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IPC The Hospitalist Company, Inc. (IPCM)

February 25, 2013 2:15 pm ET

Executives

R. Jeffrey Taylor - President, Chief Operating Officer, Director and Member of Quality Committee

Adam D. Singer - Co-Founder, Chairman, Chief Executive Officer, Chief Medical Officer and Member of Quality Committee

Analysts

Gary P. Taylor - Citigroup Inc, Research Division

Gary P. Taylor - Citigroup Inc, Research Division

Thanks for coming in. Thanks for staying with us. It's my pleasure to introduce IPC, The Hospitalist Company. It's the nation's largest physician practice group focused on delivery of hospital medicine and related facility-based services. They provide care in over 900 facilities, 28 states across the U.S. They see over 1 million patients. Anyway, to my far left is Adam Singer, who is the CEO; and Jeff Taylor, the COO on my near left here. So, gentlemen, welcome. Thanks for doing our format.

Question-and-Answer Session

Gary P. Taylor - Citigroup Inc, Research Division

First question is the same question I've been asking every company. So we'll start very high level and then we'll go lower level. But as a group and as a healthcare team, we've been thinking a lot about what we think we see over the next 5 to 10 years in U.S. and increasingly seeing payors shifting away from fee-for-service, paying for volume to paying for value, whatever that means exactly. So one, do you buy into that? That over the next 5 to 10 years we could see some significant shift away from fee-for-service in the U.S.? And two, if you do buy into that, what does IPC have to do to position itself the same, differently, better, et cetera?

R. Jeffrey Taylor

Well, first, I think we would say, welcome to our world. We think we have been doing this for 12 years now, trying to provide higher-quality care at a lower cost, which seems to be the overwhelming impetus of reform. Having said that, will this now generate changes in how we're reimbursed? Possibly, but we think we sit at a very crucial position, which is the hospitalized and facility-based skilled nursing patient and are the physicians providing that coverage at the sort of the highest leverage point on cost? We feel our metrics are very strong. We feel we can demonstrate our value to payers and to host hospitals. And I think we believe that -- Adam may have a slightly different view, that our reimbursement model will be more or less intact because we're already demonstrating value and delivering it.

Adam D. Singer

I mean I think it's -- fee-for-service in its current form clearly looks to be something that's going to be changing. However, if you mean by that a productivity-based model completely going away, I don't believe that's going to happen. From what we're hearing and what we're seeing, our models that will put certain parts of your compensation at risk for things that they're calling like value, whether you readmission rate is x or your patient satisfaction is y or you're complying with the reporting of different quality metrics under the PQRS program. But the base rate at which you're getting paid in some way is still determined based on how many patients you saw. And I don't think we're going to a world of pure capitation again. And as long as we have embedded in that the idea that patients have choice and can go wherever they want, it's very difficult to capitate on a prospective basis of population of [indiscernible] patients to change payment that way. So in some form we are still going to have a "fee-for-service" or productivity-based model. I just think parts of that overall number are going to be put at risk. And then I would agree completely with Jeff that, at IPC, we're in a perfect position. Our -- the mantra of the hospitals has been: how do we improve the quality of care while containing or controlling or reducing costs? And so once you get into the -- under these new reimbursement paradigms, where the patient has become sick, whoever is at risk for that dollar is looking for Hospitalist to be in some way involved in the care. And I think our strategy of then extending into the post acute even makes us more valuable to whoever is holding that risk. There really isn't any other solution.

Gary P. Taylor - Citigroup Inc, Research Division

Got it. If you have -- I mean, the -- predominantly what you've built today is on a fee-for-service basis based on patient encounters. There are some cases, a minority of cases, where you have some subsidy revenue from the facility. But have you had anybody, any hospital partner or even a payer partner who's being proactive and saying, "I don't just want to pay you per encounter. But if you can take readmissions down, I want to pay you for that. If you can take length of stay down, I want to pay you for that." These things that you do, is that codified anywhere?

Adam D. Singer

Yes and no. In terms of who pays us for the base work, which is Medicare and/or payers, commercial payers, pretty much they're still paying on a unit basis based on the numbers of encounters you see. However, there are participants, like hospitals, that are clearly now at risk, for example, for readmission rates or for the percentage use of observation versus submission or patients [indiscernible] et cetera, and they are writing increasingly contracts that give us upside if we can perform XYZ in terms of performance for them. But it's still not putting our base rates at risk.

Gary P. Taylor - Citigroup Inc, Research Division

Got it. And when you -- I mean you operate across the country and you operate in markets that are as long-term progressive in terms of aggressive managed care, management of patient, HMO model, debt model, like California and then plenty of other states where you operate in that are wild, wild west, fee-for-service as could be. Is there any difference in ability to grow a Hospitalist practice or kind of adoption of that model by either the referring physicians or the hospitals or the payers? How much does that differ state by state, market by market?

R. Jeffrey Taylor

There is some difference in markets like Florida, Southern California, Arizona, Nevada-Las Vegas market, where managed care is a more important player, you have a different -- slightly different marketing dent in that they can actually direct patients. So if you're going to Sunrise Hospital in Las Vegas and you're a Humana member, you're going to see [indiscernible] Hospitalist group. And so obviously we have to market to the payers much more aggressively in those markets than we would have to in a Chicago or a Houston or a San Antonio. But the value proposition is still the same and our utilization statistics are not markedly different from the markets where managed care is on top of us, if you will, and looking at everything we do to the markets where we're traditionally fee-for-service. So I think too much is made of this perceived distinction, at least for doctors, for fee-for-service. Are there perverse incentives of proceduralists and people that own part of an MRI or something? I guess, possibly. But in terms of primary care physicians, there's a shortage. The patients have to be seen by somebody. And if you take productivity out of the mix, you're losing something possibly very valuable and that is coverage for this patient population.

Gary P. Taylor - Citigroup Inc, Research Division

Got it. One of the questions I get a lot from investors is just vertical integration risk and how that might de-risk to IPC positions employment. I know you guys get asked about this on every call but I get asked about it all the time, too. So when you -- when we -- obviously we're seeing increased physician employment tends to not necessarily be a hospital-based position, they tend to be a referring physician, et cetera. But there is some thinking that, increasingly, as you see ACOs grow, that you're going to see these hospitals parting with physician groups, taking risks as a combined entity, and maybe that brings in some physician specialties that are current referrals that are just part of the infrastructure. So if you kind of think forward, I guess, what's the value proposition pitch to have IPC managing these hospitals on outsourced basis versus having a hospital, who's probably been through 8 renditions of this over the last 20 years, bringing that in-house or bringing that into the ACO and trying to do it themselves. Do you see much risk to your growth from that?

Adam D. Singer

No, don't see that much risk. I mean, hospitals, for me, you can't read just the headline when you deal with hospital employment of physicians. What's really happening in the trenches is the primary care base, at least now, before reimbursement changes or improvements happen, they have a tough time making it financially. And hospitals, in order to preserve their referral base, are buying up the primary care practices. And they're doing that somewhat in cardiology and maybe some other unique specialties, but you're not seeing that in the hospital-based specialties, and you're certainly not seeing them buy Hospitalist practices. So you can't just read the headline on hospitals are employing doctors. There are specific kinds of doctors they're employing. I think most of that's not by choice either. In terms of, should a hospital outsource hospital services? My obvious, biased answer is yes, and that's because that's all we do. We know how to hire these doctors, select them, train them. We know how to build all of the different compliance and risk systems that need to be put in place. We know how to monitor and measure their performance. And we certainly have the ability to create incentives for that performance. It's all we do and therefore we do it better than a random hospital that's randomly hiring internists and make -- and trying to make them into hospitalists. The ACO world presents an interesting new twist. And what we're seeing there is seen one, seen one. They're not all controlled by hospitals. Some are owned by physicians or physician groups or there are some who are mixed. There is no restriction that says a hospitalist only has to be part of one. As a matter of fact, you can be part of many different ACOs because we're not primary care providers. And I think at the end of the day, whether it's the hospital-controlled ACO or physician-controlled ACO, they're going to look for the partner physicians on the special side, which I would include hospitalists for those people that can actually produce results, that actually can bring a hospitalist group that's stable, that knows how to see these patient and to cost-effectively manage them. And I think they'll increasingly understand that they're going to need to contract with hospitalist groups that also do post-acute hospitalist work. Because the cost is not just in the hospitalization but in preventing the readmission once you've discharged the patient. And it’s really only groups like IPC that are going to be able to provide that service, at least, today. We don't see any of the hospital-employed hospitalists building out a post-acute strategy at the same time. So there's a lot of chaos going on, a lot of changes but, at the end of the day, as long as you're a group that can produce high-quality care at some reduction in cost while preventing a readmission, people are going to need your and are going to contract for your service.

R. Jeffrey Taylor

And I think there's an important distinction, too, in that as ACOs form, there's the automatic assumption that you have to be a member of the ACO or you're frozen out of that patient population. That's not necessarily true at all. When we're having discussion at a hospital [indiscernible] forming our ACO. We have the ACO, we have these specialists and we'd like you to take care of the patients. We say, "Fine. Let's negotiate rate and we'll take care of the patients." And they say, "Well, if you don't join the ACO though you won't get part of the upside." That's okay. You keep the upside. We like you. You're a good guy. Keep the upside. We'll just do it on our normal method and your control over us is you can fire us at any given time and I call it utilization [indiscernible] is not meeting your needs. So I think the thought that there is going to be just a massive sea change in how all this works, I think, is overblown.

Gary P. Taylor - Citigroup Inc, Research Division

Got it. I know what part of the answer is but I'm going to ask this anyway. There's one -- you're the only, sort of, pure-play, publicly traded hospitalist company. But if you had a copy of Modern Healthcare and you flipped to the back page, there's 32 ads per page for little hospitalist companies that you've never heard of trying to recruit physicians basically. So I think, one, that speaks to the demand side for the service and how robust it is. What do we see with all of these small companies? Do we see -- is there -- I guess one, maybe talk about kind of the differentiated value proposition that IPC gets to the doc [ph] and to the hospital clients. And two, are all these little, smaller guys that are circulating around, are any of them good? Are any of them -- you'd want to buy at some point? Any of them becoming sizable? Just competitive landscape, I guess, is the question.

Adam D. Singer

I guess I'll answer the first part of that. You got to be careful what you see in advertising. I mean, anybody can buy a 1-page ad in a magazine. There's really only, in terms of competition and companies doing hospitalist work, probably 3 or 4 at most. Most of those ads are medical groups that are medical groups that are just basically competing to hire physicians for their 1 or 2 hospital programs and aren't really companies. They're small groups. In terms of our desire to acquire them? Sure. We're looking -- we have a very robust pipeline of deals. We are acquisitive. We had a great year last year doing acquisitions and we plan to do the same going forward. And we're looking for any like-minded, high-quality partner that we can find, particularly in markets we're already in, as well as platforms in new markets to acquire. Of the larger guys, we obviously know them all extremely well and at a time in which it would be appropriate, we would look at them for sure for acquisition. Of course we would look at those kinds of deals. What was the other half of the question?

Gary P. Taylor - Citigroup Inc, Research Division

The value proposition?

R. Jeffrey Taylor

I think this is not simple work to take people trained in internal medicine and convert them into true hospitalists, who are not only making the correct diagnosis and prescribing the right medication but also understanding the setting in which they're practicing and understanding the economic realities of the hospital or nursing home they're practicing in to help re-engineer the processes in that hospital or nursing home to make it better for the patient. There's a lot of work involved in doing that. We have the luxury of having enough scale to be able to invest in state-of-the-art technology, not only to do better charge capture and billing, that's the least of it, to do professional transition management on our patients, to capture best practices and be able to have them readily available and disseminatable right through our technology to practices across the country. Risk management, IT, financial support, all of these things require scale. And we believe we're able to achieve superior outcomes because of our ability to share best practices across 1,400 providers and hundreds of facilities.

Gary P. Taylor - Citigroup Inc, Research Division

And just touching on that a little bit, your -- I forgot what you call it so forgive me...

R. Jeffrey Taylor

IPC-Link?

Gary P. Taylor - Citigroup Inc, Research Division

No, the kind of the fellowship program or the leadership...

Adam D. Singer

[indiscernible]

Gary P. Taylor - Citigroup Inc, Research Division

Yes, can you talk about that a little bit and remind us how many physicians you're running through that program annually? And is that -- how well known is that nationally in the physician community and...

Adam D. Singer

I think it's getting to be better and better known. The small secret is that we're hiring internists. That's what everyone hires. This is a brand-new specialty. There are no residencies or fellowships for specific hospitalist services. Doctors that understand not only the care of the patient but also understand the care of the facility and the change management they're going to have to go through to make that a safer facility to care for patients. And those doctors that actually know how to run a hospitalist practice, that's not a skill set that anyone has been trained for. When we realized that, we realized we had to invest in that leadership. And since it doesn't exist anywhere naturally we had to do it in-house. We reached out to a partner, which was UC San Francisco, which has one of the best internal medicine training programs in the world, really, and built a joint fellowship program. It's a 1-year program. We're in our third year. We've graduated 2 classes -- the class is a 1-year program, as I said. That's about 80 fellows that have graduated and our third year class just matriculated a few months. It's a very robust program. These are doctors that pick a quality initiative for their hospital and then work with professors and mentors through UCSF to actually implement sufficient safety program across the patient population in their facility. That data is then published, at least internally, and those doctors are mentored into actual leadership in hospitalist space. At the end of this year we'll have over 120 of these doctors to help lead the rest of our work force. And we believe this is very differentiating. I mean, there's literally nobody else in the country has that degree of trained leadership in this space.

Gary P. Taylor - Citigroup Inc, Research Division

I would imagine turnover of those physicians that have gone through that program -- I guess the program isn't really that long-standing but I imagine the turnover is significantly less than you see in your generalist population...

R. Jeffrey Taylor

It is, but it's a double-edged sword. It has been lower but these people now look pretty good to the rest of the world, to become a chief medical officer of a hospital, et cetera. So they're getting swooped on in that regard. And when we went into this, at least in my -- I'm not as big a thinker as Adam is, so I was thinking there are 3 things could happen here that are good. We could actually create better manager-leaders that are doctors. That would be a home run. We could do that. Two, we could get some positive -- perhaps an image and brand enhancement from this. That would be good. And three, the hospitals we're in, where we actually perform these projects and complete them and implement something in their hospital, we'll get deepened relationships out of that and be able to spread those across the system. And so far, I think we've done all 3, so it exceeded my expectations.

Adam D. Singer

We haven't -- we've lost a few doctors in the program but out theory is it's better to train the best workforce we possibly can and, if nothing else, we have ambassadors out there speaking to the high quality. Part of your question was how are we marketing this? And I guess on the downside, attrition; the positive side is we have people out there now who seed [indiscernible] what they have from us. And it's come back to play well for us.

Gary P. Taylor - Citigroup Inc, Research Division

There's 3 or 4 ways that you can grow the business. So maybe just kind of -- I want to just kind of quickly walk through what your latest thinking is around growth rates for the next couple of years. So, one, is just pure organic growth, number of patients that are coming in the door. Two is, you're either gaining share in a practice or you're adding a physician to help gain share in a practice. Three is your acquiring practices in a market where you're already operating. And then four is, going into a new market or going into -- I guess even the -- when you've done the post-acute, I would imagine you'd probably been in the market first, right? So really kind of 4 ways. So just over the next year or 2, what are kind of your base assumptions on growth as we build that up?

R. Jeffrey Taylor

I'll take a first cut at that. You're right in the ways in which we can grow. We've always focused, first and foremost, on going deeper in the facilities we're already in, both acute and post-acute. And we do that through hiring, adding doctor #8 to the 7-doctor group to get more patients in that facility. By looking at other facilities in the markets we're in to establish a beachhead here and then obviously we can either contract with a new facility or acquire another group and enter a new facility or a new market that way. All of our new market entrants in the last 6 years have been either through the acquisition of a beachhead in that market or signing a new contract so we have guaranteed business. But in terms of what does that offer us in terms of rate, we still feel comfortable that, even at our size now, we entered the year at 1,400 providers, that we can grow through organic hiring at least in the low double-digit range. So that means we would have to add a net at least 140 providers next year in order to hit 10%. So if pricing is fairly static and productivity is fairly static then the way we grow is through adding to our doctor workforce. The post-acute initiative, definitely gives us some tail wind in that. Because even in our more mature acute-care markets, we have visibility now to go out into a more untapped market and build that capability around our core acute hospitals. In terms of acquisitions, we don't forecast them. We go as aggressively as we can. Two years ago, I think, in '11 we added about 250,000 annualized encounters through acquisition. Last year it was just over 600,000. So there's some variability there. So our total growth rate if we have a light acquisition year is going to be in the low to mid-teens. If we have a great acquisition year, it'll be in the mid-teens to maybe even 20, depending on the scope of the acquisition. And we think that's sustainable in the foreseeable term, next 2, 3 years at least.

Gary P. Taylor - Citigroup Inc, Research Division

I know this number is a little difficult to get at. But when you kind of think about same practice, market share and the facilities you're in, kind of, what's your latest kind of thinking on where you are? And if you didn't do another acquisition, which of course you will -- but how does that, kind of, that same facility opportunity work, still?

R. Jeffrey Taylor

It's still our largest opportunity. We're still only roughly 20% penetrated on average in the facilities we're in. And that was the same number we had 4 years ago. So you say, "Well, how can that be?" That occurs because the facilities we were in 4 years ago we have indeed gone deeper. So Saint X, we were 40%, now we're at 60%. In the meantime, we've entered 100 new buildings, where we're maybe 5% penetrated and just getting started up the curve. If we stopped entering new facilities, our penetration rate would go up year-over-year-over-year as we grew. We're going to do both. We're going to go deeper and we're going to add new facilities.

Gary P. Taylor - Citigroup Inc, Research Division

Got it. A lot of visibility over the last year or 2, good and bad, mostly bad, on reducing short pay admissions, particularly on the Medicare side for hospitals. How does that impact your business? In a lot of hospitals, that just means what was called an admit might end up in the same bed and room in the hospital but it's now called observation or something else. Can you come in and bill a patient encounter on an observation the same way you would on...

Adam D. Singer

It's the same reimbursement. I mean to the doctor and what we teach our doctors is to properly identify the patient who's going to be there for 24 hours being observed, getting whatever diagnostic studies were done in ER and we're just going to wait and see if they get better in 24 hours versus admitting and discharging them. And it's the same reimbursement and there is really no difference. There seems to be a lot of pressure between payers and hospitals of which way they'd like to have this done for the obvious reasons. For our doctors, really make that decision based on the clinical need of the patient and there is no incentive for us to do it one way or the other. We just do it the right way.

Gary P. Taylor - Citigroup Inc, Research Division

On the topic of Medicare -- I'm sorry, Medicaid parity as part of the ACA and you guys gave guidance last week on what you think that could worth to you. Do you -- I mean, internal med is one of the named specialties but I guess there's some thought that CMS, even though we've had a proposed rule and a final rule and 2, 3 series of clarifications made may yet put something else out to clarify this. And do you think there's any risk that ultimately hospital-based physicians, regardless of specialty, wouldn't qualify? That perhaps the spirit of the law was the office-based, primary care doctor was going to see a [indiscernible] of Medicaid bodies coming at them in '14 was really what that was for.

R. Jeffrey Taylor

I would have to say, there's always -- given what's going on in Washington, there's a risk in anything. As of right now, our doctors, all primary care providers, they're internists. And the specific codes that they use for the care of in-patients have been listed as qualifying for Medicaid parity. So that's where we are. That's what we -- that's the law. It started January 1 and that's what we're booking. Obviously, with a healthy conservative swag [ph] on it just to be safe. But at this point in time, that's the law and they've already posted the codes and we qualify. I think it's actually within the scope of the intent, which is you want these patients to have good quality access to healthcare preventatively in the off-patient setting but, if they get sick, that they actually get the proper attention and aren't short-rift [indiscernible] to county facilities or some other way managed. So I think the intent is well served by what the current rules are. But I can never say it won't change; look what's going on. Anything can happen.

Gary P. Taylor - Citigroup Inc, Research Division

Any questions from the audience? Come on, anyone? I think I've kind of exhausted my list. We can all go to snack time early if no one has any questions. I guess I will say, one of the things that I really find interesting, I still -- I think there's still -- I'm sure you guys get it, you do investor meetings all the time, still a lot of misperception, kind of, how you're paid and if you're a cost to the hospital, which you're not, et cetera. And one of the things that I've said is that, every hospital I've been to, for-profit, nonprofit in last 2 or 3 years, since I've learned what a hospitalist was, quite frankly, has said we want more hospitalists. Point blank, we want more. And so I would imagine there's nothing that you're seeing that makes you feel that we're trending anything differently than...

Adam D. Singer

It's clearly trending that way. But I think you said something that's important, which is that hospitals are going to have to look at what this is costing them. So the desire for hospitalists is self-evident. We save them money. We improve the metrics that they are not going to get paid under or penalized for not achieving. However, a lot of the hospital-employed hospitalist programs are coming at a huge price, sometimes north of $200,000 per FTE in terms of subsidy. Whereas groups like IPC can come in and do it at a fraction of that cost and produce stellar results. I do think that, while hospitals are all -- whether it's not-for-profit or for-profit, quite frankly even the academic centers are looking for hospitalist services. They're going to eventually have to say, "Well, what are they actually producing for me versus what are they costing me?" And that's going to lead to more outsourcing of these services, so the company's like us that have scale and can actually produce the results at a cheaper price, as they get under further financial constraints under the new reimbursement paradigms that are out there.

Gary P. Taylor - Citigroup Inc, Research Division

What drives your ability to provide it for such a different cost than the hospital?

Adam D. Singer

It all comes down literally to the way they staff these programs. Almost all of the hospital-employed groups run and most -- quite frankly, even the contract-management companies or ER companies doing hospitalist work, staff under a 7-on, 7-off shift model like their ER groups. When you do that, the doctor's being paid full-time and only working 70% of a full-time FTE. By working a regular schedule -- and I know it sounds like super secret process because it's super easy, but literally you work Monday through Friday like everybody else, and share your weekends, you're getting an extra 30% number of days, which gives you an extra billable encounter by working those extra days. And therefore the cost of subsidization goes many times to 0. And the really scary thing is they're not actually working more hours. It's just because the ER doesn't work in shifts in 12 hours. And when you're working in a traditional practice model [indiscernible], you're not obligated to obtain 12-hour presence on site. You furthermore don't need as many bodies to do the work. So you can't really hire 30% of a doctor in a 7-on, 7-off. You need to have 2x the number of doctors. So the actual subsidy cost is more than that delta 30% in efficiency. It's the full extra human that you need to have a balanced, 7-on, 7-off program. Now why they haven't been able to figure out this simple staffing switch is beyond me. It's not like we're holding it as a secret. But they're basically not managers of hospitalist practices and they're running hugely inefficient practice. It gets even worse. Not only is it costing them a ton more but you have doctors that are only there half the time. It's very difficult to actually implement the programs you need to implement to actually improve the care over a patient population. How do you improve the -- or develop a unit-based routing system? How do you have an initiative to improve patient [indiscernible] when your doctors are coming and going off shifts and not present?

Gary P. Taylor - Citigroup Inc, Research Division

Can you talk a little bit about the difference in the billing practice between inpatient and outpatient facilities? And what needs to happen in the outpatient facility in order to bill the full physician fee versus nurse practitioner/physician assistant?

Adam D. Singer

I'm not exactly sure what you mean. I mean to process a billing is the same.

Gary P. Taylor - Citigroup Inc, Research Division

Not the process, I guess. So you talked in the past about how the reimbursement per encounter is lower in outpatient than it is in inpatient. Right? But there were some instances where, in the outpatient setting you're able to bill at the full physician rate. I think you said in one of your...

Adam D. Singer

I don't know the reimbursement rate of outpatient. I assume -- I believe it's a little low but I don't think that's the issue. The real issue is the use of extenders in the acute side versus the post-acute side, in the delta there. On the -- where we use extenders in the acute side, it's a 15% delta between what they can be paid between what acute docs get and what extenders get; it's lower. Likewise, in the post-acute setting, the physician is about 15% lower than the acute-care doctor and the extenders are 15% lower than that. And indeed there is more use in the post-acute setting of extenders. So when you look at our overall pricing because our post-acute work has been growing faster than our acute, if you look at our overall pricing, it looks like it's [indiscernible]. It's not improved. It's just mix of business is different. And why that's the case? That's just they value those visits less, in terms of Medicare, what they value, and they pay a little bit less. I don't know if that answers your question but that's how it's actually working.

R. Jeffrey Taylor

We're not actually billing traditional outpatient office codes other than in one very limited situation where we had a couple of geriatric clinics in one market. But by and large, we are billing either acute inpatient codes, LTAC inpatient codes, which is the same as acute hospital or the skilled nursing codes.

Adam D. Singer

Does that answer your...

Gary P. Taylor - Citigroup Inc, Research Division

Yes. I've got just a follow-up to that. Are there instances in -- outside the acute care setting, where it's not an employed physician billing but it's a nurse-practitioner -- it's an extender billing but there is a physician present. And hence you're able to bill at that -- under that license number versus...

R. Jeffrey Taylor

Shared billing, that's what he's talking about. We shy away from where we bill under the physician's ID number unless the physician actually did the work consolidation. Whether providing as a supervisor to the nurse practitioner or the PA, we bill directly and take that discount and then there's a method by which we compensate our physician for that. There are rare examples in the company where we are doing the shared billing, where the nurse practitioner sees the patient and it's under the doctor's ID but the amount of documentation required and the rules and regulation around that are much more onerous and, from our perspective, it's not worth the regulatory risk of managing it that way. So if you see the patient, you're the one who has to bill is kind of the philosophy we have.

Adam D. Singer

Even in that model, the doctors are providing oversight to that nurse practitioner or physician assistant. We have a different way in our comp plan to reward them for that without doing the billing under their name.

Gary P. Taylor - Citigroup Inc, Research Division

Anyone else? Gentlemen, thank you very much.

Adam D. Singer

Thank you.

Gary P. Taylor - Citigroup Inc, Research Division

Good afternoon.

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