Tenet Healthcare Corporation (THC) Earnings Call Transcript & Summary

All right. Good morning, everyone. Thank you for joining the 42nd Annual Goldman Sachs Healthcare Conference. I'm Jamie Perse, the health care provider analyst at Goldman Sachs. For this session, we have Tenet Healthcare, and we've got the executive team joining us. We've got Ron Rittenmeyer, Executive Chairman and Chief Executive Officer; Saum Sutaria, President and Chief Operating Officer; and Dan Cancelmi, Executive Vice President and Chief Financial Officer. And I think, Ron, I'll turn it over to you to start for just some opening remarks, and then we'll move to fireside chat.

Great. So good morning, everyone, and thanks for joining us today. I thought I would just take a moment and touch on, just as a refresher, sort of where we are, state of play. Q1 was very good for us. We felt very good with our continuing improvements and our continuing performance trajectories. The COVID cases in January, of course, peaked well over 3,000, and now our case level is down to the mid-300s. So we feel good about that. We continue to support the vaccination rollout, not only to our own employees, but to the public at large. We've issued -- we've vaccinated over 400,000 people so far. And our staff infections continue to be very low, which, of course, we also maintained even throughout COVID. And even at the height, our relative percentage of staff infections continue to be lower than certainly the national average in many other locations. We continue to work on our portfolio mix. We are a very diversified company. We have a very strong Ambulatory segment. And when we look at our EBITDA mix today, our hospitals are about 53%; USPI is running at about 33%; and Conifer, 14%. If I look forward to the end of 2022 moving into 2023, our targets are 35% at the hospital level and 50% at USPI, which speaks to the growth we've had at USPI, and our continued commitment to trim our Hospital portfolio, as appropriate. It does not mean we will not buy hospitals or continue to build hospitals. We would do it in markets where we see the best return and a community need that supports it. For example, we've talked before, we're adding a hospital in Fort Mill, which is under construction right now, in South Carolina, which will draw, obviously, from that area as well as South Charlotte. And San Antonio is a very strong market, so we continue to make decisions around should we add additional hospital capacity in that market. But we're doing this with data and predictive analytics and thinking through which of the markets we would do that in. But equally, and more importantly, we are also considering continued trimming of the overall Hospital portfolio in markets where we believe we don't have that opportunity. And we continue to grow USPI, which, of course, we do every year. But we had that large deal in December, and I think that continues to perform very, very well. So it gives you a perspective on our commitment to continuing the strategy that we've spoken about now for the last 2 years. Additionally, I guess, the only other comments that I would make is that our trajectory, when you look at our consolidated adjusted EBITDA from Q1 of 2019 as a base past Q1 of 2020, our Q1 of 2021 was about a 12% compounded growth, which we think goes back to the strength of our business overall. And when I think about strength, financial strength, our capital structure, Dan will talk about that, if there are questions, but we continued to do things to strengthen our capital structure. Obviously, our ratio was down in the 4s, which is what we've been targeting. I think the quarter came in at 4.37 overall. Sorry about that. Sorry, I turned it off. And at this point, our free cash flow is also doing very well. And beyond that, where we have dealt with the Urgent Care business, we diversified that. And we renewed our revolver capacity back to $1.9 billion. So overall, we believe we've had a very good quarter, a continued trajectory which is consistent with what we said and done and so nothing that sticks out as a surprise. We've, I think, for the last 3 years, have shown our continued improvement quarter-over-quarter. And I feel pretty good that, as a team, we are very locked on our strategy and executing accordingly. So those are the only comments, Jamie, that I'd make, and we'll open it up for any questions.

Okay. Great. Thanks for those opening remarks. You touched on a lot of things that I'll come back to, but I'll start where you did. I think it's top of mind for most people just getting a sense of where infections are and the progress around vaccination. So we're now, in the U.S., over 50% vaccinated elderly population as -- it's much higher than that. That's a key population you serve, of course. So when you think about that trajectory and just where we are with the progress on infections, how does that compare to what you were thinking about where we'd be right now when you last gave guidance a few months ago?

Saum?

Thanks, Jamie. It's Saum. The COVID inpatient cases, in particular, are down markedly. I mean we're at about 1/10 of our peak if you think about back in the post-holiday time period. So inpatients with COVID are really not a barrier at this point from any perspective, capacity, et cetera. Now we're seeing, in some markets, these variants causing a little bit more illness than you would otherwise see. But we're learning to manage that, just like we did kind of the first few waves of COVID. Vaccination continues to be very strong in many of the communities. We're supporting that in many of the communities. We feel very good about our workforce vaccination rates at this point. Obviously, we're still engaged in all of the appropriate precautions in the hospitals, which creates, obviously, the workflow issues and PPE expenses and other things that have kind of been in the run rate now for the past year. But we're very optimistic, at this point, from a COVID standpoint, that the vaccination efforts have been very, very beneficial to reducing the number of inpatient cases.

Okay. Okay. Let's get more in the details on the volume side. You made some comments on the 1Q call that as COVID cases in your hospitals were declining, you felt good about the strength you're seeing in the non-COVID business. Basically, the COVID business was being replaced by non-COVID business. And I'm wondering, did that correlation of replacing the COVID business with non-COVID volume continue to play out as you've moved through the second quarter?

Yes. Both in the Hospital segment, and though the USPI centers didn't take care of COVID, obviously, with COVID, when office activity -- physician office activity had slowed down, it had impacted volumes on the USPI side as well. Both businesses are continuing to see strength in recovery. As I said, COVID business -- or COVID cases on the inpatient side are less than 1/10 of our peak in our volume strength. In particular, the high acuity work that we have been focused on, surgical work, cardiovascular work, et cetera, has been steadily progressing. And on the USPI side, we're seeing significant strength, at this point, month-over-month in our volumes that people are choosing to book in those centers. So we feel good on both sides of the house from that perspective. We don't -- other than, I think, probably a lot of people, including physicians thinking about summer holidays, we don't see any sort of large air pocket out there that is potentially a result of either COVID resurgence or everything that's going on right now being some kind of a pent-up demand phenomenon. I mean it's pretty steady.

Okay. Okay. Great. And we've gotten some additional data points just this week from a number of companies that touch a lot of hospitals. And I'll kind of tell you what they've said and, curious, your gut reaction to that. But others have said that inpatient volumes, back in the kind of 95%-plus range, and outpatient volume is getting back to close to 100% of normal. Again, what's your kind of gut reaction to those numbers versus your experience?

Well, I would say If you look across the board, including in our surgical hospitals, so if you take acute care hospitals, I'd say, the inpatient volume range is somewhere between 90%, 92%, roughly, I think, of back in 2019. On the outpatient side, I'm not sure exactly how to appropriately answer that because the outpatient world is very different in the emergency arena versus the nonemergency arena. So the nonemergency arena, the outpatient work is strong, and outpatient visits are strong. Low-acuity emergency department visits are still off everywhere. I'm not sure that, at least, our experience and, at least, data that I see for other health systems, indicates that, that number is anywhere near 100%.

Okay.

But Jamie, none of the volume trends that we've seen so far during the quarter are inconsistent with our assumptions when we develop our outlook for the second quarter and, really, for the rest of the year. It's really the -- it's tracking very consistently with where we thought we'd be at this point.

Okay.

Plus, I would say, our acuity levels in our outpatients coming through the ER is much higher than what we've had in the past.

Yes. I think the net revenue intensity and strength in the net revenue and the case mix is continuing, and it's a very good sign about not only the recovery, but also the ability to generate appropriate earnings as we've planned from the work that's being done.

Okay. You've mentioned ER, and you were alluding to revenue per adjusted admission. I'll come back to both of those in a moment. But sticking with just the mix you're seeing within volume, I want to focus on the surgery side for a moment and compare that to what you're seeing on the medical side. So last quarter, I think you mentioned a 19% cancellation rate for procedures, and in January, and that moved lower to 16% in March. Has that number, just the cancellation rate, continued to move lower as infections have come down? And obviously, the winter storm impacted the first quarter as well.

Yes. The cancellation rates that we look at tend to be on the USPI side. So we're talking about elective outpatient surgical cancellation rates within the USPI centers, which we monitor very carefully because they're correlated to office activity. They're correlated to access to preparatory testing that people may be doing on an elective basis. They're somewhat correlated to people's preferences around when they have been vaccinated. And as we've talked about before, there are cohorts of patients that are waiting for their vaccinations to be complete, or the cycle to be complete, to then reschedule perhaps some of their elective surgeries because they're more elective. And that has definitely played out. I mean the strength in the USPI recovery, as vaccination rates have increased, demonstrate that consistency. So yes, as a result, cancellation rates keep going down, to your point. We're not necessarily surprised by that, but it's something that we follow very carefully, partially because the pandemic forced us to really think much more carefully about how we manage our staffing, OR utilization and bringing costs back into the system. On the USPI side, if you think about a year ago, these centers were shut down. So it just introduced a new operating discipline into the business. And monitoring cancellation rates is one of 4 or 5 things that we look at very carefully.

But it's not a concern. I would say, it's not a...

Oh, I don't think it's a concern at all.

It's not a big -- it's not something that concerns us. It's just something we are aware of. It's really part of just business, as usual, I would say, at this stage, so.

Understood. And if you think forward about where procedures will go again on the acute care side and USPI side, what are some of the leading indicators you look at, the physician visits, recovery in routine diagnostics, visibility that you have on your schedule to kind of paint the picture of where surgery volume might go from here?

Well, I mean, we have the benefit of 2 forms of -- at least 2 forms of partnership with physicians that gives us some visibility. On the USPI side, we have physician partners in our centers where we get insight into their office activity, and those offices are starting to approach what I would describe as back to normal-ish operations, right? I mean, even with COVID precautions and other things, they're starting to figure out how to get back to normal operations. As they get back to normal operations and normal demand and flow, their desire to utilize the USPI centers gets back to normal as well. The second thing on the hospital side is we get indicators. Even though only a subset of our physicians are employed, they're heavily weighted towards specialty physicians. And we get indicators by looking at those physicians' activities on the outpatient side. And that, measured by work to RVUs and things like that. That activity has been very strong. We have really seen tremendous recovery in our specialist offices, probably partially a testament to the quality of people that choose to be employed with us. And so that's a strong indicator of the recovery going on. Again, downstream, you see that in terms of operating room bookings, cath lab bookings and things of that nature. The other thing I would say is that, in the procedural areas, as the emergency department volumes recover that are higher acuity, many of those types of patient visits, obviously, end up using procedural areas as well. They may need an intervention for chest pain or something like that. And our strategies during the pandemic of working on making our ERs more accessible and all of the marketing we did about safe ERs that people could come to, we think, has been beneficial in moving some emergency department business in markets towards us rather than away from us. And that's helping with the recovery from a procedural standpoint.

Okay. Yes. Are there any categories within your Surgery business that feel more robust to you right now? Others that are lagging? And any common characteristics among the categories that are -- that you're bouncing back more quickly?

Well, obviously, there's a bit of tiering based upon, call it, medical or surgical urgency that happens. I mean there are still certain types of preventative diagnostic procedures and stuff that are a little bit slower to recover. But I don't worry about that too much. I mean if those things were sitting at 80% of normal, 70% of normal, but we're splitting hairs because we're -- it's 90-plus percent of normal, 95% of normal type of thing. Whereas other areas, let's say, ambulatory orthopedics, is 100-and-x percent of what we saw pre-pandemic. That's really the base of comparison. There are probably some specialties that are a little bit slower. Ear, Nose, Throat, for example, there's still concerns about the precautions required from a COVID transmission standpoint, where there's a bit of hesitation, probably, on elective procedures there. But again, everything is kind of recovering in steady pace, some are just ahead of others. Let me actually make a separate point. We have not had to close a service line or divest of a particular type of program at this point because of a lack of recovery from COVID on the surgical side.

Okay. Okay. And just thinking more long term, I mean, you guys have been making investments in high-acuity procedure categories for a few years now. Are the fruits of those investments material enough to be impacting your surgical mix or your market share today? Or do you see those investments and the return on those investments as still largely ahead of you?

Well, it's both. I mean it's not like we've made the investments 3 years ago, and we stopped. We continue to make those investments. So some of the mix that you're seeing and the strength, at least, in our mix that we're seeing, Surgical business, Cardiac business, some of the commercial enhancement in the mix that we've talked about, is partially a result of the investments we've made, and we continue to make. Our strength in our surgical programs, including investments we've made in robotics and expanding the array of service lines that we're offering with robotic and non-robotic capability, the types of physicians and the capabilities that we're attracting to the system, you can see their potential for growth. Again, all of those types of investments are actively supporting our current performance, and we see a long runway from that standpoint. One of the things that we did during the pandemic year was we continued to maintain a focus on recruiting high-quality specialists to the system. We didn't stop from that standpoint. And I would say that's true almost across the typical major specialties that you would see within an acute care setting: cardiovascular, neurosciences, general surgery. We've opened -- expanded trauma programs during that period of time. So all of those activities didn't stop during the pandemic. And I think, over the next couple of years, as those programs ramp up even further, we'll see further benefit from that.

Okay. Last, you mentioned, I want to touch on, as it relates to the volume recovery, is just payer mix. Obviously, commercial was stronger than Medicare throughout the pandemic. And the logical assumption a lot of people are making is that, as things get back to normal, the Medicare business will recover faster than the commercial, just given the delta there. So what are you seeing as it relates to this kind of payer dynamic? And is the Medicare business kind of coming back, like you expected?

Jamie, the Medicare business is recovering. And then we get a lot of questions, what's that going to mean to our payer mix? We anticipate Medicare volumes will continue to recover and grow, but that doesn't necessarily mean that the commercial volumes are going to decline. It just means that Medicare, as people in that population become more comfortable seeking care, those volumes are going to grow. And Medicare will be a larger portion, percentage-wise, of our overall volume mix.

Okay. So bringing these couple of pieces back, the surgical mix and the payer mix comments you've made back to revenue per adjusted admission, you've been kind of up 20%-ish in round numbers the last couple of quarters. I don't think anyone is expecting that to persist forever. I don't think you guys are either. But I wanted to kind of ask the question, if we bridge from the hypothetical world where COVID didn't exist, maybe you'd be up 4%, 5%, 6% versus 2019 on revenue per adjusted admission versus the levels you're at now. If you can kind of rank order the impact of things like direct COVID patients, non-COVID acuity and payer mix in terms of driving that delta?

So yes, in terms of our net revenue yield on a per unit basis, clearly, the impact of lower acuity cases recovering at a softer pace than the higher acuity type of procedures, that obviously has an impact. That's had an impact on our overall revenue yield metric. However, our focus and investments we've made in growth in higher acuity, more complex procedures has helped to drive growth in our revenue yield, as well as our contracting positions, how we negotiate contracts on a nationwide basis or on a statewide basis. We're very well positioned from a contracting perspective. We're essentially fully contracted for 2021. We're about 2/3 contracted for next year and over 30% contracted even for 2023 at this point. So we have very good visibility into our pricing. Yes, that revenue metric will moderate as the lower acuity volumes recover stronger. But we feel very good about where we're at from a reimbursement perspective at this point. We've also -- turning to the government reimbursement, obviously, with most recent proposal for inpatient is solid from -- at least, from our perspective. And the Medicaid environment, we get a lot of questions on the Medicaid environment. At this point -- there's no significant risks from a reduction in Medicaid reimbursement that we see at this point. The states' finances have improved, with obviously the COVID stimulus that's been provided to various states. Obviously, we watch that very closely. But in fact, there's several states, actually, where the Medicaid reimbursement environment has actually improved over the past several quarters, including in Arizona and looks like in Florida as well.

Okay. So is moderation from the levels we've seen the last couple of quarters, just steady moderation of that, is that the right expectation going forward for revenue per adjusted admission?

What we've talked about on our earnings call was that, for the full year, we could see that metric being in the mid-single digits for the entire year. So you're going to see -- as the lower acuity business comes back at stronger levels, you will see that revenue metric come down.

Okay. Okay. Great. And I want to come back to the ER for a moment. You guys have talked about quality of volume matters more than quantity over the past year. Are you seeing that in your results being able to deliver strong EBITDA in the face of volume pressures? And so the question is really, I mean, how much does that kind of low acuity ER volume matter for your business and the economics? And what do you do with the kind of excess capacity, ER capacity, versus what you had to take care of in the ER a few years ago?

Well, I think there are -- so you got a few questions embedded in there. I mean, first of all, Emergency business is Emergency business. I mean it's not something that you can easily control. And so some of this low acuity business is not there, partially because the demand is not there. I think we've talked about before that, whether it be the amount of traffic on the highways or the amount of sporting events that kids are in and whatnot, and injuries that they're having, being at a much lower rate right now. As that comes back, we expect that, that demand will come back, and it will come back to an emergency department, and we'll have to be prepared to take care of that. If there's some segment of the business that has moved into a either tele-environment or some other environment, urgent care or something like that, it's a little bit too hard to see and predict the quantity of that yet today. I mean, right now, I think the primary source of emergency department demand being down is true underlying demand reduction due to things like I described. So when that comes back, we're going to have to staff for it. Look, in terms of capacity, without question, you can imagine that potential projects from 2 years ago that were related or planned in the future for emergency department expansion are less relevant at this point, right? We've learned to manage with the capacity we have. We've improved and increased access and throughput. We've had very good results on improving our activity with respect to preventing people from leaving without being seen, all things that we were tracking before. But again, during the pandemic, heightened degree of attention to make sure that the access for the communities in the ER was being appropriately attended to. And so that's been a positive thing from the standpoint of ER operations for us. So we expect that we'll -- if volume comes back, we'll deal with it efficiently. We'll deal with it efficiently. The bigger challenge that's out there is much more related to the nursing and contract labor environment, at this point, than anything else. And as that slowly normalizes, that will hopefully correlate in timing to when some of this low acuity business slowly comes back up.

Okay. Let's go to your USPI segment. That's obviously -- I mean, Ron, you started with some comments about moving the mix of the business more towards the ASC segment. Can you just give us your kind of latest thoughts on the opportunity there and specific strategies to capitalize on that opportunity?

Saum?

Well, I think -- I mean, look, the USPI business is, as I mentioned earlier, is a business that has so many different strengths associated with it. First, it's a great service environment. And it's a very safe setting in the context of the need for surgical procedures in an environment where even COVID is still hanging around at low levels. And so I think people and physicians, in particular, have been attentive to that. So we've seen a lot of new physicians trying our ASC environment. So the organic opportunities are substantial. USPI houses a very, very advanced service line development team. So the ability to diversify our centers by adding new types of procedures is something that's easier for us to do because we have an organized group that works on that center by center. I think I've mentioned before that because some of USPI's centers tend to be, on average, a little bit larger for operating rooms, a couple of additional procedure rooms, we have ability to grow into those, both organically and through service diversification. And we've learned to manage multi-specialty within an ASC setting very, very well. And then, of course, you have the inorganic pipeline, which remains very strong, a lot of opportunities that we're working on right now. And of course, that's backed by the single most unique ability to deliver synergies into that environment, with USPI being linked to Tenet Healthcare, so that across the board, the value that we're bringing in those inorganic opportunities exceeds anything else that one could find out there. And so that's a very attractive area for us to continue to work on, both in terms of what we're able to do from an expansion standpoint, but also diversification of our portfolio into more 2-way partnerships to couple with many of the 3-way partnerships that we have. And so we're very optimistic about that.

Because of those synergies, it's more attractive to the doctors that we -- in those nonorganic opportunities, right, and the other people that would be investing in it. So it makes our story and our history, and our track record in being able to do acquisitions, much richer and much better because of the way we approach it and how -- and where our leverage points are. Saum?

Yes. And the last point I would make, it's incredibly attentive to the affordability agenda that everybody talks about today. I mean these outpatient procedures within the USPI environment are incredibly cost-effective for the service and outcomes they provide relative to some of those perhaps being done in an inpatient setting. And so from an affordability and value-based care standpoint, embracing that outpatient environment creates more value than a lot of what I would describe as complicated population health constructs that have a lot more complexity with their execution.

Yes. And going back to the inorganic piece for a second. You did the large deal in December. Investors seemed to like that. It's part of moving the mix towards the ASC segment more broadly. Are you feeling more emboldened to do M&A? I mean you spoke about the number of opportunities out there. But having had success with that and the early traction, do you have a sense that you can accelerate the M&A in the ASC segment?

Well, Jamie, I guess, I would say, we were emboldened before. I mean, the last few years, we have consistently been working on and successfully demonstrating our ability to invest in the ASC environment. Now that was a larger chunk of centers than normal, but it happened to be with somebody that we had worked with before to buy well over a dozen centers. In the past, we had a track record with the company and their physicians, the relationship with them, that was over a decade-long relationship, and so there was a bit of a larger chunk. So I don't -- I mean we're still emboldened by the opportunities looking forward. But we have been, over the last few years, systematically confident in our ability to deliver synergies. And Ron alluded to it. Of course, it's a different challenge to bring on 48 centers and demonstrate that you can integrate them appropriately and realize the earnings that you predicted from that. So that's new, right? We feel very good about the fact that our integration process is going well. And the structure and discipline that we put around it, we feel good about that. So if anything, that's really the new piece that says, look, we're capable of taking on something of that size and doing it right.

Okay. That's good to hear.

Jamie, we've talked about -- sort of as a starting point, as we think about the year and going forward, we've talked about we plan to invest $150 million to $200 million in terms of -- on the USPI side in terms of either outright M&A or de novo development. However, as we think about our goal to get to 50% or more of the EBITDA portfolio mix being in the USPI segment, we will, in all likelihood, invest more than that on a given annual basis.

It's really based on opportunity [ and need ].

Okay. Great. That's good color. Let's move to some of the cost pieces and margins. A couple of years ago, you guys outlined plans to take out $150 million in cost. You raised that target several times and, basically, just blew right through those targets. So the question -- the first question is, is the low-hanging fruit kind of behind you? Does it get more difficult to achieve some of those cost takeouts from here? And where do you turn to next knowing that you continue to want to improve operating efficiency?

Yes, we did. We initially started off with a target of $150 million when Ron came on board. That was, shortly thereafter, increased to $250 million and, ultimately, to $450 million. And we executed on that, and we outperformed. And it was really across the board and across the entire cost structure. But we're not -- we've been very clear, we're not done. It's a continuous process in terms of identifying further efficiencies. For example, we've been growing our global business center in Manila over the past year, even during the pandemic. There is still -- we will continue to grow that. We've looked at, in terms of the cost structure, when you go through the labor side, looking at our practices in terms of our mix of variable labor versus fixed labor. We've been very cognizant of that, and increasing the level of variable labor so we can flex our cost structure as volumes move up on more real time. Saum mentioned earlier about some headwinds related to contract labor. But we've been very diligent in that respect. Even with these headwinds, we've been very careful not to overcommit and enter into longer-term arrangements, and being able to flex as our volumes move up or down as well. Those type of costs have begun to moderate, but they're still at levels above where we were before the pandemic. In terms of -- a lot of the cost efficiencies really center around a number of things. The vendor recontracting or contracting process with the 3 business units, many times, we had multiple contracts with the same vendor at different prices, different service levels. We've been doing a lot of renegotiations. In some cases, terminating vendor contracts, if it doesn't make sense. We had 3 headquarters, basically, for the 3 businesses. And we had other additional space that we've been -- we've begun to streamline. We'll continue to do that into the future as well. But it's all part of -- this is embedded into the DNA of the organization in terms of the importance of becoming more and more efficient as we move forward.

You asked about low-hanging fruit. I mean, philosophically, I always believe low-hanging fruit is relative to the height of the individual, right? So the better we get, the taller we get, the smarter we get, there is more low-hanging fruit. We just never saw it as low-hanging fruit in the past. So conceptually, we operate on the basis that we're never satisfied with the cost structure. There have to be other things we can think about. And we have to keep testing why we do what we do and why we have people doing what they're doing and where does automation fit. Is there a better streamline? A decision to action is very important. And all those steps in between, many times, you can start to compress. And we've been working at that for the last couple of years. And I think we're starting to build an organization and things like that, and that's the only way this continues to get better. So there is no end to the cost improvements. It's just a question of timing and investment to get them -- to get to that. They're harder now. They're more complex now, but it doesn't mean that we're not fully engaged in going after it. And I think that's the best way to answer that question.

Okay. One quick follow-up. It's a little bit short term, but on the premium labor and the contracts you've entered into there, are some of those starting to roll off? And I imagine you're entering into new contracts that are much smaller and less material to your overall cost structure. Is that a fair assumption? And any color you can give around expectations for what you need to spend on premium labor in the near term?

Yes. The pricing has begun to moderate. It's still too high. But we have seen it moderate as COVID levels have come down, and we would expect that to continue. But we have put a lot of resources on this to ensure we have -- are able to obtain the most favorable economics as possible and the best talent to provide quality care within our facilities. In terms of going forward, we would expect that to continue to moderate the pricing for that type of labor. And the levels of where we would have to utilize contract labor, we would expect that to continue to decline as well. In terms of sizing it, in terms of -- in relation to our overall SW&B, contract labor, historically, is low single digits in terms of as a percent of SW&B.

Okay. Well, we're up.

They cut him off.

I think you're gone. Hello? I think you've been cut off. Can you hear us?

I can hear you Ron.

Yes, but he can't.

I know I cannot hear Jamie any longer.

I think they just cut us off.

All right. Thank you.

Okay. Thank you.

See you.

Thanks, everyone.