Community Health Systems, Inc. Wells Fargo 21st Annual Healthcare Conference
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Okay. Right here? Wherever you like.
Sorry. Yeah. I'll go way down here.
At this point, it doesn't matter at all. Awesome. Well, thank you everyone for being here. We're pleased to have Community Health with us to wrap up the day. Community, as I'm sure you all know, is an operator of acute care hospitals and hospital systems. With us from the company, we have CFO Jason Johnson. Thank you for being here. We also have J. Anton Hie here from Investor Relations. Thank you both for your time today. I guess first, any kind of intro, opening comments you'd like to make? Or would you rather we just hop right into Q&A?
Sure. Just a few, and thanks, Stephen, for having us. Appreciate it. Yeah. Of course.
There's a lot to be excited about at CHS, and we really do believe that even though there's certainly enough uncertainty that's going along in the near term, and we get plenty of questions- Yeah we're concerned about all of those things, whether it's Medicare or Medicaid reimbursement- you name it.
Since Kevin Hammons took over as the CEO, he immediately gathered the senior team and came up with a new vision for the company and top priorities, where we're focused on enhancing quality, employee engagement, physician experience, and patient experience. Those all are table stakes for hospitals. They should be obvious. It's not that we didn't understand they were important or have initiatives around those. I don't think we had enough clarity and resources and processes devoted to make sure that we're focused on those and that we're measuring our impacts Yeah toward improving those.
Got it. Okay. Maybe just help us frame a little bit, kind of the performance that we saw in the most recent quarter. On one hand, the same-store adjusted admissions were up almost 3%, big improvement from the first quarter, but a bunch of that growth came from uninsured or self-pay type visits, and there was some pressure on revenue per AA. I guess, help us kind of unpack some of the moving parts in the second quarter and how to think about some of the demand trends in the business.
Right. So we did, as you mentioned, half of our same-store adjusted admissions growth came from self-pay. So what we saw was both softness in the payer mix, so less commercial, more uninsured, but we also saw softness in the service mix, or acuity. So within the surgeries even, the surgeries were less acute.
Okay. Less orthopedic, et cetera.
Mm-hmm. Okay. I guess as you look more into the surgical trends, on one hand, it seems like there's been some discussion around electives and consumer uncertainty. I guess as you look at the performance of your elective surgeries, do you feel like you're seeing that, and I guess how are you thinking about potentially some ability to improve that trend throughout the year, maybe as people burn through co-pays and deductibles and the like?
Yeah, so we did see the comments that we've made about macroeconomic concerns and people making decisions based on their, to receive healthcare services, particularly elective, that's been specifically related to the commercial payer group. We saw that happen last year as well. We did see last year improvement, in the fourth quarter in particular, and our guidance does assume that that will occur again this year, particularly in the fourth quarter, although it will be off of a lower base than what we had assumed initially at the beginning of the year.
Got it. I think you did call out that maybe you saw surgical volumes improve a bit in June. I think maybe you were back to positive in June. I think June also had maybe a favorable calendar. But I guess how do you think about kind of the exit rate that you saw in the second quarter and how much confidence that gives you or maybe doesn't in terms of what you see in the back half?
Yeah. June was the strongest month of the year in terms of surgeries, and it was actually up year-over-year. Certainly much stronger than the first two months of the quarter. We do expect some continued improvement there, particularly, again, back to that's the fourth quarter where we think we'll see most of that come back as people get to the point where they either have met their deductibles or expect to meet their deductibles.
Okay. Maybe a good point to kind of jump into some of the exchange discussion. You took up the guidance that you have for the exchange EBITDA impact with the second quarter. Tell us a little bit about what you saw as you got more data in the second quarter and how that's impacting your thinking now.
Yeah. So maybe going back to the beginning of the year, we had to make estimates as to what would happen to those individuals who had been receiving enhanced premium tax credits. Would they find insurance elsewhere through a spouse or employer? Would they continue to pay their own premiums through the exchange or would they become self-insured? What we didn't anticipate is how many of those that remained self-insured, didn't get insurance coverage, continued to come in to the health system through the ED. So their behavior did not change, so we were left with incurring the cost with basically no revenue.
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