Let's talk about a couple of ways hospitals could be paid when they provide the facilities for inpatient stays. The first is essentially fee-for-service. Here the hospital is paid a fee for every service provided to the patient. If a patient uses a bed for a day, the hospital gets paid a fee. Gets some medicine provided by the hospital, the hospital gets a fee. A lab test, a fee, and so on. One way this could be implemented is that hospitals often maintain what we call a chargemaster. A list of all the services the hospital can provide, generally thousands of things, and the amount of hospital charges for each. Hospitals and intermediaries may negotiate over payments using the chargemaster either over specific fees or in the aggregate. You may hear a hospital's getting paid 60% of billed charges under its agreement with some insurer for example. That probably means the hospital will bill fee for service for charges from its chargemaster and the insurer will pay 60% of the amount from the chargemaster. Another relative would be cost-based reimbursement where the hospitals present the intermediaries with some accounting of their costs for providing care for a patient, maybe for a group of patients, and are paid based on that. A second system we can look at, we'll call a Per-diem system. That's a Latin phrase that means per day or for each day. And that's a clue to how this system works. Payment in a per-diem system is done on the basis of a day in the hospital. In this system, hospitals and intermediaries set a fixed amount the hospital will be paid for a patient day in the hospital or the cost incurred for caring for that particular patient that day. We can call the amount the per-diem. The more days in the hospital stay, the more payment there is in a per-diem system. If a patient's in the hospital two days, the hospital gets two times the per-diem, three days, then three times the per-diem, like that. A key here is that the amount the hospital gets paid is a function of the number of days in the hospital but not the specific set of services performed. If a patient gets a lot of services in a day, the hospital gets the same payment as if the patient only got a few. There are some variations that are commonly found to the most basic per-diem model which I just described. First, there can be different per-diems for different kinds of services, commonly to recognize more expensive kinds of care. For example, hospitals might negotiate a higher per-diem for patients who are in an Intensive Care Unit, or maybe patients getting heart surgery, as compared to patients getting more routine standard care. Sometimes you might find different per-diems, for example, for obstetric care. A second variant would allow different per-diems for different days in the hospital. For example, the first day of a stay for a patient getting surgery might be paid at a higher per-diem rate than other later days when maybe the patient is using fewer services than on the first day. And a third variant you'll see, would allow for separate payments for particularly high cost things like really expensive drugs. In this case, the per-diem would be set to cover everything except some identified set of drugs for which the insurer would pay separately, maybe on a fee for service basis. There's a term you might hear associated with this sort of situation. We call it a carve out. Here, the expensive drugs would be said to be carved out of the per-diem payment arrangement, and they'd be handled by a separate payment agreement. Sometimes you might see all three of these variations in place, sometimes not. It depends on the way the hospitals and the insurance companies negotiate the agreements when they set this up. So that's a fee-for-service and a per-diem system, two ways that you will see hospitals pay it sometimes in the real world.