Good morning, and welcome to Tenet Healthcare's Third Quarter Earnings Conference Call. I'll turn the call over to Tenet's Vice President of Investor Relations, Regina Nethery.

Thank you. We're pleased to have you join us for a discussion of Tenet's third quarter 2021 results, as well as a discussion of our financial outlook. Tenet's senior management participating in today's call will be Ron Rittenmeyer, Executive Chairman; Dr. Saum Sutaria, Chief Executive Officer; and Dan Cancelmi, Executive Vice President and Chief Financial Officer. Our webcast this morning includes an accompanying slide presentation, which has been posted to the Investor Relations section of our website tenethealth.com. Listeners to this call are advised that certain statements made during our discussion today are forward-looking and represent Tenet management's expectations based on currently available information. Actual results and plans could differ materially. Tenet is under no obligation to update any forward-looking statements based on subsequent information. Investors should take note of the cautionary statement slide included in today's presentation, as well as the risk factors discussed in our most recent Form 10-K and other filings with the Securities and Exchange Commission. With that, I'll turn the call over to Ron.

Thank you, Regina and thank you all for joining us to discuss the third quarter. As you can see in the results we posted, it was a very, very strong quarter, company-wide. Performance, which continues to be driven by database decision making has continued to provide consistency in every business segment. Our year-to-date results continue ahead of our expectations and as a result, for the third time this year, we are raising the midpoint of our adjusted EBITDA guidance by $100 million to reflect the continued strong year-to-date performance we have achieved and what we believe is a positive trajectory for the remainder of the year. This reflects the foundational strengths we have invested in over the past few years and as these are established across the enterprise, support the success, continued success of the ongoing transformation. What we achieved in the third quarter is notable along many dimensions, but particularly given the significant surge of COVID cases in many of our markets. And while we have actually begun to see a reduction in cases, I mean our peak was clearly pushing up closer to 1000 today, where we're still at about 700 plus cases across the company but even given the continued peaks or not to continued peaks but to continued improvement, we continue to cycle through these peaks and valleys of the pandemic, and we continue to navigate the challenges of various variants. We are consistent in applying the learnings from each event and have been successful in expanding this important information quickly and effectively across all markets. Our operators have done really a great job dealing with these rapid changes, adapting and adjusting their go-forward past. The associated expenses have obviously increased driven by the greater number of cases, but our approach has been very effective in…

Thanks, Saum. And good morning, everyone. Our third quarter results continued to demonstrate our ability to manage through the challenges associated with the variation in COVID cases from quarter to quarter, while keeping the safety of our patients, physicians and employees at the forefront. We generated net income from continuing operations for our shareholders of $448 million in the quarter compared to a net loss of $197 million in last year's third quarter. We produced adjusted EBITDA of $851 million, excluding $4 million of grant income, which was $126 million better than the midpoint of our guidance for the quarter. With very strong outperformance by our hospital business complemented by solid results for both the USPI by and Conifer. Our strong hospital results were driven by high patient acuity, a favorable payer mix and cost control. Despite continuing external cost pressures due to the pandemic such as temporary labor rates and PPE costs, our hospital operators are partially mitigating these pressures with disciplined, real time labor management, other cost actions and a focus on growth of higher acuity, higher margin services. Our consolidated adjusted EBITDA margin in the quarter excluding grant income was 17.4%, an improvement of 380 basis points compared to last year's third quarter and 100 basis points improvement sequentially compared to the second quarter of this year. The key driver of this margin growth was our hospitals, which produced margin improvement of 450 basis points compared to last year's third quarter and 140 basis points sequentially compared to this year's second quarter. As you can see on Slide 6, based on our strong performance this year, we have generated compounded annual growth rates each quarter in the range of 9% to 15% excluding grant income. Based on our continuing outperformance, we are increasing our 2021 Adjusted EBITDA…

Thanks, Dan. Really not much more to add, it was a very good quarter. I think we've covered the key points and we'll just let operator open it up for questions, which I think will be more efficient and effective. Operator?

[Operator Instructions] Our first question comes from the line of Jamie Perse with Goldman Sachs. Please proceed with your question.

I wanted to start with the staffing situation that's obviously on a lot of peoples mind these days. Can you give us a sense just across at license level, scale level, pay level where you're being the most stressed in the market and also across setting, if there's differences between ICU, ER, operating rooms, that sort of thing? And bottom line maybe should we be penciling in more wage growth in the model going forward?

Jamie, it's Saum. A couple of things. From a traveling wage perspective, it's really the areas of the ICU, a little bit the ERs and some of the specialty areas like operating rooms and procedure rooms where you don't have as much reserve in the staff where the pressure is highest. But I would say that this past quarter, even though the COVID spike wasn't what we saw back in January, February, the labor market was much more disrupted across the board in clinical staffing in particular with our ends and that's why I highlighted our work mostly and how we thought about deploying that premium in contract labor as well as length of stay management. I don't think you can overturn the market, you just have to manage the operations.

Okay, thanks for that. And I'm going to ask about the ER volume trends that remains to 97% of pre-COVID levels. That's actually ahead of where admissions and hospital surgeries are versus 2019. There has been some concern that as that low acuity volume comes back pressure, it pressure your margins, but that seems to if we're just looking at 3Q not happened. So how should we be thinking about the margin rate going forward as these various types of volumes return to normal?

Yes, I mean you're right that ER volumes have rebounded pretty quickly and to the extent there is an analogy to draw between length of stay management, the low acuity work that comes into the ER, at least in our operations, in our emergency departments is handled in fast track settings, so that we minimize the intra-ER length of stay and costs and you got to - I mean you have to accommodate that, right. I mean, I think we all knew that low acuity work would come back in the ER and the impact of it is dependent on two things, how much low acuity and what's the payer mix. And as that comes back into the fold and becomes a normal part of 2022, we're just going to have to deal with it and manage it and find offsets. I mean you're right that, that puts pressure on the revenue line, on a relative basis given the cost of staffing today.

Our next question comes from the line of A.J. Rice with Credit Suisse. Please proceed with your question.

First is, maybe just to ask about the - I know you're not ready for '22 guidance, but at least comment on the Q4 outlook. I think you're - even if you normalize for the loss of the Florida hospitals, you're looking at EBITDA stepping down $100 million to $120 million or so. Is the assumption just that there is not much COVID volume and it's slow to backfill with the non-COVID? Have you made any unusual assumptions about labor or was there any unusual items in the third quarter, either state payments or other accrual adjustments that may be won't recur in the fourth quarter? Just give us a little bit more on your perspective because it seems like you're being conservative and that may be the right way to be in this environment, but I just want to get any more color there is on the fourth quarter outlook.

Hey A.J. it's Dan. Good morning. To your question about whether there is anything unusual that doesn't necessarily repeat. No, there is nothing like that. Here's - listen, the hospitals turned in a great quarter and they've been performing incredibly well during the year. The cost control remains very diligent and tight. Pricing, the yield has been strong, driven by the growth in higher acuity services, as well as the pandemic, let's be clear about that, that drives incremental revenue per case. Although there are extra costs associated with those cases. We're in a very strong contracting position from a managed care perspective that's also helping on the revenue line. Listen, we outperformed by over $100 million in the third quarter and when we looked at the fourth quarter, we're not ready quite at this point to declare victory and say, we're going to outperform a $100 million again in the fourth quarter, but we feel very good about how our hospitals are operating. And when we looked at it, we came in by $125 million ahead of our midpoint of our guidance about $100 million above the high-end of our range and we thought it was appropriate to increase our guidance about $100 million for the full year. We feel good about how all three of the business segments are performing.

Okay. And maybe just a quick follow-up. Congratulations on getting the leverage below 4 times, it's been a while, so you're now on a path to have that on a sustained basis it looks like. With enhanced financial flexibility I know, adding in the ASC businesses and development on that side has been a priority. Do you see that accelerating now that you have more financial flexibility? Are there other priorities for capital dollars going forward?

A.J. just a couple of comments there. First of all, as I indicated, we have not stopped investing through the pandemic in our strategies, which include capital from a high acuity service line standpoint. That's the first thing, I mean we're very nimble with deployment of clinical technology in particular when their service needs in our communities and that's been an important driver of our growth and frankly, improvement in margins that we see. Remember, we do have, and have announced a couple of pretty significant market expansion building projects on the hospital side, in particular in Fort Mill, South Carolina and in San Antonio. So, there are important and from our perspective, very much better vetted capital priorities on the hospital side where we are very happy with the potential returns that we'll get from those. And then obviously, on the ambulatory side with USPI we're pleased with the strong pipeline, we have, we're confident about how we deploy capital there. And again, I would highlight the nuance in this deal that we announced with Compass Surgical Partners, which is the operating model that USPI is at this point so advantaged in our view in the industry that our ability to go deploy capital on both mature centers and centers that are still developing but actually generate returns faster as a better natural owner that is going to expand the set of opportunities for us at USPI and it comes on the basis of the confidence we've built in building and operating model at USPI over the past few years that has taken one that was really good and made it even better. And now that we have that confidence, we're expanding our aperture for the types of centers we go after, and again, I think that's going to allow us to increase the deployment of capital into the USPI segment.

Okay, great. Thanks a lot.

Yes, one other point A.J. on the capital deployment. We have various tranches of debt that we can retire including $700 million of 7.5% notes that we issued at the outset of the pandemic. So, we'll obviously be looking at that, those are higher interest rate notes and we could obviously target them in terms of from a capital deployment perspective.

Our next question comes from the line of Brian Tanquilut with Jefferies. Please proceed with your question.

Congrats again. Just a follow-up I guess on the guidance comment you made for 2022, just how we should be thinking about that. I guess, Dan, if I think of it, am I thinking of it the right way, take out the Miami hospitals and then you think you can grow. If I take out sequester or is that with the sequester in there, the $80 million?

No, without the sequestration deferral. Right now we're assuming that the sequestration deferral will not be extended. We obviously believe it to be. But right now we're assuming that it will not be and that would as I mentioned in my remarks, that would reduce revenue next year, $80 million. But even with those headwinds, how we're looking at it is, we believe we can continue to deliver consolidated EBITDA growth.

And then Saum, just to follow up on your last comment on the USPI kind of like model, right. So is it right to think that going forward, the focus will be more on the development side, right, pursuing some of these acquisitions that are centers that are still ramping up and like you said, it's a natural home for these assets and we're shifting away from true de novo developments. Is that a good way to think about that, where it's a higher - a quicker ramp and higher ROIC?

No, not at all. I mean, so what's interesting is that the way I described it is for us it's broadening the aperture right. So, there are mature centers that obviously we can deliver synergies and growth into. There are health system partners that we continue to develop centers with many of which are de novo. There are true two way de novo partnerships that are part of our development pipeline and now we're adding a fourth segment that we have built some confidence in being able to ramp up. And look, importantly for us, we look at the world from the standpoint of what is the multiple on a post ramp-up in synergy basis. So if it kind of years, 2 and 3 we're generating multiples that are below 6 or whatever, that's very attractive. Brett, you may want to add to some color at all that, how you're thinking about it.

Yes, thanks, Saum. Brian, I would say, to your point, no, our pipeline outside of the acquisitions that Saum was alluding to both de novos and acquisitions, new health system relationships remains stronger, stronger than it's ever been. As a result of that, we're actually increasing the number of resources we have on our development team just to keep up with the level of activity we have in the company. And of course, we're very focused on making sure that we're executing against our pipeline going into Q4, but as importantly, make sure that we have a stronger pipeline as possible so that we can deliver on significant amount of growth in 2022.

We're also chasing quality, higher quality opportunities.

Absolutely.

Our next question comes from the line of Kevin Fischbeck with Bank of America. Please proceed with your question.

Want to just go back to the labor cost for a minute. I guess, you mentioned the shortage that you were seeing, I guess, what are your thoughts, broadly speaking about what that labor market backdrop looks like, do you expect it to be this elevated for this long or do you think that you will see moderation in labor pressure into next year as COVID wanes?

I'll give you my observation. In the earlier phases of COVID, when there were COVID spikes and the labor market was distorted, the impact was short and it correlated with the COVID spike and so, when that spike came and went, the labor market normalized more quickly. That didn't happen during this Delta spike or it hasn't happened yet. We're still kind of living through it. And as Ron described, despite the COVID cases still being there but being a little bit less than half of what the spike peaked at, the labor market really hasn't improved that much. It did-- it has forced us to go even further in our approach to trying to manage the operations and identify offsets, look at other sources for nursing, think about some longer-term contracts at better rates that we would be able to put in for traveling nurses into certain markets, I mean you just got to diversify the approach and tighten up the operations. I'm sure we'll see some inflationary pressure from this prolonged traveling nurse market going into the fourth quarter and next year. I mean I think our plan is, we're just got to accept that and figure out how to manage through it.

Okay. And then maybe just a question on costs generally and then your ability to price for them. I think it's pretty clear that over time, hospitals can get sufficient rates but I guess I was worried that inflation is going to start to pick up, wages are starting to pick up. How do you think about the potential lag between when you see those pressures and when you're able to get Medicare, Medicaid and commercial rate updates to reflect underlying cost growth?

Well, let me make one comment and then I'll pass to Dan. One thing that we did at the beginning or kind of March-April of 2020 is we set up our - what I called our COVID operating model back then. And we kind of established different work tracks within the company, one of which was to begin to look at longer term savings opportunities on the theory that we were going to have to generate more efficiencies because we saw so much volume contraction in the early days of COVID. And that involved our Global Business Center in Manila. It involved a broader supplies and purchased services agenda where you can't turn that stuff overnight and other physician staffing contracts and other things we've just deepened partnerships with fewer vendors. So, I think you're right in the thesis behind your question. For us that track of work that began back in the middle of 2020 is paying dividends now in '21 and looking into '22 as we re-sign contracts or narrow our vendors with deeper partnerships at better rates and so, we're going to see the benefit of some of that longer-term cost management approach hopefully into '22.

Our next question comes from the line of Justin Lake with Wolfe Research. Please proceed with your question.

Couple of things here. First, can you talk a little bit about the headwinds that you talked about in terms of sequestration and the Miami sale or in the hospital business? So, do you think you can grow the hospital business in 2022 from an EBITDA perspective? And then, do you-- is there any other offsets to the good that you're thinking about in terms of, for instance, I know you bought some surgery centers recently that could kind of help offset that 150 headwind?

Justin, it's. Dan, let me start off on this one. As I mentioned in my remarks, we do believe we can drive consolidated EBITDA growth next year. We were anticipating, obviously managing through sequestration being implemented again, as well as the loss of the Miami EBITDA. Listen, we feel very confident in the hospital's ability to continue to perform well, control costs. We have very good visibility into pricing next year from a commercial perspective, 80% of our commercial book is already under contract, as you've probably seen recently we just extended our contract with Cigna. We did renegotiate a new contract with United earlier in the year. So, we know where we're at from a contracting perspective and we feel really good about that. From a Medicare perspective and in between in outpatient, the rate updates are about 1% to 2%. Listen, we're going to continue to efficiently manage the business and the focus on - and capital deployment into the higher acuity service lines will help to mitigate some of the pressures from sequestration going back into effect as well as the Miami earnings not necessarily repeating next year. As Brett and Saum mentioned, the pipeline for the USPI ambulatory business is strong. The existing business is performing well. We feel confident in ability to continue to drive organic growth and within that book of business. So we'll obviously share more specific detail in February next year but that's sort of a high level summary of how we're thinking about next year at this point.

Okay. So overall, flat to up seems reasonable in the acute business?

I'm not going to comment about guidance by segment, Justin.

And then the question I've been getting this morning you've gotten some questions on the fourth quarter and I think it's reasonable that you're saying, we don't know that the strength of COVID and everything else is going to continue in the acute business from Q3 to Q4. But it does seem a little bit at odds versus you're talking about in the ability to grow through almost a 5% headwind on EBITDA in your acute business. I'm talking about consolidated now but the - if you're - I guess, can you explain why you're kind of cautious on Q4 and the continuation of these trends but think that it's not going to present a tough comp and you can grow through it into 2022?

Well, here, let me, as I mentioned earlier. Here is how we looked at the guidance for the rest of the year. We outperformed in the third quarter, $100 million above the high-end of our range. When we look at the fourth quarter, listen, we don't know for sure how COVID will evolve and the impact as we move into the winter season. So, as I mentioned, we're not going to declare victory quite yet and say, we're going to outperform again in the hospital business by a $100 million in the fourth quarter. So, we increased our guidance $100 million, we feel that's appropriate at this point in time, but we feel really good about how our hospitals are performing.

Our next question comes from the line of Sarah James with Barclays. Please proceed with your question.

To kind of continue on this topic of trying to understand the step down here. So, in 3Q some of your Texas competitors like Scott Baylor, Texas Medical shut down their elective procedures, you guys did not. Was that a contributing factor to the strength in 3Q? And is there, I guess any assumption that it doesn't continue in 4Q, is that part of the step down?

Sarah, it's Dan. Let me start off and then Saum or Brett can weigh in. In terms of that having any significant impact on our facilities, the USPI centers in Texas are performing well and they have been performing well throughout this pandemic time period. And so, was there some impact of that? There probably was some. I'm not sure how significant it was, but the USPI centers in this part of the country are doing very well.

Yes, Dan. And the only thing I would add that if you think about our - just on the USPI side, this is Brett, our overall same-store growth was up 6.8% year-over-year and that represents 13 of our 17 markets, reflecting positive case growth over prior year. And then if you dig a little bit deeper into specific markets, DFW, for example, same-store volume increased by 7%. Houston's same-store volume increased by 15.2% year-over-year. So, you asked specifically about Texas. I've just given you a little bit of color on how those specific markets which of course, two of our largest, well they actually are, our 2 largest markets in the Company are performing from a growth perspective, very, very solid.

Great. And then just reading into your conservatism in guidance in 4Q relating to COVID, does that have implications on what the cadence could look like for '22 so, being different than '21 given the COVID pressure might be more in the first half of the year?

Hi, Sarah, it's Dan. Well, we'll have to see. That's obviously a variable and unknown at this point, we're optimistic that we won't see quite the same type of surges, but we don't know. If you go back several months, I don't think many people thought we were going to experience the surge that we saw in the third quarter. So that's one of the things when we think about our guidance assumptions for next year, we obviously are taking that into consideration. As Saum mentioned, from a labor perspective, from a traveling nurse perspective, there likely will be rate pressures, continuing into next year.

Yes. The other thing I'd add is, I think to Dan's point, it's not just the COVID, it's - I don't think we ever predicted this variant and how quickly it took hold and whatnot. So, obviously there is some cost - one would think about the winter months and be uncertain about where that goes. And then the labor market, as I indicated before, look, we view it as acuity and mix may change into '22 and we've got an operating platform that's going to manage through that. And it's the labor market and then the uncertainty around COVID that we're just thoughtful of because we did not predict delta.

[Operator Instructions] Our next question comes from the line of Josh Raskin with Nephron Research. Please proceed with your question.

I got thrown off by one question only. So, USPI was impacted more by the COVID deferrals, it sounded like in the quarter, but yet you still move from 100% of pre-pandemic levels to 101% from 2Q to 3Q. So does that mean 4Q or kind of whenever we see a cleaner quarter sort of 4Q to date so far, should we be expecting that number to be sort of well ahead of a 100 at this point, just build on that? And then, is the sort of thinking about the quality of that 101%, isn't that already significantly better I feel like there has been a huge increase in acuity and mix has gotten a little bit better as well.

You're definitely right about that latter piece. I mean at the 101% of 2019 level, with the kind of as I pointed out, the net revenue per case in the acuity, the growth in those areas and that mix improvement is terrific. And by the way, that's why we pointed out that despite the COVID surge, the margins continue to improve impressively at USPI. So, I agree with that. I don't know, Brett if you want to comment on the first part or.

Yes, the only thing I would add Saum and Josh, good to talk to you. First, it's always worth noting that going into Q4, that is obviously our busiest quarter of the year. And the midpoint of the guidance assumes 32% of our annual EBITDA in this quarter, which is very consistent with prior years. And as Saum mentioned earlier, we're very encouraged by the performance of a significant number of our markets that are in regions that opened up earlier than others. And we believe some of those markets are an indication of the type of performance we should expect system-wide is other markets reopen to the same level. So, we're very encouraged about that and also, as you alluded to with the continued increase in net revenue case throughout the year, we expect those trends to continue as well. That's given us comfort with the revenue projections.

Our next question comes from the line of Pito Chickering with Deutsche Bank. Please proceed with your question.

I understand the fourth quarter hospital guidance but can I ask specifically about how would you think about the, I guess, like acuity durability versus payer mix versus labor inflation for the fourth quarter? And any color on that for 2022? And just a yes or no question, just to be super clear, will 2022 EBITDA growth will be more than 2021? Thanks.

Pito, it's Dan. So, let me get to your second question there, will 2022 EBITDA be higher. That's what I said, that we expect to grow consolidated EBITDA from '21 to '22. In terms of your first point about payer mix, acuity levels, etc., one of the things that's been pretty consistent this year from a payer mix perspective is that the commercial trends have been positive, more positive than the aggregate overall metric. And that's obviously encouraging. It's also attributable to the fact that some of the service lines that we've been focusing on contribute to that as well. But let's be clear as we mentioned many times in the past, some of the Medicare business hasn't necessarily recovered at the same levels as the commercial mix. So, we obviously think about that as we move through the fourth quarter and ended into next year. The overall acuity, as I mentioned in our case mix up, it's in double-digit 11% to 13% depending on what time period you look at back to - I'm comparing that to 2019 not last year. And so, we'll see. I think it's fair to say that we're not going to continue to see double-digit case mix in growth in perpetuity. I mean, it's not - you know that. So as the lower acuity business does come back, we'll see some moderation in our overall case mix.

Our next question comes from the line of John Ransom with Raymond James. Please proceed with your question.

Dan, I just wanted to understand the math on the sequester headwind next year. If I look at the proposed rule of the 2.8% increase. And so, plus 2.8 minus 2, I know there some other adjustments, but let's just say for argument's sake Medicare revenue next year is kind of flatish to maybe up 0.5%, is that really a headwind?

Well, you have the fee-for-service rate update for us is about 1.3% overall. That's our projection and that adds about $25 million of additional revenue just on the fee-for-service. There would be a corresponding additional lift on the MA or the Medicare Advantage side too. What I was talking about the $80 million that's just in isolation, just related to the sequestration impact, if the deferral is not extended.

Our next question comes from the line of Ralph Giacobbe with Citi. Please proceed with your question.

Great, thanks, good morning. Just quickly back to the 2022 commentary, I guess I'm a little surprised you only called out the Miami sale and sequestration headwinds. I guess what about COVID contribution and government funding including HRSA payments in the 20% add on? I mean, do you expect that to continue, or is it just that rollover of COVID tailwinds this year essentially is going to be totally offset by non-COVID or core all the way back next year? Thanks.

Ralph, it's Dan. The HRSA funding, if COVID cases continue to be there, we would certainly hope that funding would continue; if COVID cases drop off significantly and there is very little COVID, then presumably, you don't necessarily have those patients either because we're just getting that reimbursement for patients who present with COVID. So, we'll see, it's not definitive whether that funding would continue or not, but we're optimistic and hopeful that it does as we move into next year. In terms of your other point about the other COVID business, ultimately the economics on caring for COVID patients obviously depends on the payer mix, commercial mix is obviously more attractive from an economics perspective and then uninsured or government but we are caring for all patients. And COVID cases, there are incremental costs associated with providing that care.

Our next question comes from the line of Frank Morgan with RBC Capital Markets. Please proceed with your question.

Yes, just a clarification, you had made some comments about looking at changing how you structure your contracts with travelers or agency labor. Just curious if you could provide some more color on what that would look like and what kind of terms you would be looking for? And then, just related to that, you mentioned recently negotiated contracts with Cigna United, were those at a point in time where you were able to reflect in that pricing some of this wage inflation you're starting to see? Thanks.

Well, this is Dan, I'll address the managed care contract negotiations or the new contracts. Listen, we were very pleased to be able to early renew our contracts with both United and Cigna this year. It gives us very good visibility into our contracting positions and service lines focus and what we believe the yield will be over the next several years as we think about how we will continue to manage the business. I'm not going to get into specific rate increases in those particular contracts, but we were obviously, we were pleased to wrap up, there is negotiations and continue to partner with those organization.

This is Saum. To your first question, the primary example that would maybe help illustrate what I was speaking about, we've had pre-pandemic what we call the TRA, the Tenet Resource Agency that we have invested now in building up and what we do - what we can do with that is that there are segment of nurses that seek, let's just call it more stable type travel arrangements, months at a time, etc., that we can invest in and bring on board and then deploy into our markets, when we have a need. Obviously that helps with stability, it helps with in a market where the price fluctuation is high, helps to stabilize that, give us a little bit more predictability. So, that would be the primary example I would give you.

Our next question comes from the line of Whit Mayo with SVB Leerink. Please proceed with your question.

I've got just a quick one. Dan, I just want to make sure I get these numbers right. How much have you repaid if we want to call it that, on the accelerated payments year-to-date? And what is the expectation this year? And then also, the Baylor put call, have you funded that and is there a number that you can share? And then the last sort of piece of the question is, just given some of the cash commitments, should we expect that the cash balance can grow in 2022? Thanks.

Whit, it's Dan. In terms of the Medicare advances, that we've repaid at this point, it's about $350 million in aggregate and by the end of the year, as we've talked about, between the Medicare advances and they're paying half of the deferred payroll tax we will have paid off this year about $650 million to $700 million between those two in total. In terms of the, the Baylor put, we haven't provided any specifics in terms of the specific dollar amount. We're obviously having conversations with Baylor and will come to certainly a mutually agreeable solution on that and totally fair value for that interest. And we do have intention to exercise one-third of their interest and repurchase that from them. In terms of your other question about specific cash balances next year, I'm not going to get into that, but hopefully everyone can see that we're generating a pretty strong free cash flow from our business. We are paying back the Medicare advances and the payroll taxes that were deferred last year, but we have that cash on the balance sheet and it's already reserved for. So, we would anticipate to continue to generate growth and our free cash flow.

We have time for one last question. Our last question comes from the line of Andrew Mok with UBS. Please proceed with your question.

Thanks for squeezing me in here. I wanted to follow up on some of the labor comments that you made earlier. I understand that you're managing labor productivity and contract usage well, but it sounds like you're planning for higher underlying wage inflation as well. Can you speak specifically to the trends in underlying wage inflation? And what level of wage increases you're expecting as you look ahead to 2022? Thanks.

It's Saum. I'm not going to comment specifically we have union negotiations and other things. I'm not going to comment specifically on those. We have - over the course of the pandemic, we've settled over 25 different contracts which play out into the coming years including 2022 and over the course of the next year or two we'll have a few more to work through. Look, our nurses are critically important to us. It's, the reason that we've worked so diligently in those 25 plus situations to settle fairly and amicably in those contracts. And we'll continue to work towards that in other situations. There is going to be some wage inflation and some wage pressure in that segment and also in other clinical frontline segments that will occur, but again with good relationships, with multi-year arrangements, we think that we can manage through that.

There are no further questions in the queue, I'd like to hand the call back to management for closing remarks.

Well, thank you everyone for joining us and enjoy your day.

Thank you.

Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation. You may disconnect your lines at this time, and have a wonderful day.