HCA Healthcare Inc (HCA) — Q3 2020 Earnings Call Transcript

Okay. Thank you, Julianne, and good morning. Welcome to everyone on today’s call. With me this morning is our CEO, Sam Hazen; our CFO, Bill Rutherford, along with our CMO, Dr. Jon Perlin. Sam and Bill will provide some prepared remarks and then will take questions. Bill will start with some comments on the quarter and then Sam will provide some thought or commentary around some observations that we’re making today. Before I turn the call over to Bill and Sam, let me remind everyone that should today’s call contain any forward-looking statements, they are based on management’s current expectations. Numerous risks and uncertainties and other factors may cause actual results to differ materially from those that might be expressed today. More information on forward-looking statements and these factors are listed in today’s press release and our various SEC filings. On this morning’s call, we may reference measures such as adjusted EBITDA, which is a non-GAAP financial measure. A table providing supplemental information on adjusted EBITDA and reconciling to net income attributable to HCA Healthcare, Inc. is included in today’s release. This morning’s call is being recorded and a replay of the call will be made available later today. With that, I’ll now turn the call over to Bill.

Great. Thank you, Mark, and good morning, everyone. I’ll provide some additional information on the quarter. You will note in our earnings release this morning, our reported adjusted EBITDA was slightly better than our preview. So, let me highlight some volume indicators and trends. Our same facility admissions declined 3.8% in the quarter. Within this, our Medicare admissions declined 7.6% from the prior year period, and our managed care admissions declined 0.7% from the prior year period. Our same facility admissions declined 3.7% in July, 5.2% in August, and 2.6% in September. Thus far in October, we’ve seen continued improvement in our admission trend. The COVID increases we saw in the quarter began in July and stayed elevated for most of August. Due to this and as we have mentioned in previous settings, we voluntarily suspended elective procedures in over 100 of our hospitals for some period of time during the July and August surges. And this impacted our surgical volume statistics. Same facility in-patient surgeries declined 6.8% in the quarter from the prior year period. They were down about 11% in July, down about 9% in August, and were within 1% of prior year levels in September. Same facility hospital-based outpatient surgeries declined 7.5% in the quarter from the prior year period with about 12% decline in both, July and August, but September saw some growth over the prior year. Our ambulatory surgery center volume had a similar result with a decline of 4.7% for the quarter, which occurred primarily in July and August, while September’s volume was about 1% over prior year. The surgical volume results were influenced by business of surgical days in any given month, and September did have one more surgical day than the prior year. But, we wanted to share some of the results we saw throughout the quarter to highlight the impact of our voluntary suspension of the elective procedures. Emergency room visits trends were consistent throughout the quarter, which declined 20.3% from the prior year period. Our level 1 and 3 visits declined about 29% and our level 4 and 5 visits declined about 14%. Admissions to the emergency room were down about 2.5%. The higher acuity and revenue intensity results we saw in the quarter offset the impact of these volume declines. Our same facility net revenue per adjusted admission increased 14.8% in the quarter compared to the prior year period. There were three factors that contributed to this result. One is a level of COVID-19 patients we served in the quarter. As we previously mentioned, we served close to 40,000 inpatient COVID cases in the quarter, or about 8% of our total admissions. These patients have a higher acuity than average and a longer length of stay, which resulted in a higher consumption of resources. Due to this, revenue per admission is a little bit higher than our average. Second, within our non-COVID patients, we saw a higher acuity patient as those patients presenting for service have been in higher acuity areas such as neurology, cardiology, and oncology and the lower acute services were slower to return. Our non-COVID case mix index increased approximately 5% over the prior year. Lastly, as we mentioned earlier, our maintenance care mix of inpatients as our Medicare volume was slightly slower to recover. Our teams continue to do an excellent job managing our cost structure during these pandemic cycles, which benefited our performance in the quarter, and our labor, supply and other operating costs as a percent of revenue all showed improvement as compared to the prior year period. Before I conclude, let me speak briefly to some cash flow balance sheet and liquidity metrics. As we mentioned in our earlier calls, the Company took a number of measures early in this pandemic to enhance our operational and financial flexibility. Because of these actions and other factors, we were able to announce that we will return or repay early $6 billion of CARES Act funding, including $4.4 billion of accelerated Medicare payments and $1.6 billion of provider relief funds we have received. We are working with various government agencies to execute these payments. We expect to fund the entire amount from available cash and future cash flow from operations. As of September 30, 2020, the Company had approximately $6.6 billion of cash on the balance sheet and $7.7 billion of capacity under our credit facilities. Our debt to EBITDA leverage was 2.67 times as of September 30, 2020, after netting out available cash. Cash flow from operations was $2.7 billion for the quarter, which includes the effect of approximately $300 million of stimulus payments that will be part of our repayment. Year-to-date, cash flow from operations was $12.8 billion, which includes approximately $6.1 billion of government stimulus funds. Also, as mentioned in last quarter’s call, we have reduced the Company’s planned capital expenditures and anticipate our full year 2020 capital spending to be about $3 billion. In short, we believe even after considering the planned returns of $6 billion of CARES Act funding, the cash flow, liquidity, and balance sheet position of the Company provides us the financial capability and flexibility to navigate these unprecedented times, and we will continue to look for opportunities to create long-term value for our shareholders. With that, let me turn the call over to Sam.

Good morning. The disciplined operating culture of HCA Healthcare, and the ability to take full advantage of what our size and enterprise capabilities have to offer have produced remarkable performance for the Company this year. These attributes, along with the great people we have in our organization and the steadfast commitment we have to our mission have allowed us to deliver value consistently and at high levels for all of our stakeholders. As demonstrated again in this quarter’s results, we continue to show resiliency, both operationally and financially, while also enhancing our overall position across the communities we serve. For the past couple of years, we’ve used the third quarter’s earnings call to provide some early thoughts about the upcoming year. In those years, we obviously had a more stable environment, economically, politically and operationally. While always difficult to predict our business with precision, today’s environment with all of its uncertainty makes it particularly challenging. We plan to provide you with more details in January when we complete our planning process for 2021. By that time, we will have a few more months of experience that we can hopefully use to give a better indication of our thoughts regarding certain components of our business. With that being said, we’re beginning to formulate some preliminary perspectives around a few aspects of our business. And I want to share those with you this morning. With respect to volume, given the unusual volatility we’ve seen in 2020 with COVID-19 surges, mandatory and voluntary suspension of elective business and intermittent recovery periods, we currently plan to use 2019 volumes as a starting reference point for early 2021 planning purposes. Since the pandemic began, we have had very few months, mainly September and October, that we believe are indicative of somewhat stable activity. Notwithstanding, we have some observations from these two months, and we are using them to inform our current thinking. First, we believe we will continue to treat COVID-19 patients throughout 2021. Over the last two quarters, COVID-19 patients have represented approximately 6% of our admissions. Recognizing that there are many variables that could affect next year, at this point, we believe it is reasonable to estimate around 4% to 5% of our 2021 admissions could be related to the virus. This factor suggests continued high levels of acuity in our overall mix of inpatient business, which should provide some support for current inpatient revenue trends. It is difficult, however, to know if the various governmental reimbursement programs for providing care to COVID-19 patients will continue through 2021. Overall, we believe demand for inpatient admissions next year will be down from 2019, approximately 2% to 3%, but again, with the mix being more acute. On the outpatient side, as compared to 2019, we anticipate emergency room visits will be down in 2021, similar to this year. But like our inpatient business, we expect it to be more acute, which should drive higher revenue per visit, offsetting some of the volume decline. For outpatient surgeries, we are expecting some recovery over current levels, but we expect volumes to be down slightly. With respect to managing operating costs, which has been a key part of our solid results this year, we have continued confidence in our team’s ability to hold many of the gains they have made across the different expense categories. In those areas where we anticipate some pressure, we believe we have future resiliency actions that can help offset some of these challenges. Collectively, these factors lead us to think that our preliminary expectations for adjusted EBITDA for 2021 could look similar to the Company’s original 2020 guidance, but likely with a slightly wider range of results. Clearly, there are additional factors that could influence these perspectives and expectations, including but not limited to, the economy could worsen and impact payer mix, the election result could bring adverse changes to healthcare policies, and the pandemic could fluctuate or affect our results in ways that we cannot anticipate. We will evolve our thinking accordingly as we gain a better understanding of these factors. We believe, as I stated in my comments a few weeks ago, that we have proven we can meet the challenge of this pandemic. We also believe the Company will be able to navigate successfully through future challenges as well. Since the onset of this historic event, we have improved many clinical, operational, technology, and organizational capabilities. We believe these improvements coupled with the financial flexibility we possess, should provide us with a platform to drive long-term growth and shareholder value. Once again, I want to thank our colleagues and our physicians for their incredible work during this year. We are fortunate to have such capable people in our organization. And with that, I’ll turn the call over to Mark for questions. Thank you.

Thank you, Sam, thank you, Bill. Julianne, we’re ready for questions now if you’ll provide information on the queue and instructions. And let’s please keep your questions to one, so we may hear as many people into the queue as possible. Thanks.

Thanks. I have a two-part question. I want to clarify the message for 2021. I appreciate all the details. The current thinking is that admissions will decline by 2% to 3% in 2021 compared to the 2019 baseline. Additionally, I wanted to ask about the $3 billion being spent on capital this year, which suggests an increase in the fourth quarter to about $1 billion. Should we consider that a good run rate for next year? I'm curious if there are any comments regarding 2021. Thanks.

On the admission estimation, we believe that based on our observations from September and October, and possibly even June, we will not experience some of the less acute inpatient admissions we saw in previous years. However, we expect to continue seeing more acute patients who require significant care throughout 2021, similar to what we've witnessed during many months this year amid the COVID period. This is our current perspective. As we move further into the fourth quarter, we are hopeful that we will encounter months that reflect more stable activity, which will help us refine our outlook. If any adjustments are necessary, we will provide updates during our fourth quarter call in January.

Yes. On capital, as you know, our fourth quarter typically runs a little bit higher. I don’t necessarily think the fourth quarter alone is indicative of go-forward run rate. We’re obviously in the ‘21 planning and we’ll finalize our capital expectations. I think it likely will land somewhere north of where we are in 2020 but less than what our original historical spend was for this year. So, we’ll give you some detail as we get into next year.

Back on the 2021 EBITDA guidance assumptions for a minute. You talked about sort of the volume trends a little soft than 2019 levels but at higher acuity. Can you let us know what payer mix you’re assuming in the guidance, how it differs versus what you saw in the third quarter? And if you dig into the margin side, you saw some pretty good margin leverage on OpEx this quarter. Can you walk us through what assumptions you’re making on salaries and benefits, and OpEx within that guidance?

We don’t have those details at this particular point in time to share, Pito. We need to finish our planning process as we typically do in the fourth quarter. We’re trying to give you some general sense of where we see things. There’s obviously puts and takes on every line item on our income statement as always. And as we get further into the fourth quarter and refine our thinking on each of those categories, we’ll give you some range of expectations around those metrics in our planning process in our fourth quarter earnings release.

Two-part question as well. One, Bill, wondered if you could tell us 2019, what emergency room was as a percent of either total revenue or total outpatient revenue, just so we can sort of think about the headwind that you’ve baked in there. And then, the other part is, I guess, clearly, we’ve seen that the worst financial result for HCA comes from when the facilities are empty because you’ve deferred surgical business, and there wasn’t COVID. Now, you’re managing much better sort of simultaneously the COVID ebbs and flows with your surgical business. So, the question is, as investors look forward, as COVID cases increase, do we think that’s a positive or negative for EBITDA, or do we think that still just allows you to manage your overall EBITDA trajectory in a fairly tight range?

Let me answer a couple of questions here, Gary, and then I’ll hand it over to Bill. I think it’s important to understand that two-thirds of our ER visit decline in the third quarter was either uninsured patients or Medicaid. And the balance of our visits were patients who were more acute, as one would expect, and that they delayed possibly or deferred care and were more sick when they came to the emergency room. So, I think it’s a very important element of our ER business. We don’t know exactly how that’s going to play out, but that has been the pattern throughout most of the pandemic. So, Bill, do you want to answer the other question?

Yes. On the COVID, as you’ve identified, volume will fluctuate. It’s hard to isolate that population by itself, if you will, because as we mentioned and intended to highlight in our trends, it also has an impact on some of them were elective as it fluctuates. But, we think we’ll have a level of COVID patients that we’re going to serve throughout 2021, as Sam mentioned in his comments. And I think we’re prepared to manage through those fluctuations as they present.

Just one point of clarification and then a question. One, so you’re saying the guidance you gave coming into the year for EBITDA sort of is general range, maybe a little wider. I’ve got various data points, but I just want to make sure I’m looking at the right number. I had $10.25 billion to $10.65 billion was your original guidance. And then, for the question, I guess I’d just ask, you mentioned future resiliency actions that could be taken as some of the other cost reductions or other aspects of the business, the benefits you’ve seen in the second half here fade a little bit. Maybe expand a little bit on that and how significant are those opportunities as you look out into next year.

Yes. A.J., first, on your first one, yes, I’ll confirm your numbers are correct from what our original 2020 guidance was.

And then, A.J., on the question around future resiliency, Bill is leading this effort, but I want to give you some strategic approach that we’re taking because we believe that there are significant opportunities inside of the approach, and we are executing on some of those as we speak. And we still have capacity in these initiatives as we push forward. But we have grown the organization over the last decade, I’ll call it, organically. And through that organic growth, it has yielded results that we think are very powerful for the Company over the past decade and have positioned the Company very well. As a matter of fact, our market share at the end of the first quarter right before COVID hit or even at the end of March period is at an all-time high. We think our overall positioning in the marketplace has improved over these seven months in many circumstances. And if we move forward, we should be in an even better position. But with respect to our financial resiliency program, we have looked and challenged ourselves at a number of areas where we have redundancies and/or duplications in our operations. Today, for example, we have multiple call centers. We think we have opportunity to create consolidation in those areas and create efficiencies, better outcomes for our patient and ultimately a better use of overall Company resources. We have similar opportunities in our lab services. Throughout the pandemic, we’ve enhanced our lab capabilities, and it’s enlightened us on opportunities to advance our lab services in a way that we think can yield efficiencies and better access to lab services and so forth, doing it more efficiently. And so, we have those type of examples. We’re challenging how we’re structured to see again if we have redundancies in our structure and whether or not there are better ways to service the field and produce outcomes on that front. And then, what I’m most excited about is our technology initiative where we have opportunities to advance technology even further in the Company and ultimately deliver a better patient outcome, but at the same time, support our physicians, support our management and deliver our services more efficiently. So, we think these work streams to have opportunities for the Company that we can use to offset any pressures that might serve us in 2021 and on into 2022.

I just want to clarify something. You mentioned that inpatient volumes are down 2% to 3% compared to the core 2019 levels, and then on top of that, there's an additional 4% to 5% due to COVID. So, overall, that means net volume is up about 2%. I wanted to confirm if that's correct. Additionally, I want to revisit the competitive positioning. Are you noticing an increase in the acute population in your markets compared to before? If so, what do you think is driving that change?

Yes. Ralph, on the first one, I think the 2% to 3% is just broad guidelines that we wanted to provide you with that would include all of our patients, including the COVID within that. But obviously, we’re going to finalize our planning here and share with you more thoughts as we get into our year-end call. But at 2% to 3% is our broad planning, including all patients.

This is Sam. As it relates to the competitive positioning, we don’t have any data on the second and third quarter yet that would give us market share information and provide insights into whether we had more patients in our hospitals than our competitors. Intuitively, I don’t think that was the case because all the systems in these markets were under community pressure to respond to COVID. What I’m reacting to is certain outpatient opportunities, certain physician opportunities, certain program development opportunities that we think have evolved that positions our organization, we believe, better than what it was at the beginning of this year. And we will continue to, as I mentioned on the preview call, continue to move forward on those components of our development in order to enhance our overall position.

Just a few quick numbers questions here. First, on EBITDA, similar to 2020 is kind of the EBITDA number you talked about. Should we assume revenues in that general ballpark as well in terms of what you gave us for 2020? And then, can you give us the overall payer mix numbers for 3Q? And finally, any October volume numbers you can share? I know you said volume improved there in terms of volume, surgeries, ER visits in October.

Yes, Justin, this is Bill. It's a bit early to discuss revenue specifics since the composition has been changing over the last few quarters. Therefore, I won't provide any revenue parameters until we finish our planning. Regarding the payer mix for the quarter, our Medicare was about 45%, managed care was around 24%, and self-pay was approximately 8%. What was the third one?

The October volume numbers, anything early on surgery volumes, ER visits, inpatient, outpatient…

Obviously, a sequential improvement in our admissions. As you saw, we finished the September at 2.6%. October is probably 1.5% down, a little better from where we ended September. But obviously, it’s still early in the cycle.

So just again, I sort of hate to harp on this, but the 2021 guidance of, let’s call it, $10.45 billion at the midpoint, that coming despite pretty significant improvement on the margin side, margin is up 500 basis points, excluding CARES Act in the quarter. And so, I’m curious, is there some offset? It doesn’t sound like revenues are going to be materially different than what you guys were assuming. So, is there some offsets, some costs that are coming back? And maybe specifically in that, supply expense has been down more than 50 basis points, despite this higher acuity. So, is there some assumption that some of that comes back as well?

Yes. Josh, I think there’s a couple of points. And there’s obviously a lot of puts and takes, whether performances, our thinking into next year, and we haven’t finalized it. One is, we know we do have some other government funding relative to COVID patients this year, whether it be the Medicare DRG add-on or the HRSA payments to recognize resources consumed by uninsured COVID. And I don’t think we see those continuing too long into 2021. And again, I think the purpose of our guidance was to give you our general thinking versus that we’ve gone through a lot of calcs on each one of those inputs. And so, as we complete that, we’ll go forward and give you our input in that. I think, again, I’d reiterate, we’re confident in the team’s ability to hold many of our costs that we’ve seen. And as Sam mentioned in his comments, to the extent that we have any new costs that may enter the system, we’ve got resiliency plans that I think we can execute to help offset those. And I think, given the profile we’re seeing, we feel generally reasonably comfortable with our current margin performance.

Sam, I think you said you didn’t have any market share information yet around the different regions of the country. But, could you just give us some high-level perspective about the financial performance across HCA’s enterprise in different areas of the country? Thanks.

I don’t have it for the market share, Frank, for the second and third first quarter. We’re obviously just processing the first quarter. I think we had one of the strongest portfolio performance in years across HCA’s 185 hospitals. 76% of our facilities had year-over-year EBITDA growth. So, we had very consistent performance across all of our divisions. To say one, we had a little bit of a challenge in the far west division, primarily because of our California hospitals and just the slow uptake in the activity in those communities. But our strength across the portfolio, it’s very good, consistent. And I think it again reflects the power of our portfolio, the diversification of our portfolio, including even the service mix that we have inside of it. So, very strong portfolio performance for the Company.

Just a two-part question for me. As I think about your guidance again, is that basically assuming that the economy stays where it is or you’re not expecting any further degradation in unemployment? And then, I guess, just for Bill, with $6.6 billion of cash on the balance sheet, how should you be thinking about buybacks and the dividend resumption at some point? Thanks.

Yes, let me begin by saying that, as we've noted, our balance sheet and cash flow provide us with significant flexibility and the ability to navigate various economic cycles. We haven't made any decisions regarding capital allocation, share repurchases, or dividends at this time. We will finalize our planning in 2021 and share our intentions. Historically, we have taken a balanced and disciplined approach to capital deployment. As we gain a better understanding of the market conditions, we will look for the appropriate moment to resume some of those actions, but no decisions have been made yet. What about the economy?

I’ll take that. This is Sam. I think as I mentioned in my prepared comments, we’re making these judgments off of our current read of economy, and we’re not factoring in any kind of significant worsening of the economy. So, obviously, if the economy were to worsen, it could have an impact on our expected results as we’ve indicated here.

I would like to follow up on that. Regarding the guidance, are you assuming that COVID remains at current levels at the start of the year and then gradually decreases as the core business improves throughout the year, or is this an assumption of stability? Additionally, concerning capital deployment, if next year’s EBITDA is expected to be similar to this year’s projected EBITDA, what indicators are you looking for to return to normal capital deployment? With a typical EBITDA and a strong balance sheet, one would anticipate a standard approach to that, but what are the specific indicators you are monitoring?

This is Sam. I’ll let Bill take the second question. With respect to the COVID assumption, our experience with COVID throughout the pandemic has been that it’s choppy. There are going to be situations where COVID is up; there are going to be situations where COVID is down. We’re trying to give you some estimation of the average that we’re expecting. We are, at this particular point in time, balancing off what I call the floor. And we are not nearly as intense with the volume of patients today as we did in late July and early August. But, we are seeing a little bit of a rise, primarily in one market, and that’s El Paso. And that’s created a significant challenge in that community, but we only have two hospitals there. And at this particular point in time, we’re able to support them appropriately. And with the actions that the community has just recently taken as well as what the governor has done to support that community, we believe that we should be in a reasonable situation there. So, we’re not anticipating month-by-month estimations around COVID. We’re just going to respond to it with the capabilities we’ve developed. And we’re estimating what we believe to be an overall metric that is likely to occur in 2021.

And Kevin, this is Bill on the capital. I don’t think there’s any one unique trigger that we’re looking for. I mean, we’re obviously still going through these cycles. We want a couple more stable months to kind of firm up our assessments that we’ve talked about. And part of our normal routine as we go through any year is to make those assessments, judge the environment we’re in and make the right capital decisions. That’s what we’re going to plan to do and we’ll share with you our final thinking in our year-end call.

I wanted to follow up on the resiliency topic and the technology capability Sam mentioned. I think Sam said technology was potentially the most exciting area. I think it’s efficiency. And just hoping you could expand a little bit in terms of what that means, and if you had an example or two to conceptualize it for us?

Well, I’ll give you a very specific example that we’ve been able to use on two fronts this year. We have a system called NATE. NATE is a technology solution that gives us individual insight into every patient in our hospital right now. And that insight provides clinical metrics, it provides bed location, it provides certain metrics around what requirements the patient has with respect to, let’s just say, ventilator management. And we’ve been able to use those insights from this particular system to improve our ventilation management of COVID patients in a way that has reduced their length of stay on it and provided a much more efficacious outcome. So, that’s just one example that reduces ICU days. It creates a lower length of stay for the patient and ultimately, a much better outcome. So, we see opportunities to advance this system. The second aspect of NATE that’s proved to be very productive for us is capacity management, allowing us to position patients most efficiently within the facilities or even across our networks at time. So, this insight into our capacity management has allowed us to be, I think, more efficient at managing our beds and the turnovers, if you will, around those beds, providing better discharge planning and timing and then better utilization of existing assets. So, those are just two examples. We see opportunities beyond that as we’ve had experiences with clinical initiatives like our sepsis initiative in the past. But going forward, we see more on that particular platform.

Quick question on capacity, and I’m just interested in getting some color on what you guys are doing as far as being able to expand capacity in order to kind of recapture those avoided or deferred cases. And then what’s the net impact as you think about the COVID protocols that you are having to deal with?

On capacity, I mean, we have multiple capacity metrics that we use to determine needs for capital. We have triggers around how many ER visits per bed, how many surgeries per surgical suite, what’s the occupancy in our ICUs, what’s the occupancy triggers inside of our med/surg bed in order to determine capital needs. Currently, the Company is running about 70% utilization of its inpatient beds. Where we have capacity today, which won’t require the same level of capital, at least in the intermediate run, is in the emergency room. With emergency room volumes being down some, we find ourselves in a situation where at a company level from one facility to the other, we may have issues. But at a company level, we’re running about 60% to 65% utilization of our ER beds currently. That’s down from about 85% in 2019. So, we have the situation where our ER beds are flexible now, allowing us to accommodate more volume, if in fact it presents itself. So, I don’t see capacity as being a barrier to growth for us. We do have capital still in the pipeline that will ultimately add capacity to institutions that we believe needed. And those will be playing out over the rest of this year and on into 2021. And I think the Company is in a solid capacity position today, generally speaking, maybe in the best capacity position we’ve been in a number of years, given the circumstances. And so, from that standpoint, there’s not any significant pressures. I don’t remember what the last question was. Bill?

Yes. It was about the overall impact of COVID and the loss of those businesses. I’d say it’s challenging to accurately assess that which is why I shared some of the trends we observed in surgical volume. We know, as discussed previously, that we have regained some of that volume, but we don’t believe we have regained all of it. Therefore, the overall impact is difficult to gauge. However, we will keep tracking our volume trends as the year progresses.

Hi This is Andrew Mok on for Steve. I just wanted to follow up on the slow ER volume recovery and expectations for a similar decline in 2021. Do you suspect that some of the ER volumes, especially on the lower acuity visits had left the hospital system permanently? How does that scenario impact your strategy and resource allocation from here? Thanks.

This is Sam again. We don’t know, to be honest with you. We’re not anticipating a further decline in 2021. We’re anticipating that the ‘20 decline as compared to ‘19 volume, that’s the metric that we’re reflecting here. As I just mentioned, we’re running about 65% utilization of our emergency room beds across the Company, which gives us ample capacity to absorb growth, if growth resurfaces in this particular category of our business. If it doesn’t, as I mentioned, we’re anticipating that the ER patient that we do see is one that is in fact more acute. And so, the revenue per visit will actually be supported by the acuity of those patients. Whether or not they’ve been lost forever? I don’t know. Our business model is to have capabilities outside of the ER as we’ve been investing in both, urgent care platforms over the years, telemedicine platform significantly during COVID and then our primary care platform as well. So, we have multiple platforms to stay connected to the patient. That’s the important objective for us is ultimately to stay connected with them. And if they feel that it’s better for them to use telemedicine, better to go the urgent care, it’s better to go to their primary care physician. Obviously, we’re fine with that. That’s a great answer for them. It’s a great answer for the payer. And then ultimately, they stay inside the HCA system. So, we see this, net-net, is still being a positive scenario for us and one that we can manage around.

All right. Thank you. Julianne, we’ve got time for two more questions and we’re going to call it.

Just interested in as you think about the mix of patients for next year and some of the assumptions that you have around COVID, just how you’re thinking about the timing and efficacy of the vaccines going into the market and how that influences your thoughts on some of this initial planning that you’re doing for 2021.

Thanks, Sam. I think it’s really anyone’s guess as to when the vaccines are probably available. Certainly, they’re promising, but to get them broadly distributed requires a great deal of logistics. There is also broad skepticism. So, I think we have to think about next year COVID as sort of continuation of what we see now. Clearly, diseases that are spread by respiratory transmission increase in the winter. And I think we’ll anticipate some increase and drop after that. There are a number of vaccines that follow the initial build. I think there’s some speculation they may be even better. And so, I think next year is really the year where we’ll see the introduction of vaccine, the larger scale uptick of vaccine and potentially greater effectiveness of the vaccines.

Just to drill down into COVID a bit. If we look at the quarter, do you have a sense of kind of payer mix within COVID? And then, for your commercial COVID, are they mostly paid on a per VM basis, or is this set up like the DRG with the 20% add-on and maybe a little extra for the commercial upgrade?

Yes. John, this is Bill. Our COVID mix is probably 50% running Medicare, 10% to 11% on Medicaid, and probably close to 20% on just procure manage, and then we have a few other categories that’s impacting that. So, it’s fairly comparable to our overall with some changes that fluctuate from market by market.

So, on your commercial, how do you take per day…

It follows the contractual terms. So, whatever the contractual terms with that payer would be is what it would follow. So, it’s a mix of payment methodologies.

John, thank you so much.

There’s no commercial add-on per se, like the Medicare program. If that was his final...

Yes, I think that was.

So, it just follows the term as Bill indicated.

All right, Julianne. I think we can wrap it up.