Tobey Sommer: Thank you very much.
Operator: Thank you. One moment for our next question. And our next question comes from Constantine Davides of Citizens JMP. Your line is open.
Constantine Davides: Hi, just a couple follow ups to some of the earlier questions and maybe starting with locums. How much does having a scaled up locums franchise help you compete for maybe MSP type opportunities? Or is locum still very much a separate sort of engagement?
Cary Grace: I would say, having the added capabilities that MSDR had, in addition to the capabilities that we already had, has strengthened our positioning in the overall market and certainly our ability to more completely go after locum MSPs. We also are having early success on talking to our existing clients around expanded capabilities. So if we have an existing client who’s using us for nurse or nurse and allied, how we add locums capabilities. Importantly, with the rollout of ShiftWise Flex, our new generation vendor management system, we can support nurse, allied and locums, as well as clinical, nonclinical physicians. So there’s a number of things that we have done to enhance our capabilities and ability to effectively position ourselves competitively in that space.
Constantine Davides: Got it. And then I know you talk about sort of smaller systems, larger systems in terms of travel nursing, and kind of where they are and progress towards reducing contingent labor spend. Can you give us some sense for just how your book of business might be bifurcated along those lines?
Cary Grace: Against large and smaller?
Constantine Davides: That’s right.
Cary Grace: Think of it as we serve the largest health systems and we also serve the smallest. And so your MSP clients probably tend a bit towards some of the larger. And I think, Constantine, the real question when you’re looking at where are you going to see all of this kind of find the equilibrium. I think there’s going to be a couple of pieces on that. One is while the majority of our largest clients are at or below their targets, you need to start seeing growth off of where they are. And then you need to see some of these other clients who have typically lagged the largest clients one or two quarters find their bottom. And so there’s a number of different outcomes around where you could find the equilibrium depending on those two pieces. But those are the conditions that we’re really monitoring.
Constantine Davides: Thanks.
Operator: Thank you. One moment for our next question. And our next question comes from Bill Sutherland of The Benchmark Company. Your line is open.
Bill Sutherland: Thank you. Hello, everybody. On education, I’m hearing the K-12 contracting activity is pretty strong for the 24, 25 year has been. Have you been seeing a lot of activity?
Jeff Knudson: Yes, we have, Bill. I think that business was up 20% for us quarter-over-quarter, or excuse me, year-over-year in the first quarter. And we would expect that growth to continue. And that growth is coming not only from on-site clinicians, but also through teletherapy for us, which is growing faster than the overall 20% rate.
Bill Sutherland: So you can look into the next school year and kind of see that sustainable?
Jeff Knudson: We would expect it to, yes.
Bill Sutherland: Yes, that’s great. And then, Cary, on the interim management improving right now we’re starting to turn up. I’m thinking about how the hospital financial condition is also not completely, I mean, you do have your stewards out there, but I’m just kind of curious why interim is kicking up now, thinking about the backdrop?
Cary Grace: I think what we saw in interim, and we’re still seeing a bit in terms of permanent search, is the same type of cost management that you experienced and that we were talking about in the travel nurse business also impacted those businesses. So if you could hold off on hiring an interim leader, then you saw that happen last year. I think, against the backdrop of, from a macro standpoint, the continued expectation of patient demand increasing, you’re seeing a number of our clients now go back and look at, ensuring that they’re staffed from a leadership standpoint.
Jeff Knudson: Yes. So, Bill, I would just say, even though we saw an improvement in the trend sequentially, the business was down 25% year-over-year. But I would say, encouragingly to us that the stabilization that we saw both on the price and the volume within interim was the first time we had seen that quarter over quarter since the second half of 2022.
Bill Sutherland: Got it. Thanks for the color.
Operator: Thank you. One moment for our next question. And our next question comes from Andre Childress of Baird. Your line is open.
Andre Childress: Hey, this is Andre on for Mark Marcon. Thank you for taking our questions. My first question is just to follow on to some of the comments you guys had earlier about some of the clients lagging about a quarter or two from the other clients or the larger clients that have kind of more so reset to normalize or targeted levels. But among the MSP clients that aren’t back to those targeted levels, how much further do they have to go to get to those targeted levels if you could provide a range that’s like 5% or 15 or 20%. And then also, how many MSD clients are now dipping below those targeted levels?
Cary Grace: We’ve had some of our clients go below their targeted levels, and that already happened in some cases. I don’t know that I have a number to say, somebody kind of 5% or more than that. What I would say is we saw – and we saw this last year. We saw the largest systems really lead the way in getting back to, I’d say, more normalized workforce structure, and the smaller organizations just got a later start in some cases, and we have some that don’t have a targeted goal, and they’re just looking at what’s happening from a patient demand standpoint and making decisions about how they’re going to structure their workforce. I think the important thing that we talk to clients about, again, because we help them optimize against their total workforce, is coming off of the normalization we’ve seen around contingent labor the past year.
You’re really heading into a period where the premium over contingent labor over fully loaded cost has been getting into normal levels, and we expect it by the end of the year to be there based on what’s happened with bill rates and also what’s happened to embedded cost rises in permanent labor. So the conversation is, I’d say, kind of getting back to what’s the most effective way for me to staff my organization. And that looks a little bit different this year than it did this time last year.
