Ladies and gentlemen, thank you for standing by and welcome to the Universal Health Services First Quarter 2020 Earnings Conference Call. [Operator Instructions] It is now my pleasure to hand the conference over to Mr. Stephen Filton. Please go ahead, sir.

Thank you. Good morning. Alan Miller, our CEO; and Marc Miller, our President are also joining us on the line this morning. We welcome you to this review of the Universal Health Service’s results for the first quarter ended March 31, 2020. During this conference call, we will be using words such as believes, expects, anticipates, estimates, and similar words that represent forecasts, projections, and forward-looking statements. For anyone not familiar with the risks and uncertainties inherent in these forward-looking statements, I recommend a careful reading of the section on risk factors and forward-looking statements and risk factors in our Form 10-K for the year ended December 31, 2019. We'd like to highlight just a couple of developments and business trends before opening the call up to questions. As discussed in our press release last night, the company reported net income attributable to UHS per diluted share of $1.64 for the quarter. After adjusting for the impact of the items reflected on the supplemental schedule as included with the press release, most notably a $7.4 million or $0.08 per diluted share unrealized loss on shares of certain marketable securities held for investment, our adjusted net income attributable to UHS per diluted share was $1.73 for the quarter ended March 31, 2020. During the first two and a half months of the quarter, volumes in our Acute Care segment were tracking modestly ahead of the prior year. In the last two weeks of March, however, the incidence of COVID-19 and suspected COVID cases increased dramatically in our facilities and correspondingly, the volume of non-COVID patients declined. Consequently, we experienced a 29% decline in admissions in that two-week period at our Acute Care hospitals. This significant decline in patient volumes at our Acute Care hospitals continued into April. The decline in admissions during the second half of March, as well as even more precipitous declines in emergency room visits, and elective/scheduled procedures resulted in a significant decline in income during the first quarter. The behavioral health segment was similarly tracking ahead of the prior year volumes until mid-March when admissions declined 25% during the last two weeks of the quarter, resulting in a significant decline in operating income during that period. The significant declines in patient volumes experienced at our behavioral health facilities have also continued into April. In addition to the volume decline, both business segments had to deal with other material operational challenges, including constraints on COVID-related testing and a lag on results, as well as a shortage of personal protective equipment. Our paramount concern when the COVID crisis first developed was taking all the necessary steps to keep our patients and employees as safe as possible. We did recognize the severe financial stresses created by the COVID crisis and by the end of March and the beginning of April, we undertook steps to mitigate the dramatic revenue declines and to protect our capital structure, including one, cost reduction initiatives across all of our expense categories, two, a significant reduction in planned CapEx spending, and three, a suspension of our share repurchase and quarterly dividend programs. Given the uncertainties and projecting when shelter in place directives will be lifted and hospital volumes will return to more normalized levels, we've withdrawn our earnings guidance for 2020. Congress has recognized the severe financial strains being placed on hospitals and has passed a number of coronavirus bills specifically providing relief to the hospital industry. UHS's hospitals have received funding grants pursuant to the CARES Act, which are subject to meeting certain qualifications, aggregating approximately $198 million to date. In addition, we have received accelerated Medicare payments totaling $375 million thus far, and we're hoping to receive additional Medicare accelerated payments in the near future. Before giving it back to the operator, I would like to mention that as of March 31, 2020, we had approximately $1.2 billion in unborrowed capacity under existing loan facilities to provide insulation against the decline in operating cash flow. We'd be pleased to answer your questions at this time.

[Operator Instructions] The first question will come from the line of Steve Altek with Barclays.

This is Andrew Mok on for Steve. Appreciate all the comments and everything you’re doing as an organization. My question is, can you compare and contrast the impact that the pandemic had on your two business segments and highlight any differences in baseline expectations between those segments during the recovery phase?

To me, the biggest difference is that in the Acute Division, you have the increase in COVID or suspected COVID patients, and effectively that increase in patients is displacing a significant number of non-COVID patients coming through the emergency room and displacing a very large number of elective and scheduled procedures. So effectively, you have this very unfavorable shift - negative shift in service mix. So, you've got many more medical patients who are a little bit more expensive to treat because of all the isolation and other protective steps that we're taking to protect our patients and our employee population. And then you're losing a lot of this higher profitability, higher margin business, again, for those last couple of weeks of March. On the behavioral side, while we lost not an insignificant amount of volume in those last two weeks of March, you don't have that same negative, what I would describe as service-line mix shift. In other words, the patients that we lost were not necessarily any more profitable than the patients that we retained. And that's why, I think, that the operating income results and the operating income decline in the Acute Division was more severe than it was in the behavioral division.

Great, thanks. And then just a quick numbers question. Are you able to quantify the impact from the delayed dish cuts and Medicare sequestration?

Yes, I would estimate, Andrew, that combined, and I would also include in that the EFMAP relief, that's probably about $35 million to $40 million of additional income over the balance of 2020 from what we would have originally anticipated.

The next question will come from the line of Justin Lake with Wolfe Research.

This is Eugene dialed in for Justin. I wanted to ask about how we should think about the margins on lost revenues going forward. In Q1, acute revenues and EBITDA missed our pre-COVID numbers by roughly the same dollar amount? And, obviously, with cost-cutting, that should improve going forward and wanted to get some color on how to think about that for both acute and behavioral from this point. Thank you.

As I indicated, Eugene, in my comments, we really - the decline in volumes and the shift in business in the last two weeks of March occurred so suddenly that we really didn't have time to implement any significant cost-cutting measures until the very end of March and the beginning of April. But since then, we've aggressively looked at our cost structure across the portfolio, across all of our expense categories and are making as many reductions as we think are prudent, given the significant decline in our revenue stream. But I think it's fair to acknowledge that the nature of the hospital business and the hospital business model is that given the dramatic decline in revenues, it is impossible for us to reduce cost at a level commensurate to the reduction in revenues. It's difficult to project, but I would say that if we can reduce our cost at sort of half the rate that revenues are declining, then we've probably done a pretty thorough job. We'll continue to evaluate that as time goes on. Obviously, our hope is that some of this lost business will be restored and we are in the process of measuring what the appropriate cost structure is for volumes, literally on a daily basis. But in our business, as it would be in any business, revenue decline that has occurred as dramatically and as suddenly as this one has is difficult to deal with purely on a cost-cutting basis.

The next question will come from the line of Matthew Borsch with BMO Capital Markets.

This is Eric Glenn on for Matt Borsch. A quick question on incentivizing the COVID-19 impact on the behavioral side and you mentioned a modest increase in admission year-over-year in both January and February, obviously, before the fall-off in mid-March. Are you able to give any indication of the magnitude of that year-over-year increase in January to February prior to the virus impact?

Yes, I think it was in the lower single-digits like 3% or 4%. We were tracking 3% or 4% ahead of the prior year.

Okay. That's helpful. Thank you. And on the acute side? Or is that…

I’m sorry, I think that was true on both sides of the business.

Your next question comes from the line of Pito Chickering with Deutsche Bank.

Thanks for taking my questions. A couple ones here. On the behavioral side, can you talk about the different trends that they saw at the end of March and April between residential and acute? And within acute, are there any segments like substance abuse that have had more impact than others? And have you seen any rebounds in the segments at this point?

It's difficult to make broad generalizations here, Pito. I think what we saw in the behavioral business was, I'll call it the downstream effects from our referral sources. So, when schools closed around the country, we definitely saw a decline in our adolescent business in a number of markets. We certainly saw a decline in outpatient revenues, which tend not to be quite as emergent, either outpatient treatment tends not to be quite as emergent. We've tried to replace a lot of that outpatient capacity with telemedicine capabilities and other things like that. You mentioned substance abuse and again, I think substance abuse treatment can be, or tends to be, a little bit more discretionary than some other psychiatric diagnoses. So we saw a decline in that in some of our markets. But it did vary by market. We saw - as acute hospitals, I think, around the country were overwhelmed with COVID and COVID-suspect patients, we were definitely seeing fewer behavioral referrals from acute emergency rooms as well and I think fewer behavioral patients were going to acute emergency rooms. So again, across the board, I think we've seen that but the hope is that as the incidents of COVID patients stabilize around the country, we'll return to kind of a more normalized pattern of referrals from our various referral sources.

Great. Then on the expense side, there are a lot of moving parts. Can you walk us through the P&L statement for each segment and help us think about what is the mix of variable versus fixed cost for S&B, other OpEx, et cetera?

You can start with supply expense because I think that tends to be the most variable of our expenses, it's almost 100% variable, not quite. And now, I will say that obviously, there's been a lot of focus on the supply chain items for the coronavirus patients including personal protective equipment, et cetera. So, we've really tried to stock up on those sorts of items where possible. I think salary expense tends to be sort of semi-variable or semi-fixed, however you want to look at it, maybe on a 50% level. And I would say the same thing about operating expenses. I think those expenses tend to be flexed on a step level. So, as volumes decline in larger chunks, we start to make more reductions in costs that are not directly variable. So in other words, as patient volume goes down, we're obviously going to reduce the number of nurses at the bedside because there are fewer occupied beds. But as volumes go down, we're also going to reduce headcount and other expenses in more overhead departments like ancillary departments and general overhead departments like dietary and housekeeping and billing and collection, et cetera. So, that's the exercise our hospitals are going through literally at this point on a daily basis, and I think are being pretty effective and conscientious about doing this in a responsible way so that we're still providing the highest level of quality care for the patients that remain and that we're also prepared to provide that level of care as those volumes sort of return to more normalized levels.

Our next question will come from the line of Frank Morgan with RBC Capital Markets.

I guess I wanted to focus in on what you're seeing today right now. And then maybe some more color around your plan to kind of restart the business, what you're thinking about the timing there and what kind of feedback are you getting from either state regulators or from physicians that operate in your hospitals? And then, finally, how much more accelerated payments do you expect to receive? Thanks.

Yes, so let me tackle the last question first. The payments that we've received so far, the sort of the outright grant payments are from the first two tranches of the CARES Act, the $100 billion dedicated to hospitals. So, the first two tranches were $50 billion, and that's - the $195 million is our share of those first two tranches. So the government has identified three more tranches at $10 billion each for rural hospitals, for hotspots and for uncompensated care of COVID patients. We don't know exactly how the government is going to allocate or what methodology they'll use to allocate those dollars. So, it's a little difficult for us to project what our share of that will be. The remaining $20 billion on the original $100 billion has not really been identified in any way by the government as to how they're going to distribute that. And then there was the fourth coronavirus bill that was passed that includes $75 billion of relief for healthcare providers and there's been no indication how those funds will be distributed. So, we really can't estimate that. As far as your first question, Frank, about sort of how the volumes and the business has trended since the end of March. I think it's fair to say, I think - before one of our peers indicated, things got a little bit worse in the first half of April before they seemed to plateau and in some cases, start to get a little better. We've seen a number of states already lift their ban on elective and scheduled procedures Texas for us, being probably the most notable state to have done so. And in some of our hospitals in Texas and some ambulatory facilities, we've actually started to see the resumption of elective and scheduled procedures. I think in most of our other states of consequence, Florida, California, Nevada, the general expectation is that the states will lift their bans sometime in the first half of May and we would expect, and we are certainly working very closely with our own employees and with our physicians, to be - to do everything we can to be ready for that resumption so that we can begin to treat those patients as quickly as the bans are lifted. And again, our hope is that that will occur in most of our geographies by early May. How quickly that's going to occur, I think is sort of beyond our control. In a lot of cases, I think it will be dependent on how patients themselves feel. We're certainly doing everything we can from a procedural perspective to make sure that patients feel like the hospital is a safe place to come and they can be protected. They'll be tested before they're treated and therefore, we can make sure that people are not being unnecessarily exposed to the virus, et cetera. So, the hope is that things begin to improve in late April and early May, but again, the trajectory of that and how quickly it occurs is very difficult to say at this point.

And just on the Medicare accelerated payment request, did you say there was also some additional dollars there you were expecting to receive? Thanks.

Yes, I mean our applications for those funds would indicate that we've only received about half of them. There's been some reporting that the government has slowed down those payments, I think mostly to Part B providers, which in theory, should not be - have an impact on us. But we're waiting to see. And we've been told, at least informally, that those applications and those requests that are in the queue will be paid and all requests were filed timely, et cetera. So, our hope is that we will receive an amount similar to what we have already received, but we're waiting to see how that plays out. Yes, I think we'll take the next question.

Our next question comes from the line of Kevin Fishbeck with Bank of America.

Just wanted to try and understand I guess when you think about the procedures that have been delayed or deferred. What percent do you think will end up coming back into the system and then if you could - in both segments? And again after you say that, can you spend a little more time on the psych side? Because it’s not very clear to me, I understand elective procedure deferred - reschedule it. That makes sense on the acute side, but how does pent-up demand if at all, come back into the system if most of your volume is coming from ERs and things like that? I guess - I don't know if there's the same elective deferred process there. Thanks.

Yes, so look Kevin, the world has changed. And if you had asked me two months ago how much of our elective and scheduled procedures were sort of discretionary or deferrable. I would have told you that I think it's a relatively small percentage. And obviously, in the context of this pandemic, I would have been wrong. I think a lot of what's being deferred are things like cardiac procedures, basic cardiac procedures, stents and pacemakers, cardiac caths, surgeries like oncology surgery, neurosurgery, heavy-duty orthopedics where patients are in a significant amount of pain. And I think generally, I would have described those procedures as not very deferrable. And I think our point of view is that over a period of time, and I think it's difficult to define exactly what that theory is, but I think our perspective is that most of those procedures will wind up getting done. We don't do a lot of what I would again describe as purely discretionary sorts of procedures, cosmetic procedures and ophthalmology procedures and things that certainly really are absolutely discretionary. We still do those kinds of procedures in the hospital and haven't done them for years. So, I think our point of view is that most of these procedures that have been postponed and deferred will ultimately take place. I mean that's the feedback we get from our physicians. And that's the sense we get as we ourselves analyze that on the acute side. On the behavioral side, we struggle a little bit with the same question that you posed. We don't exactly know where these patients are at the moment. We don't believe they're being treated in other forums, et cetera. And again as a consequence, we believe that ultimately behavioral volumes will return to normal. As a matter of fact, I think it's not unreasonable to speculate that we're in an extremely stressful environment for the vast majority of people and that folks who have chronic mental illnesses are more likely to struggle with some of those illnesses in this environment and with these stresses than they might be in a normal period. So ultimately, I think we feel like, again, behavioral volumes will get back to normal. I'm not sure - that same sort of sense of recapture that there is in the acute side. But I think there's a sense of being able to get back to normal volumes once, I think, the majority of our referral sources start to resume some level of normal activity. We're spending a lot of time - in our behavioral business trying to understand where these patients are at the moment, where they are in the system. If there are efficient ways for us to capture them without them going through the sort of traditional referrals, but then again, I think we've made some progress. And as my earlier comments indicated in the latter half of April, I think we're seeing some glimmers of hope that behavioral volumes are now being at least in an incremental way.

And just maybe last question, if you think about this pent-up demand concept - in both businesses. How do you think about the margin, I mean I guess we can model things coming back to normal pretty easily, but if there's pent-up demand, does that come in at normal margin, higher margin, lower margin because you have to hire more nurses or temp staff? How do you think about what the probability of that business looks like if there’s an above-average amount of pent-up demand coming back in the second half of the year?

My sense is it would come back at sort of the traditional margin. The reality is, the staff that historically treats those patients is there and available. They've largely been the ones that have had hours reduced just because there's a lack of patients. So, maybe there is some element of, over time or some temporary labor required if we're going to run the ORs over the weekend or later hours during the day. But I think for the most part, those patients get treated under a cost structure that very much resembles the traditional cost structure they would have been treated under.

[Operator Instructions] The next question will come from the line of Matthew Gillmor with Baird.

Steve, I was hoping you could talk about the behavioral length-of-stay metric. It seemed to improve a little bit in the quarter. I was curious if you're seeing payers sort of reduce some of the utilization restrictions? And how that's been trending?

Yes, I think that's a tough one to answer, Matthew. It's hard to know whether that's kind of a meaningful change in the way payers have approached the business or it's just as the rest of the world was focused on COVID patients. There was just less attention. And I think we also have always had the sort of perspective that when volumes drop some in the behavioral businesses, there's a little bit less pressure to turn patients over as quickly. So, I think you saw some of that. I saw the last couple of weeks of the quarter and even into April are so different and unusual from anything we've ever experienced; I'm reluctant to draw any conclusions from trends and statistics like length of stay.

Fair enough. Then Steve, could you quantify the reduction to CapEx. I think you had been talking about $800 million previously. Can you just give us the sense for how much you think you can reduce it going forward?

So, I think that it’s at least a twofold sort of approach on our part, and one is obviously, as we're seeing our revenue stream and ultimately, obviously, the cash flows that will decline commensurate with that revenue reduction. We're trying to conserve our capital and make the capital investments that are sort of most necessary. Most impactful from a return perspective in the short run. And I think ultimately, we have a point of view that over the course of 2020, we'll probably wind up spending a quarter to a third less than what our original projections were. At the same time, and I think this is relevant to the bigger construction projects that we've been contemplating, and that included in our CapEx for the year and for several years, we've been experiencing several years’ worth of escalating construction costs and pricing pressures, et cetera. And certainly have a sense that one of the benefits of this downturn is that those construction providers will be under some pressure as the demand for their services lessens. So, I think we feel there's an opportunity for us to reprice, recast, redraw many of our projects, et cetera, at more reasonable prices. So, we're going to certainly make the effort to do that. And if we have to delay or elongate the timeline for some of those projects, I think we're willing to do that in this period. So, I think we're focused on accomplishing both of those objectives over the course of the next several months.

Our next question will come from the line of David Cohen with JPMorgan.

My question relates to the inpatient sides of both of your segments. I wonder if you can frame for us what percentage of normal census you're running at, say, currently or for the month of April, whatever comes to mind, as a percentage of sort of normal for this time of the year? Thank you.

So, my prepared comments indicated, I think, that acute care admissions were down about 29% in the last two weeks of March and behavioral were down 25%. I think acute census and patient days and admission activity has sort of settled in around that number in April. I think the behavioral numbers have gotten a little bit better. But those numbers are kind of reflective of again, the declines we saw in March into early April. In both cases I think they're getting a little better in the back half of April. But they're reflective of the level of decline we've seen. We haven't heard from AJ. Steve, have you been in touch with him?

Yes, I have spoken with AJ.

Our next question will come from the line of Whit Mayo with UBS.

Steve, I was just wondering if you could talk a little bit about payer mix and how you're working on identifying Medicaid coverage and triages from a process standpoint? It might be helpful to hear what you're doing operationally. I would think that the presumptive eligibility rules may help you, but just from a registration process standpoint, could you talk a little bit about your revenue cycle?

Yes, I mean, Whit, in the short run, again, over the last I'll call it six weeks, we haven't really seen our payer mix change a great deal. Or see in particular a significant uptick in patients without insurance. Obviously, maybe not obviously, but I think a lot of employees who are not working have been furloughed, and I think a lot of furloughed employees are retaining their health benefits in many industries, et cetera. Obviously, the expectation is that going forward, to the degree that unemployment rises significantly as I think it's expected to do, we'll see an uptick in uninsured patients. Unlike the recession from a decade ago, there is some greater cushion here. Obviously, there's Medicaid expansion in a number of our states that should sort of help insulate some of that increase in uninsured volumes. There's some talk that Congress will provide extended COBRA benefits that obviously are the state and federal exchanges, which should provide an additional outlet for some patients. And so, our admitting folks and our folks who deal with coverage issues are prepared to make sure that our patients and prospective patients use every tool available to them to get the coverage they need. This is not the first time we've gone through this drill. I would say that a recessionary sort of environment is something that we're at least accustomed to working with. And that there are models for us and procedures that we employ. A little bit different than the COVID crisis, where I think we're sort of rewriting the playbook almost from scratch in certain cases.

That's helpful. Maybe just two clarification questions. The Medicare-accelerated payments, did you give a number for what you expect to receive? And the $20 million malpractice increase in the quarter, any more color on the trends driving that would be helpful. Thanks.

Yes, so what I said previously was, we received the $375 million and have filed for and expect to receive a similar amount in the future, as long as CMS doesn't change their approach or change the rules in midstream. As far as the malpractice adjustment, it was really based on some - a relatively small number of large cases that sort of had negative outcomes over the course of the last quarter or two, and in our minds, required an adjustment to our reserve. I think it's a little too early for us to make a judgment about how that will affect our going-forward expense provisions, et cetera. So obviously right now, we feel like the $20 million adjustment gets us to where we need to be, but it's a - an area that we'll continue to monitor as we go forward.

The next question will come from the line of Sarah James of Piper Sandler.

This is Chris Neamonitis on for Sarah. I just wanted to check in, Steve. I know you mentioned expanding capacity in the OR for when procedural volumes do come back, can you clarify or maybe quantify just how much capacity you'd be able to add to meet some of that pent-up demand?

Yes. Look, I think it's fair to say that most of our hospital enlargement, and most hospitals enlarged, in general, they're not operating anywhere close to 100% capacity. And they operate from early in the morning, usually, until sometime mid-afternoon or so. So, we've certainly had the option to operate later into the day and on the weekends, et cetera. I think a lot of that is dependent, quite frankly, on surgeon capability and their capacity to operate safely, et cetera. I think we have the employees and I think we have the physical capacity to expand our capacity if there is a sort of a catch-up or pipeline of demand that’s greater than our normal volumes. But a lot of that, again, I think is going to be dependent not so much on any gating mechanisms we have in the hospital, but on patient perception and patient willingness to come back to the hospital, et cetera. And it's incumbent upon us as hospital providers to make our patients feel like it's a safe place to come and they can come and be treated in a safe environment. I think we have a whole host of procedures in place to do that and we're doing everything we can to make our patients feel like they should not have any significant concerns about coming in to be treated.

Great, thanks. And then just a quick one. You also mentioned a decline in adolescent psych, but any chance you can maybe kind of clarify here, too, just how much of the behavioral business is dependent on referrals coming from schools?

Yes. So, that was a comment, particularly I think, about the residential business. Our residential behavioral business is probably in that 15% of our overall behavioral revenues. We certainly had adolescent patients in our general psychiatric hospitals, but I was specifically referring to the residential business before, and that's about 15% of our overall revenues.

[Operator Instructions] Our next question will come from the line of A.J. Rice with Credit Suisse.

Maybe a couple of things. One on the protective equipment, I know you said that that was something that was a little bit more costly now, but I wonder, because it seems like that's also a gating factor on when some of these locations are willing to - or some of these public health officials are willing to allow people to reopen. How are you standing in terms of your supply of that? And do you think that the public health officials in your markets are starting to feel comfortable that there's enough of a supply of that to allow for some of these procedures to come back?

Yes, A.J. So, I, again, in my prepared remarks, I had talked about two of the challenges that our hospitals have faced thus far, operational challenges have been tested in capacity and the supply of PPE. And I think you're right. I think that in order to resume elective and scheduled procedures in a meaningful way, you have to be able to test all those patients in advance. And, obviously, get their results in a timely fashion. And obviously, also have to be assured that you have adequate personal protective equipment for those cases. And also in reserve if there is a second wave or resurgence in COVID patients, et cetera. So, I think that we have worked very hard over the last several weeks to ensure that the supply chain is adequate for the various items of personal protective equipment and that the testing capacity and testing timeliness has improved. I think in both cases, we feel like we've made progress. But I think that both of those items will continue to be issues as we move forward. And I agree with you. I think that to some degree, our ability not just for UHS, but our ability as an industry to resume kind of a normal schedule of elective procedures will require us to continue to make progress on both of those issues.

Okay. Obviously, labor was a challenge late last year on the acute side. And obviously, you're implementing cost reduction efforts now. But I wonder if more broadly, it maybe just too early for this, but obviously the uncertain economic backdrop, what's happening with procedures. Has that in any way sort of adjusted expectations around labor that might be something that will help you on that side going forward? Even beyond just some short-term cost reductions that you're pursuing?

I mean certainly what we've seen, again, in the last six or seven weeks, there is a dramatic reduction in our use of overtime and temporary nurses and registry personnel. And I think as long as we're both in a period of somewhat muted demand as well as a period of higher unemployment, that we will struggle less with those issues. Because I think they tend to be issues that are reflective of a much tighter labor market. So yes, that is certainly a side benefit of the revenue decline and the decline in demand that we've seen.

Okay. And I know there was all this discussion before about what was happening in the Vegas market with HCA getting back into the network with UNH. And you had some expectations around what that would do. Obviously, maybe it's hard to understand whether that's playing out as you thought or not. But at least maybe up to the last two weeks of March, can you comment on what you were seeing there, whether that was progressing as you had expected?

Yes, so the comments that we made on our year-end call were that our expectation was that the dynamic of HCA getting back in Sierra United Network would largely be a push for us. That is, as we would see a decline in volume as some amount of market share shifted to HCA's hospitals. But that would largely be offset by an increase in rates that we were getting from Sierra/United on those patients. I think, again, for the bulk of the first quarter, we were able to satisfy ourselves that that was the case. Obviously, in the last couple of weeks of the quarter, we saw a decline in Sierra patients as we did in all of our other patients. So, it became a little bit more difficult to do that analysis in March and certainly for the last half of March. But I think, we're of the mind that our original contemplation of the impact of this was correct and this is - at least in its initial stage is turning out to be either a wash or a very slight benefit to us.

[Operator Instructions] Our next question will come from the line of Ralph Giacobbe with Citi.

I hopped on a little bit late so apologies if it was asked already. But I was hoping you could talk a little bit more, Steve or Alan, about the sort of the current backdrop. And if it changes, sort of your forward views on the business in terms of strategy or positioning whether that sort of investing more downstream, taking more risk, partnering more? Just any sort of thoughts around that and potential for structural changes in the industry?

Ralph I think, I would make a couple of broad comments. I mean we - again in our prepared comments, we made the point, as I think a number of our peers have made. That up until the middle of March et cetera, both businesses were operating in a pretty robust environment. They were tracking ahead of the prior year. I think they were meeting our own internal expectations. The business was good, the demand was good. And I think in our own minds, none of that has sort of fundamentally changed. I think that the COVID crisis has altered patient practice patterns if you will, in the short term, and I'm not exactly sure how to define the short-term. But ultimately, I think that demand as I've said before on the call will return. And so, I don't know that we're thinking about the business fundamentally differently because of the COVID crisis. Some of the questions that you asked about are we thinking about sort of taking more risk and partnering with others to do that, et cetera. I think we've talked on a number of occasions about the things that we're doing to do that well before the COVID crisis. We're doing that through Medicare Advantage products in a number of our markets, we're doing that through our insurance subsidiaries. We have accountable care organizations established in virtually all of our markets. And so, I think we were employing and implementing many of those strategies and recognizing how the healthcare landscape is changing again, long before the COVID crisis. So I don't know that the COVID crisis has really altered that trajectory at all.

This is Alan Miller. Our business is in good shape. Our facilities are modern, we are well located. We have a nice division between behavioral and acute. And we've just been interrupted in what was on the way to be a very strong week. We are financially strong, our reputation is excellent, and we just got interrupted. I am thankful that at this point, it seems that COVID-19 is on the way down or is down. Our business will open up and I fully expect that by some point, June, July, end of May, our business will return. As a matter of fact, all of the elective surgeries that have been not completed will come to the hospitals and I expect given time we'll pick right back up. I’m very positive about the future, whenever we start again.

Okay. That's certainly helpful. And just my last one, sort of along those lines I guess as you consider the competitive backdrop then, in your market specifically and perhaps potential fallout even if things sort of come back. I mean, do you see or buy into the argument of share gains or M&A opportunities stemming from all this? Or do you think it's sort of - it’s bounced back from an industry perspective and within your market you don't see that competitive dynamic really changing to create opportunities for you? Thanks.

Ralph, I think you know, and I think Alan articulated this and I tried to say it to some degree again in my prepared comments, I think we feel like we're well positioned, we're conservatively capitalized. And so, I think we have every expectation that we can deliver and continue to deliver high-quality care and efficient care even in this difficult environment. And while we hope that it rebounds quickly, to the degree that it doesn't, I think we're in a position to operate and survive in this environment better than most of our peers in our geographies in which we compete. So yes, I mean I think that anytime that there is a crisis, it also becomes an opportunity for those companies that are stronger and better positioned - and while I don't think we relish the notion that others will suffer in this environment, we're prepared to step in if they do. And if others can't provide the level of service and the level of capital investment that's required in our market, we certainly feel like we can do that.

[Operator Instructions] We show no further audio questions at this time.

Okay, we thank everybody for their time. Hope everybody stays safe and look forward to talking with everyone next quarter.

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