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EHC Encompass Health

Participants
Mark Tarr CEO
Doug Coltharp CFO
Barb Jacobsmeyer EVP, Operations
Patrick Darby General Counsel and Corporate Secretary
Andy Price CAO
Ed Fay Treasurer
Julie Duck SVP, Financial Operations
April Anthony CEO, Encompass Home Health and Hospice
Crissy Carlisle IR
Whit Mayo Robert W. Baird
Frank Morgan RBC Capital Markets
Sheryl Skolnick Mizuho Securities
Kevin Ellich Craig-Hallum Capital
Chris Rigg Deutsche Bank
Dana Hambly Stephens Inc.
Fischbeck, Banc America Merrill Lynch
Call transcript
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Operator

Good morning, everyone and welcome to HealthSouth Third Quarter 2017 Earnings Conference Call. At this time, I would like to inform all participants that their lines will be in a listen-only mode. After the speakers' remarks, there will be a question-and-answer period. [Operator instructions]. Today's conference call is being recorded.

objections, disconnect any this have you you at may time. If the now Relations to like would call Officer. to Investor I Chief turn over HealthSouth's Crissy Carlisle,

Crissy Carlisle

Thank and on Officer; Barb President the Chief Accounting you in Birmingham Financial everyone. quarter you, Officer; Fay, Mark Corporate Jacobsmeyer, earnings of Health Secretary; of is Andy Julie Officer; via today's call good also Patrick Senior of Tarr, Treasurer; Doug Our participating segment, are HealthSouth's Darby, General Chief Duck, call Chief President XXXX and phone. Counsel me Vice and joining Executive Financial Price, Operations. Executive Operations; Home third Ed Thank Vice With President in call. today operator, Hospice and Chief Executive April and Anthony, for morning, Officer Coltharp,

www.healthsouth.com. are we a in On have statements, set with supplemental earnings two and also you not related information, the are which Safe begin, Form earnings copy supplemental forth find of release. SEC, on the do the if detail filed release, Before page will of Harbor on last third quarter information the at available already X-K greater our website of you the page the

XX, the other XX-Q company's management's quarters. related Form X-K, materially you for statements that call, we read and subsequent ended the differ XX-K which and estimates SEC We including and XXXX, will Certain could Form are to During discussed to of release the expectations, filings, and the are risks forecasts, them. cause results from the make encourage which in factors December uncertainties, the control. to for the uncertainties risks, Form many earnings forward-looking year actual and subject are projection, our beyond

Statements speak forward-looking as of to on The place of events the and company does presentation throughout forward-looking and guidance other a not estimates, only duty information future You based statements. current these on reliance estimates update projections, not made undertake undue presented. this cautioned are are today. to

discussion and certain information measures. include supplemental this on will call financial Our non-GAAP

measures, related For at is of Form the and the the the the the of press directly website. with GAAP X-K measure such filed our comparable part available supplemental release, are all reconciliation information, end end the SEC, as of yesterday available to at of on most which

Mark, Before follow-up I question. one adhere everyone a remind it would that to allow submit to to question everyone I over we the like turn to one question rule to will and

put back With If you to have to yourself the free queue. that, in I'll the call additional over turn questions, feel please Mark.

Mark Tarr

Thank call. you, morning everyone today's to Crissy, good and joining

X.X% performance rehabilitation The of our topline quarter Home for both Health third our drove with growth good disruptions volume of quarter spite three and X.X%. hurricanes, growth in Hospice XX.X% segment another pricing. strong and growth of Discharge there In and admissions were in HealthSouth, the trends positive segment, was segments. inpatient of from in in

Maria a employees. company's example impacted of hurricanes Harvey, US and Texas, skills recent Puerto direct result was dedication of and demonstrated the southeastern is of the success The our Irma and Our of the portion this when Rico. most

priority main of safety and patients Our employees. was well-being these the throughout our and storms

a at patients this care up other. the the to time remained hospital need, and working our clock of employees for time. in of hospital stepped employees around for Many at Our each days

stressful of to by in home begin when for and care themselves appreciation can't I staff exhaustive and visits to, our affected Home selfless accounts The for and patients numerous. throughout the experience. patients express exhibited are my and were the their conditions of employees the these who admiration caring and ahead Health employees, put leadership of continued making Our Hospice compassion areas safe.

compassion, of clinicians thank patients by I care and is the of these our hospitals, of storms. to XX four perseverance. company home and fortunate XX supported service high impacted oriented are industry you health hospice our leading your home in professionalism, level to of and professionals extremely all who were our our a our employ Our for agencies professionals by office. agencies, provide and

store We our or of same XXX XXX these had store to a same of financial quarter. rehabilitation XXX XX preliminary storms points estimate basis of XX growth to home in XXX admissions from the these Similarly, our approximately impact in storms of hurricanes. XXX have of We estimate completed the the quarter impact hospitals had assessment XXX of of negative inpatient to discharges we health to points third XXXX. admissions, a to basis to locations to growth these impact our discharges, negative approximately or

approximately incurred for costs. in staffing, we temporary other lodging increased expenses related supplies, million $X addition, In hurricane and

In addition we areas. the in impacted and our earnings to volume a damage incurred amount of impact, this facilities physical modest to

All of our hospital buildings and insured. contents are

of a property We expenses as incurred also for interruption carry insurance event. result and additional a business

in of significant as evaluating still scope to at on scheduled that hospital HealthSouth first was damage to accepted incurred million. our our our originally will various in $X we We and process hospitals Vintage island storm, any our damage in only XX, on our modest result in The were on on water coverages, Rico evacuated did Hurricane at on Irma struggled periods. claims we with not XX. September property Vintage again was subsequent and property have hospital effects the they admitting The hospital of Texas. under Harvey's XX. hospital open its And island are power Hurricane and shortages. patients Maria On September in damage, fuel ongoing. on scheduled the on but in significant XX to expected the Puerto October operations September storm. on Puerto Hurricane to filed Houston the most With property did We Rico in approximately insurance The to began Vintage under of effects recovery evacuate Miami and August patient damage, our flooding The X, patients due the open now during due path due October construction the the but Pearland, on be it occur storm communication outages The Miami The Pearland of to bed of X hospital XX. hospitals hospital devastating. new other post been incurred The to are incurred is effects concerns. of two the known

on on remained associated since leaving us all is been the in the stable hospital power grid San the down from with is this Juan, hospital and or storm, September on evacuated throughout Our at power back we backup accept hospital accepting has power this patients has part, an patients. which the power, we until grid will XX storm, most comfortable The and of Manati a including for generator the discharged patients source and auxiliary our solely dependent are source. power. safe hospital not We operational hospital

operations. capacity beds, continue to to and remain of all million $X this providing our now the with for new of to which negatively and fourth by We quarter, If added we these like pay QX all update hospitals. would Thus approximately million. incur partners, employees hospital it on hospitals, around joint existing XX% XXX of associated growth an are were estimate with beds opened expense joint lease three expanded EBITDA our to hospitals strategic ventures initiatives care over turn adjusted hospital $X and building. new with XXXX, far the our to by venture of I’d we've closed this being the XXXX acute in we've at impact

XX and Home Home locations. health location Our has as to Health XXXX, Hospice the locations, added acquisition Health well novo as in its and de one opening novo of the segment portfolio of two de also with hospice home

and estimate and on million. XX, Through million Health Hospice have million XXXX Health Home we closed Home September spent additional acquisitions approximately October Hospice was $XX four to and for acquisitions, on Our XXXX, X. $XX we acquisitions original $XXX

While is of due we pipeline expect at range, primarily to this low our currently timing. the end to be robust,

developing of efficiencies. to installed include IT care expect clinical system by of These year. We resources of substantial our leveraging this hospitals specific ACE growth technology rehabilitation installation as opportunities, investments effort we to the devote to addition continue in patient IT. and operating In and electronic and information be improve all to of our began ACE installation substantially we end IT known in to the ACE and XXXX,

to staff and patient care system enhance with and retention, health recruitment this using providers and are exchanges, connect other and We improve information safety.

network. Corporation. post-acute and management. We of about predictive and methodology will efficient The are our the collaboration Center analytics Post-Acute Post-Acute determine of to extremely Cerner The center with Center Innovation develop Innovation post-acute will and for also work metrics effective models formation advanced in an the excited

clinical developing have As the a that that focused. outcome expertise decision patient tools is in provider and are care, clinical support we critical of

allow market specific care or in combined leading will us of will assume in to clinical support payers’ manage tools, to the with Our which our clinical company post-acute decision acute entire expertise, Cerner’s a hospitals utilization population. development position technology, and position

our continued clinical between collaboration We the two efforts segments. also enhance to

rate XX.X%, located XX, third clinical locations. in September was of a markets quarter XXXX, a of health our As radius collaboration our over one XXXX. those XX of our approximately basis improvement XX% And within points XXX were IRFs mile of of home

our by end to across track, implementation clinical the the markets TeamWorks process of of collaboration remains on the Our project and complete expect clinical we of XXXX. collaboration redesigned all overlap

Washington. now Turning to

proposed of release the final the home it was (indiscernible) model, will the health reform as model groupings such health for whether in reimbursement that the to wait XXXX to continue Health home include the We rule major included rule. Home

Chairman result in While rule been throughout calendar not reforms there not it's including understand with the to impact for fully will do XX home established the effective. administrator, of of impact be Committee and impact the the and proposed implementation we highly will of Seema proposed Partnership expenses home care CMS the care, that Hatch, to beneficiaries’ to far company include asking models likely to Congress. discharge do care. deleterious the has a likely validate beyond of constituencies Medicare that Verma, The stakeholders CMS and have the Finance are can inpatient a health the spending services letters need of in them patients lot fully individually, disruptive from Orrin the of to urging provider the resulting Senators CMS challenges analyze Medicare what CMS wrote with home health HHGM home of Quality Medicare on clinical key request its proposed to HHGM follow a rule, in to XXXX to HHGM that model. work about as face the made Healthcare the providers community leaders, who concern extend impact together will health highly care members forward the days model for can move stakeholders, program. pathways finalize Home Senate significant development in impossible our on providers to inpatient letter to It other reimbursement thus will Concerns to letter will increase final changes. highlight These similar part HHGM. agency to the until of revised affected in the the timely and signed access until in to an health echo access agency patient predict a of and and beneficiaries’ well all know has on

updating per is our million. billion $XXX to $X.X to to results million are million to of guidance to $XXX from of million $X.XX of for EBITDA first billion. of $XXX a operating a XXXX XXXX, revenues Adjusted from current months billion of range per to follows. increasing Based $XXX increasing billion a fourth $X.XX nine Net of $X.XX quarter the to a of on from to expectations $X.XX of a $X.XX EPS $X.XX on as guidance. the to Adjusted share, increasing is $X.XXX range a our range we and to Moving are range range range share. for

his comments. our that Our some will guidance release. And considerations are accompanied detail review more with the Doug you information them in supplemental of XX earnings during included of on page

that Finally, will symbol name Health X, HealthSouth January is to HLS corresponding Corporation. ticker earnings HealthSouth this EHC. segments to to you remind Effective Encompass call the as Both want our I our all will to change business Encompass last Corporation with transition from branding. change Corporation, Health of XXXX, its a

an as work Our enthusiastic care. company our to and rebrand staff position and based we our as strategy extremely are reinforce of turn together With inpatient and engaged that, existing it provider I'll to over home and integrated Doug.

Doug Coltharp

Mark and you, morning Thank good everyone.

disruptions businesses to both comments company, QX of echo extend As quarter Mark related also in highlighted, solid like the another spite with to three was performing for I’d and Mark’s very well, our place then This served phenomenal our as to job, my who associates of our storms. in an for the and company. a did these responding example both preparing strong at appreciation many to episode culture hurricanes.

AR QX better that free decrease in a QX first the the EBITDA cash $X $X were X.X%, collections. expected, one XXXX million. approximately hurricane Also from capital results Reliant was and rebranding former working million quarter, due increased hospitals. related expenses was EBITDA of at consolidated adjusted to by clinical XXXX nine grew revenues of flow of were in IME recall credit related months to consolidated our improved also to Free million Turning Adjusted the and operating expenses TeamWork’s consolidated adjusted to included related in activity. the $XXX.X the flow largely X.X%. cash benefited $X.X for in for by than to the Please collaboration. Including million

slide be flow, adjusted range can now million to a have assumptions slides, million. anticipate expectations million to for supplemental million, $XXX year on cash XX full of of free updated previous as we to$XXX the seen compared our of $XXX As and XXXX $XXX

opportunities cash $XXX deploy These over flow shareholder year quality months million. of to million business high devoting approximately by were segments, of to free our complemented year. the continue both $XXX fund projects date nine approximately in We such to first to distributions of investments the growth

providing date capital revolver. covenant disclosed flexibility, and from amended is in the XXXX, structure. interest credit our the shifting during enhanced with on managing commitments As facility, the our extending QX proactively rate lowering the spread, transaction outlined million term approximately maturity previously and strategy $XXX we senior five, slide of to loan lender as consistent to This our

revenue. move the at X.X% our another results. of by QX, strength QX same reduction quarter leverage I’ll X.X%. third in the driven outpatient by segment was of for a other combination the by IRF now increased and a including pricing balance increases, indication end in X.X%, sheet. of to Our of and of was growth the volume revenues impatient partially offset growth Discharge store X.X times,

the of six XX outpatient discharge per other stated, attributable outpatient was revenue QX $XXX.X the activity, period. expenses we in credit. included IRF Revenue Mark that mix. the million QX, you in again, impacted of million million As was XX primarily that over same adjusted X.X%, by occurred ask the all XXXX. hurricane segment closure that the increased points hurricane by owing And $X.X portion discharge for during segment negatively basis QX by X.X% EBITDA prior note growth increased largely of latter the and IRF approximately that to year estimate The within to to to patient by QX. in IME related We store. estimate XXXX $X that I'll reduction of programs absorbed

XX impact points the from over the the of as Within points a the year. resulted XXX the The year. were basis changes former staffing staffing this Reliant basis basis year, the IME XX and in at Approximately the inclusion by QX end An of of place the SWB hospitals revenues, model Reliant points is expenses, attributable the additional QX of hospitals. credit by model percentage fully increase to of XXXX. increased the at last last changes hurricanes former

approximately XX in in ramp that approximately our factor from our balance pricing in basis resulted contributed of increases. stores rate expectations, group line the year new year this So SWB. a to XX be with future and increases The the period change up not wage basis over comparisons. will although medical points of points And exceeded

of Puerto a became our basis IRF in payroll the on point Rico, X%. opening one effective and do are Medicare a revenue. XX of X, our delayed as too both SWB will without hospitals result the which debt we prior year increase SWB X.X%, of incurring will IRF segment the described rule, annual improved corresponding source in into QX his so of and bad increases in results deleveraging instances, than on continue price for comments. Now expenses expense at over new admissions final the to October merit points QX owing by suspension of pressure Further as QX Pearland XXXX this period. In last which MACRA, less in Mark of

a seen was XX, on to in new can As be slide due decline improvement claims the denials.

your you the in on developments although Now, you like may curb trend new for being of may does to remind that the enthusiasm and not improvement. sound claims this have regarding There cause are would celebration, denials time two for had encourage one an sustainability I'll I impact rate QX. of that this quarter a make, the

as subject to certain side explanations bullet the last the introduced for by Slide some, slide MAC CMS for XX, subject this be on initiative the second education/feedback initiative providers We've TPE link the jurisdictions. in limits Probe to MACs at widening all very noted the initial MACs. temporarily aforementioned medical claims Targeted the to of and to the requires reduce the the the them by In and scope and and in or of the of it This to requested denials sounds summer rate positive out probes. review CMS the denials in will First, point included of before new the bullet XX. basis rolling left Educate this on effect the initiative least regarding provide

of However, of unresolved initiative TPE for three perceived the denials. rounds the any process, for extrapolation after allows reasons

just long is on denial term narrowing scope to bad that give the to the a if the in our process. has debt experience. to us be way scope is early The process, implications for initial potential any, claims predict truth too broadening TPE the the of it what, of later such, of will the the As early in

impact the adopters through the is move time evaluate other TPE denials jurisdictions. and extended initial the as will potential We of early to as over TPE MAC

final left point will jurisdiction. the Cahaba’s MAC announced for responsibility side of quarter, Slide XX, that assume February effective the referenced as Second, CMS and Palmetto on XXXX, in bullet the during

jurisdiction. of said, date, As understatement. has XX had experience to Palmetto noted difficult hospitals a have hospitals on relationship within XX, say currently current its IRF Cahaba two would To been on very the with our Cahaba limited That Slide our vast with be just has within their that side with we jurisdiction.

with health home relationship productive. has cooperative Our has broader a and segment been experience and Palmetto that

compared bad same segment and for them will We intend Palmetto closely a new our the work notification next for We broad smooth transition. to ensure reduction Slide least two with denials IRF that see IRF to the relationship in claims debt guidance to with expense to seek a did of Cahaba considerations was not as into recently uncertainty reduction from Whether XX. we we MAC the will quarters, from debt to contract, adopting of any recent have not in that trend related Palmetto, QX at relatively re-letting or cannot introduced pending Cahaba the on QX. developments due in an to say. the for reflected that received of QX updated Moreover, forecasting in uncertainty the is transition the range TPE. be element and bad cited they These heightened we in

attention your guidance IRF XX, While considerations. another draw on of Slide the segment I'll to

us in again. will be We admitting closure. As of hospital of know was contributing has when struck. remarks, patients EBITDA Maria his Puerto for Hurricane for to Mark included and the obviously patients will our a on period adjusted EBITDA. begin described do in our That forgone admitting not stopped Hospital previous Rico, was Manati guidance the Manati opening been has since island and Manati our well-run contribution

pay The continuing guidance. are as on included without Manati addition, of not our and revenue of we staff to corresponding this the rent facility. In was occurrence expenses to pay these in Mark outlined, previous

QX, increased increasing and in Home strong XX.X% Health by Hospice XX.X%, by in revenues continued Home in performance X.X% operating growth. exhibited including strong Our store segment admissions same volume heath with QX, segment growth. admissions driven

we within the pricing that XX XXX episode. year pilots resulted offsetting our attributable we estimate point collaboration basis same XXX patient than year XX.X%, QX the basis activity resulted reconciliation mix was over receipt Approximately basis stated, revenue from ACOs by with are of to from a hurricane was growth clinical Mark points, growth from points. increase and growth of both per decline collaboration volume increases XX impacted QX prior a all payments store basis and to BPCI same changes IRFs. This Slightly of revenue in the XXX store. clinical admissions participating. which points admissions The the period better expected negatively rate various As for in

Health of strong assume improvements last to and which the million, primarily continued XX% As earn $XXX,XXX Home the will provision. to Hospice for guidance a that, decrease for by Hospice $XX.X acquisition increase over X% XXXX an growth on noted the by questions. The line Home we QX approximately to the QX. of EBITDA increased open in to from adjusted benefited and in XX, purchase now was the Slide also related EBITDA volume With QX pricing for price out the of a Medicare continue quarter and of true considerations expiration X.X% the resulted labor productivity. Segment up year. adjusted we by generated combination for approximately Health

Operator

instructions]. [Operator

Robert question Mayo of Your Whit Baird. from first line of W. comes

Whit Mayo

patient Can stroke are curious the Ortho trended newer recent quarter? growing I joints in how categories you about neuro in know what your deemphasized you and and in maybe generally little just bit how you’ve that mix, have but those talk maybe in that just a initiatives years, place.

Mark Tarr

Stroke is continue XX%, in being the that our remainder of and XX% other to what's known a neuro up patient overall continue in of mix categories. to discharges. neurological right as see stroke be Together, of with our IRFs. at almost component they we our strong make the Whit, Yes.

several accommodate a stroke the to handle lot done population in we years, to a terms past Over have higher acuity the patient.

acuity quarter, for ever was As the matter of highest hospitals. this being total can fact, our remember our it last I

And our total. have because X.XX enhances attribute think portion that and have We mix. XXX in that to hospitals was stroke accredited to of I neuro index stroke the I commission continue grow growing program our of now ability stroke population. joint mix case that Our a our

As and the in now is patient ago study showed by American Association year independent Hospital, in being you that a to IRF. Stroke going setting, with half the if treated inpatient they are a stroke be came best an and know, American out survey a served treated

this being are think a of opportunity a to to we discharged large going skilled patients There of an the nursing acute So continues be would instead not cared out to stroke growth going us. IRFs, percentage for still for care facilities, are hospitals be that that IRF. are better that in

Doug Coltharp

And some Whit, there. specifics just to give on you

the in this of you XXX QX of basis points. stroke replacement together compare QX was mix XXX and and down knee basis neuro up hip If about to and XXXX, were points year patient

So reflects the shift. that

Whit Mayo

within relationship on initiative from any additional Got maybe more the you it. you're part to size doing, partners just then been? market And the if see the has that Is population? question. elaborate this put there's and second if a And bit stroke you perspective. maybe or curious two addressable the what little to color a there I’m the into feedback opportunity any Cerner could hospital the way potentially what

Mark Tarr

IRFs, which facility. Well, XX% and discharged in care XXX,XXX in claims, there cases skilled acute XXXX treated from were in those nursing total of were if patients hospitals, were that you Medicare care look a hospitals, XX% treated of acute at stroke were XX,XXX approximately

share the stroke treat opportunity a being of discharged take market out go for patients hospitals, So us. focus additional the and a and higher the primary care of is out to acute believe we percentage

Doug Coltharp

we services we to out providers about getting speaking needs, entire With because on a having those which entering one Post-Acute that venture were the with was as Center most our that their partners, venture helping role by them new of engaging manage helping and network is broader to the by joint whether were it were formation the forward reasons really regard those and potentially increasing providing of we partners more to the directly, markets we markets, of post-acute discussions that them relationship, Cerner with take were partners were post-acute the joint involved requests effective. moved in understand from as coordinate existing we their in or Innovation

be formation So announced we're the of only Post-Acute Center to Obviously Cerner. in late the working was going with August. Innovation

in priorities we're priorities place. But we're of the much So which really putting in still to assembling a going we we're and list of piloting going begin bodies and to the the tools have that address with very the Tyler, post-acute working early we're with of by venture probably year, we've like out hip pilot our around as a there. center the Texas on fractures market developed as where a starting mid-next joint some partner

Mark Tarr

initiative heard our at You’ve risk identify acute doing group in for capabilities transfers. predictive our a the with patients care years, put modeling us extensive us or think high extremely whole, position will that this been to a their tapping been that it an medical we've our about into clinicians now take and We’ve with forward. of database. are competitive talk that next our working the Cerner help us as - directors of program partnership we to our and for we level medical past, and physicians on what couple call but help with going a in ReACT our will Working

Operator

Your next RBC from of line Capital Frank Morgan of the Markets. question comes

Frank Morgan

ultimately interruption hurricanes. the Manati being be color covered those completely, Hey, under is the business morning. like something that I’m closed be impact in my any Or Rico just will facility on all of example just I insurance? Good that Puerto this, would that color curious, appreciate surrounding question. the for first

Doug Coltharp

Frank, Hey Doug. it's

morning. recovered will insurance. that ultimately Squawk on I that Yes, your First believe be of we Box enjoyed of our all, this do much BI appearance through

can it this information. on going activity takes now you of develop imagine, lot time As to there's the claim right a and

early the we’re any periods, with in of casualty keeping of it's magnitude claims be the XXXX, three insurance, incurring to both those but recoveries under We’re hopefully subsequent determine storms. to too property sometime close regard our be We’ll yet such the of all in claims interruption filing track expenses that recoveries. will of all business under and our and and

Frank Morgan

suppose just hit that Okay lump just will when a recorded sort that be of all a mostly and happens, hit it one quarter? will - in in as all I sum,

Doug Coltharp

say to different hard because It's you've lot got a insurers of involved.

course it through so next in, as will be it we out And year. comes of the calling

Frank Morgan

you. Got

Okay.

and off. Just other then hop I’ll one

concern relates some last Palmetto or but it Cahaba, switchover in months, As made any sense think have through have this relationship or Thanks. incremental about think there - is final any you that that that occurs that few how to any of better from comments things during any you do you the plays may the process, do you I costs sense transition? that out really the had to gotten

Doug Coltharp

very with know, it's experience as quite fronts. difficult is limited. One our You two a IRF side MAC again, Palmetto on on the to tell

As if and I the my more positive, home the it's the will been on experience side, health side. side health that comments, has out but very know in home we to extensive pointed our don't on IRF extend

We’re it hopeful that will.

far MAC XX this is, impacted. is second hospitals by our largest The with

if of as don't of many the in is Birmingham. employees is number substantial. very movement our retained or Cahaba ultimately will based They other have retained large the will handling employ here who as the be jurisdiction. We facility folks of well know in within how claims the a Birmingham. those providers claims, So quite be been

existing kind administrative also know what have capacity of We areas. within may Palmetto don't its

our additional although part, costs probably lot some incremental possible. there's cost a is on of administrative think I less risk So of

subjecture temporary think all our a slowdown up in temporary could result But I build this would processing kind again which in claims, the that’s of risk at point, be capital. of [ph]. working greater in a the

Operator

next Skolnick of Mizuho of Your the comes line Securities. question from Sheryl

Sheryl Skolnick

job. It’s impressive mind good really, really deserves doing you the these that took during to such times care everyone there. and of it you results other including Good out. and nice hurricane. that is so reported Never the morning called Not patients difficult that be everybody each

Mark Tarr

Thank you.

Sheryl Skolnick

focus I little more things. - I you’re a wanted on to two actually bit wanted welcome. to

situation. very up simple is follow a The first the Cahaba to

that about you second a delay Given claims And as that in is a the question of anticipate a do be there HHGM. result? could question processing then transition,

me to give two, leave could ask we I'd answer part it. if and So appreciate first the

Mark Tarr

of and that just haven't hard this of Sheryl, will because administrative on think obviously risk included. the like on first is a slowdown is that's hospitals in reason a to short of capital, I in is the a a be highly fairly to working jurisdiction them. MAC that think that been XX a transitioning I this competent Palmetto the would contract the do would to through a and kind claims, be were magnitude that in be we widely processing know perceived one, do turnover, MAC, based temporary I there lived. there that our think say of change temporary We it where any it's increase probably but

very soon make going to do administrative the on and to as working possible. are We’re that here sure help with going changeover goes to Palmetto start as part our everything smoothly

Sheryl Skolnick

Yes, good idea.

go Street it's thank on analyst’s no what And knows rule know But that one to some I not on speculate, I you know implemented heard business. perhaps you say that form bit is, would about that impact assumption But that the be view what situation side, to and there's job to the any the to their or once be to can little might mitigation and is, do impact the rule, impact seems probably going HHGM, ‘XX can't do/ of you talk to final. you Wall companies would and the get don't don't want Okay, able could long I'm process if final just budget this going us anticipate how it's us it is a HHGM neutral we what we of final raw concern you of here my to the a because to be you'll or you. ‘XX. the want or at know walk help helpful and of you then at get When you assess give you until through the going is prudently you although from be a what whether under it's when rule suppose. to take not understand and obviously the what to might me potentially And to include, because it's or HHGM getting through the data some so form it haven't includes, the us it’s the

Mark Tarr

answer have and the to would evaluating lot be. Anthony Her going ask to options that. mitigation her the of team I'm a April spent strategies what Sheryl, time and

I’m So going comment. to ask April to

April Anthony

Sheryl, well strategies those answer with pursuing with in CMS, with and OMB in efforts Hill. been all reality great questions is, we've are you. our for as I as the had wish I Washington, objective an The

know not so when away. And even we some do concern may know fully right have I that we

a the to in traditional rule normal having So work of and guidance, XX will that have home it will will it’s all definition just or if implementation we probably directional less very pretty it quickly. expect very there to a different you then route legislative a of taking that answer XX a time a day If going we timeline some situation to would and path process think play, into that given possible up gives it come pinned you the that’s which window different have through comes us ends have that up element, to the the I what's details, rule through. be for exactly opportunity through of but down some a ends the still

at implications estimate look headed, to I of where have but it's really, better of strategy difficult like. that of a is understand there day care to the moment episodes, potentially mitigation lot perspective do industry, models a so very that it's much And that exactly I a impact the hope I done by work that's been what From will thing this middle would has to would we week, and will think care. though, next sense of going as that how the patient say an XX

and the to weeks to physicians kind thing's with wait be communications like. do episode answer would look being work headed done, But at figure patients, across care another Encompass impact and and that where couple And able we're going out XX those industry questions. I how here have this of to a firmly to so and before understand both exactly of some just would period we’ll like think day the there's what of preliminary

Operator

question Craig-Hallum. the next of line from Kevin comes of Your Ellich

Kevin Ellich

following up next the based on for are bit be if for the home guys. little taking from of what sort I guess of overhang, any, what should Morning Thanks a we this, expecting you purchasing I an deals? HHGM, questions. on given guys that, kind of valuations of year? value guess health top of benefit, seeing terms And in

April Anthony

Yes.

So one I really another that not move or risk of the we would result say have of yet multiples seen way a as HHGM.

We market. activity continue to the see in

say multiples were see pretty to for and in potential you light that certainly of things continue HHGM There higher transaction. that risk a may be look We consistent. would at the some remaining oh,

So walk few from been this deals it may maybe would overhang before more that away there. was cause you a to have of sort intriguing

so And it's on I impact minimal pretty say been far would market. a the

your to question, me. that. blank a momentary second refresh As I'm had sorry, on I

Kevin Ellich

Sure.

see you Sorry, based Value next April. should purchasing, do we benefit of year? think sort what

April Anthony

the affecting XXXX rates. value process. On good. still XXXX that’s the purchasing, experience very It’s based early Yes, it’s in the

non-value based I the of states were expect the think recently as our in were purchasing timeframe. XXXX we acquired locations that

of a expect out when We states believe hundred a do that our that very very, would XXXX we positive rate just new XXXX minimal which So XXXX a activity, impact, turns in get that if maybe back see dollars we impacted. year. couple in to negative very slight in was entrants as next we that thousand direction, pay will

that believer purchased providers of based a approach. nationwide the advocate big purchasing term based a industry a positive be to quality big for expansion is long and would in value We’re for value high a program

Doug Coltharp

a mind Bear publicly Typically to multiples. wide at five acquisitions that range buying really run not for in the multiples follow health six are just But operate activity. in we're of do we on typically on we're up looking one license just and CON times Kevin, paying the company we And our a acquisition that because traded see more disparity, sometimes a home April's we’re the the comments geography. or in EBITDA space. rate within new to regarding

Operator

Bank Chris Your of next Deutsche question Rigg of comes your from end

Chris Rigg

color to with Medicare the hoping was of the I that’s get it Advantage or last - little on if home your so plan, a the business, changed how year evolution plans. has relationship over Morning. materially health with in the really sort the sorry of

April Anthony

Medicare I in think progress world. we're the certainly continued seeing Advantage some

with to we've a patients. plans We’ve then been have been able if to control shared Med the is really per our it’s get opportunity of premium solution. a of rise able front do the relationships seen that we to paid we a years, and Medicare some certainly visit preference. rate, our few in we're We’re to progress seeing both approach. handful episodic show to base value plans Medicare but we over the Even some cost we that's episodically, even consistently where the able Advantage, our because which the on those risk in But receive the prefer a rate, I Advantage an bundle our and of some are last if we've of per things at also creative visit create have think discount paying on rate

front. we things as a percentage the of growth that encouraged better the in a world. things I pace. of the an seeing this revenue and as little Advantage if And structures lot XX% the it's a got a we're that lot we're relationships grow that total that a expansion We the at about there disproportionate we’re opportunity And Medicare so on see with at feel right by right for of place. we've our nation's being and moment, one area is that going than of creative to of can seniors think that beginning And and get in better opportunity

Mark Tarr

IRF at experience, the We’ve on when population. had stroke side, that look you with Chris it same particularly

we've but both out in just versus diem And progress segments. of cost. meet in per may some cost patients the first that stick in you now percent with time our of considerations and time it over the we've years and and our MA not lower acute seen nice the go talked several plans, back for care gone for readmitted about proposition, get hospitals Our value total quality and outcomes

Chris Rigg

then And one just Great. up. follow

just with partners? hospital gotten HealthSouth Or JVs? On the negotiating there, or the Thanks. is competitive most the the more time JV IRF side, competitive exclusively the has to of dynamic get it has

Mark Tarr

say opportunities growth and we of as this evaluate JV would for business our of Matter we've years to hospitals. fact, third now doing relative are partnerships. in I been a for hospitals model many the our

I of out business it. of outstanding the and the proposals done those job, particularly in from years say and several Our our reaching an team side going least in would out at was not development considered. with half would have say the last competitive that proposition competitive situation couple three we're being years I more any of not years we times gotten are ago. what last or it's provider But than it only where the a four

Doug Coltharp

bit is on little it a add development pipeline half JV more activity, color that. half our and about of now just right About I’d is of solo.

situation. any XX% JV putting competitive table. And in even our situations, kind pipeline the proposition record so situations, pretty of and track of IRF that good we're if on are opportunities about about the the suggests competitive feel half faces the those only value that about that we And of development competitive

Operator

from of of Stephens. the line comes question next Dana Your Hambly

Dana Hambly

Good for me getting morning. in. Thanks

there then on do priorities? differ my center the convener existing innovation in And you would be, that are the does models - how think their from where up or post-acute rank your would out - you business the hospitals of rank where the post-acute Just already? strategy follow model list

Doug Coltharp

depends So the I think rank in on terms the it priority, of of they situation it a where entirely as hospital.

a they the providers take of quality trajectory of the those find of have and clinical we of to strategy. us able on got timely post-acute data frequently proactive having hospital forth, is rate. is patients haven't and then expertise the of analytical is, about their market, tool developed in in their that so versus actual post-acute like what to impact the its Cerner, very in lot network. all cost effective in conveners, about marriage lot that's the and of it's additional a the and under operator. post-acute a tool just very the where what's the moving with which doing and firm and manner information in of been other With synthesize analytics and of thinking in that it's in perspective, thought and - make already specific its development in the if improvements post-acute them of readmission very, setting the effectiveness well So access effective them we have and we hospital What that is they (PAXA) that acronym is we the admissions a what way terms to regard other the stay and post-acute between of Medicare a great an claims very manner, is different amounts to a powerful show data competitors data ultimately to meaningful of and a business can on patients to a of out in well-run hospital things And a been length from that us in goes you've providers, go they actually more probably for controlling by it's randomly a choosing the a kind a metrics we timely

it's And provider do very the health in fourth IRF One provider we comes marketplace. that conveners the other things and combination. largest those Remedy of the to is naviHealth knowledge and that the a home bring and from table not powerful operating the the think largest

Mark Tarr

areas things at more seeing and Dana, all at post-acute care now expand time consuming figure in changing more keep the their and in out all we're acute regulations, with acute also be that and hospitals and it's different and and resource they highly competitive care good be know good is up all into programs considerations. very can't that difficult and all which be healthcare

pipeline development side acute driving all the our to the in are those our opportunities. all So effort and care for system out of driving reaching

Operator

[Operator instructions].

question next Mizuho Sheryl of Skolnick Securities. of comes the from Your line

Mark Tarr

Sheryl. back, Welcome

Sheryl Skolnick

you. Thank

Would comments care with I elaborate respect you wanted to intriguing April that component. legislative the HHGM about to with follow about please? her on a So to up

April Anthony

say to just working all Sheryl, Well, avenues. mentioned, I that we are, as

never opportunities as meetings we've So as you of to ourselves having multiplicity try a well. CMS away the And tea we leaves, read OMB. with with to legislative from want get and had

letter as you who’ve similarly on XX onto know, House to letter members right HHGM. a so opposing a We signed senators have XXX And HHGM. at signed now have opposing

a a there's who as folks well. the of Hill lot So think proposal this bad is on

And so another. one and make we we have are sure working all way avenues, bases covered can issue of that all or this to our attack trying

Sheryl Skolnick

I some that you answered when question, now. the thought you're in legislative understand and be might the it avenue of I because regulation, what that suppose was the I saying context Okay, there

That helpful. That Okay, out there. Thank than was it you. sit just very right. was rather All it.

Operator

of Lynch. question Banc America comes Fischbeck Merrill Your next line the of of from Kevin

Kevin Fischbeck

include backdrop? as stable you home of be, sounds way on a as Health improved items the to So mentioned margins productivity. labor if onetime if far it the you their right think about like assume that business, couple What’s health nicely, Home margins could where even we the reimbursement

April Anthony

think doing margins are and Encompass I certainly margin good peers. very management, Well, to you we're tools our in We of making most if the a job obviously our resources. our compare the

if had sustain you been do I like. a don't But margins long And rate could so have. some so get think certainly to the forgotten we It’s today, what of even flat. able that since upside flat where but could it kind of just certainly are that that are just we're think a back environment in be environment. rate reflecting, We’ve to we core upside looks environment. we're we flat - restrictions there tons I place in that margin potential there's from to a some be there

to manage living a rate used to down in margins. We’re still having environment,

salary are our as visits to it's the It’s a primarily in utilizing have who that we concerned more with were own our we has About kind about about staff, earlier and So changes any year, us in focusing performed gaining salaried on of I employees really efficiency clinical their the reimbursement cuts. based by model pad rate think mentioned things XX% do to staff. don't payroll. field that field incentive visits of order

to strength visit efficient. build based of to drive home tools, that a per able And the in productivity utilization. we effectively great that because to very to able use time been control full cost keep the we've members And we've staff great culture, quality, been of have care model to to home such manage able our very way our been those of so

administrative and In which ways back our addition, costs our our growing expanding challenge regulations, side, continues that to on team to of tools technologies because make office find a leverage better is to possible. the

margin I'm proud able So job over to very continue an from deliver, maintain expand we've But it that it to look certainly be of the to perspective. and to everyday been that industry I margins leads for a think to the it'll time. opportunities and

Kevin Fischbeck

let wasn't to over clear I to just Thanks. me guess It the go IRF me. side.

percentage as that a number costs. You of this a revenue mentioned impacted things of SWB quarter. labor

XX I know, you to guess don't And pressure it of away like those as are some sound labor far basis kind specifically. made made comments, quarter. the some pressure go are you still of benefits in and Reliant I points them you health going as core expect, But

You next or too. about it, the expect to happen right you rates made that point will like it inflation similar of be there highlighting to Is you that the would to? think sound way or something next year mitigating kind factors year, offsetting that are

Doug Coltharp

with X cycle provide October again, fiscal year. the our regular So correspond Kevin, increases we to merit on

MACRA, X% on us pricing those also on side in holds very pricing consideration, X. and new IRFs the that's so line of Medicare into for in increase were less April and went a item yet with much effect guidance based than the on in our And went that X%. that And to

of that delevering. to don't think are opportunities there be that, trim some a that would So likely that clinical to just by staffing. We virtue mistake. see think you're We

some think continue XXXX. that I yes, margin So of to going pressure is into

start move and environment we pricing as Care the think to to that embedded the the Affordable some are think out XXXX I better. I of start offsets at look gets in and from beyond Act,

Kevin Fischbeck

Thanks. great. Okay,

Operator

closing or Thank remarks. to now any the call additional for Crissy you. return I’ll Carlisle

Crissy Carlisle

Monday. If will today's later questions, at you. additional you Thank joining today again I be for and XXX-XXX-XXXX. call anyone Please has call. me available Thank

Operator

call. Thank conclude earnings you. third today’s quarter does HealthSouth XXXX conference That

You may disconnect. now