Good day, ladies and gentlemen, and welcome to the third quarter 2009 Tenet Healthcare earnings conference call. My name is Louisa and I will be your operator for today. At this time, all participants are in listen-only mode. We will conduct a question and answer session towards the end of this conference. (Operator instructions). I would now like to turn the call over to Mr. Thomas Rice, Senior Vice President of Investor Relations. Please proceed, sir.

Thank you, operator, and good morning everyone. Welcome to Tenet Healthcare’s conference call for the third quarter ended September 30, 2009. This call is being recorded by Tenet and will be available on replay. A set of slides has been posted to the Tenet website which management will refer. Tenet’s management will be making forward-looking statements on this call. These statements are based on management’s current expectations and are subject to risks and uncertainties that may cause those forward-looking statements to be materially incorrect. Management cautions you not to rely on and makes no promises to update any of the forward-looking statements. Management will be referring to certain financial measures, including adjusted EBITDA, which are not calculated in accordance with Generally Accepted Accounting Principles. Management recommends that you focus on the GAAP numbers as the best indicator of financial performance. During the question-and-answer portion of the call, callers are requested to limit themselves to one question and one follow up question. At this time, I will turn the call over to, Trevor Fetter, Tenet's President and CEO. Trevor?

Thank you, Tom, and good morning everyone. I would characterize Tenet's third quarter with two takeaways. First, despite the continued economic weakness, we generated solid growth and revenues. Second, we did an outstanding job managing costs. Together these factors contributed to EBITDA growth of 50%, and this was the second consecutive quarter in which we posted EBITDA growth of this magnitude. And as you read in this morning's press release, we increased the outlook range for adjusted EBITDA by $25 million to 925 million to $975 million. Let me walk you through the major line items to give you some detail. Cost control is proceeding as or better than planned. Most of the impact on cost is a direct result of our initiative, although we believe the soft economy is contributing to a decline in employee turnover. These savings included a decline in malpractice expense, which was among the mouthful of objectives of our commitment to quality. We also improved pricing in line with our objectives. This is due to a combination of our strong local market position as well as recognition that we offer high standards of clinical quality. Keep in mind that the pricing improvement is not always fully apparent in our pricing stats, because of the impact of an adverse mix shift due to soft commercial inpatient volumes. Turning to volumes, trends are clearly improving and aggregate admissions appeared to be stabilizing. After three quarters of negative growth in total admissions, we returned to positive growth in the quarter. This stabilization is evident whether you look at total or paying admissions and uninsured plus charity admissions only grew by a moderate 3.1% in the quarter. In the context of current economic conditions, I think it is fair to say that a lot of companies across any number…

Thank you, Trevor, and good morning everyone. As Trevor mentioned, our third quarter results are boosted by the cost disciplines we built into the system. You may recall we began the year by launching a series of initiatives designed to capture a $188 million in aggregate cost savings. I am pleased to report that we have made and in fact exceeded that goal as a result of better than expected hospital operating cost controls. Clearly, the disciplines we have built into the organization which include the ongoing deployment of new cost management systems at each of our hospitals is having a sustained and visible impact on our overall cost performance. We're making similar progress on virtually every line item, starting with same hospital salaries, wages and benefits per adjusted patient day, which actually declined in the quarter. Granted that decline was just 0.3%, but I think you'll agree that any time a unit cost metric declines, it is significant. In addition to the cost reduction initiatives, we introduced in January, a number of interrelated factors also contributed to this positive third quarter results. First, we implemented a number of programs aimed at improving employee and particularly nurse attention. Second, the impact of the above mentioned programs has been amplified by the continuation of an uncertain economic environment, which has added to the available workforce intended to keep employees with their present employers. And third, our hospital staffing and positioned control systems are proving to be effective and we monitor them daily. These initiatives contributed to a 27% improvement in employee turnover and a 29% improvement in registered nurse turnover, compared to Q3 2008. We also produced a 31% decline in overtime and contract labor expense which represents a savings of $23 million. The net result of all these savings is…

Thank you, Steve, and good morning everyone. Adjusted EBITDA was very strong in the quarter. Since Trevor and Steve have provided a common flu overview of overall growth and progress on cost efficiencies, I will move directly to the topic of pricing. We achieved continued increases in net patient revenue per admission, up 3.7%, and net outpatient revenue per visit, up 2.7%. The increases in both of these pricing metrics were restrained by our mix shift as commercial patients represents smaller percentages of our patient population in the third quarter. Note that however that we did achieve an increase of 4.2% in commercial managed care revenues. This was achieved despite a decline of 4.5% in commercial managed care admissions and flat commercial managed care outpatient visits. While would not disclose our pricing increases for commercial managed care, the relationship of those metrics with revenue growth rate meaningfully stronger than volume growth provides visible evidence that we are continuing to see consistently strong increases in our commercial pricing. We also had favorable patient mix which contributed to the commercial pricing stats. Looking forward at this point, we have negotiated the pricing on 74% of our expected 2010 commercial revenues and 61% for 2011. Let's now turn to the topic of bad debt. Bad debt expense was 193 million in the third quarter or 8.5% of net operating revenues. This represents a $28 million growth in bad debt expense for the quarter compared to last year on a same hospital basis. Because of the issue of bad debt has drawn so much attention in the context of a soft economy and rising unemployment, I would like to take a few minutes to discuss the complex manner in which bad debt actually impacted our bottom line. As we have said before, because uninsured…

(Operator instructions). And your first question comes from the line of Ralph Giacobbe with Credit Suisse. Please proceed. Ralph Giacobbe – Credit Suisse: Thanks, good morning. I didn't want to go to bad debt expense, is there you know – I know in your last call you said bad debt for the back half of the year, 8.4% to 9.8%, clearly 3Q at the low-end of that range, but is there something seasonal about bad debt and specifically 3Q seems to jump up historically and then you kind of come down a little bit in the fourth quarter, any comments around that?

Yes, there is a seasonal effect, and generally speaking third-quarter is the worst quarter for bad debt from a rate standpoint. Some of this is numerator and denominator, lower volumes, lower commercial revenues typically in the third quarter as a result of people taking vacations, changes the mix. And there is a very slight aging component to bad debt expense but it does affect us, so we have higher volume somewhere in the year, which are some level of bad debt recorded in the third quarter. So I would say it is definitely a seasonal effect and you can look at it both from a numerator and a denominator standpoint. Ralph Giacobbe – Credit Suisse: Okay. And then just my follow-up, did you say you have 61% of the managed care revenue locked in for 2011, did I hear that right?

That's right.

Yes. Ralph Giacobbe – Credit Suisse: Is that – I mean I guess is it normal for you to have that much locked in sort of this early, any sort of extension out of contracts and maybe any changes to rates to compare to what you have seen over the last couple of years?

It is not unusual for us and I think as we have said before we think that 2010 we expect rate increases consistent with what we had in 2009. So no pressure, no change there. We had said previously that we were going to hold 2011 to not more than 50% given risk of inflation. We have gone over that. But from the standpoint of total negotiation, however there are inflation rate adjustments clauses in there, so we have not gone beyond our express commitment to forward price on a fixed price basis more than the 50% number. Ralph Giacobbe – Credit Suisse: Okay, great. Thank you.

Your next question comes from the line of Tom Gallucci with Lazard Capital Markets. Please proceed. Tom Gallucci – Lazard Capital Markets: Good morning. Thanks for the color. I guess first you mentioned some of the TGI initiatives during the prepared remarks, I think in the past you have given us some color on some of the growth relative to the total as we can sort of monitor your progress there, so do you have any metric that you can offer in terms of growth in those areas?

Sure, Tom. It's Steve Newman. As you noted in the slides we have put on the web, consistent with the long-term trend, the decrease in commercial managed in the TGI priorities was actually less than the aggregate reduction in commercial managed care across all diagnoses. But I think that more importantly we are still pushing on those particular priorities and as we roll out to Medicare Performance Initiative and begin to look at all payers under the targeted growth initiative, we see stabilization compared to prior year. And as the activity advances, we more toward developing a positive margin on those cases, which had previously been negative margin when they are outset of the commercial pay or category. Tom Gallucci – Lazard Capital Markets: I guess I was wondering can you talk about any of the more specific areas within TGI, some of the ones that were better growth versus a little slow growth.

Sure, for example, for orthopedic surgery in the commercial line was a 0.2%. If you look at all payers, it was a more than that. If you look at other areas, spinal fusion surgery was an area that we have focused on significantly. It was up 10.6 in the commercial managed care category. If you look across all payers for fusion surgery, it was about 11.5%. On the other hand, looking at obstetrics, it was down 3.3% in commercial managed care, and even slightly more, as much as 9% across all payers, probably consistent with what it is looking like nationally as they decrease birthrate, which you tend to see in this part of the economic cycle. Open hearts were down 2.3% in commercial, and that has been pretty consistent with the trend over the last three quarters. So all in all, I would say we have movement towards stabilization but not on the right side of the zero line with respect to growth in those TGI priorities on the commercial side but doing better in the all paying categories. Tom Gallucci – Lazard Capital Markets: Okay, that is helpful. And just a follow up, you ended the 5.9 decrease in commercial managed care admissions in October, but obviously that is a tough period, so it is hard necessary to trend that out. Can you can talk about the variability that you saw and their metric during the third quarter? Was there big fluctuations from month to month or was it fairly steady at 4.5% or so rate?

There were fluctuations in the third quarter and we reported them somewhat piecemeal as the case may be because we gave stats when we gave the second quarter results back in early August and then we updated them when we updated our outlook in September. July was strong and then it fell off some from there. So if you look at October, hat is actually up from what September was, but September was down from what July and August were (inaudible). And the quarter as a whole, third quarter was better than the second quarter. So there is variability. You can't really take any shot period and extrapolate it and say that that represents a trend. Tom Gallucci – Lazard Capital Markets: Okay, thank you.

Your next question comes from the line of Sheryl Skolnick with Pali Capital. Please proceed. Sheryl Skolnick – Pali Capital: Good morning. I am not used to saying this, but nice quarter guys.

Thank you. Sheryl Skolnick – Pali Capital: You're welcome as far as you did hear that yet. Okay, could we go back, Steve, to your comments about the physician recruitment and the reigning in of your targets by about 200? If you're going to be – first of all, you attributed that to the physicians being driven by the physicians, is there any impact you would forecast on volumes from having fewer of your senior physicians transition out to retirement?

I think that is a very good point. And interesting that many of these senior physicians that they are intending to die if that disproportionately productive, which certainly gives rise to both concerns as well as positive feelings as they moved toward retirement. It is our job to make sure that community need is met and if practices have disproportionately productive positions that retire appropriate or become the elder or disabled, then it can cause patients to out migrate from the service area to get services elsewhere. So we're very focused on making sure that most of our major practices have succession planning underway. I would want to put in the context the whole issue of the target being 1000 and us coming in the range of 800 to 900. When you think about how we grow our business, for example in the quarter, we only added 15 employed physicians. So net of attrition to our active medical staff, we added 266 doctors, so that 15 employed physicians is around 6, 6.5%, something like that. That means the remainder, the huge bulk comes from redirection or relocation of physicians. The second part of the perspective is that we have really worked hard to improve the on boarding of physicians that we're bringing to our medical staff. I think in the past, as we attempted to move quantity to meet medical staffs over years that had shrunk to the point of not being able to meet community needs, we may not have been as selective, and once we did select physicians, we may not have assimilated them into our medical staffs as well as we can do today. So when I referred to the stickiness of those positions, we want to make sure we are targeting the right physicians, and when…

Well, Sheryl, those are hard questions to answer, as you probably knew when you're asking them. And just try and take them in order. So first of all on the lead-in, I would agree obviously with your statements about the importance of having reduce leverage through improving operating performance, reduce the absolute amount of debt outstanding, and it is good to continue to draw attention to the cash balance we have, which has become significant in relation to the balance sheet and operations, all of which has been intended to reduce the risk profile of the company. So if you look back at all those capital markets transactions we did in the course of the year, and even prior to that, it has all been designed to reduce the risk profile, which was painfully evident as being too high when we were in the financial crisis just a year ago. Also we have slides on the web that show that although the first debt maturity is in its – by the way, funny to hear you say, only three years away, some people would say, three whole years away, that is quite a long time from now, it all depends on one's perspective. But if you look at that bar chart of maturities, yes, there is a significant maturity for years, 3.5 years from now. But we have also pushed way out the other maturities so that I think that the average maturity has been delayed quite a bit. So all of that contributes to a far lower risk profile which I think is good in the business. Actually as to your comment about we are still a highly leveraged company, I think that is a fair comment as it relates to many industries, of course in the context of…

Well you know maybe it was the Halloween season but I did think that Wall Street investors seem to be looking for ghosts or seeing ghosts in this industry in the last few weeks. We have called attention since the beginning of the year to the risks and in fact we did it today again in our number prepared remarks, the risks that we see out there. So they relate to the economy, and job losses and a reduction in personal credit quality in an environment where patients are responsible today for a better portion of the financial responsibility than they ever have been before. So whether it is bad debt or it is insured or Charity, or commercial managed care, addressable population, those are the things that I think people have rightly focused on perhaps in recent weeks. My personal opinion would be they have got to Michael in the morning about it. But we have taken it seriously, so you go back to a year ago where our stock was, I don't know where it was exactly but probably headed towards dollars, around the dollar, and that was a serious financial crisis, a capital markets crisis, and clearly evidence that we are in a series recession with job losses. And so we responded to that and by building that foundation of a lower cost base and a stronger cost control discipline and also greater operating leverage as I've pointed out I think we're well positioned for any rebound. We are also well positioned if it continues to be tough for a period of time. And there have been you know to some degree certain elements of the economic weakness have addressed us get this contributed to the gains and turnover that we have had. So I'm not sure whether I directly answered your question, but the things we worried about from the beginning of the year to the things we still worry about, we see some opportunities. Obviously in health reform, there is a meaningful increase in the number of people who are covered into the future, that helps us. The aging of the population helps us. All those demographics things have been out there for a long time, help us, and to think about something like the Medicare performance initiative, it is directly oriented to address those kinds of risks and opportunities that are out there, and we didn't talk much about you know the improvements we have made in the revenue cycle, but Steve Mooney who runs our (inaudible) revenue cycle solutions had a perspective client say to him the other day after touring our facility, you are the Mayo Clinic of the revenue cycle, which I take as an enormous complement in this industry, But that is a very powerful skill and competency that we have that will help us regardless of what happened from the economy or the trends in our business. Sheryl Skolnick – Pali Capital: Okay. Thanks so much for the time.

Your next question comes from the line of Shelley Gnall with Goldman Sachs. Please proceed. Shelley Gnall – Goldman Sachs: Hi thank you. I have a specific question on the supply cost I guess that we have seen so far this year. Can we just clarify with the Medicare Performance Initiative, the key driver of the improvement we saw in supplies in the third quarter, and if not, can you talk a little bit about, or even if it was, can you talk about some of the specific developments that have been benefiting the supply cost?

Well, thanks for the question, Shelley. I think that the supply chain initiatives that we have had for a number of years were actually responsible for the improved performance in Q3 2009 compared to Q3 2008. The Medicare Performance Initiative is overlaid on the existing supply-chain initiative. More recently we've had a very focused supply-chain activities in cardiac rhythm management devices and orthopedic implants, those have been successful in all regions of the company now, and should drive down over time our unit costs, as well as the appropriateness of the units selected by our physicians utilizing better demand matching algorithms. So I would not say that the Medicare Performance Initiative largely was responsible for driving down supply cost in the quarter but going forward certainly that umbrella of MPI oversupply cost as well as case management, length of stay management and that sort of thing, will help us to coordinate those efforts. Shelley Gnall – Goldman Sachs: And it might be early for this question but would you be willing to put out sort of a long-term objective as far as the way you think supplies cost could go to as a percent of revenue?

We probably wouldn't give that sort of guidance, Shelley, on that line item or any of the other cost line items. Shelley Gnall – Goldman Sachs: Okay, I had to ask. Thank you.

The next question comes from the line of Darren Lehrich with Deutsche Bank. Please proceed. Darren Lehrich – Deutsche Bank: Thanks. So I wanted to ask about the outpatient trends, I think they were probably 10 straight quarters where I needled you about negative same store out patient visit growth and it is clearly turned into positive territory. I guess two things I wanted to ask here. One, are you operators, is there any feedback that the outpatient activity that you're seeing right now could be COBRA driven such that we do get some fall off in future periods, anyway that you can look into your volumes to give us some indication there? And then the second question is really more of a longer-term one, and I guess I am really trying to understand what the right baseline of your outpatient business could get to. You do a lot of outpatient services out over a period of years and I think that contributed somewhat, but is the right way to look at it, the number of outpatient visits to inpatient admissions in which case you're probably 15% to 20% below where you were in the early part of this decade? How are you just thinking about the baseline of your outpatient business? Thanks.

Those are complicated questions. First let me answer the simple one and that is we don't have any good methodology to give you an answer on COBRA. We don't identify patients that come with commercial managed care whether they have continuous employment or whether they are on COBRA. So there is no way for us to answer that. With respect to the outpatient business, I would say over the last 2.5 years or three years, we have really accelerated our focus in the outpatient arena across all of the segments of the outpatient business. I think there has been an understanding on the part of all of our operations leaders out in our hospitals as well as freestanding facilities that we have strong competitors and we have to win that business from doctors and patients each and every day. We focused on our emergency department and we have been focusing on the ER for some period of time, we haven't talked about it in great detail because it is not the glitziest thing we do, but we have improved throughput, systems, turnaround time, our left without being seen is down dramatically as we've developed better systems to get patients' triaged and examined rapidly, returning their lab test or imaging test if necessary before final disposition. The ER has driven about two thirds of our growth in outpatient and the rest has been divided between surgery and imaging which are very profitable parts of our business. I think over time the answer to your last question would be we believe we have opportunity to continue to grow our outpatient business. While we grow our impatient business, our outpatient business will become a larger percentage of the total business over the next 5 to 10 years. So we are still accelerating that up. There's a couple of milestones along the way in terms of where our net revenue is, impatient versus outpatient, and we're headed toward moving those gradually towards that 50% level. Darren Lehrich – Deutsche Bank: That is great. And then Biggs if I could just ask a couple of cost related questions, first just, where there any one-time costs associated with the headquarters move in the period to call out or to think about and any in the fourth quarter that we should be thinking about? And then you did mention the merit increases, can you just quantify the annualization or the annual impact of that so we can plug that in the model? And then just a housekeeping one, what was the ending fully diluted share count? Thanks.

Okay. On the move, nothing significant that I think you would point out in terms of third quarter or fourth quarter on the move. In terms of the –the second part of your question was what, could you just give it to me again? Darren Lehrich – Deutsche Bank: The merit increases?

The merit increases, I'm sorry, on the merit increases, the effect on – typically to put this in context, normally in the past, the effect of inpatient price increases on Medicare and the salary, wages and benefit effect of merits in the fourth quarter roughly offset this year because Medicare price increases are a little over. There is not the net loss between those two. However as we go through time, the outpatient pricing comes in the first quarter next year and we have commercial price increases which come in over the course of next year. So pricing does improve at a rate better than the cost growth associated with salaries wages and benefits as you look out over an entire 12 month period. It is just in the fourth quarter we will have a mismatch this year. The sizing of the effect on the quarter is probably in the neighborhood – it is between 10 million and $15 million on merit increases for the fourth quarter. But as I said it moderates over the course of the – over the year relative to price increases. Share, 498 million shares. Darren Lehrich – Deutsche Bank: That's the end of period count?

Yes. Darren Lehrich – Deutsche Bank: All right, thank you very much.

Your next question comes from the line of Kevin Fischbeck with Bank of America/Merrill Lynch. Please proceed. Kevin Fischbeck – Bank of America/Merrill Lynch: Okay, thank you. I wanted to go back to the physician recruiting because what you guys have done over the last couple of years is pretty impressive, I guess with the 7% growth in 2007 and the 9% growth in 2009 I mean is it fair to say that we are seeing the impact of that today, those two years of recruiting? I guess I want to understand the differential between those pretty big numbers and what we're seeing as far as volumes, I think in the past you've given kind of how certain class of physicians are ramping up, just wanted to get a sense of what your though process is about 7% physician growth equal to 2% volume growth, or is that every that you think about that going forward?

Well, Kevin, I would not say that there is a formulae driven way to assess positions recruited net of attrition that converts to incremental admissions and incremental outpatient visits or surgery. Nonetheless, we continue to track those through our physician contact management system, and we are seeing those prior classes tend to ramp up over time, once again proving our earliest postulate that it takes 18 months to 24 months for a physician who is new to staff to ramp up both their inpatient and outpatient activities at our facilities to a steady-state and the outpatient tends to be the first activity in physicians involve themselves in under their comfort level raises and they began to use it for inpatient activities. We are continuing that physician relationship program and we have added in the last couple of quarters a significant number of those PRP reps that focus on the outpatient business. And so predominantly imaging as well as ambulatory surgery. So I think with the overall program, we are seeing the yield from that. It continues unabated, and it will be the basis along with our physician recruitment program for powering the growth long-term. Kevin Fischbeck – Bank of America/Merrill Lynch: Okay. And then I guess maybe to take the opposite end of a question that was asked earlier about leverages now, earlier you were kind of below average, in a highly levered space, I mean is there a point where you start to look at it and say, we are done, and things like acquisitions start to make sense again, what is your view them?

I think that is a very good question to ask about acquisitions. I think we know, but it is impossible to answer. So it is a good question to ask, impossible to answer. We will obviously look for opportunities that would expense with our portfolio and our footprint, and we would have some desire to diversify geographic risk that we have today, but I don't feel that we are under levered at this point. So we were probably make more specific comments about our outlook on that when we talk about 2010 at the time we release fourth-quarter earnings but for now, just continue the line what we said recently in the SEC filings and public comments. Kevin Fischbeck – Bank of America/Merrill Lynch: Okay, great. Thanks.

Your next question comes from the line of Kemp Dolliver with Avondale Partners. Please proceed. Kemp Dolliver – Avondale Partners: Hi thanks. Steve, your earlier comment about the ED and the decline in left without being seen is interesting in that you know given presumed up ticks in patients without insurance, you would have some countervailing trends with regard to more uninsured showing up and potentially being triaged to a different settings, versus just the trends to improve ER turnover. Could you talk in a little more detail regarding what you're saying with regard to patients left without being seen?

The Left without being seen metric, Kemp, is one – each of our hospitals follows each month. They work on getting that down significantly, there are customized targets for each hospital in that particular area and they have activities that are both corporate driven and as well as local hospital government to try to improve the length of time from presentation, registration, to triage, and then to definite diagnosis care, either admission or discharge. Once again, as we have grown our emergency departments, we have closely monitored the number of uninsured and charity cases that are there, and obviously when we have patients that present with emergency medical conditions, we don't even look at their financial status. We take care of the patients and ask questions later. But for those that have non emergency medical conditions, we certainly work with our financial counselors in the emergency department, and make sure that they have a mechanism to pay, or triage to – community resources that can handle them. With respect to the payer mix in the year, we are actually seeing some improvement over time. So one of the postulated consequences of the H1N1 and the real, at least in some areas, panic is that patients with commercial insurance, develop symptoms instead of waiting till the next day to go to the primary care physician, or ending up in ERs because they want to be screened, they want to be evaluated, and if necessary get prescriptions, get those sales, and get on any medication as soon as possible because the education programs in the mass media are saying the sooner you treat patients with H1N1, the less likely they are to develop serious cases and consequences. So all in all, we continue to focus on making our ERs more friendly to patients, and more efficient with our quality of care. Kemp Dolliver – Avondale Partners: Right. If I could just zero in on one aspect of this, are you seeing increases in the number of self-pay cases that are showing up and leaving without being seen?

No, we're not. Kemp Dolliver – Avondale Partners: Great, thank you.

The next question comes from the line of John Ransom with Raymond James. Please proceed. John Ransom – Raymond James: Hi. I had to pick myself off the floor, I saw the words free cash low, I just want to make sure it wasn't a typo?

No, it is real.

Not a typo, and there was a lot of effort that went into it but thank you for recognizing the shock value of that. John Ransom – Raymond James: I like negative free cash flow, it is kind of an oxymoron. Just I know you are not giving 2010 guidance, but just two quick things, CapEx and med mal, what should we be thinking about as we model this to for next year? Any a significant changes from the trend we saw this year?

Well, med mal is getting pretty precise to get into a line item there for next year or for this year. Certainly, we think that our long-term initiatives to improve quality and reduce the occurrence of incidents which trigger any kind of a claim, we expect to continue to pay off for us over the long-term. As we have potentially improve quality, they would expect to see continuous improvement in the underlying drivers of malpractice expense. Also, to discount a liability, so if interest rates go up next year, there is a potential positive from that. Having said that, we obviously had some significant reductions this year, and I can't say those kind of reductions are going to recur next year. So we've just got a ways to go here before we will have a prediction internally on what we think med-mal would be next year. And from our line item guidance standpoint, I wouldn't expect to ever give it at that level of detail but give you some indication when we give our 2010 outlook, what we directionally we're thinking about in terms of med-mal. We have said previously that the 400 million, $450 million we are running this year was something we thought we could sustain. That sort of giving it as an outlook for next year. We as we completed our planning and look at what all of our priorities, what our opportunities are, we will come up with something more definitive for next year. There is never a hard number because you always have to look at what do you think the right amount of spending is for any given year. But as I said, we saw this as sustainable number. We have a new hospital which is East Cooper which is a replacement hospital which is completing early next year, so spending on that will wind down. We will have some increased spending on healthcare IT next year, going the opposite direction, and after that, it is a matter of what are all the other priority items and what makes sense investments to make investment for the long-term. John Ransom – Raymond James: Okay. And my other just quick question is, sequential your guidance implies kind of flat 4Q on EBITDA. Normally last year for example was up 40 million off of a lower base admittedly, but is there reason, you notice any reason to think about why it would be flat this year, anything unusual versus prior years, or it is usually up a little bit?

Well I think that – we have tried to remain – retain a conservative posture with respect to potential effects of the economy. So I think that our, our fourth-quarter estimates still contains some degree of conservatism with respect to what could happen with respect to mix. Commercial decline, slightly lower potential for outpatient, although it is not necessarily the expectation remains something that we will see, how we will out the year. Bad debt expense, it is possible, we have had the slope of deteriorating collections over the last year, and we could have some further degradation into the fourth quarter. And then there is a mismatch as I said between merit increases in the fourth quarter relative to government price increases which this year is a net negative effect they wouldn't have in the past. But as I said, I think that you're right. Typically we expect fourth-quarter to go up over third quarter based upon higher volumes. I think we are just being a little conservative because of still the answer is around the economy. John Ransom – Raymond James: Okay, great. Thanks a lot.

Your next question comes from the line of Gary Lieberman with Wells Fargo. Please proceed. Gary Lieberman – Wells Fargo: Good morning. Thanks for taking all the questions. Could you just break out the 20 million you guys noted with sort of I guess one-time on the expense side, could you just is breakout which expense line are impacted?

That wasn't expense items, I did characterize it as one-time to be clear. There is $11 million dollars of cost reported adjustments. There was 10 million of cost reported adjustments in the third quarter of last year, so by definition, you wouldn't say those are one-time. If you look at the track record, there is lots of quarters where we have cost reported adjustments. So it is definitely I would call one time. But on the other hand, I wouldn't necessarily forecast a like amount for the fourth quarter. The other item that is $6 million associated with Philadelphia HMO which we own a minority interest and we received distribution on, were notified of this on in the third quarter. Last year, there was a similar amount, but it occurred in the first quarter of 2008. So once again I wouldn't call it a one-time items. However, it is something that may occur in different quarters of the year, depending upon the timing of events with the HMO. And then the third item is a pension related items of about $ million. They're all actually disclosed in the release and they are disclosed in the Q, but the aggregate, the $20 million, but the bulk of it is up in revenues. Gary Lieberman – Wells Fargo: Okay, great. And then sort of looking at slight five and looking at the control board expenses, they have obviously – decline has been very low this year. How should we think about that going forward, I mean in 2010? Can you maybe not keep it where they are now, but do they not go back to sort of where they have been in years past, or just in terms of how you are thinking about when you forecast what do you think about?

Well, this sort of plays back to Sheryl's question earlier about what do we expect for 2010 in terms of cost control in our various initiatives and we're not prepared to give an outlook yet on that line item. Certainly though we see cost improvement as a continuous process, we will never stop trying to drive on costs and become increasingly efficient. As a discrete initiative, our discrete initiatives, supply cost initiative, we will continue the MPI initiative, where we are systematically attacking the DRGs which are the most problematic once in each of our hospitals. We will continue well into next year and the benefits of that are still out in front of us. But those aren't the only things, and won't be the only events from a positive or a pressure standpoint that will occur. So we are not sitting on our hands. You shouldn't conclude that everything that we can do is done, but on the other hand, we are not prepared to say what the net result is going to be. Gary Lieberman – Wells Fargo: I guess but just looking, you have gotten four years of data there, and obviously this year has been very good without forecasting specifically 2010 which is you know very big picture, is there a reasons to think that we can continue kind of closer to the 2009 levels versus where you had been in 2006 or 2007 of 2008?

You know it is you're trying to get me sort of back into an outlook number by looking at a graph and I don't think you're going to get me there. Gary Lieberman – Wells Fargo: Okay, thanks a lot.

Next question comes from the line of A.J. Rice with Soleil Securities. Please proceed. A.J. Rice – Soleil Securities: Hello everyone, thanks. Just thanks for the information about the contracting with the managed care and the fact that you have so much of it locked up even now into 2011, I guess with healthcare reforms rolling around and not only managed care, but also on the other side of the equation, your vendors medical device companies be under potential pressure, and I know some of those, a lot of those contractors long term as well. I guess I'm curious whether there's any contingencies in those contracts that as what is on the table now plays out in either the managed care side of the question or the medical device side of the question, come back to you and say, let's re-look at some of these contracts that have been lockup?

The only thing that is in the contracts from sort of an unusual flexibility standpoint that we haven't – that we had in the past is that inflation hedging or adjustment clause that we started working with some of the contracts to protect themselves against hyperinflation and we go out into the longer term or the midterm, 2011 and beyond. The I think that healthcare reform isn't likely to affect these contracts from any kind of a direct standpoint. It could be changing the environment and you know if it does, both parties will consider what kind of effects that have although it does not seem like that is something that we are worried about in affecting 2010 or 2011. A.J. Rice – Soleil Securities: Got it. I mean I'm thinking like the device companies maybe serving to this excise tax, there has been some discussion, will they turn around and push that over to you, but it sounds like in your contracting right now, you're not really – nobody is coming to you and saying, hey, I've got to build the contingency and your own cases go through or something like that?

No. We did try to get carve outs on implants and devices as a means of making it more neutral to us what happens in that area. A.J. Rice – Soleil Securities: Right. I'm thinking more from them getting it coming to you and asking for potential concessions and you getting concessions from them. Okay.

I mean if it is an excise tax that is paid at the point-of-sale which is one of the proposals, I am not sure that will really last, then obviously that is something that would be a cost increase to the purchase just sales taxes is, and that is not the intent of the Congress to tax the providers. They want to tax the device manufacturers, at least recover some of the excess economic surplus in that segment of the industry. So I think that A.J. as an opinion, I think that would probably trigger a lot closer scrutiny and maybe some re-contracting of that purchasing area. A.J. Rice – Soleil Securities: Okay, all right, that make sense., I guess my other question to ask about was if you think about the areas that have been impacted by the economy, the level inpatient and outpatient activity generally in the facilities, the collection rate on yourself pay, the mix of patients skewing away from commercial the to a lot more self-pay, have you guys, do you have view as to as the economy stabilized in turn, which of those metrics might be the first indicator to turn and which ones are likely to be more of a lagging factor?

I think so to guess right, none of us have lived through the recession, but if you start having job creation, then clearly there is a addressable progress in terms of commercially insured patients. To the extent that converts people from uninsured to commercial insured, that is a good thing. Even if we are having difficulty collecting the patient portion of it, at least the vast majority of them is covered by their insurance. So we guess I'm not an economist but you might look at job creation which leads to enrolment changes and we probably would get some early indications on that from looking at the managed care companies. We watch on an instant basis collectibility of accounts and the experience we're having with individuals, whether they are insured or uninsured and how they pay us. We would probably start to see some improvement there as an early indicator which ultimately gets reflected one way or another in bad debt expense. A.J. Rice – Soleil Securities: Sure, okay. All right thank you all.

Your next question comes from the line of Justin Lake with UBS. Please proceed. Justin Lake – UBS: Thanks, good morning.

Good morning. Justin Lake – UBS: The first question I had was just on your commercial managed care, the government managed side of the commercial book, it seems to be going very nicely. I'm just curious with all the Medicare Advantage Plans out of the trying to create a network, are you available to negotiate prices that are better than traditional Medicare standpoint?

I think first we have to pause for a little bit definitional moment. So you have actually raised an issue that I think there is a fair amount of confusion about. When we talk about commercial managed care, we're not talking about anything having to do with a government program run by a managed care company. We're just talking about people who have jobs, who get insurance, and those are commercial managed care. And the statistics that we give about commercial managed care conditions are by definition lower than if you we gave some sort of statistic that was a hybrid of commercial and government and managed care programs, which would be dramatically better, but it is a meaningless statistic. So I think you probably just misspoke, but I just wanted for the audience to clarify that point. So you're just talking about the government programs piece of it and the question is whether we are able to negotiate prices with them that are better than what we get on traditional Medicare, and the answer is typically yes. Justin Lake – UBS: Any order of magnitude you can share with?

You know we really haven't quoted kind of a key pricing statistic, but it is small. There it is a small improvement and there is also a different – when you introduce that intermediary than post constraints on utilization, that suppressed surprised utilization versus the unconstrained Medicare fee-for-service patients, that is an important thing to remember. So there is slight pricing up tick and there is a slight downtick in terms of utilization. Justin Lake – UBS: Got it. And then just on the difficult commercial managed care book, we have been, I'm just curious, do you have any metrics to share with us as far as market share? And the one I think might be interesting is just thinking about your local market share from a debt standpoint versus what you think your market share is from a commercial managed care initiative standpoint?

If we go back to the very beginning of the call, my prepared remarks, it is really hard to come by good statistics. But I gave that example of California, where you can match up the enrolment losses versus our declines in commercial managed admissions and they're almost identical. I think that is a very good proxy for market share and probably the only reliable one and only in the states where you can really get that data. Justin Lake – UBS: So you would say that you market share hasn't declined, , I'm just curious.

So we have used – in the opening comments I used facts to demonstrate that it in California, it had remained stable and then our inference was that there is no reason to believe it is not like the same experience in other states and we watch it pretty carefully. We just don't have the facts to go through prove it. Justin Lake – UBS: Okay, thank you.

You next question comes from the line of Whit Mayo with Robert Baird. Please proceed. Whit Mayo – Robert W. Baird: Hi, thanks. Good morning, thanks for squeezing me in. Just looking through you Q, it looks like in the third quarter, CMS has suspended settling cost reports based on 2007 SSI percentages but still using that percentage for DSH, can you just remind us first, I guess, what is going on there and refresh us for what the physical intermediates are doing now? And maybe secondly just expectations for DSH and UPL over the next year and how that compares year-to-date?

On the SSI, the five-year cost reports are the ones on which there is some relative suspense as they have sought out what it is they are going to do in terms of adjusting the prior year. On the current year the intermediaries are applying new rate and we have said that the annual impact was about $8 million to us of the SSI changes that took place. We recorded 22 million dollars in Q2 related – for the full effect through that date, and then in the second half, just been recording based upon that $8 million annual will run rate. So that is roughly speaking the status with respect to that. On DSH, and all of the state funding areas, we watch it carefully. I don't think that there is outside of what I just mention pm the $8 million dollars anything else beyond what is in the 10-K with respect to looking forward on DSH relative to the past. There is no other big changes in work on the state funding side. There isn't anything large pending in terms of any budgetary adjustments by the state to – state to flow through to us. There is the big upside potentially in California, so (inaudible) talking about earlier which we disclose in the 10-Q and could have an effective of $61 million. Whit Mayo – Robert W. Baird: Can you explain the eight million again, I do know if I fully understand exactly what that represents?

Well, it is the effect of applying the SSI adjustment to our reimbursement levels, sort of on a full-year basis, lower our reimbursement rate $8 million relative to what it was before.

Okay, that is helpful. And then maybe Trevor, just one other question with regards to Medicaid, lots of discussion about the increased match going away at the end of the year, you are obviously pretty close to the federation, just you know any thoughts about where you think that match could be (inaudible) any comments you have would be appreciated.

Good. And you know what, instead of answering that myself, we had our Vice President of Government Relations, Dan Waldmann, fly all the way from Washington. So he's sitting next to me, I'm going to ask him to answer that one. Dan?

Yes. Just specifically obviously there is a lot of attention being given to that increased (inaudible) expiring at the end of next year. There is a provision in the House bill that was just released that would provide for an extension for states with high unemployment rate but haven't identified which those are. And I think that as this moves forward, obviously the governors are expressing a lot of concern about the additional state budget outlays that are going to be required under the expansion of Medicaid. So I think those are issues that you will continue to see, work through and addressed as part of the healthcare reform. Whit Mayo – Robert W. Baird: And Dan, any discussion in the Senate right now for where that stands?

No discussion that I am aware of although we're kind of the Senate isn't a little bit of radio silence right now, and were waiting to see the bill from Majority Leader Reid which is supposedly at CBO getting scored right now. He has indicated that not this week, possibly next week, maybe the week after. Whit Mayo – Robert W. Baird: Great, thanks a lot guys.

All right, thank you. Thank you very much.

Due to time restrictions, this concludes our Q&A session for today. I would like to turn the call back over to Trevor Fetter. Sir?

Thank you operator. And thanks to the audience. We weren't able to get to every question today. If you have a question please feel free to call Tom Rice and otherwise we will see you next on our fourth quarter call. Thank you.

Thank you for your participation in today's conference. This concludes the presentation. You may now disconnect and have a great day.