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LifePoint Hospitals, Inc. (NASDAQ:LPNT)

Q2 2013 Earnings Call

July 26, 2013 10:00 am ET

Executives

William F. Carpenter - Chairman, Chief Executive Officer and Chairman of Quality Committee

Jeffrey S. Sherman - Chief Financial Officer and Executive Vice President

David M. Dill - President and Chief Operating Officer

Analysts

Joshua R. Raskin - Barclays Capital, Research Division

Albert J. Rice - UBS Investment Bank, Research Division

Ralph Giacobbe - Crédit Suisse AG, Research Division

Kevin M. Fischbeck - BofA Merrill Lynch, Research Division

Andrew Schenker - Morgan Stanley, Research Division

Frank G. Morgan - RBC Capital Markets, LLC, Research Division

Gary P. Taylor - Citigroup Inc, Research Division

Darren P. Lehrich - Deutsche Bank AG, Research Division

Thomas Gallucci - Lazard Capital Markets LLC, Research Division

Whit Mayo - Robert W. Baird & Co. Incorporated, Research Division

John W. Ransom - Raymond James & Associates, Inc., Research Division

Christian Rigg - Susquehanna Financial Group, LLLP, Research Division

Operator

Ladies and gentlemen, thank you for standing by. Welcome to the LifePoint Hospitals' Second Quarter 2013 Earnings Conference Call. On today's call, LifePoint will be making forward-looking statements based upon management's current expectations. Numerous factors could cause LifePoint's results to differ from this expectations, and LifePoint has outlined these factors and its filings with the SEC. The company encourages you to review these filings. LifePoint also asks that you please review the cautionary language under the caption, important legal information, in the company's press release issued this morning. The company undertakes no obligation to update or make any other forward-looking statements, whether as a result of new information, future events or otherwise. Also, please visit the LifePoint's website for links to various information and filings. [Operator Instructions] As a reminder, this conference is being recorded, Friday, July 26, 2013.

I'd now like to turn the conference over to Bill Carpenter, Chairman and Chief Executive Officer. Please go ahead, sir.

William F. Carpenter

Thank you. And welcome, everyone, to LifePoint Hospitals' second quarter 2013 earnings call. We hope you've had a chance to review the press release we issued earlier this morning. After my initial remarks, Jeff Sherman, our Chief Financial Officer, will discuss in detail LifePoint's results for the second quarter. After our prepared remarks, Jeff and I, as well as David Dill, our President and Chief Operating Officer, will be available to answer your questions.

I'll begin with a few highlights from the quarter. Revenues from continuing operations grew to $895 million, an increase of 8.2% compared to the same period last year. Year-over-year, EBITDA was $117 million, down 15.8%, and EPS was $0.57, a 31% decline. The changes in EBITDA and EPS were due primarily to year-over-year reductions and supplemental payments from 3 state programs. Jeff will provide greater detail in his remarks and update you on our guidance for the second half of the year.

The operating environment remains challenging. To offset these challenges and position the company for the benefits of health care reform, we're focusing our strategy on the most compelling opportunities for growth. This includes making appropriate investments at our hospitals, pursuing meaningful acquisitions and returning value to our shareholders.

Our investments in our facilities are designed to ensure that our hospitals are places where people choose to come for care and where physicians want to practice. Our acquisitions program is very active. We have differentiated LifePoint as the partner of choice for many community hospitals through our quality improvement initiatives, strong balance sheet and unique relationship with Duke University, as well as regional partnerships with other providers.

As we've discussed, since 2009, our acquisition strategy has been to move into faster growing markets, with a more diversified employer base. This strategy has been producing tangible results. We're building networks throughout our regions and strengthening service lines in our facilities. A good illustration of that strategy is our pending acquisitions of Bell Hospital and Portage Hospital in Michigan, and Fauquier Health in Virginia. Bell and Portage will each be LifePoint Hospitals that will complement Duke LifePoint's market general health system and expand our network in the Upper Peninsula.

In addition, Fauquier is LifePoint's 6th hospital in Virginia and will further enhance our state-wide presence with a new footprint in Northern Virginia. As some of you may have seen in our press release earlier this week, Duke LifePoint has entered into a memorandum of understanding to form a joint venture with Wilson Medical Center, which continues the expansion of our network into Eastern North Carolina. Once finalized, we expect these 4 new hospitals to contribute approximately $400 million in new net revenue to our portfolio, which is similar to what we added to the company through acquisitions in 2012.

We're focused on growing our existing market share and regional network presence through organic growth initiatives, as well as acquisitions. Our sequential results demonstrate improvement in in-patient and outpatient volumes, with adjusted admissions for the quarter in line with our original guidance.

Last month, we announced the appointment of a National Physician Advisory Board, comprised of leading physicians who practice in LifePoint communities. This board will provide guidance on matters related to clinical quality, physician engagement and innovative models of health care delivery.

We're 18 months into our work related to our CMS Hospital Engagement Network contract. I'm pleased with the results and we have already exceeded our year-end target of a 40% reduction in preventable harms. This initiative and its results are directly aligned with the mission and vision of our organization.

We continue to implement various initiatives that should improve our processes and reduce costs, including our shared services agreement with Parallon. We expect this arrangement to contribute positively to our results in the second half of 2013 and beyond.

On the talent front, we have had a great response to our LifePoint learning academy and remain focused on continuously improving our recruitment and professional development efforts through training and other initiatives. While the outcome of health care reform is evolving, we continue to believe it will be a net positive for LifePoint and we are positioning the company to benefit from these changes.

We made excellent progress on exchange contracting this quarter, with contracts in place in 15 of our states, covering 43 of our hospitals. We continue to support expansion efforts to help deal with the increasing number of uninsured patients in our communities. Overall, we believe we are well positioned to benefit from expanded coverage in our markets.

With that, I'll now turn the call over to Jeff for more detail on our second quarter financial results and guidance for the remainder of the year. Jeff?

Jeffrey S. Sherman

Thank you, Bill, and good morning, everyone. As Bill outlined, our second quarter results continue to reflect a challenging environment. In addition, there were several items that impacted EBITDA and EPS in the second quarter versus the prior year. These include a reduction in sole community funding from New Mexico, significant state provider tax payments in the second quarter of 2012 and sequestration beginning in April of 2013.

During the second quarter, the sole community provider program in New Mexico was modified due to ongoing discussions between the state and CMS. In the second quarter, we recorded a reduction in net revenue of $4.8 million related to the sole community provider program in New Mexico, which trues up the funding for the last 4 quarters. This is $14.7 million less in the second quarter of 2012 and $11.8 million less than our expectation for the second quarter of 2013. This program has been under review by CMS and in the second quarter of 2013, several changes were made to the program that resulted in less revenue for the overall program in New Mexico and consequently, less revenue for LifePoint. We expect the funding for the remaining 2 quarters of 2013 to be consistent with our original expectation of $7 million in each of the quarters. As compared to the second quarter of 2012, there was a $9 million reduction in EBITDA from onetime provider tax payments in North Carolina and West Virginia.

Finally, as expected, Medicare sequestration resulted in a reduction of revenue and EBITDA of $5.3 million in the second quarter as compared to the prior year. In comparison with 2012, these items represented a decrease in EBITDA of $29 million in the second quarter. Of this amount, $11.8 million related to the sole community funding reduction was unexpected in the second quarter of 2013.

I will now review the drivers of our results, starting with volumes. On a same-store basis, admissions in the second quarter were down 3.3% versus the prior year. Adjusted admissions for the quarter decreased by 0.7% on a same-store basis versus prior year. Total surgical volumes were down by 3.2% over prior year. Same-store ER visits were down by 2.9% versus the second quarter of last year. We experienced outpatient growth in higher intensity imaging volumes, in CT and MRI, and growth in outpatient cardiac cath procedures versus the prior year quarter.

Revenues in the second quarter were $895 million, an increase of $68 million or 8.2% versus the prior year, while same-store revenues declined by $20 million. Revenues were impacted by the reduction in sole community funding in New Mexico, retroactive provider tax payments recorded in the second quarter of 2012 and sequestration reductions, together totaling over $34 million in revenue.

Bad debt expense was 21.4% of revenue on a same-store basis, up 300 basis points from the prior year and charity care write-offs were 4.8% in the quarter. After adjusting for the revenue changes, bad debt expense was up 200 basis points over the prior year quarter on a same-store basis.

Same-store self-pay admissions were up 3.4% in the quarter and represented 7.3% of total admissions. EBITDA from continuing operations for the quarter was $117 million versus $139 million in the prior year. As I previously noted, the reduction in sole community funding, prior year provider tax payments and sequestration negatively impacted EBITDA by $29 million versus the prior year. On an adjusted basis, adding back the $11.8 million reduction in sole community funding, results in EBITDA of $128.6 million in the quarter.

Diluted earnings per share from continuing operations were $0.57 in the quarter as compared to $0.83 in the prior year. EPS also includes a gain on a reduction in pre-acquisition liabilities recorded from a recent acquisition of $5.6 million or $0.07 a share.

As detailed in our press release, EPS on an adjusted basis was $0.65, starting with $0.57, adding $0.15 for the reduction in sole community funding and subtracting $0.07 for the gain for pre-acquisition liabilities.

Turning to pricing, on a same-store basis, net revenue per adjusted admission was down by 1.8%. After normalizing for the items impacting revenue I just discussed, net revenue per adjusted admission increased by 2.4% over prior year. The Medicare case mix index was up by 2.3% on a same-store basis and increased 4.6% in continuing operations. The revenue mix was also impacted by the reduction in sole community funding, prior year provider tax payments and reductions related to sequestration.

We have made significant progress in completing contracts to participate in the state and federal health insurance exchanges. We now have contacts in place in 15 of our states, covering 43 of our hospitals at approximately commercial rates. We are in active discussions in our remaining states.

With respect to cost, same-store SMB cost increased by 1.8% over prior year and include higher physician employment cost and retention cost related to the shared services initiatives. Same-store supply cost increased by 1.5%, driven by a higher intensity surgical volumes in the quarter versus the prior year. Same-store other operating expenses in the quarter increased by 1.7% over the prior year. We recorded $11 million in meaningful use payments and have related operating cost of $5 million. This equates to $6 million in EBITDA in the quarter and $7 million in EBITDA for the first 6 months of 2013.

Cash flow from continuing operations for the quarter was $58 million versus $104 million in the second quarter 2012. The Rural Floor Settlement of $33 million, booked in the first half of 2012, was received in the second quarter of 2012 and represents the biggest component of the decline.

On a year-to-date basis, cash flow from operations was $149 million compared to $178 million in the first 6 months of 2012. We invested $37 million in capital expenditures in the quarter, including $18 million in IT capital investments. Depreciation and amortization expense increased by $9 million or 19%, driven by the higher IT investments and 3 new hospitals in the quarter versus the prior year.

We did not buy back stock in the quarter and have $195 million remaining on our current authorization. We finished the quarter with $175 million in cash on hand. Additional information regarding our second quarter results is available by reviewing our SEC filings, including our 10-Q, which will be filed later today.

To summarize the quarter, volumes improved sequentially over the first quarter of 2013 and more in line with our original guidance range for adjusted admissions. The change in the New Mexico sole community program reduced revenues and EBITDA by $11.8 million in the quarter versus our expectations. We expect the sole community funding for the second half of 2013 to be consistent with our original plan of $7 million per quarter. Our shared services initiative continues to progress well. 7 hospitals transition to Parallon in the second quarter for revenue cycle, bringing the total hospitals move to 14 with approximately 18 more moving in the second half of the year.

For the supply procurement accounts payable initiative, 9 hospitals moved to Parallon in the second quarter, with a total of 13 hospitals transitioned so far. We expect an additional 25 hospitals to transition to the shared service centers in the second half of the year. We have made excellent progress on executing our exchange contracts in the quarter and are well prepared to benefit from health care reform.

Our acquisition pipeline remains very active with over $400 million in annual revenue from recently announced acquisitions. Improving the performance of these hospitals will provide growth opportunities for several years.

Finally, consistent with our historical practice of updating guidance midway through the year, we have revised our guidance for full year 2013 as detailed in our press release. Our revenue guidance remains unchanged at $3.65 billion to $3.75 billion for the year. We now expect EBITDA the be in the range of $530 million to $550 million with EPS in the range of the $2.67 to $2.94 for the year. We're also changing our adjusted admission guidance to be in a range of down 1.5% to down 2%. We are focused on making the right strategic moves to improve quality, grow organically, and through acquisitions, become more efficient operators and use our strong balance sheet to drive shareholder value.

I will now turn it back over to Bill.

William F. Carpenter

Thank you, Jeff. Before we start the question-and-answer period, I'd like to share a few pleasant thoughts. We're taking steps to address the current operating environment, while simultaneously positioning LifePoint to benefit from health care reform. Quality and growth initiatives remain critical components of our strategy. In addition, our solid cash flow and strong balance sheet continue to support our capital deployment strategy. We believe we are making progress to create additional value for our shareholders, patients, physicians and the employees.

With that, operator, we'll now take questions.

Question-and-Answer Session

Operator

[Operator Instructions] And our first question is coming from Joshua Raskin with Barclays.

Joshua R. Raskin - Barclays Capital, Research Division

First question, just on the volume size, specifically on the ER volumes. They look a little bit weaker, I guess, than we have expected especially in light of the rebound that you saw in the admits and the adjusted admits. So I'm just curious was there anything on the ER front that surprised you? Or any potential drivers you can parse out there?

William F. Carpenter

Well, this is Bill. I'll start. The ED is a little bit of a -- something that we're watching very carefully. We did see the decline as you described. Over the past years, we have seen a vast improvement in ED. We've seen improvement not only with respect to volumes there, but we've seen improvement with the respect to performance. This quarter, we and peers do seem to be experiencing softness, but we are carefully monitoring that in order to ensure that we continue to deliver results. We're also taking steps to increase throughput and capacity by improving operating efficiencies there, reducing wait times and enhancing the patient experience in the ED. David or Jeff, I don't know if either of you want to add anything to that.

David M. Dill

The only thing I would add is over the course of last year, we have aggressively built out additional access points for patients in our communities through primary care locations and a couple of urgent care centers in a couple of our markets. Those 2 are having a big impact on the ED volumes that we're showing here today. But a lot of efforts, as Bill pointed out, on just the throughput, patient experience, metrics. Left without being seen metrics happening throughout every one of [indiscernible] performance.

Joshua R. Raskin - Barclays Capital, Research Division

Did you say -- I'm sorry, did you say that the urgent care centers in the primary care clinics there, they are seeing the volumes or they're not yet?

David M. Dill

Yes, we are, but it's not -- we're not -- we don't have urgent care centers that we've built in all of our markets. But in the small handful that we have, we have seen those volumes improve. But they're not having a significant impact on the volume decline that we're showing here today.

William F. Carpenter

So let me be clear on this to the extent that we haven't been so far. We're the only hospital, in 43 of 47 communities where we own hospitals, and we have a big infrastructure there and it is unlikely that we see additional urgent care centers or others popping up where they have to make a significant investment. We have made some investments in urgent care in a couple of markets. We have built out primary care clinics in a number of markets. We are doing things in our markets in order to provide access points for patients. We are working with physicians in order to develop primary care centers, where we will be in a position to manage a population better. So all of those things are going on in our markets and we are driving that. And at this point, going back to David's point, the -- these efforts, these urgent care-type efforts really aren't the things that we think are impacting dramatically the hospitals. And to the extent, I misspoke on the number of hospitals, 53 out of 57.

Joshua R. Raskin - Barclays Capital, Research Division

Okay. Great. And then just a second question. As you think more about your comments around the preparation for reform in '14, and I'm just trying to think about rural versus urban, and I understand the differences in some of the reimbursement levels. But I'm just curious, as you think about the impact of reform next year, are there any thoughts on differences, urban versus rural, in terms of the impact of reform? And how you're thinking about maybe exchanges and strategies you're seeing from plans and things like that?

William F. Carpenter

Well, I think there is a difference between urban and rural in one regard. Clearly, the hospital is a focal point in any community. And a hospital in an urban markets can be a significant resource to its community. In a rural community, particularly where the hospital is the only hospital there, it is the primary resource for the community in terms of information, education and care. And so we have always viewed reform -- and one of the things that gives us a bit of an advantage -- is that sort of bully pulpit that the hospital provides in our markets. So we are working on strategies and plan to engage in community outreach and public awareness efforts to inform and educate the public and encourage uninsured consumers to enroll in health plans that will be available under the health insurance marketplace. Secondly, we will, within legal and regulatory parameters that are becoming more clear very recently, plan to provide on-site assistance at our hospitals to help patients understand eligibility and apply for Medicaid and exchange coverage. So these are things that we're doing and we believe that our position is such an important part of each community where we're located really will draw people to the hospital in that regard.

Jeffrey S. Sherman

This is Jeff. And I would just add, I think, probably, no significant differences. As you look at our markets, we are the only provider of uncompensated care. So we don't have charity care facilities or county imaging clinics or hospitals. So if you think about uninsured patients in our markets needing care, either urgent care or emergency care, they're coming to our hospitals today. And depending on the urban markets, you may just have a different dynamic with more resources to treat uninsured patients than exist in our markets.

Operator

Our next question comes from A.J. Rice with UBS.

Albert J. Rice - UBS Investment Bank, Research Division

I had a couple of questions, if I could ask. One, at the risk of showing my ignorance with numbers or something. If I -- you've got 2 items here you're highlighting in the press release related to the New Mexico. And I understand the first one, I think. But I'm not really sure I understand what the second financial plan for the New Mexico, SCPP $0.09 hit is. Does that have any revenue effect or is it all an expense item?

Jeffrey S. Sherman

A.J., this is Jeff. So we came into the year expecting to record $28 million in sole community funding in New Mexico, which was about $7 million per quarter. The funding started in the third quarter of last year for the states' fiscal year, fiscal year 2013. What we wound up recording in the second quarter of 2013 was a true up. We wound up getting less revenue. So changes were made to the sole community provider program at the end of the second quarter. There was a revision to the formula to reduce the amount of money the State Human Services Department could pay directly to hospitals using county matching dollars. So the total funding decreased as a result of these changes, which negatively impacted our Las Cruces funding. The funding levels and payment mechanisms for the last half of 2013 have been established, so this gives us good visibility for the funding we expect of $7.1 million in each of the third and fourth quarters. So this is an important program for the company. That has always been a risk factor. We will continue to work with the state to demonstrate the importance of this program. In particular, for the hospitals treating a disproportionate amount of imaging [ph] patients. But in the second quarter, we are expecting to report $7.1 million. The true up that we recorded for the last 4 quarters was a $4.8 million reduction. So versus our expectation in the quarter, it was $11.8 million less than we expected. We expect to get that $7 million in the third and fourth quarter. And so, we looked at it from a normalizing basis that for the next 2 quarters, that should be added back to both revenue and EBITDA. And we do have good visibility on that amount today.

William F. Carpenter

And we are receiving those payments.

Jeffrey S. Sherman

That's correct.

Albert J. Rice - UBS Investment Bank, Research Division

Okay. All right. I wanted to also ask you about pricing. Your revenue per adjusted admission was down 1.8%. I guess, if I back out the New Mexico hit, it's still down by about 1.2%. Your acuity was actually -- or your case mix was actually up a little bit. What -- That's a more pressured trend than you've seen before. Is there anything you can drill down and point to there? Is that payor mix shift or some other dynamic?

Jeffrey S. Sherman

Well, on an adjusted basis, A.J., so the other thing was we had significant retroactive provider tax payments for our West Virginia and North Carolina in the second quarter of 2012. So you've got a...

Albert J. Rice - UBS Investment Bank, Research Division

[indiscernible] Year ago basically.

Jeffrey S. Sherman

You've got a reduction versus the prior year in New Mexico funding of over $14 million. You've got a reduction in provider tax payments of over $14 million from prior year, and then you've got $5 million in sequestration. So as you normalize for all of that, it's 2.4%. If you normalize just for sequestration -- or normalize excluding sequestration, net revenue per adjusted admission was still up 1.8%.

Albert J. Rice - UBS Investment Bank, Research Division

Okay. All right, that make sense then. And I'm going to -- maybe just one last one, more broadly. in the -- you're obviously getting more than your fair share of M&A deals, so congratulations on that, with everything that's going on with the Duke LifePoint joint ventures and the success there. I just wonder in these discussions, how is health reform impacting those discussions? Is it making people more amenable to get a sale done quickly? Less amenable? Is it -- are you factoring it into your price in any way? Or are they asking you to factor it into price? Maybe give us a flavor for that.

William F. Carpenter

Okay, A.J. The community hospitals that we're talking to really may not have as complete a picture as we have about health care reform and the impact in their individual market. We have done analysis in every single one of our markets to see what that impact is that we believe we will see. In addition to that, we have the capability of doing that analysis in any market that we are considering. And so, yes, of course, we factor it in. One of the things that we do when we are talking to any prospective new hospital is to give them a very clear picture of how we see their market and how we see their potential. Often times, that is very instructive to them, and I will say without reservation that it is at a deeper level because of the analytics that we have the ability to do than they have previously done. So whether or not it is affecting decisions to move forward at a pace, I really don't think so. I think it is factoring into the determination about -- perhaps about valuations. But the -- as I've said many times before, hospitals are looking to LifePoint and to Duke LifePoint because of the resources that we bring, because of the commitment to quality that we bring, because of our financial resources and the operational resources that are necessary today more than ever with the complexity of the business, and the particular complexity of the business that is being put on a stand-alone community-based hospital.

Operator

And our next question comes from Ralph Giacobbe with Credit Suisse.

Ralph Giacobbe - Crédit Suisse AG, Research Division

I may have missed it, Jeff. Did you give the same-hospital EBITDA margin?

Jeffrey S. Sherman

I did not, Ralph. When you would normalize for the items that I've talked about earlier, the margins were pretty close to being flat on a same-store basis. When you normalize for the sole community, and normalize for the prior year provider tax payments, they're pretty close. So, pretty close, 20 basis points or so of being flat year-over-year.

Ralph Giacobbe - Crédit Suisse AG, Research Division

Okay. And then in terms of the acquisitions you've done, is there any way to parse out? Or have you looked up acquisitions by class in terms of the year-to-year relative to sort of your legacy assets. Just wondering sort of how the ramp has been going, and sort of the growth opportunity there, if you will, from some of the newly acquired assets.

William F. Carpenter

Yes, sure. I'll start and then Jeff or David can join in on it. Each of the new hospitals is making good progress. While we expect to bring all hospitals up to the LifePoint EBITDA average within 3 to 4 years, in that kind of time period, the pace of improvement is going to vary by hospitals. Different hospitals need different resources and the timing of delivering those resources and implementing change is not the same in every case. So I give that background in order to tell you what the class of 2009 to 2011, taken as a group, has done. And those hospitals are operating at target margins in the mid- to high-teens. And we expect as well to bring our newest class of hospitals along toward the company average in that same sort of 3- to 4-year time frame. So maybe that gives you a little bit of a flavor for how we see it.

David M. Dill

And for the -- Bill talked about the 2009 to 2011 class. If we put everything else that we've acquired in '12 up through the first part of '13, in the next class, that base revenue, Marquette makes up 75% to 80% of that base revenue. So clearly, it's the biggest. A lot of exciting things happening up in Marquette. Since we talked last, we have a new president that has now been on the ground for the last 90 days. I'm excited about the progress that he's making with the team that we're building there. But from a sequential standpoint, we've seeing margin expansion in Marquette from the first quarter to the second quarter. The second half of the second quarter was better than the first half of the second quarter. So we have a team place, some operating momentum, restructuring some contracts and other costs. Then 2 other things that are really important. We have not yet started deploying capital, but we are on the verge of deploying the capital that we committed to back in the fall of last year. That's the next leg up. And then finally, Bill referenced in his opening comments, 2 other hospitals that we're close to closing on toward the end of this year, if everything works out like we expected to with the state of Michigan. So it will add to the footprint to build that integrated delivery network that we anticipated when we first made our decision to invest up in the Upper Peninsula. So great momentum there, and that's clearly the lion's share of venue revenue that's coming where a lot of our focus and attention is spent. But the other acquisitions that we've acquired are also progressing, they're just a little bit smaller in size.

Jeffrey S. Sherman

And I would just add, we've talked about our strategy of moving into faster growing markets. And Bill noted that in his comments as well. We are seeing good growth, good adjusted admission growth in the acquisitions going back the last several years, really confirming our attempt to move into faster growing markets. So we're seeing good growth and then we're seeing good upside. And we're also complementing existing markets, both on a regional basis, such as Marquette or in North Carolina, and on a state-wide basis as in Virginia or Tennessee or Kentucky. So I think both of those strategies are helping to solidify our market presence, both on a local and statewide basis, very consistent with our -- also, our approach of moving into the faster growing markets.

Ralph Giacobbe - Crédit Suisse AG, Research Division

Okay, that's very helpful. Second question, just to -- can you talk some of the opportunities you have on the cost side maybe going forward? If there's a way to quantify what you expect, sort of at least in the second half of the year. Just the Parallon opportunity, maybe remind us of what the initiatives are there and again, the opportunity.

William F. Carpenter

Well, let me. I think I will use this opportunity to kind of just talk about the second half guidance of which cost is a component. So if you start with an EBITDA number, for the first 6 months of the year of $254 million, the second quarter EBITDA was $117 million. I'm adding back the sole community funding of $12 million. And I'm subtracting the meaningful use EBIT in the quarter of $6 million. So that gives me an adjusted EBITDA before meaningful use for the second quarter of $123 million. So on the low end of our guidance range, if you just take that $123 million and double it, you have $246 million as a starting point for the second half. And if you do a little bit better than that and have a little bit more improvement, you've got $260 million. Then add back meaningful use EBITDA in the second half of the year. We have a range of $25 million to $30 million in EBITDA, meaningful use EBITDA, in the second half of the year. That's a little bit higher on the high end than our original guidance, but our original guidance did assume on the high end, the potential for more meaningful use dollars in the back half of the year. We see rate increase potentials of $2 million to $4 million in the second half of the year, and then we have cost reduction, plans in place, including shared services of about $6 million to $10 million in the back half of the year. And I'll come back to that one in particular. We also have improved acquisition performance. Just improving the acquisitions that David just talked about, our most recent acquisitions, we see $2 million to $4 million of upside there. And then as we looked at guidance, we put some contingency for unforeseen risk in the second half of the year of $5 million to $10 million. So that gives us EBITDA for the second half of the year in the range of $276 million to $298 million, really getting us to the $530 million to $550 million range on our guidance rate side. With respect to the cost reductions, in particular, with shared services, we came into the year expecting $7 million to $10 million in incremental EBITDA from shared services. We've captured a couple million dollars of that in the first half of the year, but as we've discussed, we're continuing to ramp and accelerate our movement into the shared service centers, so we definitely expect to see another $4 million to $6 million in the back half of the year for that part of savings, as well as other costs opportunities and plans we have in place that gets us to that $6 billion to $10 million in cost for the back half of the year.

Operator

Our next question comes from Kevin Fischbeck with Bank of America.

Kevin M. Fischbeck - BofA Merrill Lynch, Research Division

Sure. I was looking at the press release, Bill, I think you talked about some of the growth initiatives that you guys did to help drive volume sequentially. And I know that it seems like seasonally, most companies are seeing sequential improvement in volumes from Q1 to Q2 because the calendar and things like that. I was wondering if you could talk a little bit about what in particular you're seeing as things that you guys have done to drive a sequential improvement. And I think that often times, in the past, obviously, the metrics are getting better but they're still down year-over-year. I think in the past, you guys have broken out what were some of the leading causes to why volumes were down year-over-year. I don't remember hearing that. So if you could flesh those 2 things out.

William F. Carpenter

Well, I'll start and -- but I think, David, I'll turn this to you because it's actually something you spent a great deal of time thinking about. So it's a tough economic environment. Volumes have continued to be challenging. We know what's happening there. We're constantly working on. We're finding strategies, tactics that we'll use underlying those strategies to improve performance. And David can talk about that more in a second. We are constantly working on improving quality and service in our hospitals, and that's critically important and it's even more important as you think about pay-for-performance. We're recruiting physicians, we're making investments with appropriate returns, we're deploying physician alignment changes that will help. I couldn't be more excited about this National Position Advisory Board that's going to give us advice and input on clinical and quality issues. We're buying new hospitals, integrating them into the system efficiently and well. We are focused on holding the margin despite the economy, despite increased physician employment costs and new acquisitions and our balance sheet gives us flexibility to do all that. So we're very confident in the strategy. David, more detail on that.

David M. Dill

Yes. So on the volume side, Kevin, clearly, in-patient volumes remain under pressure. We did get a little bit of a calendar impact that helped us from Q1 to Q2. Our focus there is all around from a case management standpoint, outside physician advisors, the right setting at the right place -- right setting, right time. Deliveries were flat after the quarter, which was a little bit of a trend that has improved for us. But probably the biggest trend is on the outpatient and surgical side. Outpatient revenue was really strong for the quarter with -- I think Jeff mentioned some of these in some of his comments, around higher-end radiology, CT, MRI. Those volumes grew year-over-year. A lot of stability in our physician surgeon base. And when you look at overall surgeries in and outpatient together, we're still down by about 3%. But every bit of that decline, were in pain and endoscopy-related procedures, so are our higher intensity surgical cases. While we had some increases and decreases across the product lines, excluding pain and endoscopy procedures, surgical volumes were flat and that certainly has been an improvement for us. It's a trend that we expect to continue into the third quarter with the stabilizing base that we have. So aggressive physician recruiting, a stabilized base, growing in some of the surgical product lines, strong outpatient revenue were really the trends for the quarter. It moved us into our original guidance range of adjusted admissions coming into the year and we look forward to that trend continuing in the second half of the year.

Kevin M. Fischbeck - BofA Merrill Lynch, Research Division

Okay. That's helpful. And I guess you mentioned that you guys have bought a couple of hospitals near the Marquette Hospital, but not a part of the LifePoint JV with Duke. How do you think about structuring that transaction and including it in the joint venture versus not including it in the joint venture?

William F. Carpenter

So let me make sure I understand your question. You mean how do we think about which hospitals are part of Duke LifePoint and what hospitals are just part of the LifePoint? What are you...

Kevin M. Fischbeck - BofA Merrill Lynch, Research Division

Well, I guess, it sound like that these facilities were, in your view, part of a network with Marquette but not actually part of the Marquette joint venture.

William F. Carpenter

I see. Well, these hospitals will all stand on their own, that's the way we look at it. Each individual hospital must be there in order to provide the services needed in its community. And so that has always been the case. That will be the case with Bell Hospital. That will be the case with Portage Hospital. They serve distinct communities. However, the Upper Peninsula has the opportunity to function as a network with Marquette General, a tertiary provider, being the focal point for care there. So as we think about it, that's really it. This is what we're doing in North Carolina and it's what we've done in Southern Virginia and that's what we'll -- what we're doing in the Upper Peninsula and other places. So we'll consider, for Duke LifePoint, tertiary hospitals that are at a distance from another academic center, such that they don't have a natural relationship there. And then, we'll also look for opportunities in those type of hospitals where they have programs in areas such as cardiology or cancer care or neonatology or sports medicine. Places where Duke can really bring value to the clinical side of the equation. And those will be the hospitals that we seek together with Duke. Now in North Carolina and South Carolina and Southern Virginia, where they're in a more direct relationship with Duke, obviously, those hospitals may likely be a part of the Duke LifePoint Network. But in -- outside of that, in places like UP [ph], the way I described how we consider whether a hospital is in Duke LifePoint or a LifePoint hospital is the same. Now -- or as I've described, the way we'll operate those hospitals is going to be the same. And those hospitals working together within LifePoint, being a part of -- sharing the same kind of quality program that we'll have with our Duke LifePoint hospitals, is going to be critically important. And that's something that we'll take across LifePoint -- across our LifePoint Hospitals.

Kevin M. Fischbeck - BofA Merrill Lynch, Research Division

Okay. That's helpful. And then just last question. In some of your prepared remarks, you talked about financial flexibility, and one of the things being returning value to shareholders. Is that still, at this point, predominantly share repurchase? I know that you're not an acute care hospital but another company in the health care facility space just announced a normal dividend. We've seen another company did it last quarter. We've seen special dividends from companies. I mean, how do you think about that side of it? Or is it still kind of more focused on share repurchase at this point?

William F. Carpenter

Well, share repurchases have been the place where we have sought to return value to our stockholders. It gives us a bit of a -- an ability to judge the time depending on the other needs as that we have. We have been aggressive buyers of our stock at attractive prices. And as we said before, you can rest assure that we will always look at everything to enhance stockholder value. In that regard, that could be -- we'll look at dividends. We do. We'll look at stock buybacks. We also want to make sure that we are using our cash to grow earnings in our existing markets, and we'll buy hospitals at attractive prices. But stock buybacks have been an important part of our strategy, they return value. We have $195 million under our current authorization remaining and we expect to continue to be a buyer of the stock in the future.

Jeffrey S. Sherman

Yes, I would just add. I think we have continued to take what we think is a balanced approach to capital deployment, investing in our existing facilities, buying back stock. We've bought back over $400 million of stock since 2010 and acquiring hospitals. So I think, our strong balance sheet has allowed us to do all those things, while keeping leverage relatively unchanged or even slightly declining during that time. But at this point, to answer your question directly, Kevin, our method of doing that has been through stock buybacks. But we'll always consider the alternatives available to us and continuously do that on a quarter-by-quarter basis.

Operator

Our next question comes from Andrew Schenker with Morgan Stanley.

Andrew Schenker - Morgan Stanley, Research Division

Just to follow-up on New Mexico. What are your expectations today for 2014, understanding that's still tell a little early. Do you expect the payments to continue next year as well?

Jeffrey S. Sherman

Well, as I said, the program has undergone changes in 2012 and actually, in 2013. So there have been some meetings with the state to talk about funding levels, still preliminary. We're going to be in active discussions with the state, and we're an important provider in the state for image and funding. But as we've talked about in since 2012 and into 2013, the funding levels have come down and that's certainly something that's very concerning for us given the amount of imaging care patients that we treat. So it's still a fluid situation. We are actively participating with the state, and I don't want to speculate that this point until we have more clarity on how the funding mechanism is going to be heading into 2014.

Andrew Schenker - Morgan Stanley, Research Division

Okay. And then, changing direction a little bit. How were one-day stays in the quarter and were there any updates on RAC audit?

William F. Carpenter

One-day stays continue to decline. They declined by about 9% in the quarter. And our RAC activity on a year-over-year basis was pretty close. There wasn't a big change in RAC. It was basically flat to slightly positive in the second quarter year-over-year. But as we said earlier, we are continuing to add resources. We're continuing to use external physician advisors to make sure that patients are in the right clinical setting. We're focused on making sure our documentation is accurate. And I think over time, we have seen our appeal success rate improve. And so I think we have made good progress there. It's hard to predict with RAC audit. So we haven't seen, necessarily, a quarterly trend that we can predict -- help us predict the future. But I think we're making good progress with the resources we have added. We've added case management resources at the facility level as well. And I think we've become very, very good in working on the appeal side as well. So I think if we have made progress with regards to the RAC audit.

Andrew Schenker - Morgan Stanley, Research Division

Okay. And just to follow-up real quick. On the one-day stays, is there anything you would note that stood out, driving the 9% decline? Or was there extra payor pressures as this relates to continued increase in managed Medicaid?

Jeffrey S. Sherman

That's pretty consistent with what we've been running. So we are seeing managed Medicare increase, as I said in the first quarter, so it's gone from about 13% of Medicare admissions up to about 15% of Medicare admissions. We're not seeing anything necessarily discernible within that category. But we are continuing to see both Medicare and Medicaid admissions moving into the managed Medicare and managed Medicaid side. Much faster on the Medicaid side, however for us, versus the Medicare side. But no other discernible trends from the last several quarters with regards to one-day stays.

Operator

Our next question is coming from Frank Morgan with RBC Capital Markets.

Frank G. Morgan - RBC Capital Markets, LLC, Research Division

I think you touched on this briefly, but I was hoping you can go back and talk a little bit more about the specific programs on the outreach side to get people signed up for Medicaid. Certainly, you're fortunate to be in a lot of states where Medicaid expansion is occurring. So, maybe talk a little bit more detail there what you're doing, and maybe any kind of cost associated with that? And then my second question is, on the pricing front, you talked about negotiations with exchanges. Could you talk about how that pricing compares to commercial?

Jeffrey S. Sherman

Sure, Frank. I'll start and David or Bill can add in. With regards to Medicaid eligibility, keep in mind, we're already doing Medicaid eligibility screening for all our insured patients today. So if a state decides to expand Medicaid, that process is already in place, just now, more patients will qualify for their screening process that we're already doing. So that will be very seamless and will happen really day 1, once the state decides to expand Medicaid. With regards to exchanges and the exchange contracts, I did note in my prepared remarks that on balance for the whole portfolio, we are achieving commercial rates, which was our expectation heading into this. Again, being that only provider in virtually all of our communities, we start from a good position in negotiating for the exchanges. And in terms of the outreach, I'll ask either David or Bill if they want that any more comments.

William F. Carpenter

Yes, Frank, this is Bill. I'll make a couple comments on this. I mentioned how the hospital is the largest visible representative for information and about health care in a community, in a small community, where we're the only hospital in town, particularly. And I think it is important to note that recent surveys conducted by Enroll America have shown that there's just limited public awareness about the Affordable Care Act and what is available and how it can help health care consumers. And so, the hospital can be a resource for that. There's also information that I've read recently that indicates that the majority of Americans really don't know about reform and the coverage that will be available to them. And they also want sort of one-on-one interaction about that. So that's where the hospital can come in, in order to help with information and help with enrollment. Now with regard to federally run exchanges and state exchanges, the rules have become more clear with regard to the federal exchanges. And we will have a significant ability to help patients figure out where they may plug in and to help them in that process. And that means even sitting down one-on-one with them with a counselor and having -- presenting the information. Now, we won't make the decision and we'll follow the rules very, very carefully. But we will have the ability to do that and the rules are becoming, as a said, even within the last couple of weeks, more clear. Now on the stateside, it is a little less clear, but I expect those rules will sort of continue to evolve and probably track what's going on, on the federal side.

Frank G. Morgan - RBC Capital Markets, LLC, Research Division

Will you be bringing any outside resources or any incremental costs in those efforts?

William F. Carpenter

There will be some outside cost and new cost but none that are material, Frank. And so a lot of effort will go on. We'll have outside resources, we'll have inside resources. But I don't expect those to be material. In addition, one thing that we do have is we can pinpoint with data on who these individuals are that are coming into the hospitals that are using the hospital today that would most benefit from the expanded coverage. So using data and analytics to help drive and focus our effort in more of a pinpoint accuracy as opposed to kind of a gunshot education.

Jeffrey S. Sherman

So we have a smaller percentage of our patients that are big utilizers of our emergency rooms today that are uninsured.

Operator

And our next question is coming from Gary Taylor with Citigroup.

Gary P. Taylor - Citigroup Inc, Research Division

Just a couple of things I want to tie down. So when you talked about one-day stays being down 90% year-over-year, those are one-day admissions that are still being classified as inpatient admission that are down 9%?

William F. Carpenter

That's correct.

Gary P. Taylor - Citigroup Inc, Research Division

And what percentage of your total admissions are in that one-day stay category now?

William F. Carpenter

It's 15%, 18%, Gary, in that range. And it's a mixture. I mean, it's a mixture of -- by payer as well.

Gary P. Taylor - Citigroup Inc, Research Division

And then I just want to go back to New Mexico Medicaid. I think you've clarified this to my satisfaction, but I'm not -- I still think there is a little bit of confusion. So in the quarter, from the Medicaid New Mexico SPCC, you actually booked a negative $4.8 million of revenue.

David M. Dill

That's correct and we were expecting to record $7 million. And so verses our expectation, it was $11.8 million shortfall to our expectation, which trued up 4 quarters worth of funding, but we have visibility for the second half of the year and that funding is consistent with what we had originally expected at $7 million a quarter.

Gary P. Taylor - Citigroup Inc, Research Division

Okay. Got it. Understood. I think just the language in the release, there was confusion as to whether it was down $4.8 million versus prior year versus actually being a negative revenue item that, I think, actually existed. So, anyway.

William F. Carpenter

Thanks for helping to clarify that.

Gary P. Taylor - Citigroup Inc, Research Division

And basically you're calling out that impact as really going straight to EBITDA. So this particular program does not have associated provider taxes with it?

William F. Carpenter

That's correct.

Gary P. Taylor - Citigroup Inc, Research Division

Okay. And then just my last question, maybe for David. On the 6.9% decline in the inpatient surgical, I know you commented on a couple of things. I'm not -- may be I missed some of this, but was just hoping maybe you could talk about top kind of 2, 3, 4 service lines where you're seeing that. Is that open heart still? Is that inpatient cath moving to outpatient cath? I know you said outpatient cath was strong but outside of cardiology, if I'm right, because that's kind of in the top category, where else are you really seeing the inpatient surgical decline?

David M. Dill

Yes. Gynecological procedures have been down pretty consistently for a few years moving from in to outpatient. And we've seen a little bit of decline over general surgical volumes as well both on the inpatient side. Some of that is moving to the outpatient. It's not as easy to cross walk that over to the outpatient business but between a little general surgery and gynecological procedures, those are the 2 biggest impacts. Orthopedic procedures have been flat, that trend has been improving over the last 2 or 3 quarters. And it actually turned positive this quarter so we saw growth in orthopedic inpatient cases and orthopedic outpatient cases, but those are the main 2.

Gary P. Taylor - Citigroup Inc, Research Division

So cardiology with cath lab movement just isn't a big enough piece of your business? That's not in one of the larger categories for you?

David M. Dill

Yes, it's an important part of our business but we only have those programs in a smaller subset of our hospitals. So we have seen a shift from inpatient to outpatient. But across the metrics that you're looking at, across the consolidated business, it's not a big driver.

Operator

And our next question is coming from Darren Lehrich with Deutsche Bank.

Darren P. Lehrich - Deutsche Bank AG, Research Division

So I just -- I wanted to just confirm, relative to the EPS guidance, Jeff, the number -- the range that you're providing, that would exclude the gain in this quarter, and the New Mexico reductions as you bridge them in your release, is that the right way to think about it?

Jeffrey S. Sherman

No, our starting point is the reported number down. And then EPS will flow from EBITDA, the EBITDA guidance range I gave.

Darren P. Lehrich - Deutsche Bank AG, Research Division

Okay, that clarifies that. And then, David, you mentioned, obviously, you've been working hard in Marquette in assimilating that market. I guess, I just wanted to understand what I heard you say around making some adjustments. And the reason I ask is, the noncontrolling interest number this quarter was roughly $100,000, and I think that's the window into the Duke JV earnings. So is there something there this quarter that ran through the JV earnings that impacted that number? And any sort of thoughts or guidance with regard to the noncontrolling interest as it perhaps a window into the JV activity?

David M. Dill

Yes, we have a number of items that roll through that, Darren, that rolled through that. Have a smaller joint ventures and we have some current hospitals that are joint ventured as well. That all the rolled through that number. So I wouldn't read anything in particular with regards to Marquette out of that number in the quarter.

Jeffrey S. Sherman

Of all of our hospitals within the Duke LifePoint partnership, there are now hospitals in North Carolina and up in Marquette. And we've seen sequential improvement in each one of those hospitals from the first quarter to the second quarter. And this year, it's specifically with Marquette, getting contracts renegotiated, some expensive projects renegotiated, working -- restructuring relationships with some doctors in the marketplace, a new team being put in place. And then just a right-sizing staffing requirements to adjust volumes, and the team on the ground is working hard to do that and I expect that trend to continue.

William F. Carpenter

I'm going to jump on Marquette for a second because it's really -- I think it's an important -- this network strategy there is really important. I continue to be so impressed by the great potential there. As David mentioned, we're working with the team there to finalize the strategic and capital plans. So I think we're going to see some impressive changes there in the next few years. In addition, Marquette General has performed exactly as we'd hoped, serving as the focal point for our network in the Upper Peninsula. The addition of Portage and Bell and potentially others, will continue to the prove out the vision that we have put in that area. This is exciting stuff and it's great to see it come together.

Operator

And our next question comes from Tom Gallucci with Lazard Capital Markets.

Jeffrey S. Sherman

We're going to try and limit the last couple and try and get everyone into one question please.

Thomas Gallucci - Lazard Capital Markets LLC, Research Division

I've just got one. Thanks, Jeff. Most of my questions have been answered at this point. Just following up on some of your comments earlier, Bill, around sort of ACA awareness, et cetera. You said, I think, earlier in your prepared remarks that you still see reform as being positive, of course. Can you talk about at all how you see it being -- playing out, whether bad debt is the primary benefit early on versus volumes or if there a fairly steep ramp as we think about into '14? Or it's more like '14, '15, '16? And is there any time frame during which you expect to maybe delineate some of your thoughts in a more quantified fashion for us all?

William F. Carpenter

Yes, we'll do that as we're able to -- when we have clarity. We always speak about it. But when we talk about net positive for LifePoint, we really continue to see it as a adding a significant number of uninsured people to coverage. And that is a net positive. That's how we get to net positive. Now, we're watching the sort of puts and takes, if you will, and timing, very closely monitoring, Medicaid expansion. And I guess, at the end of the day, our view is that we are as well positioned as anyone to obtain favorable rights in the exchanges to take advantage of more people joining the insured rolls, since we are the only hospital in the community. That's really how we get to net positive with those things offsetting the cuts -- or the reductions, I guess, to reimbursements under reform.

Jeffrey S. Sherman

Yes, and I would just add, Tom, so as I said a little bit earlier in the call, if the state decides to expand Medicaid, that happens very quickly and seamlessly and we would see in effect bad debt expense going down. You'd have Medicaid net revenue in excess of what we're getting on those self-pay patients today, which is very little, as you know. And then you'd have some Medicaid contractual there. We expect it's going to -- with regards to exchanges, we expect that's going to roll out over the multiyear period as the plans get more mature, as more patients become aware. So we'll see that happen over time. With Medicaid expansion, we can retroactively qualify patients for coverage that come into our emergency rooms. So that's important. And we've seen several of big states have decided to expand, and we're watching this closely going forward. But again, we are the only provider in the vast majority of our markets. So getting payments for those patients today, we believe over time, will be in excess of what we have to give up in terms of Medicare and Medicaid reimbursement. And finally, I think, as we have seen in other places where it's done, we do expect to see some volume improvement over time with more coverage as well.

Operator

And our next question is Whit Mayo with Robert Baird.

Whit Mayo - Robert W. Baird & Co. Incorporated, Research Division

I got really a quick one for either for Bill or David. Just any thoughts on the navigator rule? And it seems helpful that hospitals can take on that role, but I don't know how to rank the importance of that. So what exactly does that mean to you?

David M. Dill

Yes. Well, clarity always helps and it's not completely clear yet, but it's becoming more clear because of what Bill is talking about on the federal exchange and the state exchanges. So it's a little more clear on the federal exchanges, a little less clear today on the state-run exchanges. But we will be able to help patients understand the exchanges, the offerings, providing them, whether it's kiosk or technology to help them. There's some things that we can't do like actually getting them signed up. So we're still defining what can we do our can't we do, but we have emergency departments where a lot of these patients are in today. What we've worked on, our wait times. We still have individuals waiting and using that time to play the role of the educator, to inform them on the options that they have. We will do that either through resources that we have today in our hospitals or through partnering with outside groups to assist with that. So becoming clear, but not completely clear at this point.

Operator

And our next question is coming from John Ransom with Raymond James.

John W. Ransom - Raymond James & Associates, Inc., Research Division

A quick one as well. The year-over-year trend in bad debt, is that still being driven by uninsured? Or is it driven more by co-pays from high deductible plans?

Jeffrey S. Sherman

Yes. John, it really continues to be driven by self-pay revenue increases. So we said our self-pay admissions were up year-over-year, and we've actually seen some slight improvements in our upfront collections of co-pay deductibles. So our collections are holding. Really, it is driven by just increases in uninsured and increases in self-pay revenue.

John W. Ransom - Raymond James & Associates, Inc., Research Division

Can you square that with the job picture getting slowly better. Do? You think this is employer positioning for '14 with part-time and health benefits? Or is there -- it is just not -- the trend doesn't hold in your markets relative to uninsured?

Jeffrey S. Sherman

I think the key question for us is if unemployment is coming down, is it coming down with the employer-provided coverage jobs. That's the key, I think, differentiator. So unemployment might be coming down but is it coming down with employers that either aren't providing coverage or as you said, in more part-time things. And we haven't seen a big change yet with the uninsured side. But keep in mind again, most of our self-pay activity occurs on the outpatient side. So self-pay admissions were up, but that's not a big number for us in total for the company. Most of the activities still is more outpatient, kind of urgent care, et cetera, driven in our facilities.

Operator

And our last question from today's coming from Chris Rigg with Susquehanna Financial Group.

Christian Rigg - Susquehanna Financial Group, LLLP, Research Division

Just wanted to ask one final on the guidance. I thought I knew what was going on, but then I got confused a few minutes ago. So what does the first half EPS and EBITDA implied in the full-year outlook? And if you have that by the first and second quarter, that would be great.

Jeffrey S. Sherman

Yes, the -- we are using the reported EBITDA in the first and second quarter and the reported EPS in the first and second quarter for the EBITDA and EPS guidance range. So first and second quarter was $254 million in EBITDA and $1.25 in EPS, so we're using the reported numbers for both of those and then walking the bridge forward that I detailed to get to both the EBITDA and EPS range for the remainder of the year.

Operator

Mr. Carpenter, at this time, I'll turn the call back to you.

William F. Carpenter

Thank you, operator, and thank you, all, for your time this morning. I know it's a busy day for you that -- there are a couple of other calls today, and we wanted to make sure that we stayed here with you in order to be sure that we answered all the questions that you had. I'm glad we got through that. In closing today, I'd like to mention that we remain committed here at LifePoint to our strategies for providing quality care, growing organically and through acquisitions, operating efficiently and developing high-performing talent. We're executing on initiatives within each strategy to benefit from the changes with health care reform. Additionally, our balance sheet and capital structure provides the flexibility to invest in a variety of ways.

All of which will continue to return value to our stockholders. Thank you, again, for participating on our call today, and thank you for your interest in LifePoint Hospitals.

Operator

Ladies and gentlemen, that does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your lines.

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