SWB, as a percentage of revenue actually came down about 60 basis points during the quarter. It came down to 6.3 from 7.5. And that, of course, continues the decline from the prior year. But you can see that’s coming more in line with what you’re seeing from a base wage perspective as well. And then on a same facility basis, it decreased by 60 basis points. I think the reason…
Brian Tanquilut: I’m sorry. Go ahead.
Heather Dixon: No, go ahead. Carry on.
Brian Tanquilut: Chris, I guess my second question as I think about your plan to open about 1,000 beds next year and 1,000 beds in 2025, are you seeing any changes in terms of the construction costs or the speed to start? As we see just the macro stuff on construction kind of having an impact on maybe commercial construction as it relates to you guys as well. Thanks.
Chris Hunter: Yes, no, thank you. That’s a fair question. And I think we’ve done a really good job overall working through this. I mean, we saw a spike in construction costs earlier last year and it’s something that we’re constantly having to work through. I think this is one where, particularly with joint venture partners, it’s helpful having a partner in the local market. So, I think we’ve got a number of strategies in place that we even talked about at our Investor Day with some of the prefabricated construction, some of the things that we’re trying to do to get ahead of supply chain constraints for materials that are more difficult to procure. So I would say that overall we’ve gotten increasingly better at managing it. It’s certainly better than it was a year ago, but we’re continuing to work through it consistently and continue to be very optimistic with all of the continued growth into 2024 that we have – that I talked about in my prepared remarks, both on the JV side as well as the de novo side for all of our business lines.
Brian Tanquilut: Awesome. Thank you.
Operator: And our next question will come from John Ransom with Raymond James. Please go ahead.
John Ransom: Hey, good morning. Just thinking about next year. I know you’re not giving guidance, but how should we think about corporate overhead next year over this year kind of a full year comparison. And also, do you have a crystal ball on labor inflation? Do you think it’s hit a plateau? Or do you think there’s some room for it on a patient day basis to continue to decelerate? Thanks.
Heather Dixon: Hi, John. It’s Heather. I’ll take that. I do not have a crystal ball. I wish I did. I can tell you sort of just to go back on a couple of things that we said. We are really pleased with what we’re seeing happening from quarter to quarter. And that continued steady decline in the base wage rates and then also the base wage rates coming in line with what we’re seeing on an SWB per patient day. So those coming in line together and as we start to lap some higher rates in the prior years, we feel good about where we are. We continue to think that we’ll see declines and we’ll see some improvements until we get to a more normalized rate of inflation. I think our question is, what’s a normalized rate of inflation? That inflation is going to continue to move with overall inflation.
And the thing that we feel good about, John, is that we can anticipate the rate improvements will also typically follow that. So we feel like all of those things are going to move in tandem and we’ve seen our ability to grow rates at a stronger pace than what we’re seeing in our labor inflation so that we can continue to sort of build some operating leverage there. Kind of coming back to your corporate cost question, what I can tell you is that we’re seeing those corporate costs level off. As you know, they sort of built in the prior year and sort of throughout earlier portions of this year. But we are seeing those come down slightly and we’re seeing those start to build leverage as a percentage of revenue. I would anticipate that leverage certainly to continue in 2024.
It’s a little early for us to have sort of a good guide for 2024 for the full year, as you mentioned. But I can tell you that we certainly expect to see that continue in light of leverage that will come there. As you know, we made some significant investments in the corporate costs in the past 12 months and we’re seeing those pay off and we’re seeing those pay off in really good ways throughout the business, but also we’re seeing corporate costs level off.
Chris Hunter: Yes, and John, this is correct. I would just add that I think there is direct correlation between the investments that we’ve made and the performance of the business, whether it’s on the marketing side and the record admissions that we’re seeing, whether it’s the quality investments that we’ve made that have consistently shown improved quality, even investments in our managed care team and others. So, I think this is one where we’re obviously continue to be very focused on corporate costs and getting operating leverage. And to Heather’s point, we’ve seen a sequential decline quarter-over-quarter since the beginning of the year expect that to continue.
John Ransom: And just a quick follow up the project to digitize your medical records, where does that stand and are you seeing any payoff from some of the early efforts there?
Chris Hunter: Yes, no, thanks for the question on that, John. I think overall we feel great about the continued progress that we’re seeing. There’s several elements of the IT investment. So one is the remote monitoring technology that we think has we’ve put that in nearly all of our acute facilities year to date. So we’re in 45 facilities and we’ve seen really promising initial improvements in patient incidents there and we expect that to continue. On the EMR front, we have implemented an EMR now and we’re expecting to end the year at about half of our acute facilities and continuing to now deploy look at our specialty facilities as well, and CTC as well from that standpoint. I think the benefits just show up in a number of different ways.
I mean, we’ve gotten really strong praise from our surveyors who have come into these most recent JVs that we’ve opened that speak to the strength of the EMR that we have in place and the patient monitoring and how unique and differentiated they see relative to the other surveys that we’re doing. We hear that consistently. Again, I think the material improvements that we continue to see on the quality front in only a short period of time also speaks to the benefit we’re seeing with patient safety and compliance, which we think is really important. I would say staff engagement. We have seen better employee engagement at facilities that have an EMR relative to those that don’t. It’s easier to recruit clinicians that have been trained on EMRs that don’t want to work in a paper environment, which is consistently the norm in behavioral health, and it helps us on the retention front as well.
