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

Josh Raskin: Hi, thanks. Just first a clarification. I think the baseline that you guys were talking about last quarter was about $3.15 billion in EBITDA for 2022. And now it’s $3.03 billion. So, I’m just curious what changed in the baseline assumption? And then my real question I was interested in the comment that Saum made around value-based care and USPI I’d be curious if the build-out of your ASC portfolio in the past couple of years has changed anything with respect to those contracts on a national or state level with the Blues with the big payers. And specifically are they looking at ways to move more volumes to ASCs? And how is that sort of impacting your negotiations?

Dan Cancelmi: Hey Josh it’s Dan. Let me address in terms of some of the funding reductions compared to what we talked about on the call in October a couple of things. One, there is — we did recognize $40 million of additional grant income in the quarter that number through the end of the third quarter was roughly $154 million. We ended the year with $194 million. But also at that time we didn’t have visibility — clear visibility in terms of when some of the pandemic supplemental funding for the Medicare 20% add-on the FMAP the Medicaid, additional FMAP funding so when — obviously, we know now when the public health emergency is anticipated to expire. And we have visibility into how the FMAP will be phased down during the year. Those are the primary differences.

Saum Sutaria: Yes, hey it’s Saum. On the second part of your question, this is another reason why the continued push into what I described strategically around higher acuity services in the ambulatory surgery setting is important because on a differentiated basis relative to the cost in a hospital that continues to be a very attractive site of care value-based care initiative, I don’t — I can’t think of other than the ASC setting a stronger site of care efficiency in the system that would exist relative to the alternative cost structure. And so yeah, we do see that as not only attractive to commercial payers, but also to government payers from the standpoint of the work that we do there and also the ability to do it with high patient satisfaction and safety levels.

So I think over time as we continue down this path of innovating in higher and higher acuity things than our ASCs. I think the ASC business in USPI in particular will be viewed as a real value-based care enterprise.

Operator: Our next question comes from Steven Valiquette with Barclays. Please proceed with your question.

Steven Valiquette: Great. Thank. Good morning, everyone. I mean the details on slide 10 for the adjustment EBITDA for 2022. And I guess from that it seem like EBITDA margin for the total company is right around 15%, if we’re doing the math roughly, and then 2023 . So just want to confirm that we are thinking about that right that are at least gradually determine the level of EBITDA margin expansion in 2023 versus 2022 basis? And then is there anything else where we’re calling out if your point of view that could drive some margin expansion at least on gross basis for 2023? Thanks.