Chris Hunter: And just maybe to add in on base wage inflation. I mean we clearly saw the high watermark in the fourth quarter of 2022 and have been, as Heather said, just very focused on our efforts around employee engagement, around retention, working with the local market operators and have been able to continue to bring that down to ending the year under 5%. And as Heather said, likewise, with the SWB per patient day also being under 5%, we see that trend continuing.
Operator: Our next question will come from Ben Hendrix with RBC Capital Markets. Please go ahead.
Ben Hendrix: Thank you very much. I just wanted to get some follow-up commentary on your Partial Hospital Program and IOPs, kind of information on where they fit in, in terms of your development strategy going forward? Should we think about those as just an extension of the Acute platform? Or could this be a new leg of the stool in terms of your business line segmentation? Thanks.
Chris Hunter: Yes. Thanks, Ben. We really believe that the impact of PHP/IOP on the clinical outcomes of our patients can really be significant. The vast majority of both our Acute and our Specialty patients are indicated for PHP or IOP, as a step-down therapy post discharge. And we see the clinical outcomes from that and that continuity of care being extremely important to maintaining those strong outcomes. Given the value to the patients, we have begun to build these programs out in some form at or near most of our Acute and Specialty facilities. But for multiple reasons, we continue to see opportunity for growth in the future. I mean I think there is opportunity in expansion in the number of PHP/IOP programs per facility.
We have real variability across the company in terms of how many tracks of PHP/IOP we have at a given facility. We also look at each of our facilities for opportunities to just better serve our patients by adding more programs. So adult versus adolescent, women’s focus, evening versus daytime and just PHP versus IOP in general. So I think just overall, increasing the share of the clinically eligible patients who benefit from PHP/IOPs in the best interest of the patients, and we need to be more intentional about ensuring that continuity of care. And we really try to address the needs of the community and how we can best impact that continuity of care. So we are opening new facilities. We’re working through licenses and certifications. We’re looking at what the most appropriate programs are to add initially.
And we’re also looking hard at the ability to cross-refer across our Acadia lines of business where possible. As we’ve said before, we know that 70% of our Specialty patients that present also have an underlying OUD diagnosis. And so that cross referral is also very important. So we just see this pathway as something that has a lot of opportunity for patients because of the strong clinical outcomes and we intend to capitalize on it.
Ben Hendrix: Thank you very much. Just a quick follow-up on the labor trend. Should we – is there any way to quantify how much perhaps incremental hiring or recruiting costs we might see later in the year as your development pipeline plays out in the second half?
Heather Dixon: I don’t know that we’ll quantify the amount, but I can tell you that we have assumed that sort of the normal course of business will continue as we’ve seen it sort of throughout the back half of last year and then continuing into Q1. So what you’re asking is if we’re assuming an elevated level? And the answer is no.
Operator: Our next question will come from A.J. Rice with UBS. Please go ahead.
A.J. Rice: Hello everybody. Maybe first just to ask, we haven’t talked in a while about the opioid settlement and how those dollars states or maybe whether any of that’s flowing to your areas of focus and to the extent it is, is that in little more healthy rate updates, or is it in other areas, any comments on that?
Chris Hunter: Yes. Thanks A.J. This is Chris. I will take that one. I think just to step back, the settlement funding continues to trickle along. So, again, of the roughly $50 billion of funds available, approximately $4.5 billion have actually been distributed to-date. And just to give you some context on that, in mid-2023, we were at $3 billion. So, still under 10% of funds have actually been distributed to the states. And then obviously, from the states, they have to be deployed to individual counties. We see a number of states leading the way on this, and we continue to position ourselves just given the very strong clinical outcomes that we are seeing in our CTC business to participate in those grant funding opportunities and to win.
And so we – the best recent award settlement example that I can give you is that in Q1, we were awarded funding by opportunity in Tennessee, and we were actually awarded. I think there were over 400 different applicants, and we were one of the top recipients. We were awarded $6 million in funding by the Tennessee Opioid Abatement Council. And the funds there are going to meaningfully contribute to treatment to underserved populations, which is really what the focus of the grant was hiring peer support personnel to help patients go through their recovery and just overall helping patients stay in treatment, particularly by covering expenses associated with social determinants, such as transportation. And so of that $6 million, we are right now – we have won that $6 million component.
We are in the contracting phase. Funds will take a few months to be dispersed, but we expect this to be $2 million a year over a 3-year period. So, hopefully, that’s helpful.
A.J. Rice: Yes, that’s good. And then on – maybe on the development and acquisition pipeline, there has been some recent scrutiny, both in some of the articles that have been written about opioid use disorder, etcetera, as well as in some of the congressional activity around private equity and in the healthcare generally, and questioning that. I wondered whether – is that – because I know private equity is quite active in some of your spaces. Has that impacted anything both created any new opportunities for you, changed any way the competitiveness of transactions you are looking at?
Chris Hunter: Yes. I would – thanks A.J. I would say to start that this has been a very difficult operating environment for a very fragmented industry of various players in the OUD space. So, you will recall a year ago at this time, we were so focused on Medicaid redetermination and made significant investments in putting a dedicated 800 hot line in place, putting kiosks in place for our patients, actively preparing to help them manage through the complexities of redetermination, which I think we have done – our team has done an excellent job on. But that has been really challenging for a number of players. And I think we are increasingly seen as an acquirer of choice. So, we have seen interest from a lot of smaller clinics.
