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HCA Holdings, Inc. (HCA)

Goldman Sachs 34th Annual Global Healthcare Conference

June 12, 2013 5:00 pm ET


Victor L. Campbell - Senior Vice President

Michael Cuffe - Chief Executive Officer of Physician Services and President of Physician Services


Matthew Borsch - Goldman Sachs Group Inc., Research Division

Brian Tanquilut - Jefferies & Company, Inc., Research Division

Colleen Lang - Lazard Capital Markets LLC, Research Division


Matthew Borsch - Goldman Sachs Group Inc., Research Division

All right, everyone. Welcome to another afternoon session, day 2 of the 34th Annual Goldman Sachs Healthcare Research Conference. And we're delighted to be welcoming back HCA, an exciting story that many of you in this room have known for years. Representing the company today, we have Vic Campbell, Senior Vice President. We have on the end there, Mark Kimbrough, Vice President for Investor Relations; and in the middle, Mike Kaff, who joined the company about a year ago. He is President of HCA Physician Services. And Dick, I think you wanted to introduce...

Victor L. Campbell

I'd like to -- some of you met Mike today. It's his maiden voyage. We brought him out of California to see the Investment Committee and to see how hard he's worked. Mike give just a 2 minute background, so that I think it would help the audience understand and maybe raise some questions in this area.

Michael Cuffe

Sure. It's been a pleasure to meet many of you this morning.

Again, my name is Mike Cuffe. I'm a physician. I've been in the contract research space. I have been in clinical practice and been an operator most of my career. Last 25 years before joining HCA I was at the Duke University Health System, various leadership roles the last 10 is Head of Medical Affairs or quality chief medical officer and Head of ambulatory practice operations for the system. Been with HCA since October a year ago. So about a year coming up, 1.5 years. And I oversee our physician services function, which includes recruitment for providers. The vast majority of whom are not employed, but rather come to our markets or come under a short-term income guarantee. The operations of our employed physician cohorts and the joint ventures that we have in that space, as well as obviously play a role with our operators in determining market strategies, particularly those that are germane to health reform that's facing all of us.

Matthew Borsch - Goldman Sachs Group Inc., Research Division

Fantastic. Well let me just take care of reading the disclosure. You've probably heard before because we unfortunately we have to read it in front of every session. We're required to make certain disclosures in public appearances without Goldman Sachs' relationships with companies that we discus. Disclosures relate to investment banking relationships, compensation received or 1% or more ownership. I'm prepared to read disclosures for any issuer now or at the end of this call if anyone would like me to. However, these disclosures are available in our most recent reports available to its clients on our firm portals. In addition, updates to those disclosures are available by ticker on the firm's public website at GS.com. In addition, disclosures applicable to research with respect to issuers, if any, mentioned here and are available through your investment representative. And finally, the use of non-Goldman Sachs personnel may not represent the company's views.

With that why don't we just get right into the Q&A, and maybe I could start off with a question on the current year trends and just an observation on what you've all seen for the last 3.5 years, which is generally a slower level of growth in utilization demand than we've seen in past historic years and wanted to get your view of 2013 in the context of that 3.5 year trend and whether you think it's the new normal or more related to the long life of the economy.

Victor L. Campbell

All right, Matt, I'll take a shot to start. I guess, if you look at HCA, we maybe have been a little bit out of the norm over the last 4, 5 years because we had going into the first quarter of 2013, I think we had 21, 22 straight quarters where our adjusted admission growth had been -- we've been up every quarter, generally running somewhere on average around 2%, but we had quarters as we did in the fourth quarter last year was up 5% and other quarters less than that. Having said that, our first quarter was clearly softer than what we had anticipated and I think it was sort of industry-wide, even in our markets, which are growth markets. I think first and foremost is you had some pretty good comparisons from the prior year so the comps weren't really easy. More significant though and I think we have been maybe had misjudged to some degree the impact of the calendar, and that's been talked about right you and others and every company in this business of how they -- and how the holiday sale and fewer days and what have you. It was pretty material and led to us being a little softer than probably we had expected. We really had a great January, and it was really middle of February before we saw softness and wondered what sort of what's happening there, continued March, although March was a little better than February. And then as we reported on our conference call just to give people comfort that it was on a continuing slide. We had a pretty solid April. Our April adjusted admissions were up 4%. Again we had the benefit of an extra day, so you adjust that out, we are probably 2% growth in the month. And so more back to normal numbers. We make a habit -- no plan to make a habit of reporting monthly volumes, but we felt like it was important to give people a little bit of comfort. And so that's where we see things.

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