And then obviously, we’re beginning to see the benefits that you would expect just in improved back office functionality, reduced paper and efficiencies there that we think will continue to be much more pronounced in the coming months. And we’re tracking all of that and expect to be in a position to share probably more detail on that. It’ll take a little bit more time later next year, certainly by our Investor Day.
Unidentified Analyst: Thanks so much.
Chris Hunter: Yes. Thank you.
Operator: And our next question will come from Sarah James with Cantor Fitzgerald. Please go ahead.
Sarah James: Thank you. I wanted to go back to your comment on the redetermination impact being modest because it seems a little bit of a contrast to what the payers are saying, which is they’re getting like 20% to 25% returning to insurance with a 60 to 90 day gap in care. So I’m wondering if your patients being returned to some form of insurance is like a geographic mix then given your exposure in Florida, or if you’re actually able to take an active role and help them resubmit for coverage and close that gap in care.
Chris Hunter: Yes, thank you for the question, Sarah. I mean, it’s difficult to know the comparison with respect to others and their geographies, but again, as I started, we have extensively prepared for redetermination, particularly with our CTC business where it’s most pronounced. And I just think we’ve been able to do an excellent job of proactively working with these patients. I mean, we’ve put kiosks in place in the individual facilities. We’ve had QR codes up in place to tell them that redetermination is coming. Many of them come into our clinics on a daily basis with a letter where they’ve lost their Medicaid coverage and they’re looking for help. We have a dedicated support line that helps people sometimes. We’ll have many in our facilities I’ve seen will sit down with a patient that’s lost coverage and take them through actually reapplying in person.
Other times it takes a little bit longer, but we’ve had a high success rate of being able to assist our patients, particularly our CTC patients, but also our other lines of business too, retain their coverage. And I think there are many instances as well where we’re able to help them get retro coverage, where they’ve lost coverage for a period of time as well. So I would say a very high majority of our patients who have lost coverage have been able to favorably resolve within 30 days. And we’ve just continued to have a really strong track record and continue to expect that to be the case into 2024 as well.
Sarah James: That’s great. And then on the Opioid settlement money you’ve previously talked about, views of it coming down to the county level in 2024 and 2025. Can you give us an idea of timeline? Once it gets to the county level, long does it take to get through a grant process and when could we actually see that having an impact on build out decisions?
Chris Hunter: Yes, it’s a very fair question and one that we would love to have a more detailed answer to. Every state, as you would expect, is a little bit different. So while there have been $50 billion in Opioid settlement dollars, in total, only about $3 billion have been distributed to the states. And then once it gets to the states, only a small portion is beginning to trickle down to the individual counties. So we’re doing everything that we can to partner with these individual counties with communities to help showcase some of the things that we’ve seen, some of the strategies to specifically deal with opioid addiction. We partner with the University of North Carolina to do an independent study on that, that is available for every single county across the country.
And we’ve been able to help show outcomes with respect to harm reduction treatment efforts that are in place. All the many things that we’ve done, we have such strong quality metrics that have been recognized by CARF, which is the accrediting body for the CTC that we are able to also talk about and share. But overall, we’re doing our best to partner with these counties when they’re ready. I just think realistically, they’re putting together task force at the county level. They’re trying to determine what services they want. If it’s a rural county, do they want access to mobile vans, do they want to expand peer recovery specialist programs, do they want housing support, do they want to just emphasize the distribution of Naloxone? I mean, it can really vary county by county, but I think we’re there and ready to be a good partner.
And we have built a very strong team that is laser focused on grants and responding to grants, that I think we continue to have significant confidence that as these dollars do begin to flow into 2024 and certainly into 2025 where we probably think that there will be a greater prevalence of that funding, that we’re very well positioned to capitalize on it and to assist these states.
Sarah James: Thank you.
Operator: And our next question will come from Gary Taylor with Cowen. Please go ahead.
Gary Taylor: Hi, good morning. Just a couple questions. Chris, I just wanted to confirm, I think the latest number we’ve seen for new bed ads next year is 1150. And given your commentary about all the development, I just wanted to get a sense of was that just illustrative and confirming all the stuff that’s coming in for 2024, or is there a reason to think the bed growth could be even higher than that number you showed us before and then related to that? Just Heather, I know last quarter you talked about generally $15 million to $20 million a year of preopening costs that burden the P&L. But with bed growth maybe going up 70% or so next year, should we think about a commensurate sort of increase in that preopening burden?
Chris Hunter: Yes. Thanks, Gary. Why don’t I go ahead and start? So just as you’re probably referencing the slide that we felt like was a very important one to lay out in Investor Day, that showed the 1150 bed additions in 2024 and 2025. And so, just I discussed earlier the three hospitals that we’ll be building in 2024. We’ve got six facilities coming online. So those three JV partners, the Henry Ford, the Inner Mountain, and the other JV partner that we haven’t disclosed, we expect those to contribute about 440 beds. We also have several de novo hospitals in reference to the one at Agave Ridge in Arizona, Madison, Wisconsin, and then this one in Tampa. So we’re expecting those to contribute about 400 beds. And then obviously, we have discussed in the past the bed addition to the expansions to existing facilities which have been in the 300 range.
So that gets you right to the 1150. I would say that we are very actively looking at whether we can even expand beyond the 300. I think that is one of the most effective and highest returns in terms of capital deployment. Because we do own those facilities. We can control the construction process a little bit more, and we’ve historically focused on around 300 a year, but we think that can be higher in the coming years, and so that’s something that we’re spending time on as well, but hopefully that helps break that down. And Heather, do you want to take the other question?
Heather Dixon: Sure. Thanks. Hi, Gary. I’ll speak a little bit about the startup costs at the end of Q3 we’re trending at around $16 million which includes the ramp of the two JVs that Chris mentioned. And as we expect to open two more de novos by the end of the year, that sort of pace will continue. We’ll see a similar level of about $6.5 million as what we think we’re going to continue to see in Q4, and that’s consistent with Q3. So that number of how we trend has already ramped up a little bit in the back half of 2023. We would expect that that pace would continue for 2024. So maybe to more directly answer your question, Gary, we think it will be relatively consistent with where we are currently, as we have already started to ramp some of that construction and bed openings, but it won’t be the same as what we started the year with last year. It’s a little higher for 2024 than 2023, but consistent with where we are right now from rate.
