Good evening. My name is Eric, and I will be your conference facilitator today. At this time, I would like to welcome everyone to the DaVita Fourth Quarter 2017 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer period. [Operator Instructions] Thank you. And, Mr. Gustafson, you may begin your conference.

Thank you, Eric, and welcome everyone to our fourth quarter conference call. We appreciate your continued interest in our company. I'm Jim Gustafson, Vice President of Investor Relations. And with me today are Kent Thiry, our CEO; Joel Ackerman, our CFO; Javier Rodriguez, CEO of DaVita Kidney Care; Jim Hilger, our Chief Accounting Officer; and LeAnne Zumwalt, Group Vice President. Please note that during this call, we may make forward-looking statements within the meaning of the federal securities laws. All of these statements are subject to known and unknown risks and uncertainties that could cause the actual results to differ materially from those described in the forward-looking statements. For further details concerning these risks and uncertainties, please refer to our third quarter earnings release out earlier today and our SEC filings including our most recent Annual Report on Form 10-K and quarterly report on Form 10-Q. Our forward-looking statements are based upon information currently available to us and we do not intend and undertake no duty to update these statements for any reason. Additionally, we'd like to remind you that during this call, we will discuss some non-GAAP financial measures. A reconciliation of these non-GAAP measures to the most comparable GAAP financial measures is included in our earnings press release filed with the SEC and available on our website. I'll now turn the call over to Kent Thiry, our Chief Executive Officer.

Thank you, Jim, and thanks to all of you out there for your continued interest in our enterprise. We are first and foremost a clinical care-giving company. And as is our custom, I'll start with talking about clinical spotlight before I move into a high-level summary; and then, Joel and Javier will take care of the follow-up. Flu, as we've seen in all the major media is the leading cause of hospitalizations in general and even more so in the ESRD population. The current flu season is especially severe, vaccinations significantly reduce the risk even in a difficult year like this and we vaccinated over 94% percent of our patients, which is a very distinctive percentage, and many years in a row where we have outperformed the norm in this all-important category. Now, onto a high-level summary of the quarter itself. It was a good quarter for DaVita Kidney Care. And we carry solid amount into 2018 and 2019. There's a lot of noise in this quarter's numbers due to a bunch of factors including the DMG sale and tax reform, and Joel will step through a bunch of that to help you navigate. But the bottom line is it was a good quarter. We have good operating momentum. And we continue to generate strong cash flows and we will deploy a significant amount of those cash flows towards share repurchases as the quarters roll on. Onto Javier, for DaVita Kidney Care.

Thank you, Kent, and good afternoon. Let me dive right in. I'll provide some details on the main drivers of the business and Joel will cover the financial results in more detail. First, our non-acquired growth for the quarter was 3.5%, approximately flat versus the third quarter of 2017 after normalizing for the impact of the hurricanes. Next, net dialysis revenue per treatment came in consistent with recent quarters, as we think about 2018. I'd break it down between government and commercial revenues. As you know, 2018 Medicare rates updates is essentially flat and will be a headwind for margins for all dialysis providers. As it relates to commercial revenues, there tends to be two questions: is there anything new on charitable premium assistance and how is the commercial environment? We believe that there's very little going on around the country on charitable premium assistance. And as it relates to the contracting environment, the conversations are back to their normal puts and takes. Onto the cost side, like many other companies, we are experiencing a tight labor market with upward wage pressure. We continue to expect a 2% to 3% annual increase and don't see significant opportunity to offset this with productivity improvement in the near term. With labor cost inflation - sorry, with labor cost inflation continuing to outpace Medicare reimbursement, we will continue to feel margin pressure in the traditional Medicare fee-for-service business in 2018. With normal Medicare updates scheduled to resume in 2019, we expect these margin pressures to subside. Finally, we continue to be excited at the prospect of transforming patient care in the dialysis industry through PATIENTS Act. We currently have an unusual amount of bipartisan support in both chambers of Congress with more than 150 Cosponsors. We believe we have a real shot in…

Thank you, Javier. I will start with an overview of the financial results for the Kidney Care business as reflected in our continuing operations. Adjusted operating income for the fourth quarter plus $430 million, up approximately $26 million or 6% versus the third quarter, although, the fourth quarter benefited from a couple of items that are outside our run rate. First, we've recognized $14 million shared savings revenue that our DaVita Health Solutions business earned throughout 2017. Second, we had $9 million onetime benefit in insurance expenses due to revaluation our reserves. As a reminder, adjusted operating income for the third quarter was $404 million, but this figure was negatively impacted by approximately $14 million due to the hurricane season. The fourth quarter was shorter by one-half treatment day relative to the third quarter, which accounts for most of this difference. For our U.S. dialysis and lab business, our reported revenue per treatment net of provision for bad debt was up $0.49 per treatment quarter-over-quarter. Underlying this are two largely offsetting unusual items. First, we've recognized approximately $20 million in cash receipts that we have previously reserved that flow through the gross revenue line. This was offset by $23 million increase in our provision for bad debts to address our higher estimates of patient pay receivable write-offs for all of 2017. To comply with the new revenue accounting standard, starting with the first quarter of 2018, you'll start to see a few changes and additions to our disclosures. I want to highlight two in particular. First, we will only be reporting revenue per treatment net of provision for bad debt. Second, we expect to recognize the benefit of approximately $30 million in the first four months of 2018 from a change and how we account for Medicare bad debt recoveries.…

If you'll excuse a little bit of redundancy, I'll make three points before we turn to Q&A. Number one, it's early in the process, but the DMG transaction is proceeding on track. Number two, it was a good quarter for DaVita Kidney Care, and they have good operating momentum. And this reflects the fact that we continue to have a very solid platform in DaVita Kidney Care, our U.S. Kidney Care business. Third and finally, we expect to continue to generate strong cash flows and we expect to be thoughtful in the deployment of this cash to benefit you, through a combination of share repurchases, substantial continued Kidney Care growth and a limited number of investments in other healthcare service areas. On to Q&A please.

Thank you. We will now begin the question-and-answer session. [Operator Instructions] Our first question comes from Kevin Fischbeck. Your line is open.

Great. Thanks. I wanted to maybe follow up on the last comment about capital priorities, I guess, specifically the commentary about investments on the healthcare services. Any color you can provide there about the types of things that you might be looking at or how limited those investments might be? I think it's an area of some questions based upon how DMG didn't play out. We're trying to understand how far field you might be looking to go with these other investments.

Sure. So, I'll take that. Kevin, it's Joel here. So a few thoughts, first, we're thinking about this from a sector perspective, not from a deal perspective. We want to find sectors where we think we can evolve them over the next few decades, the way we have helped shape the Kidney Care sector over the past few decades. Second, we are hyper-focused on opportunities where we can add value, where we can take the core competencies we have developed over many decades and apply them to new sectors and new businesses. Third, we know some things we don't want to do. We are not going to become a health insurance company. We're not going to get into drugs or devices. We're not going to get into the hospital business, so healthcare service is a bit more narrowly defined than you might otherwise think. And finally, in terms of your question about scale, we're not looking at multi-billion-dollar deal, so we don't have a specific range. But I think it is safe to say, you're not going to see something at or near the scale of the DMG transaction.

Okay. That's helpful. I guess, is there a way to think about it from the DMG proceeds. Is there - say, that the majority of it would be spent on share repurchase or is that not something that you can really definitely say at this point?

Sure, so what we have said and continue to believe, first is we will pay down debt. We haven't changed our guidance around the range. And we expect to pay debt down to get back into the - our traditional range. Second, the majority of the remainder will be used for share repurchases.

Okay, I think you talked about 3, 3.5 times leverage. But then I think you also talked about being comfortable at the higher end of that range. Is that - is it 3.5 that you're talking about or the midpoint of that range? How do we think about that?

So it's a complicated number, because after the deal closes there may be a period of distortion. How the share buybacks play out in reality remains to be seen and there's certainly a possibility that we will keep cash on the balance sheet to facilitate that over time, because the leverage level that we've talked about are always net, net of cash that excess cash on the balance sheet could create some distortion. But normalizing for that, we - again, we expect to be in that 3 to 3.5 range. Where exactly in that range we wind up remains to be determined over time.

Okay. And then, last question for me, the sale of DMG. Is there anything that we should think about as far as stranded costs or things that couldn't be put as discontinued operations that either cost that can come out once that sale actually happens or that might be a drag prospectively after the sale happens?

So I think it is safe to think of the continuing operation number that we are guiding you to as the forward runway - forward run rate, excuse me. We have worked hard and we will continue to work hard to ensure that there are no material stranded costs or dissynergies associated with the sale of DMG.

Okay. Great. Thanks.

And, Kevin, I would add on the leverage ratio that we have made statements over the prior six months, nine months, whatever, saying within the context of our historical statements and guidance that we were leaning in a more positive way towards being higher and lower within that range. I think at this point, given everything that's going on in the markets the last month or two with respect to interest rates et cetera, I don't know if that particular refinement to the guidance is really still - is really still in place. So I think what you're looking at is, basically we're going to bring the same attitude and flexibility to it that we brought for a long time.

Right. Thank you.

Our next question comes from Justin Lake. Your line is open. Justin Lake, please check your…

Sorry about that. Yeah, sorry about that. So first question, I just wanted to try to get as much color as I can on CapEx. Now, that you've got or in the process of divesting DMG, you talked about CapEx of $925 million, I guess, $825 million is more the run rate you want us to think about longer term. I compare that to a depreciation number that's closer to $500 million. And I just want to understand the use of cash here. Can you break that down, that $825 million, let's say, run rate too for us in any way in terms of maybe U.S. versus international, maybe some numbers around the - with the cost to develop new centers verses just other areas beyond maintenance and developing new centers that we should be thinking about?

Sure, so let me see if I can help out. We're not going to break out international. But as I said in the script, that number splits roughly evenly between maintenance and development. I think an important component to understand about the development is we have done more and more self-development of our clinics over time. And what that means is we build the clinic and then we sell it. We believe that drives a cost savings on the construction of the clinic. What I would point you to in the cash flow statement is a line called proceeds from asset sales, which is a positive cash flow number associated with the sale of the self-developed clinics. And as you are thinking about the total picture of our cash flow, I think, it is fair to incorporate that positive complete piece of the cash flow in to the overall thinking.

Okay, Joel. Is there - in terms of the development dollars, can you tell us what those development dollars? I'm just trying to understand - what like - how do you think of our capital from the perspective of returns on capital? Just given how much more significant the CapEx is here versus your run rate depreciation, and relative to your total cash flow you're generating?

So in terms of how we think about capital deployment, look, we've got a very structured approach to how we think about capital and whether it drives a wide growth and appropriate return on capital. The development is the biggest component of that is building new clinics. And those historically have been a high return on capital investment for us. So I don't know that a whole lot has changed around that.

Okay. Just last question on this. What is the cost for developing new clinic, right now?

Roughly $2 million.

Okay. So that's what runs through CapEx for new clinic development?

Roughly.

Okay, great. I'll jump back in the queue. Thanks, guys.

The next question comes from Frank Morgan. Your line is open.

Good afternoon. My question surrounds the growth in the international. Obviously, you had the charge on the Asia Pacific JV, but does that in any way change your view over international growth and when do you really start to see the international business growth? Thanks.

So no. It doesn't change the view of international growth. I would split the growth into two components, revenue growth and OI growth. The revenue growth as you can see from the reported results continues to be relatively high from an OI perspective, which is probably what you're more interesting of, and we standby what we've said last quarter, which is we expect to get to breakeven in the later part of 2018. So from a year-over-year perspective, you'll see significant growth.

Got you. Maybe one more, as Kent made referenced to commercial pricing. And I'm just curious as you go through the commercial pricing and contracting, are there any significant contracts that are left out there that need to be negotiated? And then are you seeing any change in the appetite of these commercial players to look at value based elements in their contracting? Thank you.

Thank you. There is nothing to highlight as unresolved on the payor contracting, we have normal renewals that come up, but I wouldn't point anything out. If anything, we are more contracted right now, meaning that there's less renewals than usual. And as it relates to value-based - it really depends on the payor and their appetite of how to structure the contracts that we are seeing the wide range of nothing all the way to P4P et cetera. So there's not been a material change in the structure of our contracts.

Okay. Thank you.

Thank you.

Our next question comes from Whit Mayo. Your line is open.

Hey, thanks. Maybe just starting on the Kidney Care business, the cost per treatment was down over $4 year-over-year, one of the lowest numbers we've seen in two years and besides from perhaps the Amgen purchasing contracts. Are there any other factors worth mentioning, I think you referenced some hurricane distortion from the third quarter? But is there anything else to call out?

There is two pieces. The Amgen thing that you mentioned on EPOGEN in the 401(k) $100 million that we discussed on the front end of the call, we did not incur approximately $100 million of what we used to call profit share in our 401(k).

Great. Okay, helpful. And then G&A same thing down 10% year-over-year on a per treatment basis, and I think, I heard you referenced lower professional fees. Any more color you can share and just how sustainable that number is as we look at 2018?

The number we have is a little different on a per treatment basis, but we're seeing is that when you annualize the number, it's roughly in the $27 per treatment, and we expect that to be in that range. I don't think there is anything to call out on professional fees.

Okay. Must just be having a bad number here and maybe two other quick ones real quick. On the topic of calcimimetics, I'm just kind of curious what the feedback has been from your nephrology partners at this point, and you have any sense of reference at this point, were they're leaning, what the pros and cons of the IV versus the oral drugs are?

We do not. We have very little data right now. And as you know, there is going to be a lot of variables in this one category, because we have both an oral going into IV. It's going to go from Part D as in dog to Part B as in boy. And then the oral is going to have an introduction of generics. So there is going to be a lot of moving pieces right now, and I think physicians are wanting to see publications, and seeing how this plays out in the marketplace. So right now, we are not seeing a lot of change yet.

And when this - because the drug is now reimbursed under Part B, can DaVita Rx play a role in dispensing this drug?

DaVita Rx is dispensing the drug now.

Okay. And - that's it. That's all I got. Thanks, guys.

And just to clarify, that's the oral drug…

That's dispensing?

…that's dispensing.

Our next question comes from John Ransom. Your line is open.

Hey, good afternoon. A couple of things for me, I may have missed it. But did you call of this pharmacy? How should we think about the pharmacy year-over-year comparisons, and your 2018 guidance versus your 2017? You mentioned that was a tough year for that business.

Yeah, I think the way that we've talked about Rx right now will hold, which is the changes we had from 2016 to 2017 will be in our run rate. And then of course, because of all the things that we've explained in the past, I won't go through each and every other category. And so we - of course, we're monitoring all the things are happening in the pharma space, and as you know some drugs will go generic and so on and so forth. So we will monitor what that does to our economic model. But we of course keep going back to the clinical piece of it, and how much we like it when our patients have 10 prescriptions and 20 pills medication management is a real gift to us. But of course, we have to make the economic model work.

So in other words very minimal EBITDA in 2018 not much 2017, so the macro environment, you're really not able to may contribute that, just given some of the issues in the macro environment? I don't mean to put words in your mouth, but that's what I think I heard you saying.

No. What I'm saying is that the environment is quite dynamic. And we will continue to monitor it and adjust, but we continue to like the story that it's for the patient and managing this, and of course, we have to make the economics works for all our constituents.

Okay. The second question is, I mean, this is a tougher sounding question and I mean it, but just looking at the pharmacy, looking at international, looking at DMG, looking at international - yeah, I said international. It's hard to conclude that any of that has just been wonderful success. So when you stray outside your core. So I guess, I'm just wondering why you think the aforetime will be the charm as you start looking at other areas of healthcare service? I know you rolled out a bunch of stuff, but it doesn't look like that has been a great experience so far. But, look, I know people who have been married five times. So there's always hope. I just was wondering what lessons learned, and why you want to go back to that particularly well.

Yeah. It's Kent here, John. That's a very fair question, and I mean, go ahead and throw some thoughts and then you feel free to further follow-up. First, the DMG was a very disappointing performance. Having said that, we took a lot of cash out along the way, and also had some nice benefits from the Kidney Care side during the period in which we owned it in terms of enhancing our integrated care capability. But it doesn't change the fact that it was disappointing in the end. The - it's important to remind people, by far, the primary driver the disappointing performance were reimbursement reductions, not operating performance. And clearly very thoughtful other people felt it was still a very valuable asset with a live upside potential. And people who know the business as well or better than anyone. But the short-term, and the immediate operating performance was what it was, largely driven by the reimbursement cuts, and then, we decided was in your best interest rather than continue to pursue what we still think was very substantial long-term potential in which several other people thought had a lot of long-term potential, because it was reflected in the multiple they paid. But rather than do that, it was in a risk adjusted basis better for us to do take the return on capital now in addition to the return on capital we earned along the way. And then, on Rx it has been a big clinical success, and has had around of several profitable years in addition to being a strategic asset, we will see what happens now, but by many measures up to this point, it's been a very good success and a very important part of our Kidney Care portfolio. And now there's an awful lot going…

Thanks, Kent. My other question is, just going back to the question on CapEx. I guess, I was thinking wrongly as it turns out, but given that you're selling DMG and give that you're kind of narrowing your focus on international. We have thought maybe CapEx would perhaps step down a bit from where it had been. So should we think about you're taking what your spending international and DMG. And you're doubling down on those things. Just because it looks like CapEx - I mean, obviously, your sales going up this year. The significant [ph] stay flat. It just surprising to me this staying flat given that you're paring down in there in your focus?

Well, let me just make one comment. Just recall that DMG was a business with very positive cash flow characteristics, meaning they're net cash flow relative to CapEx, et cetera.

Yeah. So I don't think we commented from that angle of saying, how are we going to redeploy cash that we might have deployed somewhere else. It's much more of a question of what are the options for this cash flow between paying down debt returning to the shareholders making new investments or investing in Kidney Care. So that's the angle we commented from. And with all those angles we use kind of a similar lens, which says, is this kind of drive OI growth and is this going to drive attractive risk adjusted returns on capital.

So I mean, in the CapEx, that DMG was non-zero, I don't think you ever disclosed it. I don't know why I had $100 million number in my mind. Is that - am I thinking about that wrong?

I don't know that we disclosed it. And offhand, I don't think anyone of us know. And we wouldn't say anything without wanting to confirm its accuracy, and that we had the right definition. So I'm afraid for both the reason that we'd have to make sure we nailed down the definition and not sure what we've disclosed historically, we can't answer right off the cuff here.

It's a lot easier to [see it from the help without the regard for facts to get off it and in my life quite frankly] [ph]. All right, I understand. All right, thanks so much. That's all for me.

All right, thanks, John.

Our next question comes from Lisa Clive. Your line is open.

Hey, thanks. Two question for me. Could you give us just an update on where ACA sign-ups actually came in? How many were on the exchange? How many off the exchange? Am I right that you had about 3,000 patients on and off exchange, once the Medicaid patients sort of went away? And something like 1,800 of those had premium support. I'm just curious as to what the latest numbers compare versus those historicals. And also, are you expecting any clarity through new rules from CMS on the guidelines around premium support for the ACA plans?

Yeah, thanks, Lisa. Your numbers that you recited are the numbers that we disclosed several months ago. And we're not going to keep updating those. Those numbers are pretty stable. So there is not a big story in those numbers, is probably the right way to think about it. And as it relates to a rule, as I said in the earlier comments, we're not seeing a lot. The one thing, the one dynamic that really appears, that momentum is that both providers and government would like clarity as to how we provide the education. And so, we all want to do it the right way. And so, we will see how - what vehicle that comes in. But we don't have any additional information as to whether there is going to be rule making or not.

Okay. Thanks. And then a final question. Could you just give us an update on your thinking about ESCO? Clearly, the financial structure is not deal. It's retrospective and Medicare has a lot of leeway in terms of what the benchmarks are. But the initial results you've achieved have been pretty good. And I know the Patient Care Act is making its way through D.C. But I'd imagine that probably wouldn't establish a new payment framework for several years. So what do you do in the meantime around integrated care?

Yeah, and we would like the PATIENTS Act. And if the bill passes, actually it has to start in 2019. So it would be pretty much a very quick ramp-up. If the PATIENTS Act doesn't pass, we of course, will stare at the options, whether we want to grow the ESCOs or not. Right now, the ESCO enrollment is not open. And so, we will have to see what CMS guides us on and where we stand if we don't get the PATIENTS Act.

Great. Thanks very much.

Thank you.

Our next question comes from Gary Taylor. Your line is open.

Hi, thank you. Just a couple of quick tie-ups and then one question. If I could parse a bit, is that in the 2018 guidance, there is a good guy?

Yes.

And if, I mean, care to quantify or not?

No, and for all the reasons I said it earlier in the conversation, which is there is a lot of variables right now for us to be helpful. But it is included in our guidance with all the normal handicapping we do to the numbers.

Thanks. So want to make sure, you were ripping through some numbers pretty quickly. I want to make sure I get them correct. But in the fourth quarter, you were saying OI benefited from insurance reserve adjustment of $9 million and the $14 million of shared savings. That was all 4Q numbers, right?

That's right.

And have you ever had shared savings number that you quantified before. And I guess, we're just trying to think about, should we think about next year and the fourth quarter, contemplating there might be something there?

I would not. First, we have never reported anything like that before and I would not model in this as being a kind of a Q4 recurring event.

Okay. And then on the bad debt, I'm trying to understand. You said there was about $20 million guy to gross revenue and $23 million bad guy on bad debt, both from some reconciliations. Were those - is there any color on like what was driving those? Were those in commercial revenue accruals or any help?

Yeah, so the bad debt was associated with, largely driven by an increase in uninsured patients. The cash receipts, the offsetting item is associated with a reserve we typically take associated with commercial revenue. And it has proven that our reserve was a bit conservative, so we had a bit of - a onetime reserve release there.

Got it. And then my last one, I mean, given that you are saying, you think commercial mix is pretty stable and you're back to a normal commercial rate environment, can you share what your expectations are for revenue per treatment growth in 2018, what's built into the guidance? We know Medicare is basically flat, so an overall basis what are you looking for?

Yeah, we have not guided on revenue per treatment and we're not going to start right now. So I think the best thing to do is just keep to the OI range for now.

All right. Understood. Thank you.

Thank you.

Our next question comes from Justin Lake. Your line is open.

Thanks. I appreciate it. Let me jump back in. Bunch of things here. First, just deployment of the cash, are you going to get a significant amount of proceeds? [Of course, the field closure could] [ph] generate some cash in 2019 or I should say 2018. And if you think about deploying at the share repurchase is there any way to do that, just given the magnitude of it in an accelerated manner, whether it's an ASR or Dutch or something like that, any contemplation there?

So, Justin, those are certainly two options available to us as well as open market purchases. We are thinking through our strategy now. It will depend on a whole bunch of factors. And I don't expect that we will be giving a whole lot of color on how we anticipate doing this. It's just something we'll report on after it's done.

Okay. Any of those factors specifically that you - we should be thinking about going into the decision?

There - look, there are a lot of factors including price, timing, other use of proceeds. But I don't think we have a formula or an algorithm we can guide you to.

Okay. Then you mentioned that $30 million onetime benefit on Medicare recoveries from a timing perspective, right? Is that going to be a benefit of $30 million to OI in 2018?

Correct.

Okay. And that's a good guy versus what you previously expected. Moving there, obviously you gave a range. So is that the reasonable way to think about it? And is there any other bad guys that we think should be offsetting that or should this move us out to the higher end of the range, all else being equal?

So this isn't a good guy relative to what we have been talking about before. Given the magnitude a dollar of RPT, it's not something we would necessarily, typically, call out there a bunch of things like this that flow through from a year-to-year basis on any given year. The reason we wanted to call it out this quarter was because it will drive a roughly $3 RPT increase in Q1, because that $30 million will be concentrated largely in the first three or four quarters of the year. So we just wanted to make sure you and everyone else knew it was coming.

Okay. And then, on the provision for doubtful accounts, can you tell us which drove the increase in the number of uninsured patients you're seeing in the quarter? And do you expect this to be the new run rate going into 2018?

Sure. So that flows through the bad debt line. The other adjustment that I referred to flows through the gross revenue line. And because they offset and because of the new revenue accounting standards going forward, we're no longer going to report that gross number nor the bad debt number. So you'll only see the net number. So it is - I think it is safe to use the net RPT that we delivered in Q4 as a starting point for modeling 2018.

Got it. But you're saying - the two aren't correlated, right? One, they weren't delineated to do with each other, right? One is collection of commercial and the other is an increase in uninsured patients. So there are others what's driving the increase in uninsured patients or am I mistaken it?

They are not connected. And so far, they're not necessarily driven by similar underlying business dynamics, if that's your question.

Oh, no, I'm just curious what's driving the increase in uninsured patients in the first place. Is that something that just you feel like it's happened that's white noise or do you feel like that's - it sounds like you feel like this is the new run rate, so you're going to collect commercial at a higher rate and you're going to have more uninsured patients going forward as well. Is that right?

Right, that is our view going forward. I think if you want to think about this bad debt number. It's a few things. It's underinsured, it's uninsured, it's higher patient pay deductible. So I think some of these are broad trends you're seeing within the health insurance industry. That's probably as helpful as I can get.

Okay. And I just got a few other numbers questions here to run through. The advocacy cost, you said there was nothing in for California and Ohio. Is there a number that you can think of that we should be prepared for if you do need to start advocating against the stuff in the back half of the year?

No, it's a little early. And of course, there's a lot of play out before now and then. And as you know, these things can heat up or die down. And so, the number could be quite drastically different depending on the scenario.

Okay. And then, lastly on the PATIENTS Act, have you've gotten a CBO score yet on this?

No, we have not.

Any idea what's holding that up? I know the government - and there's a lot going on and they're passing stuff day by day erodes [ph]. Is there a reason why given how long has it been out there that we haven't got a CBO score?

It really is a couple of reasons that are quite straightforward. First, the CBO prioritizes stuff and with all the major legislative disputes and issues with tax reform, and all the stuff around healthcare, and the summer and the rest, and these people coming up with proposal after proposal after proposal. Everyone one of those sucks all the oxygen out of the room. And when there is not regular order, most of this stuff is typically done in very sort of a hectic, frenetic ways. And then, there's a huge amount of organizational fatigue and a huge queue of proposals. So that's one. The second is that the PATIENTS Act involves some pretty significant numbers and pretty significant complexity. It's really transforming an entire segment that has that potential. And so, it just deserves extra levels of rigor and sort of analyzing all the interdependencies about from both the policy and predicted behavioral point of view. It's not as simple as a lot of other legislation about changing something with a drug or changing something on readmission, reimbursement or whatever else. And so, it requires a lot of iteration. And, I guess, that's the third thing I will say. It's not as if they haven't been working on it or they haven't been communicating. There's been a huge amount of interaction between our congressional champions and the CBO, and between us and our congressional champions. And so, it's getting a huge amount of high quality of attention. It isn't sitting in the closet.

That's great to hear. Just to hear, lastly, and is there any way that this has a cost component to it? Do you think it scores as a cost for the government over whatever period they're look at that, like 10 years?

Justin, you've been around a long time also. Predicting what the CBO is going to do is not something that we're foolish enough to do. I mean, yeah, the answer to your question I guess is yes. It's not one can see a scenario where they presume cherry picking and some other stuff and say it would be a cost. We think very much it's going to be a tremendous favor for the system over the relevant timeframe. But we're not the ones doing the ultimate model and they got to protect themselves and tend to lean a little bit conservative. So, yes, they could come out with a cost. No, we don't think they should. But it wouldn't necessarily be low quality shoddy work if they did, because they've got a tough job of predicting all this stuff, so is that helpful?

It is. I appreciate it, Kent, thanks.

Alrighty.

We show no further questions in queue at this time. [Operator Instructions]

All right, operator, that's good. Thank you all very much. And we look forward to talking to you again next quarter. Thank you.