Good day, ladies and gentlemen, and welcome to the Q1 2010 Tenet Healthcare Earnings Conference Call. My name is Caitlin, and I will be your operator for today. [Operator Instructions] I would now like to turn the conference over to your host for today's call, Mr. Thomas Rice, Senior Vice President of Investor Relations. Please proceed.

Thank you, operator, and good morning, everyone. Tenet's management will be making forward-looking statements on this morning's call. These statements are based on management's current expectation 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. During the Q&A 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.

Thanks, Tom, and good morning, everyone. I said on our February conference call that we're making changes to our Investor Relations program for 2010. As you've already noticed, we shorted our earnings release significantly. Our intention is to narrow the focus to the key items driving our performance in the quarter. Let me assure all of you, we value the extent of our disclosures, that we're still completely committed to transparency. All of the information you're used to seeing in our earnings release is still in our 10-Q. We're also going to streamline this call. Biggs and I will be the only speakers making prepared remarks, but Steve Newman and others are here to answer questions. We've cut the length of our remarks to 10 minutes, so that we'll have plenty of time for Q&A and can still finish the call within one hour. So in the spirit of being concise, let me jump right into a discussion of our results. I'm very pleased with our adjusted EBITDA for the first quarter, which grew more than 7% over last year's first quarter and reached a margin of 12.7%, our highest quarterly margin in seven years. Our adjusted EBITDA in the first quarter was greater than in any first quarters in 2003, and we achieved it with half the number of hospitals we had then. On the basis of the strong start to the year, we are confirming our existing full year outlook for adjusted EBITDA in a range of $985 million to $1,050,000,000. While we achieved our earnings objective for the quarter, volumes were soft, but our performance was excellent in the other key economic drivers of acuity, pricing and cost control. Our proven ability to control cost has significant positive implications for our longer-term operating leverage. Once we achieve…

Thank you, Trevor, and good morning, everyone. I will limit my introductory comments this morning to the refinements we are making to our outlook for 2010. Our most important comment is that we are confirming the outlook range for adjusted EBITDA for 2010. Earlier in the year, we set our outlook range of $985 million to $1,050,000,000. That range continues to appear very realistic to us. The summary of our refinements to our outlook assumptions is provided on Slide 6 on the web. On that slide, you'll see that softer volumes in our first quarter have caused us to re-evaluate our volume outlook for the year. Our outlook for admissions growth has been reduced by 100 basis points. We're now assuming admissions will decline 50 to 150 basis points in 2010 as contrasted with our initial assumption of approximately flat admissions for the year. Because our initial assumption for 2010 growth in outpatient visits was significantly stronger, we reduced the outlook on the outpatient side by a more significant 200 basis points. Having said that, much of the volume declines in the first quarter relative to last year and correspondingly the variance in our expectation for the year is in lower acuity conditions. So the revenue and EBITDA effects are not as significant. Accordingly, pricing on a per patient basis is favorably impacted by this patient mix shift to higher acuity. We're now significantly more positive on the growth we assume can be achieved in unit revenues. Our assumption for growth in inpatient revenue per admission is now more bullish 300 to 400 basis points, representing an enhancement to our initial growth assumption of 100 basis points. We are making similar 100 basis point refinement to our assumed growth in outpatient revenue per visit to a new range of 400…

[Operator Instructions] Your first question comes from the line of Tom Gallucci of Lazard Capital Markets.

Obviously, you've done a strong job on the cost control side. Just looking at the volumes a little bit more closely, how do you sort of view your market share, I guess. Do you think that the pressures that you're seeing out there are equal or perhaps, your losing any market share, I guess both overall and then particularly, within the managed-care?

We share your concerns regarding market share. And during Q1, we did a very deep dive into our market share across the country. And our results really were quite encouraging. For example, if you'd look at our hospitals in the following states, you get the following results. California was up 0.1%, Florida was up 0.3%, Texas was up 1.2%, Missouri was up 0.3%, Georgia was flat, and our only state that was down was North Carolina, where we lost market share of 1.1%. This covered the change in market share between 2008 and through 12/31/09.

Okay. So that was your estimated change in market share for your facilities in those markets?

That's right, Tom.

And then just maybe can you give us a little bit more detail, we've seen a lot of headlines over the last couple of years about managed-care relationships and, in certain cases, expanding those. But can you talk about maybe a little bit an update on what you're doing in terms of either positioning, creating or working on splitter-type docs to really get the leverage out of the contracts that you're signing and get the volumes through the door ultimately?

I think those are both important aspects that we're working on, Tom. We have a big push to make sure all of our active medical staff are participating in the networks of the managed-care companies that we've contracted with. We see variability across the country by pair in terms of that. They range from 70% to 90%. We're trying to push all of them to the 90% level. That gives our doctors the opportunity to take care of those patients that are inpatient and outpatient facilities. We're also organizing our physicians in selected markets around the country to contract with managed-care payers on a single signature. Done that in a couple of areas, we continue to do that. We believe that's a proactive strategy, getting us ready for the post-health reform era with bundling and creating accountable care organizations.

Your next question comes from the line of Adam Feinstein of Barclays Capital.

Maybe just a couple of questions on the cost management, obviously, very strong trends there. So just maybe a few things I want to go into. I guess last quarter, you called out some items that were somewhat one-time in nature, in terms of labor costs, in terms of merit increases and 401(k) matching, but I would expect there was probably some fall through. So I guess last quarter you caught about like $25 million of incremental cost. I was just wondering if any of those costs were still -- any incremental cost there in the first quarter that we should think about?

No, there weren't any unusual one-time type of expenses or step-ups over the prior year to note in the first quarter. The HIT expenses, which we of course said we expected for the full year, were very evident in the first quarter. That will ramp up more later in the year.

And then as we look at the cost, once again, great cost management, controllable operating cost of 1.3%. And now the quarter, on a per adjusted patient day basis of 3.5%, which is still a lower than normalized number. But just curious as you guys think about it, do you look at more at the total number? Or do you look at it more on an adjusted patient day? So just as you guys think about that, and I know what was going on with patient days, but I guess just trying to think about in terms of managing the business, in terms of how you guys analyze those metrics?

Well, we look at it both ways. Certainly, the benefit of looking it on a patient-day basis is it normalize it for volumes swings. So that is an important metric. It is not a perfect metric because, as we know, shifts between inpatient and outpatient and other mixed shifts can create some distortion in the stat. So it's not a perfect stat. And you have to always be aware of that, but it is best one available and it is one we used on a regular basis to look at our cost performance.

So you guys are think that, that 3.5% is a better way to think about cost relative to the 1.3%?

Well, at the end of the day, obviously driving down total costs relative while you're trying to drive up revenue is the key. And so total cost performance is important. If we're looking at productivity, yes, we try to get down to a patient-day basis, but obviously the bottom line is the most important thing. And so at a macro level, we have to manage to.

I guess on the 10-Q, you mentioned -- you were talking about some of the regional variability here and the talked about three out of four regions suddenly decline in volumes. And then on the outpatient side, just mentioned that the central region did well. So I was just curious if you could just talk a little bit more on the regions, and I guess what was it about the central region which led to better volume growth than some of the other regions?

Adam, that's correct. We did say that in the Q. I want to give you some additional color about outpatient visits and variation by region. Certainly, our outpatient declines across the company were largely related to imaging declines. About 70% of the total was hospital-based imaging being declined for the quarter, also with outpatient laboratory testing contributed to that. It's only isolated to two sites in California. And to some extent, also compromised in Texas with respect to outpatient. That may sound odd since Texas is part of the central region. But in those two sites in California, physician IPA-owned facilities opened, which took imaging and laboratory testing out of the hospitals. And we have a unique situation in Texas where freestanding emergency rooms were approved by legislature. That then pulled some visits out of our hospitals, especially in Houston and Dallas. So central was stronger in aggregate, but those two issues really aggregated to keep our outpatient visits negative. And when you consider the lack of flu-types syndromes that we saw last year in our ERs, which we didn't see this year, I think our aggregate performance down 0.6% and emergency visits really was quite minimal.

Your next question comes from the line of Ralph Giacobbe of Crédit Suisse. Ralph Giacobbe - Crédit Suisse First Boston, Inc.: I know you guys don't give quarterly guidance, but is it fair to look at the progression of EBITDA we saw last year as sort of a way to think about this year? Or should we be thinking about that differently?

You're right, we don't give quarterly guidance. And actually at this point, I'd have to go back to look at the progression last year. I think that last year was flatter than what we've experienced from a seasonal fluctuations standpoint in the past. While we're in a recession, I think it's a little harder to say that normal seasonal patterns work. We certainly are expecting that as the economy stabilizes and improves that we will see some positive trends as we proceed through the year. And in particular, the fact that we were off to a slow start on volumes, we expect to see that turned and for those trends to improve through the remainder of the year. So it makes it I think a little bit harder to say it's going to look like the past. I'm sorry that doesn't answer -- it give you two clear view but that's all I can give. Ralph Giacobbe - Crédit Suisse First Boston, Inc.: I mean, last year, I think it was something like 27% or 28% EBITDA came in the first quarter. Now, obviously, this first quarter is a little bit weaker as it relates to the volumes side of things. So I was just wondering if that wasn't the right way to think about things because last year, obviously, disproportionate came in the first quarter?

Well, I think if you -- certainly, if you look at our outlook for the year of $985 million to $1.050 billion that suggest that there's some variation in the first quarter and remainder of the year. That's about as far as I'd come to giving you quarter-by-quarter look. Ralph Giacobbe - Crédit Suisse First Boston, Inc.: And then just want to go back to your comments on the managed care side, I think you said 80% of the book was done for 2010, 60%, 2011. Can you give us just the average rates between those years?

I'm sorry, what do you mean the... Ralph Giacobbe - Crédit Suisse First Boston, Inc.: Or range? Just your pricing point increases.

In terms of pricing, I think the ballot say this year should be the same as last year. And then we were not quite at the point of projecting the 2011 numbers yet, even though our 60% in, we have pretty good visibility, which is at the point of 2011 guidance.

Your next question comes from the line of Shelly Gnall of Goldman Sachs.

A question on the supply cost. So at first, it just looks like there's some improvement here. As a percent of revenue, you've got the supply cost down to 17% now. That's down 30 basis points year-over-year. But if we look at the supply cost per adjusted admission, I guess we're seeing -- is that first, is how you look at it? And would you agree that we're seeing 3% inflation on the supply cost so far this year? So if that's the right way to look at it, can you tell us if we're seeing any of the benefits from your MPI initiative at this point in the results? Especially, are we seeing any of the $30 million supply cost savings that were guided in the last call?

Biggs, why don't you address the outlook related part of the question. We'll have Steve say a little bit about MPI and some of the accomplishments there in the supply chain.

Well, I think we were pleased with our supply cost performance in the quarter. I think you had a question as to we ever look at it on a patient day basis. I think that there are problems with looking at supplies like -- and I'm going to go back to earlier question, in this case, you can have a mix affecting the areas in which supply expenses are incurred that don't show up in the adjusted patient day denominator. So by example, if you have more surgeries, it does proportionally change your patient days but it may change your supply more significantly. So you really have to dig in and understand on a specific basis what's happening in the business, now that supplies are performing against that. So admittedly, it's hards for you all to do it, totally from the outside looking in. So for the year, we certainly still believe we're going to get yield from all of our supplies initiatives, including MPI, nothing has changed there. I'll let Steve talk to what we've been able to do so far.

Shelley, just for example, in the first quarter, our spinal surgeries were up significantly year-over-year. Those are very high-cost implants, yet each of those still just contributes the same as any other surgical procedure in terms of adjusted admissions. We're doing a number of things in MPI to continue to drive our supply cost down. The impact from MPI is both short-term and long-term. We're able to certainly continue our efforts to drive down individual unit pricing. In terms of implants, we just had a concession on our cardiacs stent implants with another 10% drop. That, combined with more appropriate utilization, is going to continue to drive down our supply cost in cardiac interventions. So I think those are two examples of how we're continuing to drive our supply cost down.

To Steve, to follow-up with what we've seen so far, I guess. If you are able to consolidate vendors, for example, in the spinal side or on the cardiac side, for the hospitals where you're doing MPI on a targeted DRGs right now, is it too soon to see the supply cost savings in the results that came out today? So if you do consolidate vendors or limit your product selection, does that contracting take time to flow through, so we wouldn't see it until next quarter, six months from now? I mean, does it get push out like that? Or will we see some cost savings in realtime?

I think to answer your question directly, Shelley, some of the savings you would've seen in the quarter in cardiac, especially those where we touched those first-wave hospitals and some of the cardiac DRGs in 2009, they would in fact show up in this quarter. Others, as we flow-through, take more time to develop. So it's both short- and longer-term cost savings in the supply area. Also, I should mention that we're working continuously on length of stay and driving down other variable costs, other than the supply cost, through the Medicare performance initiative.

On the charity care, you're seeing less charity care in the quarter. Can you talk a little bit about what's driving that? Is that the Right Care Right Place initiative?

Well, I think that it will be a combination of things. It would be the right care, right place initiative. Also our eligibility program where we have reps in all the hospitals working to get people qualify for Medicaid. So we're pretty confident that over the last couple of years, we've gotten more people qualify for Medicaid than we had previously. So those are the two primary drivers. There's also some evidence, anecdotal, that some undocumented immigrants are returning to their home economies due to job loss, that's, once again, harder to quantify our track. But all those things are having an effect, we believe.

Your next question comes from the line of Sheryl Skolnick of CRT Capital Group.

The first thing is, I'm going to go back to MPI and I think that there was some interesting disclosures in the Q with respect to the supply cost, et cetera. But what I'm more interested in is, we saw, despite a significant increase in acuity that drove really, I think, perhaps even record rates of growth on outpatient revenue per visit, as well as strong growth on net revenue per adjusted admission. Despite that higher acuity, we saw a reduction in the average length of stay. Now that to me is fascinating. Is this proof of Medicare performance initiative beginning to take root? That's part one of the question.

I think the short answer to your question is yes. And it is particularly noteworthy that the length of stay was down in the quarter, because our OB deliveries were down 4% or over 730 deliveries. Those, as you know, have a length of stay of between one and two days and tend to pull down the overall length of stay. So with the absence of those, you would have expected our length of stay to creep up. So I do think the effort that we're putting into the Medicare performance initiative and the rollout of our case management program aggressively to each hospital has made a difference in the length of stay, which then will affect our variable costs and our profitability for inpatient stay.

The second question is, as we look at the Medicare performance initiative across the board, you addressed the issue of it being both a short-term and a long-term performance. But as you look at your pace at which you're rolling out, the degree to which physicians are accepting this, recognizing the changing -- you're not changing employee-physician behavior and as much as you're changing community-based physician behavior, which is the harder thing to do. What has been your experience in your track record to date? How many hospitals have it? How may hospitals are scheduled to get it? And I'll then stop there and let you answer that question.

With respect to how many have completed Phase I of MPI, they're 20. We expect remaining hospitals to be completed with Phase I rollout by the end of the first quarter of '11. We've also begun Phase II at some of our early hospitals that would be the second five MS-DRGs with respect to loss related to excessive variable cost. Back to the issue of physicians, we continue to find physicians interested in learning more about the Medicare performance initiative. We kicked off MPI at one of our Houston hospitals yesterday. We had 30 physicians in attendance. Our Corporate Chief Medical Officer was there as well as our Regional Chief Medical Officer. And I think as the environment changes, as healthcare reform moves forward, as physicians understand their performance, both in their office as well as in-hospitals and outpatient facilities, is being measured by both commercial and governmental payers, with the potential for their pro fees to be affected, they are coming on board with the idea they should participate us. So I do believe that the embracing of MPI by physicians is increasing with time.

And pro fees are professional fees in the aspect of...

Sorry for the acronym.

Yes, and all of that makes a very good sense. I don't know of any doctor wants to stand up in front of it at court and say, "I take pride and I'm providing lousy care at a high price." And then if I can move on to another question, which is, given where the performance is today -- I'm going to step back from the detail this quarter, given where the performance is today, would you describe the company as having moved out of the initial phases of the turnaround and into the middle innings, number one. Number two, if so, what is more crucial to do right now? And include in this, please, an update on your physician recruiting. Is it to recruit the right physicians in the right markets? Is it to -- as well as the Medicare performance initiative? Is it the control of costs? Is it expansion through acquisitions? Can you give us an idea of your strategic thought process about where the business is today and where it needs to go, say, in the next three years or pick a time frame, but where you are today?

Sheryl, this is Trevor. You know that sports analogies are not my forte, so the...

Yes, well the only other thing was to second trimester pregnancy and I don't think people would appreciate either.

No, that wouldn't be any better. So I'll defer on the innings question. I think we clearly put all of the clean up and all of the legacy issues behind us. And so we're just really operating the company in a way where we're focused on the basics of building volume, making sure that the pricing increases we are able to get are fair and appropriate and controlling cost. And driving cash through a variety of initiatives, we don't necessarily talk about it on this call, but we've done very well in bringing working capital out of the business. And even seemingly little things, I threw out that little factoid about the savings in rent on our headquarters move. But basically, every decision we make is made with the cost imperative in mind. So I would say that for some time, we've been operating in more of a stable environment. Clearly, volume remains our number one challenge. A few weeks ago, we had our 350 top hospitals and corporate managers here in Dallas for a conference, that was basically the entire topic. So the initiatives we have on volume, the initiatives we have around recruiting physicians, the MPI initiative, which is very directly focused on cost and quality and improving that, those are the engines that we are counting on to continue to drive improvements in the economics. And I think we're approaching a level where although our margins are still low relative to the industry peers, they're not orders of magnitude low like they were and we are within reach continuing to improve the levels that we can be proud of.

As we look at your guidance for this year, and I think this is a question earlier for Biggs, you did nearly $300 million in EBITDA this quarter. It appears to be as clean an EBITDA number as we've generally seen, so accepting that. And as you've noted, volumes were especially weak, perhaps, affected by weather and lack of flu, the volume comps just simply get a little bit easier, given that weather may straighten itself out, the economy may improve, it just seems to me that if you've done better in the first quarter relative to the midpoint of your guidance, why would you then therefore be -- unless you thought you were going to do this all, why would you therefore be sort of apart from just generally being conservative, doesn't sort of stand to reason that the implied numbers from consensus don't give you enough credit for getting traction on all of the positive things you've identified, but do give you credit for not getting traction on the commercial managed care. Is it simply that given where you are today, it's just more appropriate to be conservative? Because when I look at your numbers and the way they work, I have trouble keeping them down.

Well, I think that there's a couple of points of conservatism or couple of points where mathematically, there's some cost increase remainder of the year, such as in healthcare IT where we haven't spent much in the first quarter and that's going to go up in the remainder of the year, so that sort of clearly identifiable as a variance in future quarters relative to this one. But having said that, your question is still a good one. I do think we're conservative with respect to cost performance otherwise. Malpractice expense, very low in the first quarter. We find that very challenging to forecast and won't give line item guidance. But in a nutshell, we presume the remainder of the year that it goes back up from this first quarter level to stay conservative along that point, and it's quite possible that we will be better than that. As I mentioned before just besides our efforts to control malpractice expense, the fact that there will be likely increasing discount rates into the future will cost that expense to be lower. But at this point in time, that's a difficult thing to forecast just like the economy, so we have left it at a conservative point. Same with our overall cost performance, I think, that we had a very good first quarter. Everything worked well even in a period where we had declining volumes. I think that we haven't fully extended that level of performance out for the remainder of the year to stay conservative as we watch the economy, but once again, we will see how that unfolds. In balance, as I said, we think that our outlook, we're very comfortable with it. I think that we're conservative on the cost, as I said. On the volume side, we still have some improvement to accomplish, so we've decided to leave it alone in the aggregate as far as the overall EBITDA outlook looks. But you're right to look at the cost and say, "Gee, it appears conservative."

Your next question comes from the line of John Rex of JPMorgan. John Rex - JP Morgan Chase & Co: Just picking up and continuing on kind of the cost commentary you just gave there. So I just want to focus particular on the op expense line. And we think about some of the elements you said that maybe that were running at lower levels than you expect for the full year. Can you help us size -- if we're jumping off from the absolute dollar level that you reported in the 1Q, what do you think should be kind of more normalized quarterly run rate for that category when you think about some of the elements you just described?

To be clear, there's nothing in the quarter which isn't repeatable. So I've mentioned malpractice expense and the fact that it could go up, we're very conservative with respect to that point. However it is possible that it will stay at a very low level throughout the year. Just difficult to forecast. So I want to resist the temptation, try to create some new run rate and suggest that empirically there's a number in there. It was just what you should multiply times four to get to a full year estimate, because I think that it doesn't quite work that cleanly. John Rex - JP Morgan Chase & Co: So you wouldn't spike out anything all that unusual -- I mean, so let's take malpractice and set that kind of difficult forecast. Is there any other item you want to spike out and say kind of unusually low in the Q? Or x malpractice, is this a decent run rate to be thinking about for the stepping off here in 1Q?

I think, as I said, everything is repeatable. There is good cost performance across the board. If you look at everything from utility, to contract labor, expenses, everything was running well. We managed very effectively all of our efforts over the last couple of years to fine tune. Our cost management practices were evident. So I don't think there's anything else that I would pick at and say, "Gee, there is a single event which would unwind or some trend that would unwind." Malpractice, this is a single largest one in which it's relatively low in the quarter. It could stay low. But for the sake of the forecast, we haven't predicted that. And then HIT expense, we said, will go up over the remainder of the year as that's to more back-end loaded effort. John Rex - JP Morgan Chase & Co: I appreciate the share data you gave. Just want to be clear on that, was that all in share, or was that managed care volume only?

That's all payors. It's not possible for us to really get to universe, specifically, of the commercial managed care covered lives and utilization, so we used all payor data. John Rex - JP Morgan Chase & Co: It would seem like just given where the volumes are running that there has been a share loss on the commercial side, and I know this is going to be way more of an art than a science, but if you think about kind of disaggregating kind of the economic impact in your market from what you think the share loss impact might be, when we see kind of the commercial volumes where they're trending?

So this is highly speculative. But if we look at corporate lives from Q1 '09 through the end of Q1 '10, there's about a 2.8% decrease in commercial managed care covered lives. In couple with that not only the decrease in covered lives but the utilization rates of those covered lives that's still have commercial managed care coverage, then you'll have to say that our losses are pretty much about what the shrinkage in the coverage and utilization is and therefore, I would come to the conclusion, we're not losing commercial market share in most of our markets. John Rex - JP Morgan Chase & Co: So your expectation right now would be a stabilizing economy would at least kind of bring you back to kind of more flattish performance on the commercial side? Is that all that would take to get there, I guess, to stabilize in those numbers? Or is that more so you have to achieve some progress on the physician recruiting targets also?

We got to do both. First of all, you have to have job creation, get the enrollment numbers up. Presumably, there's some pent-up demand when people become re-employed and re-insured again and then of course, the physician. All of the efforts Steve talked about earlier on the physician side are incredibly important.

I'd give you one leading indicator to look at. And while our outpatient surgeries in aggregate across the company were down in three of the four regions, those outpatient surgeries were up for the quarter and outpatient surgeries are frequently more elective surgery, and that might be an early indication of the consumer deciding to move forward and have those procedures done. John Rex - JP Morgan Chase & Co: If I was taking the commentary you gave on your March and your April results, assuming that continues and a lot can happen, but would your expectation be the 2Q should show your meaningfully better commercial volume results?

It's too early to make a prediction like that.

Your next question comes from the line of Doug Simpson of Morgan Stanley.

If we try to strip out the cyclical factors and we just think about continued benefit buy downs and the pricing activity you've seen, how would you sort of set up a three-year trend line for commercial volumes if you could isolate some of the shorter-term dynamics?

I'd say it's impossible to answer that question. It's probably a question more appropriate for somebody following managed care, one of the managed-care companies. But really hard for us to have visibility into that.

And then just to follow on the comments on the commercial volumes, are you thinking about potential -- looking into the second half of this year, as people start to hit the 18-month limit around the July, August time frame for the COBRA benefit, is that something we should be thinking about in the second half of the year for any impact on volumes? Is that something that would show up, or does it not really move the needle?

We've been asked so many times about COBRA. And as you realize, when patients come into our hospitals, they either have insurance or they don't. We don't know if they've obtained that insurance under COBRA. I suppose that expression of opinion seems to me like COBRA benefit has become pretty popular. It is on the verge of becoming an entitlement.

And we also tried to estimate the effects. And although we don't have empirical data based upon statistics provided by managed-care payors and others, we don't believe it has significant impact on us. That could be wrong. We don't believe so.

Is there any directional commentary just in the second half cash flow seasonality just as we're thinking through the models?

Well the most significant element of cash flow seasonality is in the first quarter, we have a big usage in working capital related to the payment of 401(k), our incentive compensation plans and the normal pay down of payables that occurs after having a build up at the end of the year. That effectively reverses itself over the remainder of the year. So if you look at our cash walk-forward, you'd see that working capital for the next three quarters is expected to be a significant source of cash.

In each of the three quarters?

Yes. Particularly, it builds up I think in the fourth quarter. Some of the things like incentive comp, 401(k) build more or less over the course of the year, but we talk about payables growth, that's more of a fourth quarter activity.

Your next question comes from the line of Whit Mayo of Robert Baird. Whit Mayo - Robert W. Baird & Co. Incorporated: You've alluded recently to me what seems to be a more aggressive posture with regards to outpatient investments and service line development. Maybe, Trevor, can you talk a little bit about how you're thinking about in-market acquisitions now and how important that is to your overall strategy going forward?

That's a very timely question because actually, last Friday, we closed on an outpatient acquisition, outpatient center acquisition in Nacogdoches, Texas. So acquiring outpatient centers is a key part of our outpatient development strategy. We are taking a more aggressive position at least in terms of activity in looking at inpatient acquisitions. We're little reluctant to get involved in this acquisition. I might characterize that as turnaround where you've got a system in distress that's leading, and a lot of capital in some time is required to turn it around. But we've at least made it clear to brokers who are involved in the traffic of these types of transactions that people that they should talk to about it. We find the outpatient segment a more fertile opportunity but obviously small dollars and a smaller impact. Whit Mayo - Robert W. Baird & Co. Incorporated: And maybe any way to maybe sort of size up expectations of maybe what we can expect to see over the course of the next 12 months or so?

I don't think so. At this point, I've always been reluctant to give expectations around acquisition pipelines, because it can put undue pressure on the people inside the company try and make acquisitions work that otherwise we shouldn't make. But I think you can expect us to announce and disclose them as we do them.

Your next question comes from the line of John Ransom of Raymond James. John Ransom - Raymond James & Associates: Just trying to get a little more behind the strong pricing, is that truly all pricing or was there some acuity in there as well?

It's clearly both. We do have strong pricing increases, result of all the negotiation that have taken place over the last couple of years. But in addition, it is a fair amount of acuity in the quarter too, so that's one thing that you look through the remainder of the year. We would expect the same year-over-year increase in per-unit revenue that we had in the first quarter on commercial. But it's still expected to be favorable and aligned with last year from negotiation standpoint. John Ransom - Raymond James & Associates: For example, what was your Medicare exchange quarter-over-quarter?

It went up a few percent. John Ransom - Raymond James & Associates: So if you had a guess, is that 60/40 price acuity, 70/30, 80/20, 50/50. I mean, just some ballpark number?

I don't have the exact stats here and I don't want to guess. John Ransom - Raymond James & Associates: The second question, just kind of going back, I'm always interested in when companies talk about things for a while and they try things to see how they work out. I know you had this big program under an old regime to have engage these footer positions and you also had a big -- you were earlier than most in terms of focusing on quality. So now that we're kind of three to five years beyond that, can you look back on that and say what worked and what didn't worked and how we should think about it?

Short answer, John, would be we're very happy we focused on quality. We continue to drive on quality. We're trying to improve patient safety. We've been continuously disappointed that we haven't been rewarded with both hard steerage and enough premium even though we're getting incentive payments from commercial payers today for the effort that we put in, but we continue to believe long term, it's the right strategy. With respect to our Physician Relationship Program, we're continually refining that. We've recently changed the incentive comp of the PRP representatives, the organization of that comp. We're improving their targeting on a monthly basis and we continue to believe that we'll pay dividends and we're confident in those strategies.

And your last question comes from the line of Justin Lake of UBS.

Just a quick follow-up on some of the commercial questions. I was wondering if you could -- you talk about the disparity between price there, obviously mix is improving. Can you talk about the differential between elective admissions or schedule admissions versus admissions coming from the ER on the commercial side and how that might have changed?

I think, the short answer would be, Justin, that we've seen weakness in our elective admissions and it seems to permeate preferentially the commercial line. As you might expect with their deductibles and co-pays and people not wanting to miss work, their elective surgeries on the inpatient basis would be down. On the other hand, Medicare elective admissions are not down significantly and those people have annual co-pays deductibles that don't change dramatically year-for-year. And if they're on fixed incomes, neither do their incomes.

And does the average acuity of an elective admission, I would assume, is probably lower than something coming through the emergency room? Would that be driving some of the mix shift?

That's generally correct.

Is there a way to, I mean, think about that from a market share standpoint? I would assume that the market share of emerging admissions is less tied to things like physician recruitment, and your capital spending, things like that, what others are doing in the market, the ambulance is going to come to the closest hospital rather than an elective procedure? Is there a way to think about that from a market share perspective and kind of relate it versus the economy?

I'm not sure you could really interrelate those variables and draw our market share conclusion from that, Justin.

I'm sorry we're not able to take everyone's question, but we were determined to leave this call at a one-hour time length. If you have further questions, feel free to call us. Also, I'd like to remind everyone that we will be in New York next week presenting at the BofA Conference and we look forward to seeing many of you there. So operator, this concludes the call.

Ladies and gentlemen, thank you for your participation in today's conference. This concludes the presentation. You may now disconnect. Have a great day.