HCA 2Q17 Earnings Call Notes

R. Milton Johnson – HCA Healthcare, Inc.

Results slightly off from internal plan

“Although, we are on plan for the second quarter, it’s slightly off from our internal plan for adjusted EBITDA at midyear. Our results in the first half have been challenged by, one, softer managed and exchange volumes, and, two, our London market results have been negatively impacted by currency conversion rates and lower admissions from Middle East embassies and private insurance. ”

Seeing more opportunities for small tuck in acquisitions

“We’re seeing more opportunities in the marketplace now. I think as many health systems, again, went through the positive environment from 2015 and early 2016, and now we’re seeing some volume pressures. We’re looking, I think, to be part of the bigger system. And so we are encouraged by that. We think we have a lot to offer as far as opportunity for many of these systems. So it is opportunistic, but it is also consistent with our strategy. So, we’re pleased to see the pipeline more robust than it has been in recent years”

Bill Rutherford

Bad debts running a bit elevated

“So we know our bad debts are reading in terms of year-over-year a little elevated. And obviously, we talked about before, we think if you look at our total uncompensated care, which includes our bad debts, charity and uninsured, in any given quarter you are subject to some classification trends among these categories, but generally speaking, over time, our uncompensated care trends track with our uninsured volume trends. And as we mentioned, we’re seeing roughly a 4% to 5% growth in uninsured admissions, 4.9% in the second quarter.”

Samuel Hazen

Obstetrics volume down 2.5-3%

” I think one thing that’s really relevant here is obstetrics on the commercial side is roughly, I don’t know, 20% of overall commercial demand, give or take a few points. And with commercial obstetrics volume being down 2.5% to 3%, it weighs out to be 0.6%, so it explains half of our decline”

HCA Holdings 4Q16 Earnings Call Notes

HCA Holdings (HCA) R. Milton Johnson On Q4 2016 Results

Acquisition pipeline a little more robust than it has been

“I think with respect to opportunities for acquisitions in this environment, we do have a pipeline today, I’ll comment. I will comment that I think, I will also say as usual, its very difficult to know how some of the opportunities and discussions we’re having will actually turn out, but I will say that the pipeline today is little more robust than it has been in recent years and the transactions feel like they could be more realizeable and that’s just my kind of feel for the market right now.”

Beds and occupancy numbers

“It is an annual number. That’s on average, I mean, we have about 38,000 impatient beds that are operational, so the 400 or so that Milton counted, it’s a 1% increase in capacity and then our ER beds we have about 5,000 ER beds so if we’re adding 200 – 150 to 200 then next we’d get to the 4%. Its important to understand that our impatient bed occupancy for the company is at record highs, we’re operating over 70% in patient occupancy utilization on our operating beds. Our emergency room room that utilization is running almost 90% utilization.”

A lot of unknowns in ACA reform but we’re probably not going backwards to old uninsured levels

“I do believe when I think the management team here believe that there will be — if there is a retail there will be a replacement. What that replacement will look like and how many lives it’ll cover, it’s been a — we can’t, we don’t know. But I’ll say I don’t see it’s going back up to the 2024 sort of uninsured volume lies and percentage is population uninsured that we had in 2014”

Exchange business is important to us but only a little extra volume

” The exchange business is important to us, but it yet it only as about 2.5% of extra little volume. So we watched the market place very, very closely and to be able react to it when we see change coming. And this is one of the situations we are going to continue to do that. This next year we will be watching the market very closely as we get more clarity around how we think health policy changes if any in the next two, three years it will impact ACA”

Samuel Hazen

Significant movement around payers entering the provider space

“Well, there’s has been significant movement across our markets where payers entering the provider space. Optum and United have made a couple of strategic acquisitions, but they’re sprinkled from one market to the other and they don’t really have what I call it concentrated influence on any one particular market. Obviously, we see opportunities for us to work with the payers as they try to build out providers assistance because what we’re doing as an organization and we’re having discussions with the payers around using our network and our footprint in these areas to accommodate their objectives and we think there’s a lot of opportunities there for HCA and other payers to accomplish that.”

Opportunities for expense management

“From the supply and other expense standpoint no significant inflationary pressures that we see at this particular point in those categories that will create any unusual risk in our expense structure for 2016. So we feel pretty good about where the company is. From that standpoint we have a host of initiatives underneath our expense structure that are driving toward efficiencies and we continue to evolve those, they center around better labor management approaches with one HR platform, our performance improvement change which we’ve talked about in the past continue to find opportunity to enhance processes in our facilities and efficiencies and in our clinical agenda it’s continuing to identify opportunities to improve supply cost utilization, blood utilization, better patient length of stay and those kind of thing. So the combination of those are still a positive opportunity for HCA and one in which we believe we can execute on and mitigate some of these pressures.”

HCA 3Q16 Earnings Call Notes

HCA Holdings (HCA) Q3 2016 Results
Milton Johnson

Not seeing any change in wage inflation trends

“Well, let me just mention – this is Milton. I mean, we’re not seeing really any substantial change in our wage rate and wage inflation. I think as we’ve been saying over really the last few quarters, we have pockets of wage pressure from time to time. We’re always monitoring the marketplace. We make those adjustments. It’s in our run rate, and nothing in particular this quarter, Sam, that I see in the wage inflation that’s any different from recent trends.”

William B. Rutherford

Sam Hazen

Volume growth was not as high as planned because inpatient demand down and increased competition

“All in all, we had another good quarter of volume growth. However, the overall growth rate was not as high as we had planned. It is important to note that the third quarter last year was also a relatively strong volume quarter and presented a difficult comparison, with inpatient admits up 2.9% and adjusted admissions up 3.6%. We believe this deceleration in the growth rate was primarily attributable to the following two reasons. First, overall demand growth in inpatient services has moderated.”…”The second reason can be explained by growing competition in certain areas of our business. In particular, a growing supply of freestanding emergency rooms by independent companies and health systems in various Texas and Colorado markets has had impact on emergency room visits and some downstream admissions.”

Looking to build networks of emergency room, urgent care and hospitals to complement each other

“In some respects, we try to build an urgent care strategy around our emergency room strategy which is built around our hospital strategy. So it’s almost in concentric circles of facilities that create a fairly broad HCA network in these large markets, allowing our patients to enter the system in different forms or different fashions and also creating relatively favorable price points, if you will, for our payers where they can direct as they feel they need to direct but keep them in the HCA system. So it’s hard to give you a specific because we have to look at the individual markets, but those are some of the general approaches that we take.”

Cost per FTE actually at lowest y/y growth rate

“And I would add, Milton, that our cost per FTE, when we look at our SWB per FTE, which includes benefits, contract labor and wages as a whole was actually at its lowest point on a year-over-year growth rate in the third quarter. So we have seen moderation in contract labor. We have, as Milton said, made these adjustments ongoing to different markets in different situations as they’ve surfaced, and we’re at a pretty good point we believe with wages.”

Victor Campbell

Election will probably have some effect on Medicaid expansion

“Gary, I think most everyone would agree, if the Republicans gain control of the White House and what have you, there will be pressures and probably less opportunities for states to expand Medicaid. If the Democrats are in place there, I do believe that there will be consideration, hopefully. Maybe see some additional incentives, maybe a little more flexibility in bringing some states to bear. And you would hope that some of the states that haven’t expanded Medicaid will look at this as, ACA is not going away. There’s money there that can help our states and get people insured. So I’m not about to say every state goes, but I think you’ll start to see some – hopefully, you’ll start to see some movement.”

HCA 2Q16 Earnings Call Notes

HCA Holdings’ (HCA) CEO Milton Johnson on Q2 2016 Results

Health exchange admissions were a factor last year

“Sheryl, one thing I might just add and that is as we all know the health exchange admissions really grew last year, they get small piece of the company, but if you look at what they added to admission growth last year the second quarter verses this year, while we’re still so that’s also one factor to keep in mind when you start talking about last year.”

Clinical data warehouse is an area of opportunity in controlling costs

“Let me add one comment to that. I think it’s about other area of opportunity for HCA. Our clinical data warehouse, the number of our quality initiatives have sort of supply cost utilization, drug utilization, bad practice identification and so forth attached to it. As we engage our positions more than we’ve done in the past, they’re understanding of how it helps them, how it helps their facilities, how it helps their patients is another opportunity that I think we’re in the early stages of execution on our supply costs”

There’s a lot we can do with this data

” If you think about what’s happened over the last several years with electronic health records and investments that HCA and other providers have made in moving now to a digital medical record, it’s not like stealth one; now we have all this clinical information in a digital format, and what do we do with it? And there’s a lot we can do with it.”

We’re investing in data scientists to help us take advantage of this

“some things that we’re doing around acceptance care and really dropping mortality rates in our hospitals from sepsis and saving lives. It’s really happening; it’s happening today in our facilities. And so there’s examples like that. So it’s, again, we’re investing in not only in terms of the technical side of that but the human resource side of that with hiring very talented data scientists to help us take advantage of this. And then you think you move on from the structured data that we have to the unstructured data, and that’s a language processing and, where we can move the needle there is, again, something for the future that I’m very excited about.”

Samuel Hazen

Growth in visits through ER slowed

” growth in emergency rooms business in our hospital base units slowed as compared to the past few years. As a result downstream growth in inpatient admissions through the ER was not as strong as compared to recent quarters. We believe most of the softness can be explained by three factors. First, a slowing in demand growth to more normal rates, second new competition in several markets and third in a couple of our Florida we have experienced the change as how certain Medicare advantage payer classified the patients between inpatient admissions and observation status.”

Capacity constraints did not play a broad based role in softening

“I don’t think though in the second quarter, capacity constraints played a broad based role in the softening. There are pockets where we know that difficult day in and day out to manage the capacity challenge and that could in fact squeeze out few patients here or there but in total I don’t think that was a material impact in the quarter.”

William Rutherford

By recent standards wee see growth slowing

“by recent growth standards, we see it slowing. We went through over past 5 or 6 quarters that was exceptional and we saw demands in our markets growing and we suspect although as you know our market share data lacked about 6 months but we suspect we were going to see some flow in demand in many of our markets and that’s why we are seeing it show up in our numbers. That being said we still have a great outlook and a very optimistic outlook for the long term in our markets.”

HCA 1Q16 Earnings Call Notes

HCA Holdings (HCA) R. Milton Johnson on Q1 2016 Results

1.6% same facility admission growth

“We continue to experience solid growth in inpatient and outpatient volumes as well as surgical and emergency room visits. We believe these results speak the quality of our markets, and the execution of our strategic agenda. Same facility admissions increased 1.6% while same facility equivalent admissions increased 3.1%. Our growth drivers include capital improvements, programmatic developments within our service lines, end market access point development and strategic acquisitions.”

William B. Rutherford – Chief Financial Officer & Executive Vice President

Exchange admissions were 2.6% of total admissions

“Let me touch briefly on health reform. Health reform activity continued to grow in the quarter. In the first quarter, we saw approximately 12,500 same facility exchange admissions as compared to the 9,860 we saw in the first quarter of last year, or about a 27% increase. You may recall, we saw about 11,200 same facility exchange admissions in the fourth quarter of 2015, or 11% increase sequentially quarter-to-quarter. We believe this is largely due to the minimum enrollment (13:27)

For perspective, exchange admissions represent about 2.6% of total admissions for the company. We saw approximately 50,000 same facility exchange ER visits in the first quarter compared to the approximate 37,000 visits in the first quarter of 2015 and 38,000 visits in the fourth quarter of 2015. Overall, our exchange and reform activity is in line with our expectations.”

Samuel N. Hazen – Chief Operating Officer

Outpatient surgeries have grown

” our outpatient surgeries have grown very consistently over the same 12 quarters, 13 quarters, with a little bit of acceleration in this first quarter. And I can’t really point to why it accelerated in the first quarter as compared to the trend. But our efforts are broad-based. ”

ER and urgent care are filling a gap left by not enough primary care physicians

“I don’t know that the ER as a venue, if you will, is changing in any significant way. I do believe, though, that urgent care and emergency rooms over the past three years to five years, and I think this will be the case going forward, is still a substitute for the shortages of primary care physicians that exist in a lot of markets. And so you see urgent care, freestanding emergency rooms, and even hospital-based emergency rooms, providing the solution that patients are looking for when they can’t get into a physician clinic because of physician shortages, or because of payer dynamics.”

HCA 3Q15 Earnings Call Notes

Higher contract labor costs to fill vacancies and serve increased volume

“we carried more labor cost in the quarter compared to our plan. There are primarily two items that impacted our labor cost. We saw an increase in the use of contract labor during the quarter. Our contract labor expense was up $55 million or 36% as compared to the third quarter of 2014. We have seen growth throughout the year but it did accelerate during this quarter. This increased use of contract labor is used to fill in for staff vacancies that occur because of higher turnover rates and needs we have to serve the increased volume.”

Increases in Pharmaceutical costs also impacted results

“The second area that impacted our results in the quarter is the continued increases in pharmaceutical costs. Our pharmacy cost in the third quarter of 2015 were up in total just under 13%. When we adjust for borrowing growth, we estimate the company had about $15 million higher pharmacy cost due to price increases for certain classes drugs. We have seen multiple price increases for a small number of drugs which primarily relate to single manufactured pharmaceuticals.”

Also saw increase in uninsured admissions

“And the third area is we saw an increase in our uninsured borrowings in the quarter. Recall, we saw this developing in the second quarter. In Q3 of this year, our uninsured admissions were up 13.6% as compared to Q3 of 2014 and uninsured adjusted admissions were up 8.8% over the prior yea’

Saw insureds convert to self paid due to non-payment of premiums

“We also saw an increase in the number of people previously registered as insured that were converted to self-pay in the quarter. For instance, we saw 480 patients who were previously registered as health exchange convert over to self-pay in the quarter. We believe this is likely due to non-payment of premiums”

Volume growth was solid in 3Q

“As mentioned earlier, volume growth was solid in the third quarter. We believe this performance continues to reflect growing demand for healthcare services in HCA markets and further gains in market share for the company. ”

Improving economy is having some effects on labor equation

“we do have an improving economy as we have indicated across most of HCA’s markets and we think that is having some effect on our overall labor equation. It’s pocketed in some markets and more significant in others, but nonetheless it is having some effects we believe and we have been indicating that as a potential issue. ”

Significant supply competition in some service lines

“The other issue is, within certain service lines we have seen significant competition in new supply. And that’s especially relevant in the emergency room where we have seen difficulties in recruiting emergency room nurses and having to use contract labor to service our emergency room”

Texas economy so strong even with oil

“Clearly the oil economy have had some impact on Houston in particular and then some sprinkled impact across other Texas markets. However, the Texas economy is so strong that there still reported job growth even in Houston and obviously in the other markets and we are seeing that in the demand that we are studying within the Texas markets.”

HCA 2Q15 Earnings Call Notes

Health reform activity strong, about 40% of admissions were uninsured prior to ACA

“So let me touch briefly on healthcare reform. Health reform activity was strong for the quarter. In the second quarter, we saw approximately 11,600 same-facility exchange admissions as compared to the 5,600 we saw in the second quarter of last year. You recall we saw about 9,800 exchange admissions in the first quarter for an 18% increase quarter-to-quarter. And we believe this is largely due to the continuing new enrollment.

We saw approximately 44,700 same-facility exchange ER visits in the second quarter compared to 19,400 in the second quarter of 2014 and 36,900 in the first quarter of 2015. We have history on about 45% of our second quarter HIX volume. And based on our look back at previous coverage, we still estimate about 40% of these admissions were uninsured prior to health reform.”

We are seeing some acceleration in drug costs which are pressuring margins

“And then the third point is we are seeing some acceleration in drug costs, which have been in the press, it’s been in the political arena and so forth. We’re feeling that in our pharmaceutical cost trends somewhat and that puts some pressure on our margins in the second quarter.”

Medicaid expansion trends are beginning to normalize

“the slowing of uninsured declines is, we believe, largely attributable to the fact we didn’t really have any new states other than Indiana expand Medicaid. So these year-over-year trends are beginning to normalize and sunset on us. And by the way, it’s pretty much in line with our expectations and what we’re seeing in other areas of our volume.”

Do think there will be continued tailwinds from ACA

“I think next year’s performance will largely be attributable to the enrollment that we might see. We do think there’s some kind of key points of the law that may incentivize people to find enrollment. And so I do think there will continue to be some tailwinds in reform, at least for next year. Not so sure longer term we’ll have the visibility into that”

There are still penalties that will be enforced on individuals and employers

“I think you’ll see more material – that the penalty tax will materially increase next year for those who choose not to seek health insurance coverage. And that may drive more enrollment. And then you’re going to see employers with as few as 50 employees having to provide health insurance to their employees to avoid a penalty at the employer level. So there’s still some implementation pieces of reform that we’ve yet to see and so I want to reinforce that out into the market and not react too much to this second quarter because of the comp situation that we had last year.”

Inpatient surgeries are higher margin?

“I will say a number of our service line initiatives that are intended to drive more acuity, more complexity and round out the offerings within our market, will be centered on certain service lines that have a lot of inpatient surgeries. For example, trauma, cardiovascular, oncology, just to name a few, have a very significant inpatient surgical component which is a very high-margin service line for the company and a very significant service line with respect to rounding out the depth of our service line offerings.”

Priorities of Capex

“inpatient capacity, outpatient capacity, technology that’s needed for our nurses and physicians and then new facilities are really where we’re spending our money, which makes sense. That’s what we are when it comes to an organic growth-oriented company. So that’s where the capital expenditures are going.”

Over the last 9 years, increased EBITDA by $3B on roughly the same assets

“when you think about the company going private in 2006, we had $4.5 billion roughly of EBITDA and, again, basically the same assets today, nine years later. And if we hit our guidance near the top end of the range of $7.85 billion, you can see the solid growth in earnings through that time.”

We think the economy is a stronger driver of performance than ACA

“what we see and what we understand is a very significant improvement in overall macroeconomic factors within each of our markets. It’s hard for me to process that the exchange running, around 2% of our total business, versus the commercial, running around 28% to 30% of our total, that the exchange is driving the overall performance. It’s not big enough yet.”

We’ll be fine if insurers consolidate, but how does this affect smaller providers

“In most of our markets either we’re number one or number two in share in most of our markets, puts us in a good position to be relevant to all the payers going forward…my concern more over the longer term is how does this consolidation or possible consolidation affect smaller providers or systems in markets that may only operate in one or two markets.’

It could be a catalyst to allow for more consolidation among providers

“the question I would have is could this consolidation be a catalyst for further provider consolidation. And that’s yet to be known. We’ll see how that plays out. But it could be a catalyst to give us more opportunity for consolidation in the provider space.”

Tenet Healthcare 1Q15 Earnings Call Notes

Move to drive business from exchanges has paid off

“I would just like to say again and thank our managed care team, who helped us implement a strategy beginning more than two years ago to make sure that we were really well positioned in these exchange networks. And so, we were an early adopter of the exchanges, we entered into contracts with – and you’ve heard us quote this statistic all last year, with a very high percentage of the plans that were offered in all of our markets. And that is what is really driving that business. So we’ve been first movers, we have a competitive advantage due to the pricing that we have and the level of clinical quality and reputation of our hospitals in these markets, and that’s what’s really driving that business.

The numbers will move around little bit, because you did start with a very small base, and it’s growing very rapidly. But it’s a great story for us with a new market that’s substantial, it’s profitable, and we’re providing good service to people who are utilizing our hospitals within those.”

So much of the healthcare industry isn’t public

“you got to remember that the industry that’s five times as big as the companies that everybody pays so much attention to.”

You know better than I do why the stock is moving this way or that

“I would start by saying you have to ask your own clients that. I’m the wrong person to ask because just on the fundamentals, this is the latest in a string of very solid quarters where we have exceeded expectations, driven organic growth, driven it in the right way which is with increase in the number of customers we are serving and good metrics, solid metrics on pricing and cost control. And so to my way of thinking about it, we are creating value in the enterprise that should be reflected in the market. But I’ve also learned over time to keep doing what we do and what’s within our control and not become too obsessed with short term fluctuations in the share price.”

HCA Holdings 1Q15 Earnings Call Notes

60% increase in EPS

“If you adjust the quarter’s performance for electronic health record incentive income and share based compensation, adjusted EBITDA increased 20.6% over the prior year. Net income attributable to HCA Holdings, excluding gains on sales of facilities and legal claims cost, increased 53%. And diluted earnings per share increased 60.7% over the prior year’s first quarter”

Medicare admissions up 5.9% during Q1

“During the first quarter, same-facility Medicare admissions and equivalent admissions increased 5.9% and 6.8% respectively. This does include both traditional and managed Medicare. Managed Medicare admissions increased 14.3% on a same-facility basis and now represent 32.2% of our total Medicare admissions.”

Seeing a growing number of exchange patients

“let me spend a minute talking about health reform. Health reform activity was strong for the quarter. In the first quarter, we saw approximately 9,880 exchange admissions as compared to the 1,600 we saw in the first quarter of last year. You may recall, we saw about 7,700 exchange admissions in the fourth quarter of 2014, or a 28% increase quarter-to-quarter. And we believe this is largely due to the new enrollment. We saw approximately 37,000 exchange ER visits in the first quarter, compared with the 4,000 in the first quarter of 2014 and the 26,000 in the fourth quarter of 2014.”

We think ~40% of exchange insureds were uninsured prior to ACA

“We have history on about 50% of our quarter one exchange volume and based on our look back at previous coverage, we estimate about 40% of these admissions (13:26) were uninsured to prior to health reform. Given this is the second year of reform, we are also tracking what the coverage was in 2014. Based on the exchange patients where we have 2014 experience, 36% were previously covered under a HIX product, 39% were covered by another insurance product, and 25% were uninsured in 2014. ”

Are seeing some wage pressure in stronger markets

“We have had in certain markets where the economy has historically been a little bit better seen some level of wage pressure. We’ve been able to deal with that on the fly, if you will. And we’ve adjusted certain compensation programs and so forth to give ourselves capacity to address some of those challenges. We are benefiting over the last few years from a relatively low inflationary environment and we are considering that in evaluating what we can do to prepare ourselves for possibly some level of inflation over time. I do think it will happen from one market to the other. It won’t happen in one big step across the whole organization.’

Strengthened balance sheet gives more flexibility

“Our balance sheet today, the leverage ratio is the lowest point it’s been since we entered the LBO in the fourth quarter of 2006. Our cash flow is as strong as it’s been, I think, in the history of the company. So, we’ve gained financial flexibility. And so we will continue to deploy capital in a way that we think will maximize shareholder value and shareholder returns at the same time with a view towards continuing to invest in our business for the long term.”

Better margins come from leveraging scale and more complicated service offerings

“The thing I think that we believe is driving margin production inside of HCA, you mentioned scale. We do believe leveraging the scale and continuing to find ways to leverage our scale both on making our business better with respect to quality, efficiency, patient experience, all those kind of things are very helpful in the discussion here and then finding ways, again, to take out administrative cost. We’re able to do that.

The other thing that I think is important to the company from a margin standpoint is we do have a growing complexity of services that we offer and, typically speaking, more complicated service offerings will generate higher margins. And if you put that on fixed cost base like our hospitals have, the operating leverage that comes from that is very powerful.

So we’ve been very intentional over the past four years or five years to add more complexity to our facility offering. And in most of our markets make sure we can offer pretty much any service to any patient that needs care.”

Focus on commercial segment also helps

“the fourth thing I would mention is that we have been intentional about our efforts to grow our commercial market share and put ourselves in a potion to generate margin from that particular segment.”

Learning from others also important

“And then the last thing and I think this is a powerful and tangible asset for HCA and one that we’re getting better at each and every year, is leveraging the learnings that we see across the various marketplaces. If we see a great physician strategy or we see a great outreach strategy or program strategy or quality initiative, whatever the case may be, bottling that up, finding a way to get it to the marketplace quickly is something we’re getting better at.”

There’s risk inherent to a value based reimbursement system

“Let me maybe take the last part of that question, then go back to the value equation, but we’re – as a company, we’re not looking to move and to take risk. We don’t see that right now in the intermediate term as something that we need to do. Now, do we have markets where we are taking a certain amount of risk that’s not material to the company. Sure. We have pilots going on.”

What is our value?

” with respect to value, and we talk a lot in our organization about healthcare and the value that we need to bring to our markets. And we see right now, our value as being turned by including, number one, patient safety, patient quality, patient experience, access points, so that it makes our system accessible, easy to get into, easy to access from a patient standpoint, from a physician standpoint, from the standpoint of bringing capability that Sam talked about in terms of being able to take care of any patient’s needs from basic care to some of the more complex acute care that they may need in the marketplace.”

HCA 4Q14 Earnings Call Notes

This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. Full transcripts can be found at Seeking Alpha

30% EPS growth isn’t bad

“The fourth quarter performance was highlighted by strong volume metrics, favorable payer mix and excellent cost management. As a result, we produced revenue growth of 9.1%, adjusted EBITDA growth of 14.1% and diluted EPS growth of 29.3% over the prior year’s fourth quarter.”

Volume growth accelerated in 4Q

“volume growth accelerated in the fourth quarter as compared to the previous three quarters of the year. We believe this performance reflects a combination of solid execution of our growth agenda, our operating teams, improving macroeconomic trends in many of our markets, and capital spending that has been invested both to increase access to our networks and to add operational capacity.”

Huge swings in medicaid expansion states

“Our trends in Medicaid expansion states continued into the fourth quarter. In the fourth quarter, Medicaid admissions were up 51% and uninsured admissions were down 65% in expansion states. For full year 2014, Medicaid admissions and expansion states increased 40% and uninsured admissions were down 58%.”

Estimating that 42% of exchange patients are newly insured

“what we do is look back at exchange patients level we’ve seen this year, look back how we’ve previously seen them and what was their status when we saw them. And that’s what we’re coming up with our estimate of about 42% on a yearly basis of the patients we saw in exchanges who are newly insured.'”

Not factoring in more medicaid expansion but there should be some

“We do have a small physician in Indiana and it appears that Indiana is moving forward, so that’s very good moves.

Here in Tennessee you’re probably all aware that a special session of the legislature began last night. Governor Haslam is working very, very hard and many are working with him to try to help our state legislatures understand how important this is to the state of Tennessee and benefits that would accrue to many across states. So we’re hopeful and reasonably optimistically hope that that can get passed here early, but we have not put any of that into our numbers. We’ll obviously continue to watch other states and be supportive where we can be.”

Medicaid still struggles to get access to physicians, end up coming through ER

“We haven’t really seen a significant change in Medicaid activity and behavior. So the emergency room heavily, they struggle to get access to physicians in some markets. So that dynamic still exists.”

When people get commercial insurance, they have better access

“On the uninsured, who have gained access to commercial insurance products, we have seen less utilization of the emergency room and more availability to other facility opportunities or physician opportunities. And that’s been slight, but significant enough for us to notice that when they do get commercial insurance, there is different ability to access care through physician office or possibly through urgent care centers and the like and not through the emergency room.”

Investing in access points to our network

“We have numerous initiatives that should drive growth into marketplace, and Milton touched on them, it revolves around creating sufficient access points to our networks, so that patients can find it convenient to enter into an HCA network. So we have significant investments in additional outpatient access points. In 2015, that will hit the marketplace.”