Ladies and gentlemen, thank you for standing by and welcome to the MEDNAX Fourth Quarter 2019 Earnings Conference Call. At this point, all the participant lines are in a listen-only mode. However, there will be an opportunity for your questions. [Operator Instructions] As a reminder, today's call is being recorded. I'll turn the call now over to Mr. Charles Lynch, Vice President, Strategy and Investor Relations. Please go ahead, sir.

Thank you and good morning, everyone. Welcome to our fourth quarter call. With me today is our CEO, Roger Medel; and our CFO, Stephen Farber. I’ll quickly read our disclaimer and then we’ll move to the call. Certain statements and information during this conference call may be deemed to be forward-looking statements within the meaning of the Federal Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on assumptions and assessments made by MEDNAX's management in light of their experience and assessment of historical trends, current conditions, expected future developments and other factors they believe to be appropriate. Any forward-looking statements made during this call are made as of today, and MEDNAX undertakes no duty to update or revise any such statements, whether as a result of new information, future events or otherwise. Important factors that could cause actual results, developments and business decisions to differ materially from forward-looking statements are described in the company's most recent annual report on Form 10-K and its quarterly reports on Form 10-Q, including the sections entitled Risk Factors. In today's remarks by management, we will be discussing non-GAAP financial metrics. A reconciliation of these non-GAAP financial measures to the most comparable GAAP measures can be found in this morning's earnings press release, our annual report on Form 10-K and in the Investors section of our website located at mednax.com. With that, I'll turn the call over to Roger.

Thank you, Charlie. Good morning and thanks for joining our call. Our operating results for the fourth quarter and full year 2019 were in line with our expectations. 2019 was a year of significant organizational change, leadership restructuring and broad spectrum transformational activity. We expect in 2020 to continue our full throttle efforts to improve and have provided a preliminary financial outlook for the year. There's a lot I'd like to cover today, but I will start by discussing the payer matter that we announced alongside our earnings this morning. As we stated in our press release, we've been notified by UnitedHealthcare that they have unilaterally and with no prior notice terminated all of the contracts of our affiliated practices across four states covering all of the services our physicians provide in those states, including anesthesia, neonatology, and maternal fetal medicine. In doing so, United is eliminating many critical healthcare services from its networks in those states, which in a number of instances include the only physicians providing anesthesia coverage, neonatology or high-risk obstetrics in urban and rural geographic areas. These surprise terminations were not for contracts that were under negotiations. They were unilateral, without warning and unprecedented. We have been told that the only avenue for negotiation would be to accept a 50% reduction in the rates our practices are paid for their services. This is neither an approach nor an outcome, of course, that we will accept. And I sincerely doubt that our patients or their parents think that the work that we do is worth $0.50 on the dollar. We have also heard that we're not alone in receiving these notices and that several large anesthesia groups and other physician organizations have also recently received terminations with demands for 50% rate reduction. In fact, the American Society…

Thanks Roger. Good morning and thanks for joining our call. We have a lot to cover today, so I'll keep my comments brief, beginning with the United matter. The specific contracts that United terminated represents $70 million to $80 million of annual net revenue, more than half of the terminated revenue relates to anesthesiology with the remainder impacting neonatology and maternal fetal medicine services. In terms of timing, we're scheduled to be kicked out of network in batches over the next several months with the first occurring on March 1. These terminations represent about 2% of our total 2019 annual revenue. Our total annual United revenue is about $350 million to $400 million or roughly 10% to 12% of our total 2019 revenue. Overall, about half of that total business with United is for neonatology and other women's and children's services. These terminations, if they occur, we'll have differing impacts on revenue and EBITDA. In some cases, the impact may flow through dollar-for-dollar. In other cases, the impact may be partially offset by a range of items, including the financial dynamics and structure of individual practices. In many cases, these terminations will reduce the compensation of highly specialized physicians who are scarce and clinicians that directly care for patients. Let me reiterate now, as we noted in our earnings release this morning, our financial guidance for 2020 does not include any estimated impact from these terminations. We expect to impact, but right now it cannot be estimated. With that said, I'll turn to our fourth quarter results. As Roger mentioned, our adjusted EBITDA and adjusted EPS for the fourth quarter were in line with our expectations. Our top line performance was also in line with our expectations. Same-unit growth was 2.3% with one point of this growth, volume-driven and with…

Thanks, Steven. We have talked for several quarters now about the transformational activity that we have underway. But today I’d like to spend some time to pull all of this in context, particularly related to the organizational changes that we have also undertaken. Over the last 40 years, we’ve had tremendous success in our growth, attracted more physicians to join us and created a true national medical group that is committed to our original mission, which is to take great care of our patients. Throughout this company’s history, we’ve taken it upon ourselves to invest continually in the pursuit of that mission. As one of the leading medical groups in the country, it’s become our responsibility to help set the standards of care for our patients. Through the support of physicians across all of our medical groups, our organization has distinguished itself as a leading innovator. Innovations, such as our 100,000 babies campaign for neonatology, leadership in the development of treatment for babies born with neonatal abstinence syndrome, quality and safety programs in the operating room, simulation programs, enhanced recovery after surgery, subspecialty training for advanced radiological interpretations, big data and artificial intelligence in radiology. MEDNAX is a leading innovator in all of these efforts and I am tremendously proud of the success we’ve had in caring for our patients. In recent quarters, we’ve taken decisive action to address the challenges and headwinds in our business and position our company for success. Although, changes in our patient population in reimbursement and in the cost of providing care remain challenging, we are better equipped to face them today. I want to emphasize that as we entered 2020, we are now organized very differently than we were just a couple of years ago. In 2018, we took a deep look at the…

Certainly. [Operator Instructions] And first we go to the line of Ralph Giacobbe with Citi. Please go ahead.

Thanks, good morning. I guess, what if anything can you infer or did United tell you about sort of the four states specifically. Can you give us what those four states are? And then any other indication that this is just sort of phase one with more coming or anything along those lines?

Hey, Ralph. It’s Stephen. Good morning. We’ve sort of said what we have to say on the United matter. So we aren’t going to go beyond our prepared remarks. Do you mind telling me again the second part of your question?

Well, I was hoping you can give us the states and then any indication if it’s just sort of phase one or if there is sort of more coming?

Okay. I’ve already answered that I guess.

Okay. Can you give us a sense of when you received the notification from them and whether or not negotiations are still ongoing at this point? Or is there sort of no negotiation at this point?

Ralph, I’d love to be able to answer your questions, but you got to ask me ones that I can actually answer. We aren’t going to make any more comments on the United matter really beyond what we’ve already said.

Okay. Maybe you can discuss negotiations with other payors I guess at this point. Is it getting more difficult to come to agreements on rate and/or are the balance billing headline sort of being used against you in those discussions and greater threat, if you will, of more payor sort of willing to go out-of-network?

Look, we’ve had fairly good relationships across our payor universe over the course of time. Many of the services that we provide are highly specialized, which I think does and in many cases for physicians where there are true supply problems, there are meaningful imbalances between the availability of physicians and care and patient’s demand. So I think we over the course of time have perhaps in a slightly different position than some of the more commoditized elements of medicine. But we’ve always sought to have good relationships. And I think that is evidenced by the fact that we have well less than 5% of all of our contracts across hundreds, probably thousands of contracts that are in-network. We have – we historically have had very, very small amounts and usually only transitory amounts of out-of-network patients. That is our goal of the company and I think that does sort of reflect the state of our relationships with our payor universe.

Okay, alright. And then just one last one if I can. Can you talk about recourse you have, whether it’s with United or anybody else, in the past perhaps there was some willingness to balance bill and Roger based on your commentary, it sounds like you may not have no alternative, but to do that, but there’s obviously greater sensitivities around that with all the headlines. So if you did have to go out-of-network and a payor decides to sort of pay you less, not more, can you just help us, I mean, what is the current process you employ? And just give us a sense of whether or not this could bubble and sort of cause DSOs to rise and cash flow implications? Thanks.

Yes. Hey, Ralph. So this, of course, as I said earlier was unexpected and unique. And so we’re gathering what our solutions – potential solutions are. I think the biggest problem here is, it’s just a big mockery to what the government is trying to do. I mean, you have the House and the Senate trying to take away these surprise bills from the patients, and all of a sudden, these guys are kicking us out-of-network and terminating the contracts. I mean, again, these are not contracts that we were negotiating or anything else. In fact, a lot of the contracts they’ve terminated has been in place for almost 20 years. And so – and they say that in their communications. So I think the first thing we’re going to do, of course, is try to publicize what’s going on and go talk to the legislators and make sure that if they do put a bill in place that is one that hopefully takes this situation into account. One thing as we said in the press release, is that these terminations are not immediate, in fact, none of them have taken place yet and will continue throughout the end of the year. So there is a slow accumulation of these. So I think we have a lot of opportunity, I’ve written, as I said, the CEO of United, a letter, I want to make sure that he understands what’s going on here. And so we await that response. And those are the things for right now. I know that there are others – other physician companies that have taken more legal actions against them and that kind of stuff, but we haven’t done any of that as of now.

Okay, thank you.

[Operator Instructions] And next we go to A.J. Rice with Credit Suisse. Please go ahead.

Well, I just wanted to – hello, everybody, ask maybe about what’s happening with the transformational and cost restructuring program. So you ran $44.3 million in Q4. I know that includes beyond just the third-party vendor. It sounds like that’s sort of the peak level, but is it going to be stable at that level of spending as you progress through the rest of this year? And then, I guess, as part of all of this, too, you’re exiting these couple of practices, where you were breakeven. Is that – can you give us a sense of how many more of those types of situations exists in the portfolio where you might walk away from business as part of your repositioning?

Good morning, A.J., it’s Stephen. Thanks for the questions. So in terms of transformation, we are probably at our peak spend levels right now. We have a massive, as you know, systems replatforming effort under way with installing Oracle and cloud, ERP worldwide across our organization, with redoing our entire revenue cycle platform, which, as I’m pretty sure we’ve discussed before, we have in the 1,100 person revenue cycle platform that carries itself more than $100 million of annual cost. So there is a tremendous amount of systems work going on and that’s all under way. So I would think the heaviest part of that spend really is over the next sort of three quarters, as the bulk of that – of those efforts get in place. And then it should start to scale down, but I wouldn’t really think of it is that $40 million to $44 million number quite as much. It’s probably something more like in the $25 million, $28 million per quarter type range for those third-party investments, because some of those dollars, as I noted, were severance or at lease buyouts or we have a lot of ancillary efforts under way. From a portfolio perspective, I think the best way that I can answer that question, Roger noted in his comments that over the last series of quarters, we’ve gone some 47 to 41 anesthesia contracts – or from 47 to 41 practices in the anesthesia. We continue to work on that portfolio and I think it’s really hard to give an outlook other than that we do expect some additional activities within that portfolio. I mean, it – in some cases, we have practices that are marginally profitable or at breakeven and we have been putting a lot of effort over the past several quarters in determining whether those – the performance of those practices can be improved or not. Once we reach a conclusion, that the answer is not, then we’re going to do something about it. So we made that more as a directional comment and sort of frame revenue because otherwise, the revenue guidance that we laid out for 2020 would seem a bit soft, it’s soft because we’re eliminating revenue that carries no margin.

Okay, alright, thanks.

Next we’ll go to Chad Vanacore with Stifel. Please go ahead.

Hey, good morning. This is Seth Canetto on for Chad. I just had a question on the 2020 outlook, you guys had mentioned that the adjusted EBITDA was down 140 basis points on an apples-to-apples basis, and for 2020 we’re forecasting less margin compression than in 2019. But how should we think about that compression. Will it be like closer to 70, closer to that midpoint or just can you give us any more thoughts about how you guys are thinking about that?

Yes. Hi, Seth, it’s Charlie. Stephen gave you a couple of parameters to think about for 2020 at the top line and we did that early purposely to think about how you look at your models. So something that’s comparable to slightly higher at the top line in 2022 what we reported in 2019 of $3.5 billion. And if you look at the midpoint of our adjusted EBITDA guidance range, I think you’d see something that is moderating from the 140 bps that we referenced for 2019 and the margin compression we saw there, and moving towards the 100 bps range or something like that. But I think you can work out the math on that looking at our EBITDA guidance range versus that topline.

Okay, thanks. And then just a question on G&A spend. In the fourth quarter, you guys had talked about how it is a little bit better than expected from the true-up of the North Carolina business, but just given the cost initiatives there, what should we expect for that going forward throughout 2020 in terms of dollar amount?

Yes, we don’t generally comment too much prospectively about G&A as a line item, to some extent, because a lot of expenses through the restructuring are getting remapped. So we are pushing more out of the practices. So in some cases, something that may have previously been G&A will migrate into COGS. In other cases, we have things moving in the other direction. We’re also doing a lot of installations technology, which will have some substitution effect on some labor cost and we are working in general on many efforts for labor efficiency. So I guess it’s not a terribly satisfying answer to say we expect it to move around a bit, but we expect it to move around a bit as we worked through all these transformation efforts.

Alright, I’ll stop there. Thanks for taking my questions.

Next we’ll go to line of Rishi Parekh with Barclays. Please go ahead.

How are you doing? Thanks for taking my questions. I guess two questions. One, I appreciate that you are not giving us any information on the UNH contract. But in general, can you provide us what your average commercial and Medicare spread is for anesthesiology, radiology and neonatology? And then in terms of the UNH contract, is that a regional contract or a national contract?

Good morning. The first part of your question, I can’t answer, because I think I’d break much laws if I did. The second part of your question is, we have many, many contracts with United as we do with most of our payor. We generally don’t have national contracts.

Okay. And then on the out-of-network payments, can you just maybe give us an idea how you get paid on those out-of-network, payments. Is it less than or more than your in-network, as you see today? And then what is your blues exposure?

Yes, I think we’re going to keep our comments around that too to what we discussed, Rishi, related to United and particularly related to out-of-network payments. So there is just simply too much diversity of how those are administered, collected et cetera, to give a blanket comment.

I would add two factors which is out there, one, one would be that, as we said before, we typically have had well under 5% of our total revenue in out-of-network because we – it is not good for our patients or anybody else to be out-of-network. So we are fully supported and wish to have all of our patients being in-network. But when you go out-of-network, well, I can’t speak to any individual contract. I will say, in general, going from in-network to out-of-network imposes a lot of inefficiency and a lot of extra costs and longer time periods to collect and that’s on top of what’s most important thing, which is a lot of stress and burden on our patients. Think about it this way. Typically, when we are in-network with most of our payors we can electronically adjudicate the majority of our clients. Out-of-network clients, particularly because we have so few of them require a high degree, if not complete manual handling. In many cases payors and we have had some experience with this and we have heard from others as well that if you get kicked out-of-network that some payors, including United will cut off our access to their systems and will require our people to literally pickup telephone and call them to status and accounts or to find out what co-pays are required. I don’t want to go too into the weed, but it is essentially in effort to encourage us to stay and anyone to stay in-network. They impose lots and lots of speed bumps that make adjudicating plans significantly more expensive, significantly slower and a significant burden upon the provider and in particular the patient. So I just wanted to give you a little bit of color that consistent with the comments that I made before, getting kicked out-of-network creates a ton hardship for everybody.

Next we’ll go to the line of Kevin Fischbeck with Bank of America Merrill Lynch. Please go ahead.

Great, thanks. I wanted to focus on the comments on kind of returning to growth in 2021. How much of that is kind of a view on the topline, reaccelerating versus a view that you’re going to get a more balanced cost growth versus rate growth dynamic. And to the extent that it’s the latter, what gives you confidence that the cost growth is going to no longer be the margin pressure once we get past 2020?

Yes. Kevin, it’s Charlie. Let me frame that a little bit, because it’s a multitude of factors that we’re looking at, I would say that part of it, within our Medical Group reflects something that Roger talked about pretty emphatically surrounding Anesthesiology that we do believe we have a demonstrable path as we move through 2020 to go into and exit from this year with a stabilized EBITDA profile for that Medical Group. We also believe that there is a meaningful amount of growth opportunity still remaining in radiology and the trends have been very favorable for us in that business. And in Pediatrix with the investments that we’ve made, with the dedicated leadership, we do believe that there is an opportunity for an acceleration of growth. So part of our view is looking at 2020 as a whole reflects to some of those inflection in trajectory. And while we do envision some continued compression of EBITDA and margin this year, we do believe we have a high visibility of where that can go. And exiting 2020, we do think that trajectory can continue to change, with cost alignments to our topline in particular, and the acceleration of topline growth in Medical Groups where we’re making concerted investments. So I think that we kind of frame it as a view that we believe we’re on a visible path for exiting this year with a stable dollar EBITDA profile. That is our goal. And with the early stage investments and ongoing investments in growth of our Medical Groups, those can take greater and greater hold as we move out of 2020 and 2021. I hope that’s helpful.

I guess, the question is, kind of just going to you guys maybe a resetting kind of the EBITDA base here. But it sounded a bit like in the prepared remarks that you guys were talking about kind of structural supply pressures that there is shortages of doctors and certain specialties, which is making it hard and that's putting up a pressure on labor. Even if you're able to reset this, you had your confidence that that's just not going to say, okay, but now we're going to see pressure again the following year off of these rebased numbers?

Kevin, it's Stephen. Good morning. Part of it to add to Charlie's comments and to go direct to your follow-up, we are investing a tremendous amount of technology efforts to better manage all of our labor. The vast majority of our P&L is physician and clinician labor and we want to have those physicians and clinicians utilize their time as efficiently as they possibly can. So we are investing in a lot of things to help with that, which should help close that gap in terms of labor costs. We also are making a ton of investments in trying to make our G&A and shared services more efficient and automate as many tasks as we can. That should also help somewhat to close that gap, but the bottom line is, we also have to get paid for the services that we provide. And it is very difficult going on some period of time now with these sort of 1%, 1.5% type unit reimbursement growth in the face of the real world of providing highly specialized physicians and clinicians that take – it takes a decade and a half to make a neonatologist. So the – and demand at this point does outstrip supply. So that is, at the end of the day, the fundamental question, and I think we're taking a very broad and hard effort against it and our hope is that we managed to find a way to get closer to balanced and how we manage to drive both organic and M&A driven growth that took the balance towards upside as we get through the transformation and back into ordinary way operation.

Okay, great. That's helpful, thanks.

Next question is from Whit Mayo with UBS. Please go ahead.

Thanks. Just one question from me. I think, Roger, in your prepared remarks you discussed prior conversations you've had with private equity sponsors, none of which seem to manifest into additional conversations were a bit. I'm just kind of curious what the timeframe is you're referencing, just any other thoughts you care to share would be helpful? Thanks.

Whit, it's Charlie. That was in 2018, that Roger was referencing.

Okay, thanks.

And next we'll go to Gary Taylor with JPMorgan. Please go ahead.

Hi, can you hear me.

Hey, Gary. Yes.

Hey, good morning. I guess, maybe following on Whit's question, I want to ask about Starboard and I certainly appreciate there's probably a lot of what we'd like to know that you can't answer, but maybe any help. I mean, I think last week they announced, they increased their stake by a third, they made their alternative slate of directors public. So maybe the few of the questions I have is, is the annual meeting set for May? Do you have an ability to delay that if you wanted to, did Starboard have any confidentiality agreements? Do they have any access to non-public info that we don't have. And there also were headlines last week about possibly line of business sales being considered. So, I know investors have a lot of questions about all of that. So anything you could help us with there would be great?

Well, excuse me, as you've already figured out, there just isn't much along those lines we're going to be able to talk about. Your questions sort of fall under a different – a different type of questions and we're just not prepared to answer any of that stuff right now.

What about just the annual meeting, is that – is that yet set and do you have the ability...

No, that hasn't been set. Yes. No, that has not been set.

And is there – is there a outside date on how far you could push that out, if you chose to?

Gary, Roger, as I think already answered what we're – what we're able to now.

Okay, last one if I could just do one more, sorry just on United, I know we're trying to limit what we've said there. I know some states over the last few years have implemented laws and regulations that have really defined what you have to get paid or what you're allowed to get paid on out-of-network, and then there's other states, as Steve, as you mentioned, are there's an array, there's a lot of diversity, it's more nebulous. Is there anything in these states that United has chosen to terminate that – I guess, are these would potentially be the more nebulous state. So it puts you a little more at risk or I wanted to ask a – take a shot at it?

Look, Gary, we are generally happy with most of the laws that each state has passed as far as being out-of-network. Now most of that stands because you’ll remember, last time we had this conversation, I said I wasn't losing mostly over the out-of-networks not because we weren't out-of-network, but in those states where, for whatever reason, we may be out of network for a few days or whatever, we're not unhappy with the bills that have been passed, we find them to be mostly reasonable. I think the problem most physicians are having is with the federal legislation that's being proposed and as you know, there is more than one bill that is being proposed at this point in time, there’s probably some time to go before anything really becomes more official. But the lack of being able to negotiate et cetera is what – what most people are unhappy with. I wouldn't say, there's anything, just to answer the question, I wouldn't say, there is any special about any of these states. Thank you very much.

Thank you very much.

For those in the audience, we have gotten over our normal hour, but to be respectful we still have a few questions in the queue. And with your patience, we're happy to take those and try to move through them pretty quickly.

And next we'll go to Jason Plagman with Jefferies. Please go ahead.

Hey, good morning. Just a question on the comment on variabilizing the clinician compensation model, I think you mentioned a target of 50% of the anesthesia practices making the switch by the end of 2020. Can you just add any color on the timing of contract renewals beyond – in 2021 and beyond and the trajectory to get that eventually to 80% or 90% of anesthesia practices on a more variable compensation model?

Yes, Jason, it's Charlie. Roger was correct that that's what we had in our sights related to the coming year. And moving beyond 2020, I think the best way for you to look at it is, we would probably have some ratable amounts over the next couple to three years beyond 2020 that we would also be interested in moving. So moving from, if we're successful, roughly half of our revenue base converted to a revenue share model and then moving into a solid majority and then mostly a predominant amount of that over the coming – over the couple years beyond that, subject to some of the calendar renewal schedules and the like.

Yes, it's mostly a function of when their current contracts expire. So as their current contracts expire, they get renegotiated and we're just following the calendar of when those contracts expire.

Great, that's helpful. And then last one for me, it looked like my math would say admin – hospital admin fees in Q4 were up about $10 million from the prior quarter. Can you just comment on the negotiations or discussions you're having with your hospital partners on admin fees and subsidies?

Yes, Jason, that's – this has come up in the past, because our line item has moved up, I think in general, the components you were thinking that are, some of it is purely business growth where we have certain different service lines that have a greater admin fee associated with them and that are more funded by the hospitals and we've often brought up the example of OB hospitalist program. So some of it has been business growth within our service lines that has a greater admin fee component, some of it has also been different negotiations and contract updates with hospitals themselves, but it's been a mix of those factors. That said, has moved that line particularly over the past couple of years.

Okay, thanks.

Next question is from Pito Chickering with Deutsche Bank. Please go ahead.

Good morning, guys, thanks for taking my questions. I'll take another shot at this one, I apologize, but last quarter I asked about, so what percent of managed contracts are locked in for 2020? With the changes to the United contract, investors are obviously skittish about this topic due to private competitors bonds trading at $0.50 on the dollar. Any chance you can share with us what percent of your contracts you have visibility to be on for 2020 and how it compares versus this time last year?

That's really not something that we've ever really commented on, Pito. We have a tremendous diversification of our managed care contracts within payers, within states across service lines. So we've generally not looked at it in that fashion. And secondary to that, if you go back to some of Roger's comments, these terminations were unilateral and in instances that Roger brought up, related to contracts that have been in place for 10 to 20 years or longer. So our focus here is on the process by which this was undertaken and not at any kind of renewal schedule or anything like that.

All right. And then may I ask a different question. Capital deployment, you're guiding to shares higher to be for 2020 versus fourth quarter, you bought back a sort of truckload of stock in 2018, should we read this as any signs due to your capital deployment strategy, you sort of talked about capital deployment in 2020 versus 2019, any changes we should read into or not?

Sure, Pito. Good morning, it's Stephen. The only comment that we made in our prepared remarks was that, especially in the face of this United matter with an unknown outcome and unknown impact or scale, you should expect over the near-term for us to have a pretty conservative posture from a leverage – from a leverage perspective, we obviously need to finish the transformation work that we have begun. We do want to continue with M&A, particularly, in the pediatrics and women's and children's business and we put out there the big numbers we contemplated in our model, which was about $50 million. If you look at 2019, what you'll see is – our total M&A spend was roughly around $110 million, $120 million, but half of that was related to radiology and the rest was women and children. So kind of a consistent type of women and children spend over 2020 is at least the underlying assumption in the model. In terms of other historical share repurchase activities. I think there were certain circumstances at those times around those repurchases and I'm really not in a position to make any comments about any sort forward-looking activity on that front.

Great, thanks so much.

And next we'll go to Matt Borsch with BMO Capital Markets. Please go ahead.

So my question is not about UNH specifically, but just to understand the contracting more broadly to the extent that's in focus. Generally speaking, is it more the case that your physician contracts are based on regional or statewide fee schedules or would you say, are the majority of them, at least to when you want to look at by revenue volume whatever based on practice specific negotiation?

I would say there, B is the right answer. They are practice specific, depending on geography, as well as specialty types and number of physicians required to cover, we do have just in our pediatric group, we do have pediatric cardiologists, pediatric intensivist, neonatologist, hearing screen. I mean it's just a number of different services that we're able to provide. So it's going to be dependent on all of that.

Go ahead.

No, I was just going to ask, if the customization I would think would be correlated with that market or pricing power that you have, but maybe I'm wrong?

Like, I would just go back to a comment that I made earlier, is that, look, we, for the most part, provide really sensitive and important services to a very vulnerable patient population rather vulnerable because they are premature babies, they are vulnerable because of high-risk pregnancies, they're vulnerable because more than half the patients that we serve are Medicaid babies and our pediatric business. I mean, we take care of really sick little kids and that the dynamics of our payers discussions, for the most part and over the course of time, have been cordial. And nothing that you would find extraordinary. We have not been, in any meaningful way, subject to heavy-handed or abusive approaches to figuring out how to make sure that these are folks are – have access to these services. So this is a significant departure and that is – and it's a very significant and has a potential to be a very significant matter, and that's why we are highlighting it the way that we are because it deserves to be highlighted.

And I want to stress one point that we keep making over and over again, which is that it's never been our strategy to be out-of-network. And I think it's really important to know that there are a number of times when we acquire a group of physicians who are out-of-network and we automatically and immediately bring them into network and our negotiations take into consideration, what the new revenue from the Group is going to be once they get into network. So we have been adamant from the beginning, when you're taking care of these very sick newborns, you're developing relationships with the patients and the parents. You are there with them at night time, you're – when the times are bad you sit there and you hold their hands. These people are going to be – have patients in their hospital for two, three weeks, a month, more than that. There's a special relationship that is built between the parents and the physicians who were there, from the delivery until the time the baby gets discharged. And the good – the news are not always good news. There are times when you unfortunately have to deliver some bad news. So there is a very special relationship. And now to go tell the parent, listen, your insurance company is not going to pay the bill. I'm going to have to send you a bill, it’s not something we want to do.

Absolutely. All right, I'll leave it at that. Thank you.

And with no further questions in queue, I'll turn it back to the company, if you have any closing comments.

No. Thank you, John. I appreciate your help. And thanks everyone for listening this morning.

Great, thank you. Ladies and gentlemen, that does conclude your conference for today. Thank you for your participation. You may now disconnect.