Question-and-Answer Session
Operator
(Operator instructions). And your first question comes from the line of Ralph Giacobbe with Credit Suisse. Please proceed.
Ralph Giacobbe – Credit Suisse
Thanks, good morning. I didn't want to go to bad debt expense, is there you know – I know in your last call you said bad debt for the back half of the year, 8.4% to 9.8%, clearly 3Q at the low-end of that range, but is there something seasonal about bad debt and specifically 3Q seems to jump up historically and then you kind of come down a little bit in the fourth quarter, any comments around that?
Biggs Porter
Yes, there is a seasonal effect, and generally speaking third-quarter is the worst quarter for bad debt from a rate standpoint. Some of this is numerator and denominator, lower volumes, lower commercial revenues typically in the third quarter as a result of people taking vacations, changes the mix. And there is a very slight aging component to bad debt expense but it does affect us, so we have higher volume somewhere in the year, which are some level of bad debt recorded in the third quarter. So I would say it is definitely a seasonal effect and you can look at it both from a numerator and a denominator standpoint.
Ralph Giacobbe – Credit Suisse
Okay. And then just my follow-up, did you say you have 61% of the managed care revenue locked in for 2011, did I hear that right?
Trevor Fetter
That's right.
Biggs Porter
Yes.
Ralph Giacobbe – Credit Suisse
Is that – I mean I guess is it normal for you to have that much locked in sort of this early, any sort of extension out of contracts and maybe any changes to rates to compare to what you have seen over the last couple of years?
Biggs Porter
It is not unusual for us and I think as we have said before we think that 2010 we expect rate increases consistent with what we had in 2009. So no pressure, no change there. We had said previously that we were going to hold 2011 to not more than 50% given risk of inflation. We have gone over that. But from the standpoint of total negotiation, however there are inflation rate adjustments clauses in there, so we have not gone beyond our express commitment to forward price on a fixed price basis more than the 50% number.
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