HCA Healthcare, Inc. (NYSE:HCA) Q4 2022 Earnings Call Transcript

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We did that throughout last year mainly in the late summer, early fall, where we adjusted our wages to deal with movement in the market resulting from some visibility that we had with our overall competitive positioning. Some of the contract labor reductions that we expect and have already made even will be absorbed a little bit in those decisions, but we think the net of it is what Bill just alluded to, and that is that we can maintain our labor cost as a percent of revenue roughly around what we finished 2022 at. So that’s how we’re thinking about it. And again, we’re seeing positive metrics across the key dimensions of our labor agenda that is encouraging to us. And we believe we have more room to gain with our agenda, and we’re hopeful that, that will continue throughout 2023.

A.J. Rice: Okay, thanks.

Operator: Our next question comes from Gary Taylor with Cowen.

Gary Taylor: Hi, good morning. Two quick ones for me. Bill, I know you said contract labor came down again, but I didn’t catch if you disclosed the 4Q number. And then my other one was just also on your comment about the other OpEx line. I mean that’s still a line that on a per adjusted patient day basis is up in the double digits. So any help you can give us on thinking about modeling that for €˜23?

Bill Rutherford: Yes, Gary. On contract labor for the quarter, we were down about 16% from where we ran in the fourth quarter of last year. So good improvement in that area. It represented roughly 7.8% of our total salary wages and benefits. We talked about given that number before. So again, solid trends in the fourth of this year compared to where we ran last year and especially where we ran in the first half of the year. Our other operating expenses, you’re right, are subject to some of the general inflationary increases that we’re seeing across the economy. When we think about utilities and insurance and, in addition, our professional fees areas, we’re seeing some higher single-digit cost growth in other operating expenses.

Fortunately, if you look across the quarters for 2022, as a percentage of revenue, you’ll see our other operating expenses as a percent of revenue staying relatively and pretty consistent throughout the year. As we look forward to 2023, we do believe that’s an area that can continue to see some higher single-digit inflationary pressures, and we factored that in to our guidance going forward. Again, we think labor supplies will keep in line and hopefully below where our revenue growth is. But the other operating cost area is around utilities, insurance pro fees are going to continue to see some pressures, and we factor that into our guidance.

Operator: Our next question comes from Ben Hendrix with RBC Capital Markets.

Ben Hendrix: Hi, good morning. Thank you. With regard to capacity constraints, you mentioned last quarter missing out on 1% to 1.5% of total admissions in 3Q. Can you give us an update on where that stands now? And then maybe some more commentary on progress with your HR and case management initiatives and then the degree to which you expect those to help ease constraints and support your guidance this year? Thank you.

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