivery process really was never designed. It was never engineered. No one ever sat down and said, let's figure out what is the exact right way for doctors and nurses and pharmacists and techs to ideally interact with each other, so that we have the most efficient and most effective way of delivering health care across all of our health care settings. It really grew up organically over time. Doctors and nurses just sort of knew what it is that they needed to do, and they show up every day and they get the patients the care that they need and the outcomes that they deserve. And I think it's really actually quite impressive, when you look at our performance and our outcomes, both clinical and operational, that we get the outcomes that we do. And it's a testament to the amazing hard work and fortitude and intelligence and experience of our 300,000 colleagues that we perform at this incredibly high level. And then you add to that the fact that some of the technologies that we've deployed -- and when I say we, I really mean health care in general, not just HCA, have really not made that care delivery process better or more efficient for those caregivers. And if you think about an electronic health record, in some ways, it's actually added to their work. It's actually become a second job where the care providers have to both provide excellent care and are fully responsible for the lives of human beings. And then they've got to care for this system where we put in all the data, and it has to be all done correctly for billing and regulatory and compliance purposes. I'll throw a number out at you. We studied this. In our care providers, doctors and nurses and others spend between 30% and 50% of their time on administrative activities. We refer to this as administrative burden. It's all of this extra stuff that we've put on their plate in addition to providing for the care of the patients in our hospitals and other sites of care. So again, it's pretty amazing that through all that, our clinicians do the amazing job that they do and have created this standard of care that we have. But when I look at this, when I look at this slide and these examples, which I wish I could tell you that we pulled these images out of our archives, but no, these are actual pictures of our hospitals. I see nothing but an ocean of opportunity because the people have become a patch for all of these systems, these systems that don't talk to each other and aren't designed to make them and their jobs more efficient. But all of these problems are completely solvable through technology. And in fact, many other industries have already adopted digital capabilities, big data, machine learning, artificial intelligence in a way that has eliminated a lot of these types of administrative tasks. And so in many cases, all we have to do is follow a playbook that already exists and we can eliminate a lot of this administrative burden. And that's one of the areas that we are laser-focused on when it comes to our technology agenda. And this really goes beyond just the care teams. I mean as a care provider, I tend to always think about the care teams in this process. But it's the people who support those care teams and then the folks around them that are also impacted by this. And you heard about our ambitions in technology and digital transformation and artificial intelligence throughout the presentations that immediately preceded Marty and I. So this is an example of this ocean of opportunity that we can tackle. But we're HCA Healthcare. So just removing the administrative burden and lifting all of our caregivers up to the top of their license, while we know that returning that time to them will lift the entire organization as they begin to be able to focus more on patients, more on things like transitions of care, which are high-risk points in the care delivery process, we know that there's actually a lot more potential we can unlock than just that. Inside the 42 million -- the data that describes 42 million patient encounters that we have the privilege of doing a year across our entire system are amazing insights and patterns. We take care of the same types of patients every week, every month. And so we can learn from those patterns by studying that data, put all that data inside that Intelligence Net that Google is helping us build that Marty spoke to, and begin to train algorithms that can return data and insights right into workflow through MEDITECH or our mobile solutions or directly to our administrators or other leaders. So they continuously improve and can make better decisions, and we continue to get better day in and day out. So we have high ambitions here, not just to remove the administrative burden, which, again, I think is an enormous opportunity, but to really become an always-on, always-learning health system where the data continues to improve our performance every day, every year, every quarter. So hopefully, you're starting to see what an ocean of opportunity we're sitting in right now and are beginning to be as excited about this future as I am. All of this is not necessarily easy. But again, I think HCA has invested and focused on this effort in such a way that we are ideally positioned to tackle some of these really big challenges. To really transform the way health care is delivered in our hospitals and across other sites of care, we can't just apply technology. You can't sprinkle artificial intelligence over the top of those manual processes and paper workarounds that I showed you on that previous slide and expect to really get a transformed outcome. You might see some incremental improvement. But to really get that transformation, we have to redesign the care processes themselves. So we built a custom design team, and this has been ongoing for the last 2.5 years, that we call care transformation and innovation. And this is a team that gets the privilege of waking up every day just thinking about how do we solve some of the biggest challenges in health care delivery that our caregivers and other leaders have put in front of us or asked us to solve. It's a multidisciplinary team. We have clinical leaders, business, financial, data science, technology, importantly, change management, all working together, all focused on how do we solve these problems at scale. Not just can we go do a pilot in a hospital that shows that AI can do X or Y, but can you actually take a solution like that and design it in such a way that we can scale it and get deep and wide adoption of those solutions so that we really can see scaled impact across our entire organization and then again, maybe across all of health care. In order to get that scaled impact, we believe we have to design these solutions elbow to elbow with our care teams and our leaders. You probably have heard at some point that health care moves at a glacial pace and that's true. And then actually, there are some good reasons for that. We have people's lives at stake, and so we're not as caregivers opt to make quick decisions and quick changes to the way we do things. But we want to accelerate that work. You heard a lot about acceleration in the last few talks as well. And so one way that we've discovered that we can do this is by standing up 2 innovation hub hospitals, and we've been working with these hospitals for 2 years now, and training them up to be clinician innovators to be folks who actually are receptive to change and excited for change. And therefore, we can come to them on a week-by-week basis and try out new ideas, work elbow to elbow with the end users of those products, iteratively design the solution so that they are optimally designed. So we can take advantage of them, they can be accepted, and we can spread them across the entire organization. And that's how we'll get to scale the impact of this care transformation agenda. Because ultimately, what we are trying to accomplish is to deliver a step change, not just incremental improvement, we do that well also, but a step change in patient and care team outcomes through that clinically led integration of technology into care. And I mentioned change management. I'll mention it again because that is probably the hardest part of this entire agenda. And so if you're listening to others talk about digital transformation or AI changing health care and they're not talking about their change management strategy, they're probably not going to get the scaled impact that we, I think, have built into our processes. So there are a couple of other foundational investments that we are going to have to make, some renovations, if you will, that we have to do to our current systems in order to be able to achieve these types of outcomes that I'm talking about. So the first one, and Marty already mentioned this, is to our core clinical system, our electronic health record. And right now, most of our hospitals are on a product called MEDITECH Magic, which is a bit of a dated system. We've got incredible value out of the system that we've hung on to for about 30 years. But we are now moving into the future, partnered with MEDITECH on a completely new product that's called MEDITECH Expanse. And it's a cloud-based system. And it's interoperable. And those are 2 really important things, and I'll give a little more detail on why that is. But there's really 4 things that I want to call out about Expanse that are important. The first one, which probably right now would be the one our caregivers would say is the most important, is that it's a better system. It's got improved workflows. It's an intuitive system to use. It looks like all of the other technology we use in our lives. And we've now implemented this system in 4 hospitals. We actually just went live with one on Monday, and we're getting all of that feedback. The caregivers like the new system. More important to us, and I think the caregivers will see this as more important in time, are the ability to create standard data or harvest standard data from this system. So I mentioned the 42 million patient encounters, and that's the real number. And all that data does flow into our data warehouse, but it's not all standardized and it's not all normalized right now. And so we have to do a lot of work to take advantage of it. And as you've seen throughout the entire morning, we do that hard work, and we take incredible advantage of it. But as we roll out a standardized cloud-based system, we can standardize all of those data dictionaries and all of the way that data is entered into our system, which means now it flows into that new data architecture that we're building with Google in such a way that we can immediately take advantage of it. And as or more important, artificial intelligence can take advantage of it. The second is the ability to standardize workflows themselves. So if the data is sort of the flow in, the workflow is sort of the -- from the system out. So the caregivers, if we have standard ways that we want them to do certain processes because we know it's a best practice and it will lead to better outcomes, we can build those into this cloud standard that we can hold at the corporate level and then push out to all of our facilities. Now you still have to do the change management. I'm going to say that word a few more times, I'm sure. That part doesn't necessarily get easier. But at least, the technology now enables us to create that standard approach across the entire organization and then hopefully lift our standard of care as we do that. And the last thing, which I mentioned in the beginning, was interoperability. And this does make MEDITECH stand out as a little bit unique in the industry in that they're building a system that they don't see as the be all, end all clinical system. They don't want to be all things to all people. They want to do what they do well, which is that core electronic health record, but then they want to partner with folks like us to be able to bring innovations alongside or even incorporate it into their system. So they built it such that it has APIs and FHIR interfaces, so that if we build a really interesting algorithm inside Google, inside GCP, we can feed that data back into MEDITECH and they can get right into the workflow of our providers. So as Marty mentioned, it's a really important partnership as we work together to understand what are we going to do inside with MEDITECH and then where are we going to innovate alongside them. The second system that we have to renovate is our data system. And Marty talked about Teradata, which has served us well for many years. But we are building with Google a next generation and I totally think a state-of-the-art system that's beyond anything anyone else right now in the industry is building that will allow us to take our clinical data as well as all the other data sources that we have in our hospitals. And if you've been in a hospital, all of that equipment that sits around the patient has a data port that can stream raw data out of it, an IV pump, a bed, an anesthesia machine. And so think about harvesting all of that raw data, plus all of the data that we're already using, bringing it into a data lake, and then building structure on top of that where the data is standardized, normalized and easy to access and easy for anyone, not just a data scientist who understands how to code SQL. So we're already building that system I just described to you. It's called a lake house, and we're partnered with Google right now to build our first iteration of it, which will unlock amazing potential with that data going forward. Okay. So we've got amazing opportunities that I hope I've laid out for you, and we've got the systems and the foundations and the investments we've been making over the last 3 years to take advantage of that. So let's talk about some of the work we're actually doing. So let's make this real. So when we started care transformation, we went and spoke to our caregivers and our leaders in our hospitals, and we asked them lots of questions about what their pain points are because we wanted to start with what they thought was important. And we got lots of different feedback. I'll talk a little bit in a minute about what the physicians told us. But one of the things that the nurses and nurse leaders pointed out to us was that staffing and scheduling of our units was actually a big opportunity. Now remember, this was in the middle of a labor crisis, right? So think end of 2021, beginning of '22, the entire industry was dealing with serious shortages of clinical labor. And so it was interesting to us to learn that we weren't necessarily even using the labor that we had in the most efficient and effective way that we possibly could. We had nurse leaders distributed across our entire organization, probably some 3,000-plus of them, that were doing this sort of on their own. I mean we were giving them data and tools to try to do it as best as they could, but it was a highly variable and highly distributed process. We've already mentioned a couple of times today the idea of standardizing decentralized processes, which is hard to do. So this was a decentralized process. And when we measured it, we saw these results you would expect to get with a decentralized nonstandard process, and we saw highly variable results. So this was a massive opportunity because the nurse leaders were telling us, this is a huge burden on us. It takes an enormous amount of time. That's not really what nurse leaders went into being a nurse leader to do is to build and maintain schedules, and it's definitely not the highest value use of them in a hospital. And then the outcomes that we were getting from that process wasn't entirely satisfying to all those involved either. So lots of wins that we could create here if we could solve this problem. And that's exactly what we've gone and done. We've built a product called Timpani, and this is now live in 9 of our hospitals, including one of our most complex hospitals in North Texas. And Timpani is a completely digital and completely automated end-to-end staffing and scheduling and clinical labor management solution. And there's really 6 different innovations here. I'm not going to go super deep, but I'll just sort of hit the high points here that all come together to make this possible. So the first is the way we measure demand. We recognize that a head in a bed was not a very specific way of measuring the demand on a nursing unit. And so we measure the demand, the work intensity that a patient creates, in a new and different way. We also applied machine learning and artificial intelligence to how we predict demand. So we used to use averages, which is pretty typical for our industry. Now we have machine learning algorithms that are constantly getting better at predicting how busy a unit is going to be. Previously, we always used self-scheduling. We thought this was very nurse friendly to let them schedule themselves, and so they would pick their shifts. One of the problems with that though is that the nurses who are picking their shifts don't really have the full picture of what the needs of that unit are going to be. They're sort of just picking based on their own needs. And then the nurse leader has to figure out how to make that all work. And so we shifted to preference-based scheduling, where we could harvest really rich details about the preferences of our nurses, and that gives us more information to work with when we're building schedules. And then the last thing is talent profile. And what this really is, is a measurement of how proficient a nurse is or another care team member. And by proficient, we mean how independent can they act on that unit with that patient population. We then combine all of those new data sources with other data we already have, like how much -- how expensive is the various types of labor that we might use. And we put all that information into a solver-based technology, and we're partnered here with Palantir, who helped us build this system. And the solver can try about 1 trillion different options for each nursing unit. It takes about 30 minutes to do that and come up with the most balanced schedule that meets the needs of the nurses, the hospital, the patients, the unit, even the CFOs and basically ends up with a schedule that's fair, more balanced and a better outcome for all of those who are involved. And then the system goes on to become a decision support tool to how you manage that schedule over time. We build our schedules about a month in advance, and then life happens and things change. And so you need to be continuously updating that schedule and the system can identify the next best action, the next best nurse or tech up to fill any holes that might occur or call off people where we have excess capacity. So all of this is aimed at making sure that we have the right people in the right place at the right time to care for the patients that are going to show up that day. That's ultimately the goal is to care for the patient. But then to do it in a way that also meets the needs of the entire organization at the same time. And that's really the power of this kind of digital technology. The last step, which we're piloting right now, is day of assignment. And that's where the system will actually help match the nurses to the patients on the day of, so then the entire process from end to end will be completely digitized. The other thing that I want to leave you with on Timpani is that this is by no means a point solution. It's a platform. And so we now have a capability to see and understand the management of our labor, which is, by the way, our most expensive and most valuable resource, in a completely different way than we have in the past. But we can build on top of that. We can run simulations in the system that tell us what we should be doing from a hiring perspective to maintain that balance that we have. We can take the system and port it over to other areas like the emergency room, which we've already started working on. So that's one of the key tenets of this type of transformation work is we don't build point solutions. We build platforms that we can continue to grow and evolve on top of. So I mentioned the physicians, and they had a bit of a different view when we asked them what their pain point was. They started off by telling us documentation burden. And then they said documentation burden and then they said documentation burden. So we said, okay, we heard you. And we decided we're positioned to be able to actually solve this problem for them. So physicians, just like the nurses, didn't go to medical school so they could sit behind a keyboard or dictate into a phone notes all day long. And a lot of them do it at night after work, and it eats into their work-life balance. And so what we're building with a partner called Augmedix is an ambient speech-driven technology where you can put the phone in between you and the patient, and we're doing this in our emergency rooms, that's Dr. Alex Stinard. He's our Chief of Emergency Medicine at UCF Lake Nona in Orlando. And you can interview the patient and the patient responds and the AI is listening, transcribing that entire event, and then natural language processing and large language models break that transcription down into the structured documentation that we need that can then be fed back into the electronic health record. So this system is live in 4 emergency rooms. Right now, we have a human in the loop, so we have a medical scribe that's in the middle of that process that helps sort of clean up the note because the AI is still learning, but it's continuously getting better. And large language models have massively accelerated this work. So right now, we have a target of the AI being able to completely independently build this structured note, 60% of the content being completed by the AI by January of 2024. And then the more users we can expand it to, the faster it will get smarter as it learns from all of those encounters. We started with the emergency room because it's basically the hardest place to do this. It's chaotic. It's noisy. It's asynchronous care. And so we know if we can do it there, we can take it to all the other areas of our acute care frame. You've probably heard about this in other spaces, right? Maybe part of like Nuance and [ DACs ] and some of these other systems that Microsoft is working on. But one key differentiator for us is that we are focused on structured data. We don't want to go backwards and just have AI create free text notes that then drops into the record because the structured data is what's going to power this entire Intelligence Net. So it's maybe taking us a few minutes more to get this done because we're focused on that key outcome. So then let me finish up with an example of how we're deploying generative AI. And it's always better to be lucky than good, right? So we started this transformation journey and this care transformation work 3 years ago. Obviously, because we knew a year ago, generative AI was going to burst onto the scene and absolutely transform everything, and so we were prepared with all of that prework that we had done. And our partnership with Google also is critically important here. So let me -- you all are probably pretty familiar with what generative AI is. Let me just jump right into an example to really bring it to life. So a lot of health care delivery is language and communication, right? It's looking for information. It's communicating that information to other caregivers. It's summarizing it. It's explaining it to patients. And so that's actually what large language models are really good at. So one of the highest-risk times during care delivery is handoff, when one shift is handing off to another. And so the nurses right now across our entire organization do this process, again, mostly manually. They collect information over the course of an entire 12-hour shift. They do it on a piece of paper like you can see on the screen there, and then they hand off to the next shift when they come in. So another highly variable manual process, which, of course, creates risk and variable outcomes. Just to sort of size this opportunity for you, we do this handoff process 400,000 times a week across HCA Healthcare. So we've trained a large language model to actually do this work for the nurse. So we taught it how to read an electronic health record. We taught it what all the data elements in that EHR mean. And then we gave it prompts like you do to an LLM. We said, hey, you're a friendly assistant to our nurses and you're going to build this thing called a bedside shift report, and here's a little bit about what a bedside shift report is. And what you see on the right side of the screen there is the output of, in this case, PaLM, which is this large language model from Google that we're using. And so it's very capable of building those summaries, finding that information and bringing that information right to the forefront. And it can actually interpret the information to a certain extent. So it can pick out what's important. It can understand the difference between a critical lab than just a normal lab. And so it can automate this entire process, again, that happens 400,000 times a week, making it more standardized, safer and removing this burden from our nurses. The key thing about this is the scalability. So you can do this in ChatGPT if you grabbed a bunch of documents and just dropped it in there. We would never do that because they don't protect our patient information if we do that. We have pipes into these large language models where all the information is protected. But to do it at scale, to do it in a scaled reproducible way where you continuously monitor the output, is actually the challenge. And that's the innovation that really our teams have created here is the ability to do this in a scaled way. And so we're still in the iterative design phase here. We have our 2 innovation hubs. The nurses are continuously giving us feedback. We want to get this thing right where it needs to be. But we're looking for a full pilot to start in December. And then if that goes well, hopefully, scale across the rest of the organization. And that's just the beginning for generative AI. What's really cool about this technology is once we've trained it to read the EHR and to understand that data, we now have a reproducible structure. We can start adding more prompts, and we can teach it to do more things. We can teach it to do discharge summaries or ER-to-inpatient handoffs. We can teach it to translate key documents that patients need to be able to understand into any language at any grade level. And so this foundation of teaching the LLM to read our EHR is really just another first step, another foundation, that's going to allow us to continue to build exciting new use cases into the future. So this is a space that I think is going to absolutely change health care in the next few years, and we're leaning heavily into it. And when all of this comes together and what I hope you can see from what I've shared with you today is that we're creating a new part of our flywheel, a new way for HCA Healthcare to continuously create value by unlocking that value that's inherent in our processes, that the inefficiencies that we've been able to identify can be turned into opportunities. And we can continuously mine those opportunities and create new processes, new technologies, learn from those, measure the impact, feed that information back into the system, and then keep turning this flywheel faster and faster. We've talked about the embedded opportunity in our current operations, and this hopefully gives you a little bit of a view of how we're already unlocking that embedded opportunity with these technology and process improvement efforts that are underway. So I mentioned transformation is not easy. And it almost always takes this kind of expected curve, where in the beginning, you have to make investments and it takes time and you don't immediately see return on those investments. You have to sort of put in that early effort and create those foundations. And then you have to get good at changing. You have to get good at transforming. And I say we've made a lot of progress in that space. But if we do all those things, which we are, I think in the very near future, there's an inflection point where things start to really accelerate. And that's where that embedded value starts to get unlocked in a rapid fashion. And we see this as a massive growth opportunity for our entire company that we can continue to become more efficient, more effective, better clinical outcomes, better financial outcomes and then just continue to invest in this agenda, and it will move faster and faster for us. So it's really a privilege for me to be able to introduce to you what we think is a next frontier for HCA Healthcare, where we can lead this industry in how we use technology to transform the lives of our patients and our caregivers for the betterment of everyone involved. So thank you for the time today.

Thank you for your attention this morning. We'll now break for lunch. Our program will resume at 1:00. [Presentation]

Please welcome Senior Vice President and Chief Nurse Executive, Sammie Mosier.

Hello, and welcome to Nashville. Well, thanks for being here. Every day in our HCA hospitals, over 115 colleagues work in our hospitals every day. Our workforce development strategy is designed to empower and achieve company growth while adding capability through the hiring of new colleagues to join our HCA family as well as continuing to build the capacity and the capabilities of our staff through education and experiences. We are in the people business and must ensure that we are establishing a robust workforce to meet the needs of our staff. Today, we will discuss 3 aspects of our workforce development strategy, nurses, physicians and leaders. To begin with, I will talk about our nursing strategy and how it is designed to meet results. Nursing is the heart of HCA Healthcare. And every facet of our business, nurses are responsible for delivering compassionate connected care to our patients. Our teams rely on our nurses to open up the doors to our hospitals, but also to ensure that our patients have great experience when they're in our hospitals. Our nurses are the ones that patients remember when they go home. At HCA Healthcare, we believe that the nursing workforce is critical to not only advancing the quality of patient care, keeping our patients safe while they're in our hospitals. But truly, enabling company growth. Nurses are needed to expand the service lines that we talked about today, utilizing their expertise open the door to our hospitals through that capacity management that we discussed, gain physician alignment, it is important that our physicians have confidence in the care that nurses provide. And overall, operational excellence, a good nursing culture leads to better retention of staff, better patient outcomes, happier physicians and overall just better healthcare business. As 1 of the largest employers of nurses in the country with over 100,000 nurses, we are positioned well to support capacity, and we're continuing to build a pipeline of nurses for future growth. We have 95,000 nurses in our hospital just dedicated to hospital operations and over 2,000 nurses dedicated to the ambulatory surgery space. We have 11,000 nurse leaders. That's 1 in 10 leaders for 10 nurses. And why is that important? Because we truly do appreciate the value that leadership brings to the success of our colleagues. Additionally, as Ed Jones mentioned, we leverage our HealthTrust workforce solution partners to supplement our staffing needs. And although not nurses like yet, we employ over 5,000 nurses -- nursing externs for our future pipelines. These are current students that are practicing in our hospitals. Let me talk a little bit about what's happening across the country when it comes to the nursing shortage. So nearly 3 years ago, with the COVID pandemic, the healthcare industry, of course, was profoundly impacted, but the nursing profession in particular, was really impacted. The national nursing shortage dates back for decades, but the COVID pandemic really pushed us at a crisis level. So simply stated today countrywide, we have a supply demand and pipeline challenge that must be addressed. And this is really fueling our momentum and our efforts. So let me talk a little bit more about this. From a national supply perspective, 100,000 nurses left the profession in 2021 and 2022. And if you couple that with the 6% projected RN job opening growth over the next 10 years, you can see that supply gap just continues to grow. Additionally, the nursing workforce is aging. Today, the average age of the nurse is 52 years old, and 20% of those nurses are expected to retire in the next 5 years. From a pipeline perspective, there's currently not enough graduating nurses to backfill the nurses that are leaving. Over 78,000 qualified applicants were turned away from nursing schools in 2022. The cited reason for that was due to a lack of faculty. Additionally, there has been no annual growth in the number of students taking the NCLEX exam. So the NCLEX exam is that exam that nurses take at their state level to practice medicine. That number has remained flat at 150,000 for the past 4 years. So no growth of nursing students to take that exam. While this may seem doom and gloom, we see this as an opportunity to respond. And at HCA Healthcare, we are responding to these challenges very aggressively. We know that nursing is a differentiator or 1 of our differentiators at HCA. And we want to make sure that our nurses have a great culture to live in, as well as supporting their growth and development and allowing them to have an endless career opportunity. And finally, talking about education assistance, how we can leverage our Galen College of Nursing to ensure that our nurses are confident and they can continue to develop and grow. So let's look at our HCA healthcare performance or hospital nurses. You can see that recruitment and retention strategies have improved our overall are in headcount. Yes, like most organizations, we did lose nurses during the pandemic. But our practices for recruiting and retention are strong, retention even stronger. If you think about the pre-pandemic level, we ranged about 15%. We got as high as 28% during the pandemic for turnover, and we're back down to 17%. What this is doing is it is allowing us to open the doors to our hospitals so we can serve our communities. We also are seeing a reduction in contract labor because we have those head count gains. And during the pandemic, we had the opportunity to add additional colleagues to our workforce so that we can leverage new models of care, and I'll talk a little bit more about that. So how do we accomplish those head count gains. We accomplished that through a robust nursing strategy. Let's take a look at our strategy. So nursing being a differentiator, we wanted to make sure that our strategy had the voice of our nurses included in that. We have a lot of avenues where we get the voices from our nurse and then we draft our strategy to ensure that we have tactics that approach any of the challenges or barriers that they're facing. So we focus on 4 pillars: advocacy and leadership; staffing and care team support; standards of care; and education and academic partnerships. Advocacy and leadership is ensuring that we have strong leaders at every level of the organization to support our colleagues. We have over 11,000 nurse leaders in this space, and this could range from a chief nursing officer that's responsible for a hospital or a charge nurse that's responsible for that shift that day, rounding with those team members. Our structure is designed to ensure that our nurse leaders have an appropriate span of control, the right amount of leadership to help support that team. We equip our leaders with experiences as well as formalized training to ensure that they can effectively manage their team. A good leader leads to retention of staff and influences that individual nurses abilities at HCA Healthcare. Staffing and care team support. To extend the reach of our nurses, we ensure that our nurses have the right tools and resources available to help support them. And you heard a little bit about that already. But I think about this, people, process, technology trend that you're hearing. When we think about people, we created additional care models that leverage license and unlicensed personnel to support the capabilities of our nurses to reduce their workload. This model of care expanded the nurse's capabilities. We leveraged a patient care tech or a transporter that could work beside that nurse and take off some of that burden or the challenges that the nurses were facing that an unlicensed personnel could assume those duties. This allowed the nurse to function at the top of their license. Processes. We ensure that our nurses have the right tools and resources. Validating that supplies and medications are available on the units. We don't want our nurses running around the building trying to look for things. That's inefficient. We focus on that, and we require hospitals to focus on that, too. So we ask each 1 of our hospitals to host a resource council. So, a Resource Council is led by our Chief Nursing Officers and our Chief Financial Officers at the facility level. They come together, they bring their support teams together and they talk about any of the barriers or challenges that our nurses are facing. The Resource Council at the local level is charged with solving that, but we also have the ability to understand what those trends are at the enterprise level so that we can look for company solutions. When Ed talked about the equipment management program, that was 1 of the challenges that was brought to the Resource Council at the company level and hence the team took responsibility for that, and they implemented a program to help support that. Our nurses were telling us that's inefficient, and we're wasting time looking for those supplies. Technology, leveraging technology to improve nursing workload through innovation, and Mike talked about that earlier. But 1 innovation example that we have is virtual nursing. So this is the ability for a nurse that is remote to utilize a camera and a TV to remote into a patient's room and interact with that patient directly. So we leveraged our call center infrastructure to create a virtual care capability where we can leverage our remote nurses to complete this task. What does that do? That reduces some of the workload burden that our nurses are facing. So that remote nurse comes into the room, they interact with the patient, they complete the admission and the discharge process for the nurse. So doing those interviews and also documenting that care, while that bedside nurse is able to function on hands on tasks with the patient. Again, improving efficiencies. This allows us to extend the reach of our nurses. Standards of care, ensuring that our nurses are delivering care consistently is very important to our patient outcomes. We use evidence and research to define the standard. We teach to that standard and then we validate that our nurses are practicing to that standard. Validation should also be the outcomes of that. And 1 great example that we have with that, over the past couple of years, we have been seeing our infection rates with catheter-associated urinary tract infections and bloodstream infections continue to go down. What that is, is hardwiring of practices and especially nursing practices when they care for the patient. Now let me double-click into our education and our academic partnership strategy. Our education strategy is designed to support the transition of that new nurse from the student role into a bedside role. We focus on 3 areas: capacity, competency and connection. We will increase our pipeline as we focus on the capacity aspects of that. And when it comes to competency, we want to make sure that our nurses are confident in the care that they are delivering because that means they'll be more efficient in the care that they deliver consistently. All of this leads to an overall connection between the nurse and HCA Healthcare. Our nurses have endless career opportunities. Nurses want to learn and grow. They do not have to leave our company to be able to accomplish that. We're leveraging our assets to shape the future of nursing. Our majority ownership in Galen College of Nursing will continue to increase our capacity and our supply of future nurses. Our vision is that we have a Galen College of Nursing on the front end of each of our provider systems. Galen is an integral part of our overall system. Our current focus is on nursing, but in the future, we would explore the opportunity to leverage Galen for Allied Health. Since our acquisition of Galen in 2019, we have grown our campus sizes from 5 to 20, with a projection to add 10 additional campuses by 2026. Student enrollment in our markets is strong and is projected to be at 29,000 students in 2026. This will position us as 1 of the largest providers of undergraduate nursing education in the country. So I shared with you the number of students taking that NCLEX exam had remained flat for the last 4 years at 150,000. In the future, Galen will not only be solving for the HCA staffing challenges or adding to our pipeline, but we believe we'll be changing national statistics when it comes to the number of testers taking those exams. In addition to Galen, we have a lot of local college and university relationships, and those will continue. We need those schools, and we prioritize those partnerships with our schools outside of Galen as well in our markets. But Galen is a little different. Galen targets a different population of students. Unlike the traditional college that targets that high school to college student, Galen students are a little more experienced and diverse. The average age of the Galen student is 32 years old and over 60% of them have a dependent. So when I mentioned the opportunity of the students that were turned away, that 78,000 qualified applicants, Galen is opening the door to those students and allowing them an opportunity that maybe they wouldn't have in the past. And what's beautiful about the Galen in the HCA experience is that we are all focused on the success of our people. Virginia is an example of a Galen student. So at each 1 of our Galen campuses, there is a large wall. And the nursing students have the ability to go up to the wall and document their why. Why do I want to become a nurse. So it's a visible display that they document their why on, and that Board is present throughout the semester. So it's motivation for the students, right when they come out of the classroom, they can see that. And so daring Virginia's campus visit, she wrote on the wall because when I was 16, sitting on the hospital bed pregnant, a nurse grabbed my hand and told me I could do anything. So when we ask Virginia, if we could share her story, she said, yes, share it loud. So not only is Virginia a successful Galen student, but the nurse that inspired Virginia is an HCA Centennial nurse. We're already making a connection between our students and our practicing nurses. And we want to be the preferred employer of these nurses post graduation. In addition to our vision of having 1 Galen campus to each of our provider systems, we also have the opportunity to change the paradigm of how students are educating by merging what makes a really good student with what makes a really good nurse. We currently have a lot of integration efforts underway between HCA and Galen to make sure that those student experiences are wonderful because we want these students to transition to HCA nurses in the future. The experiences between Galen and HCA are allowing us to integrate these students into our hospitals faster. And they're developing a more competent nurses. We have a lot of structured education utilized to support our nurses as they transition from that student to the bedside. And to ensure that they have a smooth transition, we invest heavily into our environment. So our year-long nursing residency program, our training environments and our dedicated educators. We have invested in our dedicated learning environments and those are called Centers for Clinical Advancement. So much like a Galen campus, these centers are designed as a realistic learning environment for our nurses. So it has a classroom space as well as simulation space. And what simulation space is, it's the opportunity for a nurse to go into the room and practice a situation or a scenario on a mannequin, which is a high fidelity mannequin that interacts just like a patient would. This creates a safe place for our nurses to practice skills in that realistic environment. Our vision is to have a center for clinical advancement tied to each 1 of our hospitals in our market. Currently, we have 15 and we announced a $90 million investment to build out up to 20 over the next 3 years. So we'll continue to grow that out. In addition to our dedicated learning spaces, we have over 1,000 nurses dedicated as nurse educators. So their focus is on ensuring that our nurses have someone that they can interact with, and we can focus on ensuring that they're confident and they can continue their journey with us. A competent nurse is confident and effective. Competent nurses create consistent experiences for delivering patient care, so we can anticipate what those outcomes are. Connection with our nurses is critical to our success. Nurses want to learn and grow and in HCA Healthcare, they have that ability. Whether a nurse wants to stay at the bedside as an expert clinician, we need that. Or if they want to take a leadership path, we need that as well. Additionally, they can work for Galen College of Nursing in the future. We shouldn't have a faculty gap. Our nurses are able to train and go to school through Galen throughout their career to prepare for that role as well. Our career pathways and development programs have allowed us to establish a strong nursing leadership pipeline. Currently, over 90% of our Chief Nursing Officers and our Assistant Chief Nursing Officer positions are filled with internal candidates. Today, company-wide, we only have 3 CNO openings. That's pretty impressive for a company this size. Heather is a perfect example of 1 of our nurses that selected a nurse leader route. Heather started as an ED nurse in 1 of our hospitals. She continued to grow throughout her career. She participated in formalized education. And today, Heather sits as a CNO nurse or CNO in 1 of our hospitals. We believe that HCA Healthcare nursing strategy positions us well for the future as we are aggressively building our pipeline, supporting our nurses through experiences and clinical education to build their competency. And overall, just differentiating ourselves from other healthcare systems as our nurses have the opportunity to continue to grow within our company. Our goal is to be the best healthcare organization in America. Thank you.

Please welcome Executive Vice President and Chief Clinical Officer, Dr. Michael Cuffe.

Good afternoon. Well, we've heard a lot of terrific strategies that are accretive to us in a financial way and in a quality way from the emergency rooms and the stroke care to care transformation, our technology agenda, some of our people agenda. I appreciate your attention this afternoon. I'm going to talk to you about another people part of our agenda and that is graduate medical education. So I'm going to provide an overview of graduate medical education, what it is, what we're doing with it, touch a little bit on hospital-based physicians and the quality and company and the impact of GME. So as some of you know, but perhaps not all, Graduate Medical Education or GME is the period after medical school, where young doctors go and do somewhere between 3 and 9 or more years of training in a specialty in a residency or a specialty fellowship. And after that, they're able to take their board exams, perhaps join a practice and hopefully join the medical staff of 1 of our hospitals. It's a big commitment. You heard this morning about our strategies around physician alignment. Graduate Medical Education is a complement to those strategies. And it furthers medical staff loyalty today, it enhances hospital capacity. I think it encourages enterprise growth in ways that I'll describe. And ultimately, it benefits the communities we serve as we talk about the physician shortage in this country. GME overall has a strong strategic value for both today's medical staff, but also in creating the pipeline for tomorrow's medical staff. The benefit of GME at teaching hospitals include a strong culture of collaboration, often better clinical quality and GME also naturally facilitates research and treatment innovation as research is a required element of GME. At the end of it then, residents are positioned as future members of our medical staff having, in effect, done a 3- to 9-year job interview. Over half of U.S. residents, you may know, stay locally in the markets in which they trained serving their states or their community and therefore, being present in this space becomes very important. Overall, GME provides strategic value to HCA Healthcare by retaining that next generation of physicians by developing our existing physician workforce. It also attracts and helps maintain some of the highest level of physicians in the country who often want to interact with these residents and it improves access to care simply through clinician supply. So we have approached Graduate Medical Education very differently than traditional academic hospitals as we've approached so many things. We've approached it at scale. Foremost, GME is new. It's layered on top over the last 5 to 10 years of our fully staffed, fully functional hospitals, so it's incremental. Therefore, while it's both additive to our workforce, it also enhances our ability over some others to allow the residents time to be focused on education and preparation for their boards. GME at HCA Healthcare is also unique in that it operates through a scaled support model, whereby key functions are both centralized and standardized. This model compared to all others fosters cost efficiency, higher quality education and enhanced efficiency in the required research component of GME. Overall then, it improves adherence to accreditation requirements. There are accrediting bodies for this work just as there are for nursing schools. And so in the long run, we believe that this model is also synergistic with our other discussions today with nursing through multidisciplinary training and simulation, through professional student education, the many nursing students and the 10,000 or more medical students that rotate through our hallways each year and with general leadership training, as you'll hear from Jen Berres in a moment. So in summary, this model, like so many things we do, consolidates expertise and allows us to really rapidly respond to emerging trends in education. The scaled support services creates cost savings through shared faculties, shared rounds, shared resources, shared administrative functions, shared simulation. The consistency of the training curriculum and standards help ensure that all the trainees receive a uniform level of education and experience, which is crucial for maintaining high-quality medical education. The impact of the standardization, in my view, is best demonstrated in our graduating resident board exam scores, which are consistently well above the national averages. So this is a complicated space. While it's well known that residents stay in the region of their training, it's also understood that there is a shortage of healthcare providers in the United States. Nursing, as we talked about, but also physicians, both today and projected ahead by specialty, by region, the Association of American Medical Colleges, has long put our projections. And even with the advancing waves of advanced practice practitioners, nurse practitioners, CRNAs and anesthesia and other types of providers as well as telemedicine, there are still projected deficiencies in parts of the country in certain specialties, psychiatry, behavioral and then particularly the more rural areas. So while addressing this provider shortage is a very broad challenge. Currently, GME, graduate medical education is the key limiting factor. There are plenty of medical students, many of whom now can't find residencies. It's the choke point, so to speak, in the new physician supply. So I look at HCA's foresight 10 years ago as we started down this journey, anticipating provider demand in our growing markets. I think it speaks to the company's awareness, our planned resiliency and our strategic risk mitigation as we've jumped down here by focusing on the component of medical education that we can influence, we'll work to increase local capacity in our markets in our own physician workforce and in turn, enhance the overall U.S. physician workforce. So in addressing these workforce challenges and then growing GME, as someone mentioned earlier today, we are now the largest educator of the next generation of physicians in this country. We're multiples larger than the next largest GME provider, and we continue to grow. Resident enrollment, some 10 years ago was less than 1,200 and it's grown to just over 5,000 now in less than 10 years. We have offerings in 45 different specialties across 72 of our hospitals. And every year, we're planning to add more. A notable part of this physician alignment component is our research publication platform. This work produces roughly 5,000 academic research products each year, abstracts, journal articles and things like that, that raises the prominence of our medical staff physicians, but also includes now the internationally read HCA Journal of Medicine, a component of this scaled to 1 location, which accepts publications from HCA, yes, but also from across the world. Our GME commitment also includes growing the supply of and attracting key hospital-based specialty physicians. This effort, which is further highlighted by the recent Valesco acquisition includes a focus on hospitalist graduates, focused on anesthesiologists, on psychiatrists, on emergency medicine, the providers of those hospital-based specialties that are required to staff our hospitals. Our intention ideally is for our residents to continue their careers at HCA Healthcare facilities alongside the dedicated staff that train them. Earlier this week, I was at 1 of our hospitals meeting with the medical executive staff and a number of them were products of their own residency program over the years who're now mid-career, but further along, and it was wonderful to see. We now graduate over 1,700 residents each year from our programs as they go on to further training or to practice. I know a lot of people here and questions have come up about the space of hospital-based physicians. These are the ER doctors, hospitalists, anesthesia providers, others. This is an area of long and ongoing industry disruption that I think we can all recognize. I will say that HCA Healthcare has extensive experience managing the space, both previously and currently. There are 2 groups in intensive care medicine and in pathology on the auspices of a group called ICC Intensive Care Consortium and then pathology, forward pathology solutions FPS that we moved to direct management over the last 3 to 10 years. It's been an accretive intervention to the run rate. It improved both practice and system economics, quality, efficiency and overall value for both HCA and for our patients. Each of those 2 groups in pathology and intensive care medicine is now the largest, if not among the largest groups in their specialties, with nationally recognized brands, operating as a single entity with a shared identity but all under HCA Healthcare. Many of the faculty members for the same GME programs are these very hospital-based physicians. So we view GME as a further enabler and attracted for the right physicians. They're part of the workforce as well and they help us unlock greater enterprise value in areas like case management and in quality. In this disruption, we see opportunity. That opportunity is magnified by graduate medical education. Perhaps they have greater influence and alignment of these hospital-based physicians as we have with intensive care doctors and pathologists towards greater efficiency of our platform and better patient care. I'm going to provide a spotlight on 2 facilities that I think are noteworthy. The first is HCA Healthcare Riverside or Riverside Community Hospital as it's known. This is far east of Los Angeles. It's a hybrid academic community hospital, next to an academic center. It's in the heart of their community. As you saw from some of the earlier slides, it's the top in their market. It's 1 of extraordinary scope and quality. It's grown its medical staff and its beds as GME has grown over the last decade, attracting and retaining physicians, but also, as we have done in so many markets, it's not well understood that to build a new medical school, you need to rotate those students at a hospital with graduate medical education residents. And so we have facilitated the start-up of medical schools across the country simply by having our hospitals have GME. The University of California Riverside, a really good Hispanic-serving institution was able to start their medical school and rotate students to our hospital. And we feel like that has helped the community and raised it. Our Riverside facility grew to supply services not only to help them, but to develop the highest level of trauma care, the first hospital in the region to be so recognized. That level requires GME and requires research. GME is an operational growth and top talent enabler for our physician alignment strategies. There's 1 further benefit of graduate medical education and that is GME hospitals across this country often lead in clinical quality. So while HCA overall has terrific quality at Riverside Community or HCA Healthcare Riverside, that shows up they're rated top 5% in the country with their critical care medicine, and they're routinely sit in the top 250 U.S. hospitals by health grades. So let me pivot to quality just for a moment. We've not talked a lot about that, but HCA has a really terrific high-quality results. You've seen some of it in the vignettes and the mentions that have occurred. But with key outcomes like mortality, we run less than 2/3 of expected across our hospitals. With other things that patients care about, like hospital-acquired infections and complications, we run typically far less than half of the expected rates of complications in the rest. We do well in so many areas around sepsis and the rest, and GME can be part of that. In terms of those types of outcomes, every day, we have to win physicians. We've got to win patients. We have to win market share. There's no sustained growth without great quality, great safety and excellent patient experience. GME programs have a natural focus in this space. They, because of their accreditation needs, must focus on patient safety, on reducing medical errors and overall care quality. And as such, they contribute to the improved clinical outcomes for patients. As I said, I was in one of our hospitals with GME earlier this week, and I routinely heard overhead Code Sepsis, Code Stroke, Code 5, the type of things that bring everyone running. And I can't help, but imagine while I was at the bedside, it's the nurse first, the resident and their faculty member second, more hands in those situations are better. With a higher presence of physicians on site, this ensures more immediate support for patient care. This hands-on involvement leads to prompt decision-making and ultimately can improve patient outcomes. The GME accreditation process actually demands continuous review and oversight of care delivery. Treatment plans are closely monitored and refined resulting in higher quality outcomes, more efficiency, better care in our communities. Teaching hospitals can also leverage the required academic research to its cutting-edge treatments, new trials, new therapies, innovative physician attraction, not innovative ways to attract physicians, but attracting physicians who are naturally innovative in bringing new technologies to the bedside, ultimately leading to patient benefit. One of the spotlight where I was earlier this week is in Miami at HCA Florida Kendall Hospital. Again, complementing the growth in medical staff, service lines and beds was the introduction nearly a decade ago of graduate medical education. In 2014, they started internal medicine and general surgery, how we often start recruiting new faculty medical staff to serve on the medical staff, have their practices there, often community doctors attracted to the opportunity to grow with the hospital. By 2018, Kendall had achieved the American College of Surgeons Level 1 trauma designation, a status that requires graduate medical education and research. In that year, Kendall had 6 accredited GME programs, 143 residents as well as a podiatry residency. Today, Kendall continues to grow, has 7 GME programs in specialties and has over 70 core and affiliated GME faculty physicians who are attracted to that market and that facility to set up their practice there. In key areas, GME has acted as an enabler to expand the medical staff to attract high-quality specialty providers and support the community. If you're from the area, you may know that just on the street from Kendall is Florida International University. And shortly after they received that Level 1 trauma status in 2018, FIU is the site of that concrete pedestrian bridge collapse that fell down and crushed cars and people below, and less than a mile away is Kendall Hospital, and they were well prepared and took a huge number of trauma victims to help their community. When I was done in Miami, everywhere there were signs that said, "Take me to Kendall." And that's the status and the nature of that hospital. And I think GME has had a role in that story. So in summary, this is another people story. HCA Healthcare's emphasis on GME at scale is now a force behind our ability to attract top physician talent amongst the faculty physicians. It enhances differentiated care through research and new innovation, and it facilitates our long-term growth through increasing the physician supply. GME is also a lever in maintaining our strong culture of patient safety, efficiency and high clinical quality. And finally, I think it's now a strategic asset. It anchors to our commitment to providing exceptional healthcare services both to our patients and for our communities, and it does so for today, but it also, I think, builds the pipeline for tomorrow. Thanks for your time this afternoon.

Please welcome Senior Vice President and Chief Human Resources Officer, Jen Berres.

Good afternoon. It's a pleasure to be with you today. I have the pleasure of talking about the power of our people. So throughout the day, you have heard examples of many of our critical capabilities and the power of the HCA Healthcare network. These critical capabilities are the outcomes of our culture and the collective skills, abilities and expertise of our leaders. We have a culture of execution, performance and accountability. And it starts at the top and it cascades across the entire organization. This culture didn't just happen. It is a result of intentional structures, processes and people practices. I'm going to spend the next 10 or 15 minutes going a little bit deeper on our people practices, specifically how we are intentionally developing our leaders. You've heard Sam and all of the other leaders today talk about those capabilities, IT, clinical, operational, all of those capabilities are made possible by our people. From bedside to C-suite, we are developing leaders who embrace our culture, grow our business and lead the industry. And we have some of the best talent in the industry. But it takes a different kind of leader to excel at HCA. It takes a higher level of drive, devotion and grid to really operate at the top of the game. So our commitment to developing leaders is really critical to our success. I am going to share with you how we're fulfilling that commitment. So we've had a variety of leadership programs over the years. But about 10 years ago, we formed the HCA Leadership Institute. And the HCA Leadership Institute is a learning and development platform that we've scaled across the organization to serve over 24,000 leaders. We believe it's the largest source of training for healthcare leaders in the country. And what we teach in the HCA Leadership Institute is very much aligned to our business strategy. It's about equipping our leaders to deliver on our mission and deliver business outcomes. We're focused on delivering critical leadership skills, providing the training needed to execute on key initiatives and sharing and leveraging best practices across the organization. Through the Leadership Institute, we're building capabilities at all levels from supervisor to executive, whether it's in-role skill development or preparing leaders for the next role, we're identifying, developing and mobilizing the talent we need to execute on our agenda and to provide career growth for our colleagues and our leaders. Just this year, we've developed over 16,000 leaders, and we've provided over 170,000 hours of training and development. I'm going to walk you through some of the programs and approaches that we utilize to help our leaders excel in HCA. We need leaders who can operate at our pace of play, execute on those key initiatives that we've mentioned, ensure high-quality patient-centered care and lead in a way that creates followership. And through these programs, we're building those skills. So we've got a variety of programs, some just-in-time learning programs through Harvard Manage Mentor and Harvard Spark allow our leaders to access real-time guidance on a range of topics. It could be a 2-minute video on coaching and feedback or a 1-hour session on how to build a business case. The beauty of this learning is that it's available at any time from anywhere. We also have a number of in-role executive development programs that provide formal education and experiences ranging from live or virtual training to case studies to capstone projects. I'm going to give you 1 example, it's our Physician Leadership Academy. The Physician Leadership Academy is very similar to an executive MBA. It's designed to develop the critical business acumen and leadership skills that our physicians need to successfully transition from caregiver to executive. Lastly, I want to highlight our pipeline development programs. These programs are designed to prepare high potentials to assume some of the most critical roles in the company. It could be emergency services directors, surgical services directors or even C-suite executives, but these programs are designed to create the bench of talent that we need, again, to deliver on our mission and grow our business. Just over the course of our director development program, we put 230 leaders through the program and close to 20% of our existing emergency services and surgical services leaders are graduates of the program. And although we started with those 2 critical roles, we're continuously evaluating our talent needs and broadening the programs to help solve leadership pipeline challenges. In fact, today, you heard Mike Marks talk about the critical role of case management in our facilities. Obviously, that is an important aspect of our business in reducing our length of stay and creating capacity. So back in 2021, we expanded the director development program to incorporate case management to ensure that we have the talent that we needed to deliver on this critical imperative. Probably 1 of the most impactful offerings we have, and we call these programs our Signature series, but this program specifically, the executive development program is an award-winning industry-leading program for Chief Operating Officers, Financial Officers and Nursing Officers. And each year, we select about 40 to 50 leaders from across the organization to participate in the program. Once they've successfully graduated from the program, they are then placed in executive roles across the company. And this program is highly successful. In fact, today, 1/3 of our current hospital CEOs and over half of our COOs are actually graduates of the executive development program. And today, as you may know, our division presidents are in the audience with us and 1/3 of our division presidents started their careers with HCA through the executive development program. And it's not just about the learning or the training provided in the programs, it's really also about the partnerships that are formed, the trusting relationships, maybe even friendships that often last an entire career, the participants and the program graduates, they stay connected. They can fight in each other, they share ideas, they lean on each other for support. So it's again, another reflection of the power of these programs and helping us really develop those relationships. They share best practices, they're calling each other to really figure out what's the best next move for them. There's 1 more important aspect of these programs that I really want to highlight. It's really an incredible thing within HCA. And that's leaders as teachers. Our executives are actively involved in developing others. They host learning sessions, they participate in Capstone projects. They serve as mentors and this is a really important aspect of our programs, not only for the mentors and the -- but also the participants because it allows both parties an opportunity for visibility and exposure. It leverages the experience and the expertise of a more seasoned leaders and really helps us develop that next generation of leaders. We also incorporate external perspectives into these programs. We bring in folks from the outside, it could be various thought leaders, subject matter experts. And oftentimes, we actually have members of our Board participate in these programs as keynote speakers. So it's through a combination of education, experience and exposure that we're building the leadership skills, robust pipelines and organizational capabilities. I'm going to walk through just a few examples for you to demonstrate the impact of these investments. So the learning provided through the HCA Leadership Institute is really designed to build leadership skills and competencies whether it be effective decision-making, driving execution or communicating with impact, we're elevating the performance of our people and the performance of our organization. I'm not going to fully read the code on the right. If you want to read through it real quickly. The one thing I wanted to highlight here is this is a comment from 1 of the program participants. She really shared with us that the power of the program was that accelerated her learning, it improved her performance and it also improved the performance of her team, which led to better outcomes for our patients and for our business. So speaking of outcomes, the graduates of these programs generally have better retention rates. They have higher engagement levels both personally and among those, they lead, they generally have higher patient satisfaction scores and better operating results such as better turnaround times in our ORs. So while we're building leadership skills at scale, we're also building very critical pipelines. I want to talk a little bit about an example here, and I know that Sammie, he touched on this just a little bit, but it's how we filled some of our Chief Nursing Officer vacancies. This is a really critical role in HCA because our chief nursing officers are responsible for the care delivered in our hospital, that's at the core of what we do. So through a variety of development programs and a strategic investment in the assistant CNO role we were able to strengthen the CNO leadership pool and enhance the execution of the nursing strategy. You can see here on this slide, as we've ramped up this assistant CNO role, we were able to significantly reduce the time it took to fill the CNO vacancies and actually reduce the number of vacancies in a notable way. You heard Sammie reference this. It's a pride point for us. Today, we sit with only 3 Chief Nursing Officer vacancies across the company, and we have already now pool of talent in the pipeline. The strategy is working, and we're very proud of this work. In fact, 51% of our current chief nursing officers were promoted from the Assistant C&O role. So a very intentional pipeline program. And our ability to cultivate and leverage leadership talent is really what sets us apart. You may be aware of the company reorganization earlier this year, we reorganized into 3 hospital operating groups. This was made possible without any business disruption by leveraging our internal talent. We had 29 directly related moves. We were able to fill 97% of them with internal talent, and the remaining was actually filled by a rehire back to the company. So again, I'm not going to read through all the highlights, but the highlights on the right-hand side just show you the power of the multiple talent pipelines that we're developing to feed the CEO role. We had executives that were moving to larger roles, larger divisions or larger assets. We had Chief Operating Officers and Chief Medical Officers assuming their first-time CEO role and again, we were able to do this because we're consistently investing in our people to ensure we have a continuous supply of capable leaders. And we're not just focused on developing individual leadership skills. We're focused on developing organizational capabilities that you heard talked about many, many times today. And one of the ways that we do that through our programs is through the Capstone project. It's designed to reinforce learning and address business challenges or opportunities. So here's a highlight for you. This is one of the COOs who went through the executive development program. His Capstone project drove positive results for the business. He was able to increase surgical volume. He was able to improve the OR turnaround time, and he drove better employee engagement within his organization. So again, the people participating in these programs are working together with the executives within the organization on these Capstone projects to solve business issues, solving a business issue and also providing learning and development. I want to share just one more example of how we're growing our leaders. This is Jackie Venblaracom. Some of you might recognize Jackie because she's actually here with us today in the audience. Jackie started her care with HCA 23 years ago as an associate administrator right out of her MHA program. She went through our COO development program and became a COO shortly thereafter. You can see her career progression on the slide, again, from associate administrator to COO to CEO and now President of the Far West division. She was actually promoted as part of that reorg I just mentioned in January of this year. We're obviously very proud of Jackie, but we also have numerous stories just like her's. We have a solid, long tenured, experienced and highly capable leadership team, and we're committed to continuously developing our leaders, delivering on our mission and growing our business. Thank you so much.

Please welcome Senior Vice President, Marketing and Corporate Affairs, Deb Reiner.

Good afternoon. I am honored to be here to share a little bit about how HCA Healthcare gives back to our communities and how we address societal issues. As soon as I'm done, will bring up Sherri Neal. She is our Chief Diversity Officer, who will talk about some related initiatives. We take our responsibility to positively impact our communities very seriously, and we have a robust agenda to address that. We know it's critically important for HCA Healthcare to integrate into the infrastructure and the stability of those markets. Health care in and of itself is an economic engine, but what we can do in those communities to help grow them kind of comes back to us in returns. Our relationships with local politicians, chambers of commerce, emergency operations centers, they are crucial to our ability to do that overall strategy you saw this morning of creating those comprehensive local networks. And this type of community support is also crucial to our reputation and our brand. The majority of our markets are branded locally and the benefits that HCA Healthcare can bring to those local markets this community agenda, really, and the way we show up every day, really help make those communities stronger. So as an anchor institution in our communities, there's really 3 ways that we kind of look at this. And first and foremost, our responsibility is to deliver quality care and provide that access to quality care. Now you've heard about that a little bit from Dr. Cuffe and Dr. Mosier. So I'm not going to really go into that. But I am going to go into the other 2 on this slide. As I mentioned, we are an economic engine, and we contribute to the growth and stability of the markets that we serve. And then our third is our corporate citizenship. So we use our unique resources to kind of give back to the communities in unique and impactful ways. And we'll share some of that right now. So we, you know this, intentionally operate in strong markets. At the same time, we drive a significant portion of the economy in those markets. It's kind of a symbiotic relationship if you think about it. Local economic development leaders frequently tell us that the reason they are able to attract new businesses and new companies into their community and how they're able to attract and convince others to grow, other businesses, it's really because of the availability of those comprehensive quality health care networks, which includes ours. Also in most of the communities that we serve, we are 1 of the largest employers and those are good paying jobs. And there are jobs that require a higher level of education and specialty training. When you think about that in turn, you heard some of this again this morning is that as we partner with local educational institutions to help train our employees, it actually brings more job into those communities as well. And it enhances our clinical capabilities. So again, that's a symbiotic relationship. So we pay taxes that many of our competitors don't. And those funds are used to build local infrastructure. They build roads, they build the bridges, they build schools, they pay for teachers, which again makes those communities that we're operating in even stronger. The tax base that we provide to those communities is part of our value proposition for those markets that we serve. And you know our capital investments drive growth for the company. But the projects, the construction projects themselves actually provide another stable of good-paying jobs in those communities. And when we take our capital dollars and invest in an acquisition, the result often includes a community foundation. Over the years, through our acquisition and our purchase system not-for-profit hospitals, we've formed a number of community foundations that live on long after the acquisition is done. Just a few example markets. Asheville, North Carolina, Denver, Austin, Kansas City, but Kansas City was 2, 1 on the Missouri side and 1 on the Kansas side. And finally, we support these nonprofit community agencies, and it's not just with our monetary contributions. We also provide significant opportunities for our employees to go out and volunteer in the community. And then we reward that voluntarism with something called the Care Card. Think of it as a preloaded gift card with money that they can donate to the charity of their choice. So again, if you can kind of start to get the pattern of the cycles of how we give back, more than 6,700 agencies -- community agencies benefited last year from HCA's in cash and in-kind gifts luster. Bottom line, good health care begets good economic development. So we have 2 foundations inside of HCA. The first 1 is the HCA Healthcare Foundation. It was started in 1998 by 1 of our founders, Dr. Tommy Frist Jr., and that foundation supports local 501(c)3 organizations here in Middle Tennessee primarily. Since its inception, we have given about $250 million in grants. But about 2 years ago, we said, "Hey, it's working great here in Middle Tennessee. Shouldn't we expand that to other markets?" So we started a second fund inside the foundation called the Healthier Tomorrow Fund. And you can see the areas of focus up there. But what this really does and kind of the advantage of having HCA as a national platform, broad footprint, partnering with organizations like the American Heart Association and Girl Scouts, another 2 other strong national platforms. It really does show that the power of how that comes together and the difference we can make in our communities. So a little bit about those, the American Heart Association is a multiyear partnership. We co-developed a program called Getting to the Heart of Stroke because most strokes are actually cardiac related. And that initiative includes an educational collaborative for physicians, it includes patient and community education, and it includes other types of community events, you're probably more familiar with, like Heart Walks and Health Fairs. The girl scout, one that's really close to my heart. One of the societal issues that has been pretty prominent since COVID is the mental wellness of adolescents. And so our partnership with the Girl Scout is focused specifically on that. It has been so successful that we have decided to expand it into multiple markets next year. So we're able to really use, and I think you're seeing this the scale of HCA in a number of ways with our foundation. So our second fund is -- our second fund is the HCA Healthcare Hope Fund. The Hope Fund is an employee assistance program. It really benefits employees who are having financial hardship due to the death of a loved one, a natural disaster, spouse loses a job. So, it was started in 2005. And since its inception, we have been able to provide 51,000 employees with grants, and we're so excited by the end of this year, we will have hit $100 million in grant since its inception. So one of the other critical ways we demonstrate our corporate responsibility is how we respond to disasters. So about 2/3 of our hospitals are in hurricane prone areas or regions. The first time that we really rallied around a specific HCA facility or market was in 2005 in New Orleans with Katrina and the -- Hurricane Katrina and the catastrophic flooding that followed. And that event really was the impetus for us to start our emergency operations center as it functions today at an enterprise level. And you can see the number of hurricanes we've had to address since that time. But we took the muscle memory from those hurricanes and we're able to apply those more recently to other types of natural disasters, things like the historical winter storms in Texas, the wildfires in California, even industrial accidents like the one up here, which was the explosion of the sugar factory in Georgia. What's interesting about that is all of those natural disasters tend to happen in 1 market or 1 small region. And it wasn't until COVID-19 that we were required to address an emergency at a national scale. As you know, it was monumental, and we had to enforce our -- or put into place our emergency operations center every single market, every single hospital, every single facility for a prolonged length of time. So we were able to take the learnings, the resources and the coordination to really withstand all those surges that we saw in each community across the country through the pandemic. So our scale and the variation of the types of events that we have encountered and successfully managed really prompted national agencies to come to us and said, "Can we work closely with you? Can we learn from you?" you saw it this morning, we have data on clinical care, but we also have data on how to respond to a variety of emergencies. We gladly participated in their request to help bring storm ways to prepare, so -- and that's really important because it's not just what we do after a hurricane or after a wildfire, it's what you do to prepare for that. So that community can get back up on its feet functioning, growing and driving that economy once again. Our enterprise operations center is actually comprised of a really unique leadership team that is both clinical and business operations. and they are considered really to be a leader in the industry. So we do all of this because we know it's the right thing to do. It really just follow our mission and our commitment to the care and improvement of human life. At the same time, we also do this because it's good for business. Whatever is good for the community that we operate in is also good for our business. So I'm now going to introduce you to Sherri Neal, our Chief Diversity Officer, who will share more about our corporate responsibility initiatives.

Thank you, Deb. I'm really proud of the progress that we've made in advancing health equity for our patients, creating more opportunities for our colleagues and strengthening our relationships in the communities that we serve. Recent recognitions that we have received for our diversity, equity and inclusion efforts affirm that we are on the right path. In 2023, we announced that we have been recognized for the 13th time by Ethisphere, a global leader in defining and advancing the standards of ethical business practices as 1 of the world's most ethical companies. We're also proud to be named among the best places to work for disability inclusion, receiving a perfect score on the Disability Equality Index for the second year in a row. HCA Healthcare has also had a long-standing history of supporting our veteran and military spouse colleagues, hiring more than 55,000 veterans, active duty personnel and military spouse colleagues since 2012. As you can see from this map, we have a huge overlap with our military bases and our communities. A couple of examples include Fort Campbell, Kentucky right in our backyard, Las Vegas, San Antonio. In the State of Florida, we're deeply embedded in communities where there are a number of military installations deeply around our facilities. And we have the opportunity to support those bases with jobs, serve patient needs whenever appropriate as well as the opportunity to advance our corporate citizenship. So our approach, our strategy is first about patients. It is our higher calling, the care and improvement of human life. And we've been intentional about those efforts. We have a very diverse patient population. As an example, over 160 languages and dialects are spoken and our more than 2,000 sites of care. We have a strong commitment to cultural confidence. It's also important that we have a diverse workforce, and we're committed to fostering inclusive environments for our colleagues. We need to connect with and engage in our communities to effectively serve our patients' needs. I want to share with you a few examples of how this is happening. Our workplace programs such as our Colleague Networks, also known as employee resource groups are leading to greater engagement. We've established over 125 local colleague network chapters that are engaged in meaningful programming across the enterprise. Our May 2023 employee engagement survey, even our most engaged -- recent engagement survey shows that our colleague network members report a 5-point higher sense of belonging. The colleague networks connect to our purpose. Pictured here, our colleagues in San Antonio at a community event. The engagement of our colleagues connects to creating a supportive place to work. We're also committed to providing equitable care for our patients, which includes analyzing data related to patient outcomes, exploring opportunities to address disparities within the walls of our hospitals and pursuing partnerships with organizations to address an equities in areas such as maternal health, cardiovascular outcomes and cancer screenings for communities of color. We have an opportunity with our scale to be at the forefront of reducing health disparities and we're looking inside the organization to make sure that we have the support services in place to remove the barriers to care, language, disabilities, cultural needs in order to deliver high-quality health care. Pictured here, for example, is an empathy lab that we designed to better understand the unique needs of patients with disabilities. And outside of the organization, Deb just mentioned partnerships with the American Heart Association and the Girl Scouts both have a health equity lens. American Heart focused on stroke care and diverse populations and Girl Scouts, on mental health and well-being for girls and young women. So we're in very diverse communities. Nashville, Tallahassee, Augusta, Savannah. And then we looked in those communities and others where we have a presence. And we saw historically black colleges and universities and Hispanic-serving institutions where we could support those organizations and institutions and position ourselves in those communities to advance and build a diverse health care workforce. These partnerships are all very unique and are a result of us taking time to canvass those communities and build on existing relationships or create new and intentional partnerships. In 2021, we pledged $10 million to invest in those partnerships, which is already making an impact on our organization and in those communities. For example, Fisk University right here in Nashville, Tennessee, historically black college, we're seeing a lot of students who are bypassing them because they didn't have a nursing program. And so we said we can help with that. And so today, there is a dual enrollment program between Galen College of Nursing and Fisk University, where students can graduate with 2 degrees in 5 years, a bachelor's degree from Fisk and a BSN from Galen, and it's a program that we not only help to create, but we're supporting. We also have, like every other organization, a lot of young people, a lot of generational diversity in our organization and a lot of opportunities, which means we must be intentional about the strategies for retention. So for example, we have a sponsorship program and other leadership development programs that you heard Jen Berres talk about, which has seen great success in accelerating the advancement of leaders of color. We will continue to innovate in our approach to supporting the development of diverse health care leaders. These opportunities will ultimately lead to greater engagement, better retention and increased representation of diverse talent among senior and executive leadership. We are being strategic and intentional in our actions to advance diversity, equity and inclusion. The goal is to positively impact our patients, our colleagues and our communities. And I am confident that we will continue to listen, we'll continue to learn and create healthier, more equitable tomorrows. And now we're going to close this portion with a short video of our response to Hurricane Ian in 2022, which is a good example of how all of this comes together. [Presentation]

Please welcome back Executive Vice President and Chief Operating Officer, Jon Foster; American Group President, Erol Akdamar; and Landing Group President, Richard Hammett; National Group President, Tim McManus; and Senior Vice President of Finance, Mike Marks.

Thank you. Well, in this section of the day, we have an opportunity to hear from our 3 new group presidents and our Senior Vice President of Operations Finance some real veterans within HCA. We're going to specifically talk about how HCA achieves operational excellence. And throughout the day today, you've gotten a sense a little bit of how we're organized. But just in summary, obviously, we have 183 hospitals. Every 1 of those hospitals has a deep executive team. But those hospitals in and of themselves, these are large businesses. I think people don't sometimes realize that some of our hospitals have over $1 billion in revenue. They have thousands of employees. They're massive physical plants. And so there's a lot to manage there. Those 183 hospitals are organized, as you know, into 16 divisions. Those have about 12 hospitals each on average. Those divisions have a deep and broad management team. And then those are typically organized geographically around the country. And then those 16 divisions are organized into these 3 operating groups, each with a division Group President and an executive team there as well. That is further supported as you know, by our shared services platform in revenue cycle supply chain and IT and HR and clinical services, et cetera, et cetera. So with that overview, let move on to our discussion here. We're going to focus on the elements that drive operational excellence and we think about the HCA way, which Sam mentioned in his first comments, 6 things sort of come to mind. First, our systems of accountability and our operating process. Secondly, how we use data to drive decision-making. Third, our focus and our pace of play. Fourth, how we develop and scale enterprise solutions Fifth, how we identify and develop leadership talent. And then finally, running through those various dimensions is how we are constantly balancing between sort of centralized support -- centralized support for the field versus a more decentralized approach. So let's dive into the questions here. And the first one for you, Richard, if you would speak a bit about the operating process and how that drives accountability in the organization?

Sure, Jon. Several things come in mind to answer that question. Number one, accountability requires measurement. And you've heard a number of examples of that already today, right? And -- but our management reporting systems, we really believe are a differentiator for us. And we'll talk a little bit about that, but you saw examples of information that's pushed. How we've collected dashboards and the idea that trending results is -- there's a ton of pressure testing in this organization. But within that, kind of the second point is a frequency and urgency within HCA around our results. It's driven by that management reporting system that I believe is another differentiator for us. And by that, I mean, we as operators, and there's a lot of many of the audience today were driven by the shift day, the month to date, the run rate of that month to date, et cetera, there's an urgency driven by the nature of our reporting system so that gaps are identified. And so there's an immediate pivoting. And I believe there's a speed there around solving problems -- identifying and solving problems because of the nature of our management reporting systems. I'll give you one example because I know you heard some today and saw some today and really good clarity. But one of the disciplines within our company that is, I believe, another differentiator is the fact that we project our earnings on a very frequent basis. So our CFOs and our group CFOs at 3x to 4x per month full revenue picture, full expense category picture. And so -- and then there's -- particularly between the group CFOs or in the audience of they're sitting over there together, sharing and we're pivoting immediately if we see trends in one market that may affect another market. I think that's another function of our management reporting systems. You heard earlier that major elements of our organization are ranked, quartiled, benchmarked. That's an element I just don't think can be understated. Transparency is extremely high in HCA. And you heard Jen Berres just talk about -- and I wrote this down to be an HA leader requires drive devotion, grit. And I also believe because of this, it requires humility. Results are going to get -- generally going to get called out pretty quickly. And so that's another quality, I think, as a result of how we operate that is required in the system. And the last thing where all of this comes together. as a core operating discipline for our company is the management reviews that we do. And it takes many forms, certainly financial quality service. At all levels of the organization, many times topical by a corporate functional area like HR, retention focus. You heard -- I talked earlier about ER discharge, length to stay, there's ER throughput at the weekly, monthly level in hospitals, at the division level, group and corporate level through Jon's leadership. There's a -- that's just one example of a topical area where we're driving management reviews. There's 3x a week labor reviews occurring just like in my group alone. So I think that the command performance though is the monthly operating review. And it's a meeting, a rather intense meeting, but that's the -- at the hospital level with the division presidents that are in this room. It's at the division to the group level, it's a group to senior leader level to Sam. It's a month in, month out. And there's a ton of review that's done on every element of our business, certainly, revenue, expenses, operational gaps are identified. And that's where we -- frankly, we become better and better as a company.

I would double-click on that. I think the other way to think about this is leadership development. So you heard Jen Berres and others talk about that we hire a lot of people very early in their career. And then the way up the system, starting in hospitals and over time, moving into multiunit roles. Think about the power of those junior leaders sitting through every one of those operating reviews. All of the data that they have to learn how to command. And their maturity and development of the granular understanding of the business that this process that we take for granted now after living in it for many, many years that speeds up the maturity in development of our young leaders as they start going from their right out of college and maturing as leaders. And I think it's a part of the DNA of HCA.

Yes.

You've heard throughout the day today a lot of references to data, and we certainly are a data-rich company. Mike, just picking up on some of that. Can you speak to the various ways that we use data just sort of added Richard talked about to drive decision-making in the company. .

Sure. And I'm not going to repeat all the kind of the words that you've heard over through the day. We've heard a lot about benchmarking, advanced analytics, our monthly reporting packages and all of those are robust. I would say, just to make sure that everyone has a sense of it, that is not just financial. We have very detailed monthly reporting and daily reporting on quality, on engagement. We report on our employee engagement. We report on our patient experience and our physician engagement. A lot of detail around our operational data. You heard Richard mentioned earlier, I just think this is a great example of our ED dashboards. We've been collecting a standard set of ED data around our operating performance for 18 years. And so we can take the power of that data to help people really understand their performance. So this data in capability is really widespread across all of the pillars that we're working against, not just finance and not just quality but operations and the like. And I think it's kind of a little bit like what I said last time, this idea then kind of generates a part of our culture that is being really data-driven and granular in our understanding analysis of the business. And if I think about our leadership teams, their ability to understand their business, find where their performance gaps exist and take action is really one of the things that powers the company and is really impressive. So that's my sense of the data-driven culture of the company.

I do think that we use this kind of data time. And it's on our phones. It's from on Sam's phone, all the way down to frontline supervisors phone we are managing -- when he talked about throughput, just to give us some applicability to that. That means when our hospitals are going to jam pack with ambulances that they talked about earlier, when do we go on closure, how do we get it back open, how do we move patients through the continuum and then I think about clinical protocols. The work that were HCA led the industry around sepsis protocols, all that came out of taking that big data and learning lessons from it and then really applying it.

Yes. Piggybacking a little bit but pivoting to another idea here. You heard us mention earlier that our physician liaisons make 455,000 visits to doctors a year. And through that process, they're capturing information. They're capturing issues that doctors are having, problems that they're having, barriers to maybe challenges to get anything scheduled here or there. And all that is used and then elevated up through our management structure, and there are targets around how quickly we want those things resolve. So this notion within the company that the cycle time between problem identification and problem solution is something that we want very short, regardless of sort of what the issue is. And so pivoting to you just a little bit, Erol, talk a little bit about how we focus, how we prioritize and how we resource our efforts to execute at pace.

Sure. I think we've talked a lot about the sort of inside advantage of HCA being its leverage in its size. We also work very hard to make a large company small. And so when it comes to executing with pace, it's really about how do we identify opportunities and execute on that and identify challenges and execute on that. And part of it is the structure we've talked about. It's leveraging the matrix. So at the facility level, it's really about executing -- largely about executing at pace at the division level, which really is sort of the strategic business entity for our company. It's about organizing and prioritizing. And then at a corporate level, at the most senior level, it's really about prioritizing. And then from a corporate support standpoint, it's coming around that. And Jon, I think of an example with our recent reorganization, went I from 2 seasoned group residents to you, Jon, moving into the COO role in 3 new group guys and the creation of the operations executive committee -- operations counsel, excuse me. And that's the group the corporate functions, all sitting together in real time, weekly to talk about the timely decisions that need to be made or actions that not need to be prioritized and then how that invariably works its way back down through the groups to the division, to the field that allows us to execute with pace. The other thing I would say is that we are an incredible learning organization. One of the advantages of scale is that when a problem is identified in Miami, Florida, and someone gets after it with innovation, they're able to solve that problem. But it's not just solved in that hospital or in that market. It gets to trail through the rest of the company. And so we have the ability to learn quickly and to deploy that learning. So it's about learning, it's about codifying learning, it's about solidifying what the plan is and then leveraging that throughout the network. And so a great example of that was COVID to be fair. I think we went into COVID thinking we were a pretty nimble and agile organization. and the first weeks and months of the pandemic, where our focus unilaterally switched to the COVID issue in front of us. We were -- information was changing weekly, daily and hourly about how we deal with this pandemic. And we moved quicker. We innovated quicker -- tools were built we talked about earlier. And so I think that's another example of really a forced discipline within the company getting strengthened during the pandemic. And frankly, coming out of the pandemic, we're challenging ourselves not to lose that muscle memory of moving quickly and executing quickly. The other thing I'd say is that our management team -- our management teams that pride themselves on execution as much as innovation is no pride of authorship within our company. If it's learned in one area, it's equally executed in the other. And so the sense of urgency is a part of our culture. And I think that also helps us focus and operate with pace.

That sense of urgency. I mean this company is not for everybody. And when I think about the people who have risen through the ranks of it, and there's not a sort of people who think about coming into the company, but we're highly selective and we don't need planners, we need planners and executors. And we feel that sense of urgency. And when you think about pivoting when Erol talks about coming out of pandemic, we had a competitive advantage because we are ready to reopen our OR, ready reopened our inpatient units faster. And that's just a core tenet of the leaders that we're looking for -- and we're often by the way, some of those leaders don't know how good they are at it, and we're tapping them on the shoulders to tell them and get them in the pipeline to be that. .

Yes. That's really great. And that message comes from the top. And then one of Sammie's favorite phrases is that we need to move with alacrity. And we are always sort of being pushed obviously further and further around results, but also the speed with which we get them. And so that's very much a part of our culture. . Back to you, Mike. One of the distinctive strengths of our company is our ability to develop enterprise solutions. And we've talked about many of those today. Those tend to make our networks more competitive in their local markets. some thoughts on how we identify, how we develop and then how we deploy and scale some of these enterprise solutions?

Sure. If I think about Identify first, heard a lot today about our administrative and operational process and the operating reviews are big part of that. The other thing that we do is we really get to the field. And so our division teams, our group teams and our corporate teams, they visit our hospitals very frequently. So between these operating reviews and the site visits that we are able to participate in and then all of this data and analytics we produce, we are able to identify new ideas. And this identification comes through pain points. It comes through identification of best practices that we physically see when we're in a hospital that's doing something really well or opportunities that become clear in the data as those ideas become identified, we have a way of pulling those in and some of that through our resiliency program, some of that is through these operating programs. And then we developed a project. And those projects are talented. So we've always said, like we're not going to enterprise scale anything that verified in a pilot. So our hospitals and our divisions are used very accustomed to doing pilots, and that's part of this kind of innovation process that is abundant in the company. We support those pilots and these scale solutions through multidisciplinary teams through project management and through funding and resources. And there's a healthy competition in the company for being the hospital that identify the best practice or being a hospital that's successfully piloted a best practice on the way to making that a scaled solution. And then we scale it. And you've heard a lot of this today, but I think it's important to note. I mean we take this idea of implementation seriously. So we have funded dedicated implementation teams that support the rollout of these scalable solutions. These teams are -- have multidisciplinary factors where you have the right people from change management, the right people clinically, the right people financially who are then dedicated to support that. And then the most important part of this, in my view, and Richard touched on this is measurement. So when we roll out a scalable solution, we put into place a measurement system to make sure that across 183 hospitals that, that solution is implemented and then maintained. It's not unusual, and we had to learn this lesson the hard way over the years to roll out a solution and come back 2 or 3 years later and find that in place anymore. And if you don't put the structure and discipline of measurement into the process, then you can lose track of your initiatives. And I feel better today than I have in a long time of our ability to maintain performance within our scalable solutions because of our execution and our discipline.

Mike talked about resourcing and ensuring execution and pulling on the threat of project management. I think that really has been an evolving capability within the company to develop the project management function to come alongside of the operators or the clinical function really across any discipline to ensure that we're hitting our milestones, that we're making our marks, that we're moving with pace again and really just executing. And I think that's been a good adjunct to an already strong operating culture to ensure that we can move more quickly and to get the results on the time frame we're looking for.

Yes. Another example is something that comes to mind on what you're talking about leveraging our enterprise capabilities It's about a 6-year period in the state of Florida, where we had -- we went from 0 trauma centers to 6 trauma centers. And what was happening was there was a number of hospitals hearing from their community leaders, local EMS as well who are sick and tired of having to transport patients long distances. And so this was bubbling up and there was demand -- clearly, demand for more trauma centers in certain geographies of the state. And so we were -- our division offices were needed to respond. It was bubbling up and we really leveraged a large-scale initiative to develop and support the development of more trauma centers in the state. That was a very -- that was a period of time, and you can't just wave your hand and say, I'm a trauma center now, send me -- send me patients. There's third-party validation you have to go through become state verified in the state that the hospital is in. There are guidelines that are put out by the American College of Surgeons, probably, I think, the oldest physician organization in the country. There's a ton of rigor and it's a heavy lift to go from a non-trauma hospital to trauma receiving. And so this is where the enterprise capabilities really come into to bear to bring value because we have other hugely successful high-quality trauma programs out the company. We have division leaders. We have corporate leaders that can lean in. And so when you think of the lift, every department is touched laboratory, the blood bank, radiology, OR call teams, certainly the ER and ICU, et cetera. a ton of education. There's gaps that have to be identified, but the teams lean in to help pressure test the demand, the volumes, the business model, identify those gaps, assess the capabilities of the hospital against guidelines, policy formulation, staffing models and on and on and on. We have a team of people in to help the hospital become trauma ready to submit that application, to sit for a survey. We [ Marshall ] trauma surgeons from our to help get our hospitals ready. And then when it's ready for a site visit, we have teams of people who are -- who can lean in at the division and corporate office to help with that survey. One final thought. think of what we've learned from that. Tim talked earlier about, we have 52 trauma hospitals now. We've lifted growth of trauma centers to meet demand in a number of other states, not just in Florida. And once you become trauma status, you don't just always get to keep it, you need to get reverified. Third-party visitors come in and pay a visit and you can lose your trauma staffs. And so we do our internal teams lead mock surveys, and we try to be harder than third-party validation. And so we maintain a level of vigilance for our hospital to maintain a trauma as just 1 example of leveraging enterprise capabilities.

Yes, I think the other thing I'd add is that the 3 of us have commented from -- coming from divisions, which I think we would all argue as the field to the corporate office, just the enterprise capabilities that are housed and the expertise within the function. And I've been with the company 30 years and then similarly, probably tenure up here, our appreciation now for the functions that help the field be successful are deeper than ever, whether it's corporate legal, audit and compliance, ethics and compliance, there are just so many different things that are a little bit in the background to the operator. that I think are a bit of the secret sauce, Jon, in terms of enterprise capabilities that maybe an operator doesn't see on a daily basis, but certainly set us up for success. .

That's true. We'd like to stay within HCA, if somebody has a problem, somewhere across HCA, we figured it out. And the trick is identifying it and applying that in the right way at the right time. And talking a little bit about applying things, let's talk -- let's shift a little bit to leadership assessment. Tim, last question goes to you. All the systems are great. All the processes are great without a strong leadership to execute on everything you come up short, right? So talk a little bit about how we identify, develop position leadership talent to execute.

Yes. Jen Berres commented about how much we hire within others did too. The stats is really for our officer level talent and above 87% of those are coming from internal company. So how does that happen? Our execution of figuring out how to -- who those right people are, who could be long-term leaders. This is a longitudinal piece. We're not thinking about just in there's 1 hospital that, that person is, we're thinking about what's their applicability to a market, to a state and across 20 states that we're in. We do -- the succession planning focus that we have is more mature than ever. And so when we think about having formalized mentorship programs, where we pair frontline supervisors maybe with a manager, we pair directors with an officer, we pair officers, maybe with somebody and not necessarily in their chain of command at all, but somebody else in the company and on up into a lot of these corporate mentors for people too. We purposely designate hands-on learning. We want to make sure that they have the right experience. This has almost little to do with the lane that they're swimming in right then. We want them to broaden that. So if you're a physical therapy director and you're doing a great job. I want to know how I can make you a Vice President of Operations, and I can do that by giving you some projects across our enterprise to help us execute at scale, hugely important for us. And then I think we've heard about site visits, but let me tell you what a site visit is. What I was thinking about, by the way, the 3 of us, we have about 90 years of experience. So for us going into a facility, we've seen a lot of stuff. We haven't seen it all, and we've learned from those facilities. We take best practices away from those facilities and we teach somebody else that. But that experience that we're taking in there is to be able to look for and mine that talent. We're looking for who has those characteristics. And we are one of those companies that we're more interested in having the right attitude and the right focus than necessarily having the most perfect resume and you promote somebody as a 55-year-old to be their first COO. And so that effort and it goes all the way up to Sam. Sam and I are traveling next week to New Hampshire. And to have that team here directly from him and his experiences and what he's thinking about and what he's prioritizing is as important as it is for our division team to be actively engaging and working with those teams. And so I get really excited. [indiscernible]

I think what you'd agree is that across numerous dimensions of performance in the industry, HCA really is a leader, and it takes strong execution to get those kind of results. And if you're a patient or if you're doctor or if you're a shareholder, you certainly want you certainly deserve that kind of detail orientation then we believe our management teams are [indiscernible] but we've got a lot of winners in the organization. So guys, thank you.

Please welcome Executive Vice President and Chief Financial Officer, Bill Rutherford.

All right. Good afternoon. It's been a great day. I hope you've seen and learned about the depth of HCA Healthcare and the opportunities we have in front of us. I get to close the day by reviewing financial results. And I want to have a discussion about how we combine our operational performance with our capital allocation philosophies to drive long-term value. At the end, I will share with you some of our long-term performance targets and some of our underlying key assumptions. When I'm done, Sam is going to join me on stage, and we're going to open up the floor for some Q&A. So let me begin by reviewing some historical financial results. HCA has got a long track record of creating strong shareholder value. Since 2012, our share value has increased over 650%, that represents a 20% compounded average annual growth rate during this time period. If you add in dividends, it would be even greater in that. I think the S&P 500 has grown roughly 200% during the same time period. So I'm trying to find time to pause on this slide because I think it shows that our formula for creating long-term value has a proven track record. Now formula is pretty straightforward. We combined consistent adjusted EBITDA growth with a disciplined and balanced allocation of capital, all while appropriately managing the balance sheet. In fact, you'll see we've actually significantly reduced our leverage since 2012. We think our results prove this is a powerful formula for creating long-term value. And I want to dive down into each one of these components a little greater. Ultimately, our value is driven by our operational performance. HCA Healthcare has generated adjusted EBITDA growth of about 6% annually on average for the past decade. If you went even further back, you see a similar result. And although we know in any one year, events or circumstances may cause that annual growth to be above or below that. I think this demonstrates remarkable consistency for an organization the size of HCA Healthcare. I think that consistency is further demonstrated if you looked at any 5-year rolling CAGR during this period of time. It speaks to the resiliency of our model, the company, our management teams and the systems we have in place. We've managed through economic downturns, periods of competitive disruption, changes in governmental policy, natural disasters and even a once in a career global pandemic. The ability to navigate and manage through different market conditions and business cycles is a key attribute for HCA Healthcare. And I know as a team, it instills a level of confidence in our ability to capture future growth opportunities and deliver value over the long run. I talked to the investment community for some time that our operational performance has ground and on capturing our volume opportunities. Historically, we've targeted growing adjusted admissions about 2% to 3% a year. You see on the right-hand side, since 2012, we've averaged 2.6% growth in adjusted admission. Broadly speaking, that's coming from about 1.5% to 2.5% inpatient admission growth and outpatient revenue in the mid-single digits. COVID interrupted demand patterns. And we've said publicly, we believe over time, demand will return to historical trends. And I think our volume results in 2023 demonstrate that. There's a lot of factors that go into our ability to grow volume. But fundamentally for us, it starts with the markets we operate in. Good population growth, good economic indicators, we believe we operate in some of the best markets in the country. Historically, we've seen about 1% to 1.5% just organic demand for inpatient emissions in our markets. You've heard throughout the day efforts we have to capture market share through expanding our networks, spanning service lines, partnering with physicians, rural outreach and the like. Ultimately, our pursuit is to establish the local HCA Healthcare network as the provider system of choice for our patients, our physicians, our employees and our communities. We've been able to couple volume growth with reasonable growth in revenue per equivalent admission, which has averaged just over 3% for the past decade. Three primary drivers of this. Pricing adjustments, we received from commercial payers and governmental updates, continue to grow higher acuity services and changes in payer mix. During the COVID years of 2020, '21 and '22, we were seeing results above our historical trends because we were servicing higher acuity patients, and we had very favorable payer mix supported by good enrollment in the health insurance exchanges. This is combined to generate strong and consistent top line growth. Our revenue has grown just over 6% annually for the past decade. I think this shows remarkable consistency as well and speaks to the durability of health care demand in our markets, our strategies to expand our networks, our team's focus on execution of the growth agenda. I think this shows remarkable consistency as well on any 5-year CAGR that you look at. You've heard our focus on investing in comprehensive provider networks, and that's resulted in strong and consistent revenue growth in both our inpatient and outpatient segments. This dispels perhaps a common misperception that inpatient revenue trends are shrinking or declining. Our efforts to grow our networks are focused on growing all segments of our provider setting. We often get asked the question about what's the impact of services that might be migrating from an inpatient setting to an outpatient setting, which indeed that does happen, like we've seen with joint replacements over the past couple of years. But I think this chart shows the strength of continuing growth in our inpatient segment. We've been able to combine our revenue growth with strong and consistent EBITDA margin performance, to average between 19% and 20% for the past decade. I think this speaks to the enterprise scale capabilities, our management systems that you've heard about throughout the day and our teams focused on driving operational efficiencies. Because of our scale platform, we operate with a fixed and administrative cost structure well below the industry average and that of other health systems. You also have heard today the opportunities we're seeing around technology, innovation, automation and our resiliency programs. Our focus on operational excellence and driving efficiencies is just the DNA of HCA Healthcare, and we focus on this to continue to invest in our markets to provide high-quality services. The results of our operational performance is HCA generates a significant amount of capital capacity through cash flow from operations. It's doubled since 2012. It's averaged 7.5% growth and is forecasted to exceed $9 billion this year. Our capital capacity allows us to invest in our networks, execute on strategic acquisitions and deploy capital to drive value over the long run. Capital allocation philosophy is balanced and disciplined. Our first priority of capital is to invest in our existing markets to meet the growth opportunities that you've heard about today. Capital expenditures were approximately [indiscernible] million this year, and we continue to see great projects with good returns on invested capital that I'll talk about in a minute. Secondarily, maintain the balance sheet in a strong position, which gives the company additional capital opportunity. And then we return value through a dividend and share repurchase program. You will see we've executed on an enhanced share repurchase program in '21 and '22, partly making up for the pause that we had in 2020 and utilizing some of our balance sheet capacity in 2022. This disciplined and balanced allocation of capital is a key attribute for long-term value creation for HCA. In fact, the capital capacity the company generate provides us tremendous opportunities and flexibilities to continue to invest to drive long-term value into the future. These are cumulative amounts since 2012. You can see we've generated just under $80 billion of cash flow from operations during this time period. Between capital expenditures and acquisitions, we've invested $45 billion or 60% of this back into our existing markets to meet the growing demand for health care and being an important resource for our communities. The balance has been deployed through our dividend and share repurchase program. During this time, we've also generated about $4.8 billion of proceeds from divestitures if we've made some rebalancing of our portfolio. We've distributed $6.5 billion to noncontrolling interest for our joint venture partners. So the capital capacity the company has affords us tremendous opportunity into the future to continue to drive value. And it's a key aspect that we want investors to recognize. I want to dive a little deeper on our capital expenditure program. Our capital is balanced across our geographic regions. This chart shows the percentage of our capital allocated by market from 2018 to 2022. Over time, this percentage approximates the revenue contribution of each one of these markets and helps improve our competitive position broadly. But our capital expenditure program also allows targeted investments where we see opportunities. And in addition, it helps diversify some of our capital investment over time. A large portion of our capital program has gone to see to make sure we have the capacity to meet growing demand. So we look at inpatient occupancy levels, the capacity to expand our outpatient network and to ensure we've got the service line expansions underway. This is a chart of the new beds that have come online through our capital program are scheduled to come online in the near future. And this is an important part of the growth profile and story of HCA Healthcare as well. This capacity investments are really important because the company runs very high occupancy levels. You may have heard us talk in the past, we have a number of management systems to monitor capacity and occupancy from inpatient occupancy to ER visits per bed to surgical cases per suite to cath labs per room to ICU occupancy and the like. And we utilize these management systems with input from the field on projected assumptions to make sure our capital investments gets ahead of that demand. You can see our occupancy has increased from 66% in 2012 to over 72% today, nearing pre-COVID levels. That's even with the new bed capacity that we brought on during this time. And all of these projects has resulted in a rich pipeline of opportunities. You heard Jon Foster share with you that we got $5.3 billion of capital in the pipeline. These are projects we've approved that are in some form of development or construction, with the majority that are going to come online over the next 12 to 24 months. And as you might expect, we got a host of other projects that are working their way through the system. You may know we have a very disciplined approach to how we evaluate capital expenditures. We have a capital asset management department in Nashville that worked with our field at scoping and designing projects, working on assumptions, completing financial models. We do look back our past investments to look at the actual results versus our model results and take that into account with our future assumptions. We have a centralized design and construction department that oversees the deployment of our approved capital, working with our contractors to bring these projects on time and on budget, and they do a great job. So we continue to see ample opportunity to deploy capital in our markets with good returns, and we'll continue to position the HCA network well, and we have the capacity to fund these into the future. These include building new inpatient hospitals. In addition to the acquisitions we've completed, we've added through our construction efforts 12 new hospitals to the HCA profile over the past decade. Many of these started as a freestanding ED or an outpatient setting that we build it in a hospital as the community around it grew. This is just an example of a few of those. Some of our recently completed projects is a 165-bed university hospital, Broward County, Florida, Lake Nona hospital outside of Orlando. And that approved pipeline that I showed you, we have 8 hospitals that we've approved that are in some form of development or evaluation. And we have a number of projects that we're continuing to evaluate under consideration. The majority of these, we've already bought the land for future expansion. These facilities will be an important part of the future growth profile and growth story of HCA Healthcare. Our capital expenditures have proven to be very productive. HCA Healthcare returns very high returns on invested capital. And in fact, when you look at the spread between our returns on invested capital and our weighted average cost of capital, it's been an important contributor to our long-term value creation over time. And as I said, we continue to see strong projects that we expect to generate continued strong returns on invested capital. We've been making these investments while we've been strengthening the balance sheet position of HCA Healthcare through deleveraging. We were leveraged 4.4x in 2012, just 3.2x today. When you consider 1 turn of leverage, it's about $12 billion. It gives us ample capital capacity into the future. It's an important financial aspect for HCA Healthcare. So we brought our operational performance and our capital philosophies together to deliver strong adjusted earnings per share. It's Increased over 380% since 2012. It represents a 15% compounded average annual growth rate. And I think what's important for investors to recognize is the spread between our adjusted EBITDA growth of roughly 6% and our earnings per share growth, I think, speaks to the unique capital leverage of HCA Healthcare. It is another attribute that contributes to long-term value creation. In summary, we think we've created a significant shareholder value through combining strong and consistent operational performance with a disciplined and balanced allocation of capital believe our model has proven to be reliable, predictable and powerful. And you've heard throughout the day, we believe we're well positioned to continue to deliver strong operating results. So as I close, let me share with you a little bit about some of our long-term performance targets. During the summer, we've completed a pretty in-depth market -- strategic market assessment, where we looked at our market opportunities, capital programs and the like. And we came up with a set of operating assumptions leading us up into the future, both operating and capital. And these will probably look familiar to you is that we believe that we can continue to grow equivalent emissions between 2% to 3% a year, realize about 2% to 3% growth in revenue per equivalent admission, and we expect to operate adjusted EBITDA margins 19% to 20% over time. From a capital perspective, we would anticipate spending 45% to 55% of our cash flow from operations through our capital expenditure program, operate the company near the low to mid side of our stated leverage range of 3 to 4x, provide a reasonable growth to our annual dividend and depending on market conditions, deploy the majority of our free cash flow to a share repurchase program. I got to say our assumptions do not anticipate any material changes in governmental policy changes, and we recognize that performance in any 1 year may vary from these averages for a variety of reasons. You've heard throughout the day our belief around our technology, our innovation, our automation and resiliency agenda continue to drive operational efficiencies, better patient outcomes and better patient satisfaction. We are planning on committing a significant amount of resources to this agenda over the next 5 years. But we anticipate our resiliency programs that you heard about earlier today. We'll pay for these investments in the early part of our projection period and provide meaningful value towards the end. And we have factored those into kind of our long-term forecast. So in summary, we believe over the next 5 years, HCA's long-term performance targets is to grow adjusted EBITDA between 4% and 6%, adjusted earnings per share growth between 8% and 12%. Again, results in any 1 year may vary from these, and these are averages over a period of time. So that was kind of the financial conclusion. And before I ask Sam to come up and make some concluding remarks, let me speak to 2024 because I know based on all the questions I got, it's on your mind. We're still early in our process. We haven't completed our budget process. But when you think about the payer settlement we recorded earlier this year, we expect our 2024 guidance to fall within the ranges that I just covered. And as usual, we'll plan on covering a lot more detail with you in our year-end call in January. So I thank you for your time. I hope you've enjoyed the day, and I'd like to invite Sam to make some concluding remarks, and then we will open it up for some Q&A. Thank you.

All Thank. right you, Bill. I want to thank everybody for attending. There's been a lot of work that's gone into this, a lot of scrutiny over presentations and so forth. But I want to hope you take away because we believe it as a management team, we have a special company that we have the privilege of leading. I think we have a special culture and responsibility that goes with our company, and we take that very seriously. And we think we have a model, a business model that is a value-driven business model that, again, has proven itself over time, but we believe can prove itself in the future. And we're encouraged by our initiatives. We have the resources to support them. As you heard from our teams, we have a disciplined mindset, disciplined systems for execution and the willingness to adjust appropriately whatever circumstances require. So with that, I want to stand up here and deflect every question I get to Bill Rutherford. So we have a process. It involves paddles, sort of like a bid and ask. So I think if you raise your hand, we will get a paddle to you, and we will call on you with the mic so everybody can hear your question. So Bill, you do the -- you're the lead.

I see a bunch of hand, but I don't see a number next to them. So we'll go from here. Let's start with #3 over here. Go ahead.

Awesome. Good afternoon, thank you again for hosting the even today. Maybe Sam and Bill, one of the discussions today is how on GME that you're growing GME, growing residencies and hospital-based physicians is one thing that we're focused on. So just curious, what are the limiting factors to increase the number of anesthesiologists and hospitalists and ED docs, because we saw the numbers today. And maybe the thought on in-sourcing eventually, because I think one of the things that Dr. Cuffe mentioned is that for some of these hospital-based specialties that are not there in that list, you already in-source it, right? So just curious how you're thinking about that.

Well, let me speak to hospital-based positions. They are as important to our ability, our capacity to deliver care, high-quality care, available care and so forth. Just as Sammie said with nursing. We have to have hospital-based physicians to be able to deliver the services that we deliver. And so we have made decisions in the past to internalize certain services like critical care medicine, for example, and incorporate that into sort of the organizational capabilities of our company. And that has proven to be successful over time. There were some bumps when we first did it, but we can point to better care in our critical care units, we can point to efficiency, and we can point to more standards. So as we start to implement our data systems that Mike Schlosser and others were talking about, we think we'll be able to go to market, if you will, more easily with critical care medicine standards than we maybe could in the past by not having that internalized. So when you get to the other areas, obviously, there's been a ton of disruption. We've been witnessing the disruption, and we've been trying to mitigate the risk as best we possibly could. And we felt we had a situation where we needed to move faster to mitigate the risk across the company more broadly, and we did that. And we did that in the context of a very big company with a pattern of being able to ultimately integrate effectively whatever it is we decide to do on the front end. And that's what I think we can do with emergency room services and hospital medicine. And again, I go back to what Mike Schlosser was talking about, and that is, as we start to learn more and more about the patterns, the wonderful patterns that we have in our company, we're going to be more connected to the people who are going to influence those patterns, emergency room physicians, hospitalists and critical care medicine positions. And so I think there's a dynamic for us that over time, will get us to a much better care environment for our patients. We think a more efficient and a quicker uptake of some of the initiatives that we've got. We're in an integration transition right now, and I am confident in who we are and what we will adjust to. And Jon Foster said, if we identify a problem, we put the effort into solving it. We have this saying in our company, own your realities, whatever they are. And so we have a reality. We own it, and we're going to address it properly, and we're going to get ourselves in a position where we can execute on our long-term initiatives. GME plays a huge part in it. It supports the pipeline of physicians just like Galen is supporting the pipeline of nurses. It allows us to do training in certain of those programs in ways that maybe are supportive of our longer-term initiatives. So GME will play an integral part both in pipelining as well as training and being a resource even during the GME process for helping us get through this situation.

4, Pito?

Pito Chickering, Deutsche Bank. Besides Valesco, can you talk about what you're seeing in physician labor pressures in areas like in physiology, radiology, ER? In terms of increases of subsidies or having able to change those reimbursements? And where do you see those prices going sort of in 2024 within the guidance you provided?

Well, Pito, I'll refer you to our third quarter call. I mean we've said we've continued to see increase in physician subsidies and some of those disciplines. We were encouraged that, that rate of growth of those subsidies declined in the third quarter, at least sequentially compared to what we all are in the second quarter. I think it's a reflection of what the industry is seeing with some compression of the revenue, and us as a host hospital having to make some subsidy adjustments in those cases. We have a number of initiatives underway to try to mitigate those going forward, we spoke about those on the call. Those are continuing underway. And kind of the earlier point, we're focused on mitigating those trends going forward on this. Too early to give you specifics on '24 as we haven't completed that, but we believe we can continue to make inroads into some of that industry pressure that we've seen thus far this year. Sorry, I'll get to you. 5, yes, go ahead.

Where does M&A fall into your long-term plan? The couple of years before COVID, you were very active buying hospital systems and hospitals. Would that be additive to your long-term growth? And if you are interested in M&A, can you just describe what type?

Well, we're active in acquisitions and inorganic growth, mostly in the outpatient space currently. We do have a few hospitals here and there that we've added, and we have some LOIs on those currently. I mean we obviously have the capacity -- the financial capacity. I think we have the organizational capacity and we have the desire to add more to our platform. But we're in a bit of an odd business. Not everybody has the same mentality as we do when it comes to value creation or asset optimization for lack of a better term, and I think that slows down the pace of hospital acquisitions. We're fortunate, though, on the other side to have a wonderful organic growth opportunity. I mean some of our communities are adding just large swaths of population over time. I mean, Dallas-Fort Worth has 7.5 million to 8 million people today, it's expected to grow to about 10 million over the next 2 decades. So it's adding a Nashville effectively. And so we have position in there. We have opportunities to invest. And so we're fortunate that we have a portfolio of markets where we can invest aggressively for organic growth as well. So I think it will be a combination of both. At this particular point, we're not anticipating anything sizable that would change our perspectives on the future. But that could change, and we'll just have to wait and see. Number three.

There you go. I'm going to ask 2 questions, of course. But first, and going back to all the discussion around data analytics and so forth, you're working with Google, you work with Palantir or others. Do you own those products that develop out of that? Or do they own that? And would there ever be any opportunity like you've done with the GPO to say to other health systems, maybe there's something that could be done there? And then I'll throw my other question in here. So the last 5 years, we've grown EBITDA 6% on average, 2019. The 5 previous years, you've grown EBITDA 6% on average. Last 10 years, you've grown EBITDA north of 6% on average. Your target is similar to what it's been historically, 4% to 6%, but you're laying out a demographic profile, a market profile and then all these opportunity sets you're talking about today. Is there any reason looking out the next 5 years that you wouldn't say 4% to 6% is the goal, but we have a good chance of, again, being toward the high end of that?

I'll take the first one. [indiscernible], the product that Mike put up there is ours. And so we're of the mindset that we're building these products, they're helping enable our building of those products. So is there a commercial opportunity for some of them? Possibly. I mean, obviously, we have an internal market that we want to sell to, for lack of a better term, and that's to HCA facilities because we think there's just tremendous value potential inside of that. We do think there could be some commercialization opportunities for us, coming from some products, possibly even some services that we have to offer, A.J., and maybe even our data down the road. But right now, we're focused internally on making sure we extract the most value, but if there are adjacent opportunities with it like Health for us and even like Parallon to some degree, we will try to leverage those. We're not built for that right now, so we would have to put some ramp around structure to make that happen. But we do think that could be a potential for us down the road.

On the other one?

So we provide a range to accommodate a variety of different outcomes over a period of time. I hope you got the message from here that we're very optimistic in our growth opportunities, and we expect to continue those trends going forward. So...

Our mindset, A.J., is to grow as much as we possibly can. And I think if there are opportunities for us to push through the top side of that, we're going to clearly do that. That's just in our DNA. And so I think at this point, there are still factors out there that we're trying to be thoughtful about, and we want to make sure that we are considering those. But our patterns, we acknowledge that.

One was waiting over there, to go ahead #1.

Specifically on the nursing side, how do you think the labor market is going to evolve in terms of wage inflation, I guess, what does your guidance assume there? And then to the extent that it could be a bit higher, do you think you'll continue to have success going back to payers? Or do you think you're starting to run them to a little bit more resistance when it comes to that?

Well, again, we'll go through our budget process. When we think the labor market is settling, especially compared to where we were, say, this time last year 2022, I would say for a planning horizon, 2.5% to 3% would be a good planning horizon for us, and it varies market by market. Fortunately, we continue to see opportunities to reduce our premium labor and our teams have been very successful over the past year on being able to do that. But that's kind of our planning horizon is somewhere between those 2 levels right now.

And our commercial pricing has accomplished what we had targeted. We're what, Bill, 80%...

70% for next year.

Yes. And then about 35% to 40% for the following year at the mid-single-digit target, which is where we had planned. So if inflation does in fact spike again, we have a pattern to our contracting that will allow us to adjust in a reasonable period of time.

Let's go over here. Justin?

I'll focus on the revenue side as well. A couple of questions. One, just a follow-up on the commercial pricing. The -- it's clear that you're getting better rates than historical makes sense given the inflation. But you're typically signing 3-year contracts. Is it -- so as I think about that contract, should we expect that the first year moves up to that 5%, 6% range that you've been talking about and then kind of moves back in year 2 and 3 to kind of more the 3% to 4% that you've historically gotten? Or is it 3 years of 5% to 6%? And then just let me follow up on these direct payment programs. It certainly seems like they picked up in pace, picked up some dollars in Florida. Sounds like one just got announced and is about to go into effect in North Carolina. So just curious how big in totality these PPP programs are for the company. And Sam, maybe you can share a few states like I've heard Tennessee, but maybe a couple of others that you think might be on the cusp of doing something similar to help you on the Medicaid side.

Well, I don't have the exact amount. But clearly, over the past couple of years, we've seen expansions of these state supplemental programs. And I think those largely helped offset uninsured in [ initial ] care. And you're right, we have seen one in North Carolina. There's one projected for Nevada. We're going to wait until those programs get finally approved, at least for Nevada. We expect North Carolina to start seeing something in the fourth quarter. And when we report fourth quarter, we'll size that for you. But we have factored those in into our forecasted ranges that we've spoken about.

And on the commercial pricing, they're blended. And I would say they're consistent in the blend in that when you look at '24, you look at '25, you look at early '26, they're fairly blended at a composite number that's on our target, Justin. I mean some contracts are that way because they're not priced where they need to be, so they might get an early stage uplift and then moderate. But most, we're in a pretty good position, and we try to move them up in a consistent fashion.

So this fancy new MEDITECH system that you're putting into place, can you just size maybe the cost of that? I don't remember the number of years that you're planning on doing the conversion. I'm just trying to kind of size the opportunity and also the risk with maybe some potential disruption. And then is there any maybe impact on your labor agenda as you think about the usability of this new system? And I mean, it's pretty clearly not all the nurses out there love the old clunky MEDITECH. So just kind of trying to think through the labor benefit?

We don't think so. And we've got a robust project plan. I think, as Dr. Schlosser said, we just recently converted our fourth hospital, we're in the middle of kind of our beta site, going to waves, going forward. We think there's operational efficiencies to be gained once we go through the implementation cycle. We haven't fully sized the investment yet. But when you take the technology in total, we think it could be an incremental $100 million to $200 million of expense going forward. But we think we have the [indiscernible]. In fact, we know we have the resiliency program to offset that, and we factored that into our forecast going forward. Where do you want go?

Number four.

Maybe kind of a 2-part question. I guess when you think about the margin that you guys are talking about doing, it's consistently above what we think about peers being able to generate. We talked about a lot of the things today about scale and what you've done. Are there 2 or 3 things that you would point to and say these are probably the biggest drivers to how we're able to extract a little bit more margin per dollar of revenue? And then you highlighted a pretty high ROIC on capital. Why not spend more? Why not spend another $1 billion on CapEx every year if you're getting those types of returns?

It's a great question. The first one, I think the 2 factors I mentioned briefly in my comments is, I think, because of our scale platform, we operate in an administrative and fixed cost basis, well below the industry average and other health systems. And if they've got 30% or 40% of their cost in that area, that's a major driver of that margin. And then secondarily, I think because of our size and our management systems, our variable cost per patient day, if you will, runs much lower than most health systems as well. So those would be the 2 primary drivers, I'd say, would account for the margin differential.

Yes. Let me just add a third one, and Tim spoke to this in his presentation. I mean we have strategically and intentionally approached building out complexity and sort of program depth in our organization. And that in the business model that we operate within what's heavy fixed cost. If we can layer on more acute patient offerings, that tends to enhance the margins also because they're more acute, they require more resources. And so the margin on them by themselves may not be any more than another service. But the dollar magnitude of that program is on top of a fixed cost base, it produces the operating leverage, just like the financial leverage produces a return on equity. It produces margin for us through that. So that's a strategic piece on the top side, in addition to what Bill was talking about strategically on how we manage the expenses throughout the organization.

On the capital. As you've seen, we've been growing our capital investments, especially since COVID on their $4.7 billion. We expect that to continue to grow at a pretty good pace. We think we have that size right. We have the capacity. If we see the opportunity to accelerate that, we will do that.

I think it's important to understand, we're investing in businesses that have sick people, and it's disruptive to do a $100 million project inside of a hospital that's operating. So we have to be able to digest the spend to, and unless it's a greenfield project, which is easy to do, obviously, for purposes of capital and no disruption. So we have to manage the disruption in their long-cycle projects. And so some of that is limiting, but we will naturally lift, I think, because our needs are there and our opportunities are there. Is it $1 billion? Probably not. But there'll be a natural lift to it, Kevin.

Let's go [indiscernible]

I just wanted to ask about the move from 12 outpatient access points to -- for every item patient assets 20 over the coming years. I'm sure each market is different and each approach is going to be different for each hospitals. But does that move index to a particular type of outpatient site of care? And then maybe can you give us a sense of how you think about the natural margin benefits from the greater outpatient investment there, too?

Well, Jon alluded to that in his presentation about how we're thinking about expanding the network, which is one of our opportunities. And our philosophy is to take the care to the patient and create the convenience and efficiency for them. And in some cases, it's a different price point, we get to that, but it's about the whole system and interacting with the patient upstream is a positive encounter hopefully. And then if there's a need for interacting with the patient downstream, let's just say, we have the relationship. So it's really important to the model. With respect to margins, margins on outpatient business tend to be higher. Now the revenue turnover tends to be lower. So the absolute dollar is not necessarily the same. And so Bill spoke to our inpatient revenue and how it's grown equal to our outpatient revenue when we've been investing heavily in outpatient facilities. Outpatient facility investment is very efficient from a capital standpoint, and so we're aggressive in pushing that out. I think you're going to see more urgent care centers, more clinics, more ambulatory surgery centers, more freestanding ERs, all aspects of our outpatient network is being pushed out. And it creates this network. And if we can connect the network even better with those optimizers that were indicated in our first presentation today, then we're able to create a better patient experience, a more efficient patient experience easier because it's hard to navigate the system. And so is 20 the exact number? We don't know yet. Some of them will be determined by just how fast these communities grow and where we see opportunities and needs and so forth. But those are -- that we have a deep pipeline right now in just about every category, and I think it's going to be closed if we're not right at 20.

Josh?

I heard the M&A answer, but I am curious where new market expansion ranks on your priorities. And if that really even makes sense with that sort of density strategy that you have. And then following up on the last one. I was actually surprised to see that the inpatient revenue growth rates were actually -- it looked like almost slightly above the outpatient rates. So with all the investment in that '12 to '20, will that continue? Do you think inpatient would continue? And I'm just thinking about sort of overall returns as you see more on the outpatient side.

The outpatient revenue was more impacted during the COVID period of 2020. So that explains a little bit of that difference that you're looking at. If you -- because the outpatient declined a little faster in 2020. But in terms of the year-over-year growth from here, we've said mid-single-digit outpatient revenue growth is kind of where we anticipated landing.

But inpatient revenue growth is tremendously productive for the company. And again, it's because of the revenue turnover, if you will, that's associated with an inpatient, and in many instances, that's where our fixed costs are located. So the fixed cost of HCA are embedded in the corporate office, and we're trying to thin that out but nobody wants to leave. And so -- just kidding. Don't put that on the web. And inside of our hospitals -- and so when we generate an inpatient admission, inside of our hospitals, yet it's on a big piece of our fixed costs, and that's where the return comes from. So connect back to Mike -- Marks' presentation, when he said if we can create bed capacity without having to spend capital because we're managing the patient case appropriately and efficiently, and getting them into the right setting so they have the best outcomes, then you're going to find a situation where an inpatient revenue is going to produce a really positive return because we have the embedded capital already in place.

On new markets?

Well, I didn't understand the question with that on new?

Do we have an appetite to go to new markets?

Oh, yes. Of course, we do, but you have to have a willing seller. And we don't have the luxury of being able to do an unsolicited bid for people like other industries do. So we have to wait for hospitals to come on the market. They come on at totally different time lines that maybe are inconsistent with other industries in the country. And so there are a lot of markets that we find attractive that have attributes that we would believe to be positive for our company. But at this particular juncture, again, they're not available to us. And so we focus on where we have the growth opportunities, which is organically.

This is Ben Hendrix from RBC Capital Markets. I wanted to go back to the incremental savings targets from the resiliency measures that Mike, Shannon and Ed outlined for us. Mike talked about $600 million to $800 million over the next 5 years. And I wanted to get an idea of the degree to which that's factored into your 5-year EBITDA CAGR growth, 4% to 6%. It seems like that's about 100 basis points of CAGR over the period. Do you need that to get to the midpoint? Or could that be a swing factor to the upper end there?

So we factor that into our forecast. And as I said, we've got some technology investments we're making on the front end. Fortunately, the resiliency programs will be a pay for those. And as we think we get into the latter years of the forecast cycle we have, that's going to provide meaningful value for us. And so I don't yet want to guide you inside that range. I think the range accommodates the resiliency program and factors, the resiliency execution that we see there. And we see continued further opportunities. As that technology gets adopted, as we find new applications for the AI and some of the things Dr. Schlosser talked about, we're going to continue to be striving for driving as much efficiencies as we can.

Jamie Perse, Goldman Sachs. A lot of focus today on case mix and all your investments in driving high acuity services. Can you first, I guess, just give us a look back on what's driven the big increase in revenue per adjusted admission since 2019? And what's your level of confidence in continuing to drive 2% to 3% revenue per adjusted admission growth off the much higher base? Do you have to do anything different to sustain that level?

Well, 2 things. If you're looking at a revenue per equivalent admission in kind of the post-COVID or the COVID years '20, '21, '22, as I said in my comments, it was elevated in that period of time for a variety of reasons. We were servicing higher acuity patients. Lower acuity patients were staying away. We had favorable payer mix. Medicare patients were staying away. And some of those here, we were actually helped by COVID support payments that don't repeat. Over time, 2% to 3% has been a very solid performance level. But you saw a little north of that. You saw 4s in some of those years. And as I said, I think there's multiple drivers of that. We have reasonable visibility into our pricing adjustments as we talked about earlier. We continue to see growth in higher acuity services. And we continue to see strong employment and good enrollment in the health insurance exchanges. So I think the fundamentals that have historically driven that 2% to 3% number remain. And that's how we came up with our forecasted guidance. I guess we're on this side of the room. So go ahead, yes.

So maybe as a follow-up to that, the slide on the 40% of inpatient revenue coming from higher acuity service lines. Within your longer-term targets, where do you see that percentage going to over time? And then maybe just to drill down a little bit into those higher acuity lines a little bit, which is the largest currently, which are growing the fastest? And where do you see the biggest opportunity?

That's a lot of questions. I think we have to pull up first. We have an unbelievably diverse set of service lines. Richard mentioned that the emergency room is the largest service line contributor to the company's revenue. So if you go to cardiac, for example, it's maybe second in our company as far as revenue production. Within cardiac, there's layers upon layers of different program offerings that tend to get more acute, culminating with heart transplants. We have 3 heart transplant programs in our company. And so I think you have to look at each one, and each one by itself is probably not going to move the company's needle. It's going to take sort of aggregated movement across some of the different service lines and deepening where we can. And so that's our model. And what we see in these communities is when a particular suburban area starts to get denser from a population standpoint, we're able to attract physicians into those communities, start to build out new services at, I'll say, secondary care hospitals and add that capability and really move into that particular demand opportunity. So that's how it's worked. I think that's the way it will continue to work. I mean we have suffered a fairly high revenue-producing component. Orthopedics move in 2 years from roughly 85% inpatient, 15% outpatient to just the opposite. It's 15% inpatient now and 85% outpatient. And we've absorbed that in this diverse set of services that we offer. So I think from that standpoint, there's stuff on the margins that go out, there's stuff on the margins that grow internally. And so for us, we believe that aging baby boomers, that the hospitals are always going to be sort of growing naturally with acuity, because some of the stuff will just migrate out as it's had in the past, and it showcases in the overall composite number. So it's really hard to point to one service line here or one service line there. Would be my take. I don't know if you got the other thoughts?

That's right. Yes. I mean we just -- relative to the percentage that you talked about, I think that's going to continue to grow at a reasonable pace. A couple of more questions and then we'll call it. One here.

So Mike Marks in his presentation spoke about some of the exciting efficiency initiatives you guys have going on internally. And perhaps like $600 million to $800 million of savings, which is really exciting. But on the other hand, from all of the presenters, it sounds like this HCA wave operating has been ongoing for decades and the philosophy of [ Kaizen-like ] continuous improvement has been a consistent feature of the company. And reflecting that, the margins have been in a pretty tight band. So I guess my question is, are some of these efficiency initiatives, just kind of what it takes to keep up with the Jones is such that you're running to stay still? Or has there been with these tech partnerships a step change and kind of the velocity of cost rationalization?

Well, I wish everything would be static and all of our initiatives would be on a static environment. Unfortunately, that's not the case, just like the hospital-based physician dynamic, just like the nursing shortage, just like COVID. So these events do occur. And to say we're keeping up with the Jones is I think we're beating the Jones'. But I think to keep up with the HCA, Jones, Jones is of the past, yes. Some of these initiatives have helped us compensate for a new dynamic that happened in our business. And if we can run the company at 19% to 20% margin, as Bill alluded to, that really produces a good starting point for us to think about creating shareholder value and investing back in our business in a very significant way for growth for patient outcomes, for technology transitions and so forth. And that's how we think about it. And yes, we have to, as I said earlier, on our realities, whatever they happen to be, and if we have a new reality, we got to find a way to adjust to it. And some of these initiatives are helping us navigate some of those dynamics that do happen.

And some of them are being unlocked by our technology investments. The benchmarking tool, that's a new. Our analytical capability and our computing standpoint, our scheduling process, some of our efforts around the case management are being unlocked by some of these new technology investments. So we've absolutely always driven efficiencies, but I think, as Mike alluded to, we've got some ongoing opportunities going forward that we're planning for.

Just a quick question. Does your long-term planning actually for 2024 include the possibility of a recession at all, the 4% to 6% range? And if so, do you expect like historical trends to hold during this recession or do you expect something different? What are you guys planning for in that regard?

Yes. Honestly, we're not planning for a recession. As I said, we've managed through different economic cycles on there. So I would say our forecast that we've talked about largely anticipate an economic environment very similar to what we're experiencing right now. And obviously, if a material recession came, then it tends to impact some demand going forward, we've actually planned for that in the past. But we don't have any, I'd say, materially assumptions of changes in the economic climate built into the forecast that I talked about.

Yes. One thing, though, that we have, if we do experience a recessionary cycle that we've never had in past recessionary cycles, is the safety net of the Affordable Care Act in the exchanges. Typically, people would rotate out of an employer-sponsored health plan into COBRA or into an uninsured status. We now have a pathway to help them get into the Affordable Care Act and the exchange programs related to that. So that's a safety net, that's a different dynamic than what we've experienced in past recessions.

Okay. I think that's it. Thank you for your questions.

Yes. And thank you again for coming. We appreciate all the support, and Frank will be available starting tomorrow.

Thanks a lot, everyone.