All right, we'll go ahead and get started. Thanks for joining us this afternoon. I'm Whit Mayo. I lead Leerink's efforts covering healthcare providers and managed care. My pleasure to have Steve Filton, Chief Financial Officer with UHS, here today. If anyone has any questions, just raise your hand. We can try to keep it interactive. Steve, as you reflect back on 2024, you exceeded the midpoint of your original guidance by $200 million or so, roughly a 10% beat versus your original targets. Maybe where did the sources of outperformance really come from when you look back at the year?
Yeah, we talked about this a little bit on our recent earnings call, and I think that it feels to us like both of our business segments have returned to sort of an operating model that is more historically normative than it's been in a number of years, probably dating all the way back to pre-pandemic levels. That is, you know, same-store revenue growth in the mid to upper single digits. I would say acute care revenue growth, 5-7%, same-store, behavioral maybe a little bit higher, 6-8%. I think that in the current environment, if you're able to grow revenues at that level, which we were able to do in 2024, expenses have definitely stabilized, moderated. Wage inflation has moderated from where it was at the height of the pandemic. Physician expenses on the acute side have stabilized.
As a consequence, you know, I think what you're seeing with that mid-single digit growth, mid-single digit revenue growth is stabilization of and the ability to grow EBITDA and expand margins. I think, you know, you certainly saw that in 2024. Obviously, we were also helped in some cases by some Medicaid supplemental payments or DPP payment increases in 2024. That's certainly a part of the upside in 2024 as well.
What are the actual underpinning assumptions that you have within the guidance for both segments on same-store volumes and revenue?
Yeah, what we talked about is, again, in terms of the underlying business, something that I think is pretty historically normative. I mean, I'm going to go back to, you know, acute care revenue growth in the 5-7% range. I'll use 6% as the midpoint. I would say that's split pretty evenly between price and volume in our assumption. You know, 2.5% adjusted admission, 2.5-3% adjusted admission growth, 2.5-3% pricing growth. And behavioral, I'll use 7% as the midpoint and say that's skewed a little bit more to price, probably, you know, 4.5% price and, you know, 2.5-3% volume. Obviously, and I think we talked about this on the call, we've really done little to sort of forecast those kind of exogenous variables that are out of our control, Medicaid reimbursement, exchange subsidies, tariffs, site neutrality.
There's a, you know, a bunch of, you know, potential impacts in the healthcare or hospital space that, because we don't have any real clarity on, you know, we've tried not to. I think we have suggested that. I think we tried to make our overall underlying guidance a bit more conservative so that we could absorb some amount of headwinds from some of these other issues. You know, obviously, it depends on the order of magnitude we could see.
Yeah. If I could see all of the different service lines within the behavioral segment, you've got acute psych, you've got residential, you've got the addiction business, U.K. You still have a U.K. business, and then you have, you know, military services as well. How would you characterize the outperformance and underperformance or headwinds and tailwinds there?
I think it's fair to say, and we certainly have talked about this for some time, I think we believe, and I think most of our peers suggest that, and I think the broader macro metrics suggest that underlying demand for behavioral services remains quite strong. I think that crosses all diagnoses. You know, you ticked off some, you know, whether it's general psych or eating disorders or autism or, you know, illnesses of the elderly like dementia, Alzheimer's, that sort of thing. I think we find it to be pretty strong, you know, throughout. I think we see outpatient growing. We talked about this a little bit on our recent earnings call, trying to expand more in the freestanding outpatient business.
You know, just generally, you know, I don't know that any, I'll call them diagnoses sort of categories or service line categories are growing faster than others. I think most are quite strong. You know, the challenges for us are, you know, being able to hire all the people we need to service the patients, you know, dealing with insurance companies and the limits that they're trying to place on sites of service and, you know, patient day restrictions, that sort of thing. Just broadly, I would describe the demand dynamic across, again, the whole sort of portfolio of diagnoses as relatively strong.
This past year, we've had the wyden, you know, investigation around the residential treatment industry. Paris Hilton has been very visible around advancing that. How are you internally, you know, dealing with that? Is this anything that your team focuses a lot on? I mean, to me, it seems like it's a broader focus on industry oversight than any individual company or specific issue for you or some of your peers. How do you internally talk about this as an issue?
I think the challenge is that a lot of the attention, whether it's media attention and articles in the media or, you know, regulatory attention in this case, you know, you talked about the Senate Finance Committee hearings back in June, I believe. I don't know that there's a great deal the industry can do to proactively kind of defer or avoid that sort of coverage. I mean, I think, you know, look, you point out, I think, honestly, the Senate Finance Committee hearings were largely driven by Paris Hilton. And I think if, you know, that was somebody who had a different name, I'm not sure that we would have had Senate hearings, but it was sort of a, you know, kind of a newsworthy thing.
You know, I think that the flaw in a lot of these articles and coverage and even the regulatory oversight is, you know, kind of focus on individual incidents. You know, we treat in our behavioral segment in excess of 600,000 patients a year. And while obviously it is our goal that in doing so, you know, there's never a negative incident, there's never harm that comes to a patient, realistically, it would be difficult to treat that level and that magnitude of patients without having, you know, the occasional negative outcome as much as we try and avoid it. You know, we have provided, again, to the Senate, to, you know, news sources that are writing articles, you know, more of that broad data that suggests, you know, the vast majority of patients that we treat, you know, have positive outcomes, have a very positive patient experience.
We see meaningful improvements in our patient experience scores year over year. You know, they tend to avoid, I think, that sort of reporting for, you know, kind of what's the more sensational thing. Although, you know, interestingly, at the end of the day, even though the Senate Finance Committee, you know, held hearings and pointed to a number of companies that had, you know, very specific issues, et cetera, the ultimate sort of suggestions or recommendations they had were sort of more community-based, more family-based care. The reality is there have been a lot of issues with family-based care, foster care, community care, et cetera. Their other suggestion was just sort of more transparency, meaning more reporting from the industry on incidents, et cetera. People who are seeking care, you know, have that data available to them. We welcome that.
We're happy to, you know, have greater transparency and, you know, sort of more comparisons between providers because we ultimately think, you know, we will be advantaged by that. We think that the care we render is as good as anybody else in the industry.
I get asked a lot around the frequency of some of the legal cases and the investigations. Does it feel like this is, is this a pattern that's growing here and where do we go with them? Do you agree that there's a heightened level of sort of investigative stuff happening right now in legal issues for the industry?
I think those are two separate issues. You know, you already asked about one. I'm not sure that the oversight and regulatory issues are directly related to the litigation issues. I think sometimes they can be somewhat related. You know, at the end of the day, you know, we've talked about the fact, you know, we increased our malpractice reserve and our malpractice expense this year. We did so based on the third-party estimates we get, which, you know, we have always, you know, based our reserves on a third-party actuarial analysis. We did so again this year. We've actually conservatively moved, you know, our actuary gives us a range of sort of outcomes, a range of reserves that they're recommending. We have historically sort of targeted the midpoint of that range.
This year, we moved to the upper end to some degree, I think, to kind of respond to sort of the, you know, the trends that we're seeing in that business. Interestingly, and I think we've made this point, and I, you know, I think, you know, you heard it, the increase in our reserves and the increase in our expense based on the actuarial feedback is split pretty evenly between acute and behavioral, even though, to your point, more of the sort of headline news in the last year has been on the behavioral side of the business. I think that's because the actuary tends to take a kind of a longer-term view based on our specific experience, you know, broader trends in the industry.
I think, quite frankly, the malpractice trends are not even part of a broader malpractice trend, which I think is on the upswing. I think part of a broader sort of litigation trend broadly in the sense of all kinds of tort cases, product liability, you know, other sort of, you know, third-party liability cases have all been on the uptick. You know, I think, you know, we're responding to that. Again, I think that goes beyond our industry. The way that we, you know, and you sort of talked about it before when you asked how we respond to sort of the media kinds of attention, I mean, we are very focused on, you know, what we describe as a zero-harm policy. No patient who comes to us who's within our control should ever be harmed, you know, while they're in our care.
I think we have a pretty strong track record of being that. Now, again, if we're going to see hundreds and hundreds of thousands of patients a year, there will be some exceptions. We try and make sure that those exceptions are as absolutely minimal as possible. That is always going to be our focus.
You invested in an EMR two years ago? Last year? Two years ago?
18 months, maybe.
Where are we in the rollout? How much capital have you spent? How much do you need to spend? How long is this going to take? Any tangible benefits that you've seen? I'm particularly interested on, like, recruiting, if that's been any anecdotal positive for you.
Yeah. You know, I think it's worth noting that I think the behavioral industry broadly is, you know, fairly, you know, candidly behind the curve, particularly when compared to the acute care industry in terms of information technology, et cetera. I think there's a couple of reasons for that. I mean, the acute care industry is much, much, much larger than the behavioral industry. The acute care industry, particularly from an EMR or electronic health record perspective, really benefited. People may not remember, but at the beginning of the Obama term, there was a stimulus bill. Part of the stimulus bill was, you know, $20 billion, I believe was the number to encourage, you know, acute care hospitals to install electronic medical records.
You know, in other words, the federal government for us picked up, I'm going to say, somewhere like 75%-80% of the tab for us of implementing an electronic medical record in the acute care space. There's no similar support or subsidy for the behavioral hospitals. It will probably cost us, I'm going to say, somewhere in the $60 million-$80 million range to fully implement all of our behavioral hospitals on an EMR. I think we're about probably 20% of the way through that. The pace, I think, picks up the more experience we get and the more implementations we do. I think we're probably, you know, two and three years out from being, you know, fully implemented.
The other sort of technology that we've talked about and mentioned, I think, you know, on our recent call as well, is sort of what we describe as patient rounding technology. You know, patients in a behavioral hospital, you know, are different than patients in an acute care hospital. Most patients in an acute care hospital are in their rooms and in their beds for most of the day. If they get up, they, you know, take a few steps and they're back in their bed. I mean, but they're not moving around. They're easy to keep track of. Behavioral patients or patients in a behavioral hospital really shouldn't be in their rooms at all during the day, you know, other than to sleep.
Keeping track of them and keeping in mind that they're generally physically healthy, et cetera, you know, is a real sort of focus of the behavioral business and behavioral care. Historically, we've done that in a very manual way. You know, eyes on patients, somebody laying eyes on a patient literally every 15 minutes that they're in the hospital. That technology is improving, you know, using, you know, sort of what I'll call Apple Watch technology, you know, wearable, you know, device technology where the patients can wear that. That allows us to keep track of them and knowing where they are. It also allows us to keep track of when a staff member lays eyes on them or is close enough to lay eyes on them, et cetera. We can get much more efficient in that.
I think that really increases patient safety and increases our efficiency. Along with the electronic medical record, now you talked about sort of recruiting, et cetera. I think, you know, the issue there is, and I think this is very much a generational thing. I think folks who graduate from nursing school or from medical school today, you know, younger people, they're expecting, you know, an electronic medical record as, you know, that's sort of their standard. If you want to recruit from that, you know, subset of the, you know, the target, you know, employee population, I think you need to be technologically competitive. That's part of another part of the reason why we're investing in both electronic medical record technology and this patient rounding technology.
When I look, I'm sorry, I'm bouncing around. Essentially, my questions, and you can probably tell beforehand, like what's bouncing around a lot here. When I look at the corporate overhead costs, it's not really, you don't have a corporate overhead line. I mean, we just subtract the numbers and it's what's implied. That is now up to about $500 million. I don't believe you have the health plan in that. I think it's in the acute segment. Is there anything else inside that that is contributing to that level of growth that we've seen? You used to have a construction business. I don't think there's much activity there anymore. I'm just trying to square my head around like a $500 million implied number.
Yeah. The answer is we don't have that construction management business anymore. That's not contributing to it. You are correct that the insurance subsidiary is recorded in our acute care results. No, I think the only thing that has really risen probably, you know, sort of beyond the rate of inflation in recent years, we do include the bulk of our sort of equity compensation in that. That number, I guess, fortunately has increased, you know, with the relatively dramatic increase in our stock price over the last several years. That's really the only thing. Other than that, you know, the main thing that's in there is, you know, our corporate overhead expense, which is mostly salaries, quite frankly. Obviously, that has increased with the size of the business, but I don't think has increased, you know, faster than the size of the business.
I don't think we would expect that it would.
On the health plan, since I said it, just maybe remind the room the size of that business, how you look at the strategic value of that. I don't think you'll look to sell it, but maybe just talk a little bit more about how you look at that as an asset.
I think as is true with most provider-based insurance plans, you know, we don't view our, you know, insurance plan as sort of a standalone, you know, profit contributor. We've talked, you know, a number of times that it, you know, largely runs at something close to a break-even, maybe a small profit or small loss. The main rationale for the business is to create more physician alignment, create physician alignment in a way that we actually think is less expensive than sometimes employing physicians or other arrangements where physicians are being paid or subsidized. You know, the nice thing about having, you know, physicians, you know, as part of a network or a Medicare Advantage plan or Medicare Advantage savings is there's sort of a shared incentive for you to treat patients and to treat them efficiently, et cetera.
You know, that physician alignment, using the physician alignment as a way to create a narrow network for, you know, more effective steerage of patients, all those things are really the reasons why we, and I think any other provider, operates a provider-based plan. To your point, if there was another way of accomplishing that, you know, by, for instance, having some, you know, either an insurance company, you know, a standalone insurance company owning that business or partnering with us, you know, as long as we could meet our goals of, you know, keeping the physician alignment in place, keeping the network in place, you know, largely sort of along the lines of, you know, a narrow network that favors our facilities and our providers, I think we'd be, you know, willing to do that. I have had some conversations over the years in exploring that.
You know, the challenge is the, you know, the standalone insurance companies have a different sort of, you know, incentive, you know, model, you know, where they're more interested in the pure profit of it. If we could find a way to align those incentives, then, you know, I think we would be open to that.
You had a good Star Ratings year, by the way.
We did. I mean, and, you know, our insurance company increased their Star level. It's a little bit of a kind of an ebb and flow. You know, we talked about this year, we've added or projected, you know, adding a significant amount of Medicare Advantage enrollment, you know, on a small scale. You know, generally, when you add Medicare Advantage enrollment, it puts some pressure on your Star ratings in the short run, although we expect to be able to raise them in the long run. Yes, you are absolutely correct that we have increased our Star ratings, which should help us in our 2026 premiums.
Acute margins, costs are obviously have rebased materially higher since 2019. Your margins, I think, are still kind of below where you were. How do you view the trajectory of margins on the business, excluding like directed payment programs and all of those factors that are certainly influencing it higher?
Yeah. We have talked at some point in time that our consolidated margins should be able to return to pre-pandemic levels. I think that is still our view. If you look at the two segments separately, I think behavioral margins have already done that. I mean, to some degree, that is with the help of DPP payments. I think what we have said going forward is I still think we believe within the next couple of years, we should be able to return our consolidated margins to pre-pandemic levels. I think if there is an upside to that, it is probably on the behavioral side, more likely to get to above pre-pandemic levels. On the behavioral side, a little bit more challenging. On the acute side, I think the acute side has some structural hurdles.
One of the things that has been talked about a lot in the last few years is physician expense, which has probably increased by about 150 basis points and is difficult to recover. We also talk on the acute side of a more dramatic shift from inpatient to outpatient care. There is some of that on the behavioral side, but it is clearly, I think, more dramatic, more impactful on the acute side. Yeah, I think we have a view that we can, you know, acute margins still have a runway of improvement. May not get all the way back to, you know, pre-pandemic or 2019 margins. Again, I think consolidated margins should get there and sometime within the next couple of years.
Just maybe a second on directed payment programs. You've once again materially exceeded your preliminary forecast that you put in your 10-K every year. I know your views are on the risk of the program. You've excluded Tennessee and D.C., so maybe just size that amount and maybe when you think you may have some visibility on those two programs.
Yeah. As we disclose in our 10-K, the Tennessee and Washington, D.C. programs, which are new and are awaiting CMS approval or full CMS approval, are probably, we estimate, worth about $160 million in total and the two combined if they become fully approved and would be retroactive to July 1 of 2024 for the Tennessee program and October 1 of 2024 for the District of Columbia program. More broadly, all of these DPP programs have to get reapproved every year. We think about half of the programs have been reapproved for 2025. There's clearly been a sort of a pause in the approval of these programs as the administration transition has been occurring. The feedback that CMS gives the states, who I think they routinely, you know, communicate with, is that they believe that these programs sort of, you know, meet the requirements. They've been approved before.
They will likely be reapproved, although they don't necessarily provide, you know, a time estimate of exactly when that's going to be in terms of when, you know, the new political appointees are in place, et cetera. The way that we've handled this, and you kind of have alluded to it, is we, and this is consistent with our historical practice, once a DPP program has been approved, we assume that it will continue to be approved and we continue to accrue and recognize that and those revenues, you know, going forward until at some point somebody would tell us that there's evidence that they will not be reapproved, et cetera. We certainly are not there at this point.
For new programs, we have waited historically until they're fully approved, at which, you know, at which point we would start to include them in our earnings results, which we have not for 2024, and in our forecast, which we have not for 2025.
Do you wait for the full approval or do you wait for the cash receipt of the program?
Really, it's an approval issue. It's not a cash issue. It comes up here because people have rightly asked about Tennessee and specifically because HCA, so HCA has made the point that the Tennessee program has been approved for the last six months of 2024 from July to December. We agree with that. We believe that in order for those monies to be paid, CMS also has to approve what's called the 1115 Medicaid waiver. We're waiting for that to happen before approving the, you know, those Tennessee dollars. We believe, and I think our reimbursement folks have confirmed this with their counterparts at HCA, HCA sees it the exact same way factually that the 1115 Medicaid waiver is necessary. They just take the position that they think that's a more routine sort of approval likely to happen.
They've recorded that in the back half of 2024. Again, I think we both agree on the facts. We've taken, I think, a slightly more conservative position in how we're going to, you know, treat that. Yeah, I think that, you know, the general sense that HCA has, which, you know, I hope is absolutely right, is more likely than not the program gets approved and we'll, you know, be able to record that at some point in 2025.
You've got a couple big states that benefited the behavioral business. As we talked to at least one state Medicaid director, one of the things he told me was like, as more states are coming around to go through the reapproval process, there's a greater desire to include behavioral health providers. And frankly, there's a larger desert that's out there. There are access points that just aren't available. It makes a lot of sense to give providers the money so that the economics work. Do you believe that is an accurate statement that we're seeing more or that behavioral health providers are being included at a larger pace right now in these programs?
Yeah. No, I think that's true. Look, I think we have a view that from a legislative perspective, there's probably more bipartisan support for behavioral reimbursement and behavioral access to care and other, again, you know, macro issues than even on the acute side. I think, as I said, I think it tends to be a relatively bipartisan support. I think that's specifically true of the DPP program so that a number of states that have had existing programs have revised their programs to include either behavioral coverage where behavioral coverage didn't exist or more generous behavioral coverage. There still are some states, North Carolina is an example that I can think of that implemented a program but still doesn't cover freestanding behavioral facilities. I think there is still more upside.
Yes, I think your general sort of observation and general statement that more and more states are covering behavioral care, both in DPP payments and in other ways, I think is a fair statement.
You've opened a new acute care hospital in Las Vegas. Vegas does not nearly get as much attention as it used to, Steve, when I think about the earnings calls. How is that, or how has that new hospital kind of changed any of the dynamics within that market as that volume is being redistributed? How is it performing relative to maybe the internal expectations?
Yeah. I think your first comment or your comment about, you know, Vegas not getting as much attention as it used to is probably fair. You know, Vegas, I think, as anyone who follows the company, you know, sort of closely knows, is our single biggest market. As a consequence, you know, it had always been a focus. I just think there are so many other issues that people are focused on now. They tend not to focus on those geographic issues. Yeah, we opened West Henderson Hospital, which is our sixth acute care hospital in the market back in early December. It has been open for a few months. It has gotten off to a quick start. We expected that. The West Henderson, which is kind of the southeast quadrant of Las Vegas, has been growing very quickly.
We opened Henderson Hospital, east of West Henderson, as you might imagine, like five years ago, and it got off to probably the quickest start of any hospital we've ever opened. I think West Henderson will do even better than that. You know, we continue to be the largest market share provider in Las Vegas with a market share in the sort of mid 40%. You know, we will continue to expand, not necessarily with brand new hospitals, but with capacity and, you know, access points. We've got, I think, 10 freestanding emergency departments now in Las Vegas, you know, and other access points. You know, we'll continue to do that as we like that market. We like its growth trajectory. You know, there's just a lot to like it. There's a lot to like about our market position in that market. Yes, it's opened strongly.
I think it will continue to do well. It may, and we mentioned this on the call, I think it may distort a little bit negatively some of our same store data, particularly admissions data or adjusted admissions data in 2024, because some of that business is being cannibalized from our existing hospitals. I think most of the business is new and incremental. It should be, you know, a very successful, as have pretty much every opening we've had in Las Vegas in the last 20 years been.
You have startup costs, obviously, that you're incurring. Is that ramping? You view that as offset by what was the?
Yeah. Most of the startup costs, quite frankly, were already incurred in 2024. We opened, as I said, in December. There is a ramp up. I mean, no hospital opens at, you know, sort of the average margins in the market. But, you know, what we have always found in Las Vegas is our hospitals in Las Vegas ramp up faster than any other market that we operate in.
You mentioned micro hospitals. That just had me thinking. You have a network strategy, you know, in each of your markets. You're thinking about developing ambulatory capabilities. Maybe just share some of the areas where you are actively deploying capital and, you know, advancing, you know, an ambitious outpatient strategy.
Yeah. I mentioned freestanding emergency departments, and we've had great success with that strategy. I'm going to say five years ago, we didn't have a single freestanding emergency department in the country. Today we probably have in excess of 30 and probably another 10 under development that will open sometime in the next, you know, 12 - 24 months. That's kind of a whole access point strategy. The nice part about freestanding EDs is that you can open them, you know, in many places around a market that they don't have to be in, you know, geographic proximation to your existing facilities. It's a way to draw in business that you might not otherwise get. That's been a big, you know, focus of ours. I think broadly expanding the continuum beyond more traditional inpatient has been a focus of both of our businesses.
You know, we want to have more of an outpatient presence on the acute side. I think that means things like ambulatory surgery centers and freestanding imaging centers and physician practices, all of which I think, you know, we've got an expanded presence in over the last several years. We talked a little bit on our recent earnings call about, you know, more of a presence on the outpatient continuum on the behavioral side, especially again, the freestanding part of it, because historically we've always had an outpatient practice in behavioral based on patients who are discharged from our inpatient facilities require outpatient care, as many of them do. That's kind of a natural for us. We control that flow of patients.
Patients sort of going the other way, entering the system on a freestanding basis, they're not usually as interested in getting their care on the campus of a behavioral hospital necessarily. They sometimes view that as a more acutely ill population. Maybe they don't feel like they belong there, et cetera. I think there's an opportunity to capture more freestanding outpatient business over the next several years on the behavioral side.
Maybe just capital deployment in general, like larger scale capital deployment, thinking kind of three to five years. There's nothing that's out there for sale that I'm aware of. You've got very low leverage today. You can buy back a bunch of stock. You could raise your dividend maybe to a level that could be of interest to a different set of investors. What are all the, you know, I know you go through a process every year sort of thinking about like taking the dividend up or do we buy back more stocks or where do you guys land internally on that?
You know, I think on the issue of capital deployment, past is likely to be sort of prologue for UHS. If you look at our capital deployment over the last five years, even 10 years, it has been heavily skewed towards CapEx, you know, organic expansion, either building new capacity as we were discussing at West Henderson or, you know, capacity, you know, additional capacity to our existing facilities, new capacity, new OR capacity, that sort of thing, new beds on the behavioral side of the business. We have also been, you know, I think as you suggested, a relatively active acquirer of our own shares. I think that is likely to continue. The area where we have not been terribly, you know, active is in M&A.
I think part of the challenge is there are independently owned, a lot of private equity owned businesses out there, particularly in the behavioral space. I think, you know, the challenge from an expectation perspective is we find that those private equity owners generally have a view that those businesses are worth 12, 13, 14 times EBITDA. That is a challenge for us economically when our own stock is trading at seven or eight times. You know, we will look at those. We will continue to look at those businesses and see if any of them make sense. I think, again, most likely we are going to continue CapEx at right around the same level that we are currently at. Maybe that level goes down a little bit in the next few years as we open up some of these bigger, particularly acute care projects.
You know, we'll continue to be an active acquirer of shares. I think one of the questions that came up a lot on the most recent call was, you know, would we consider accelerating our share repurchases, you know, levering up to some degree to do that? I will note that our leverage levels are at, if not at historic lows, they're at pretty low levels. I don't think we have generally operated at these low levels for an extended period of time. I think if no other opportunities come up, the likelihood that we would sort of accelerate and become a more active acquirer of our own shares is probably, you know, a likely outcome.
On the ACA subsidies, you're one of the only CFOs that's come out quantifying, you know, the exposure. I can't remember the number, but something in the $50 million-ish range, something like that, maybe near the midpoint. Can you maybe elaborate more on the process that you went to and how you identified this person has an ACA plan? We think they're going to find employer-sponsored coverage or be uninsured. Just what was the level of rigor that you went through in that analysis?
Yeah. Look, I think it's worth noting at the outset that I think we purposely sort of threw out this number or floated this number because it felt to us like people were overestimating the impact of the exchange subsidies, you know, expiring or allowed to lapse. The way we went about this, and I think we stressed very much that it was, it was a, I don't want to say back of the envelope, maybe too much of an exaggeration, but it was a relatively broad exercise, you know, with not a ton of precision. About 5% of our current acute care adjusted admissions are exchange patients. We assumed that about half of them would lose coverage.
We did not do the sort of nuanced analysis that you're suggesting, which is how many might be able to get Medicaid, how many might be able to just sort of downgrade their plan from gold to silver to bronze. We just assumed half would lose coverage. We went through the exercise in that population where we can do this to say, all right, how much of those people have brought us elective procedures in the past because we would assume we would lose those without coverage? How much of those people would still come to the emergency room even though they did not have coverage and we would have to, you know, provide care without being reimbursed for it? That is how we got to our sort of $45 million-$50 million number.
Again, I would stress that I think it's a pretty broad guesstimate, but I think, you know, we were responding to the fact that I think people were in some cases estimating numbers that were multiple times larger than that. I think that was a mistake.
All right. Steve, I have not realized, but we have run over time.