Tenet Healthcare Corporation (NYSE:THC) Q4 2022 Earnings Call Transcript

A.J. Rice: Hi, everybody. Thanks for all the detail on USPI. I might pivot over to labor. If you’re saying in December contract label was about 6% of total SWB. Is that a good run rate that you’re taking into 2023 with guidance on where you think that would be? And then I know your experience with contract labor throughout 2022 was a little different in pattern than some of the other public peers. How much of a tailwind gross basis would that represent if you’re 6% or whatever the number you’re thinking it will be for 2023 versus what you spent on contract labor in 2022? And then finally have you incorporated any of that into your outlook, or are you sort of holding that out in case you need it for the permanent labor?

Dan Cancelmi: Hi, A.J. It’s Dan. Good morning. In terms of contract labor – contract labor peaked as a percent of SWB in September. And as we move through the quarter it declined sequentially each month. And we exited with December at 6.4%. As we move into this year, we have assumed some further moderation this year in our contract labor spend, obviously, net of full-time employment costs because I mean what we’re really focused on is replacing contract labor to the greatest extent possible with employed colleagues. And so we €“ obviously, we’ve been focused on now. We’re going to continue to do that as we move through this year. And so, yes, we have built some moderation in aggregate contract labor into our guidance this year.

A.J. Rice: So net-net what you’re doing on the permanent side it is — you have some in there?

Dan Cancelmi: Yes. We’ve obviously taken into consideration the incremental investment with our employees when we think about the reduction in contract labor it obviously will be replaced by some form of employed costs, right?

A.J. Rice: Okay. All right. Thanks a lot.

Operator: Our next question is from John Ransom with Raymond James. Please proceed with your question.

John Ransom: Hi. Just a little confused about the cyber issue. How do we think about that last year versus this year in terms of a good guide to organic growth?

Dan Cancelmi: Hey John, it’s Dan. So, obviously, in terms of the EBITDA, we’ve sized that approximately $100 million and we did receive insurance proceeds in January of $10 million and that is reflected in our guidance this year. But we have not reflected any additional insurance proceeds in our guidance this year. Obviously, we’re working that with the insurance carriers, but we have not assumed any additional proceeds. Obviously, in terms of the impact on volume, it did have an impact on volume. And we obviously took that into consideration when we built our volume assumptions for this year.

John Ransom: Just remind me what was the total that you collected last year from insurance?

Dan Cancelmi: Total was about $10 million in terms of the net impact on the P&L. But that offset — that’s part — we rolled that into that net $100 million number.

John Ransom: I see. So, in other words just to be clear it’s about a $90 million good guide if we think about the organic growth help this year.

Dan Cancelmi: Well, no, we view it as $100 million. That’s what we put on the slide. Again the cyber estimate that was an estimate and it took into consideration some of the insurance proceeds that we received.

John Ransom: Okay. I got you. That’s what I was confused. All right. Thanks so much.

Operator: Our next question is from Josh Raskin with Nephron Research. Please proceed with your question.