Benjamin Hendrix: Hi, great. Thanks, guys. Just appreciate all the commentary about the preferred payor progress in Texas and expectations to go to 70% this year. I was wondering if you could remind us kind of where we are in California and where that could go in the near term in terms of preferred payor relationships on the PDN side? And then separately, kind of in areas where we’re not yet seeing that double-digit rate increase in budgets, how do we think about how much of the PDN, preferred payor penetration can make up for that shortfall? Thanks.
Jeff Shaner: Good morning, Ben. Thanks so much and great question. I think California, we’ve been heads down, I’ll start big broad picture in California and then drill into your question on kind of how we think about California. We’ve been at the government affairs’ legislative the process in California now for over two years. I think it’s no surprise to anyone that California is staring down somewhere between to $50 billion and $80 billion. I know it’s a pretty broad but area deficit this coming year. So big, big, big issues and opportunities in California for them to tackle their budget. We’ve made meaningful progress, significant progress with both the governor — current governor, his staff, leadership staff, the Head of HHH, which is Medi-Cal, Dr. Ghaly as well as the legislature.
I think as we think of this moving forward, we think of accelerating our preferred payor strategy to your question, Ben, in California. Unlike Pennsylvania or Texas that is predominantly 90-plus percent Medicaid MCO for our business. California still the majority, more than 50% of the PDM population in California still is on Medi-Cal, still is a — we are paid by Medi-Cal. They are overseen by Medi-Cal families. What we have seen, though, in the last two years as California wage and hyperinflation have played through is that families have found their ways to either, let’s call it the whole child model program, which is a specific California, as well as some of the commercial plans in California and some of the Medicaid MCO plans that are established in California.
So we are seeing families find their ways. And I think it’s nothing more specific than they just realized to get their children coverage, both acute care coverage in home, they need to get to an MCO plan or a whole child model plan. So we are seeing a shift in our population in ’23 and as we enter ’24. Now it is still less than 50% of the population. So we’re pleased that we get to accelerate our preferred payor strategy in California. We are not going to give up on our legislative strategy. We’re going to continue to double down our legislative strategy because at the end of the day, at $44.12, is what we’re reimbursed in California for Medi-Cal, that’s not enough. It’s not competitive to hire wages on the Medi-Cal program. So we’re going to continue to do both.
Then you asked for a specific metric. We have not shared that publicly yet. And I think over the course of 2024, we’ll reevaluate that. But we’re excited that we have two levers to pull in California, not just a government affair strategy, but we’re going to use our Texas strategy, our Pennsylvania strategy, many of states and accelerate it in California. And I will say out of the 14 preferred payors we have today, I think it’s two or three of them today are based in California. So a couple of our preferred payors today are already in the State of California, and they pay us well above the Medicaid PDM rate. So hopefully, that’s helpful, Ben.
Benjamin Hendrix: Yeah, thank you very much.
Matt Buckhalter: Anything else, Ben?
Benjamin Hendrix: I think that’s it for me for now. Thank you.
Matt Buckhalter: Awesome. Thanks, Ben.
Operator: Thank you. Our next question comes from the line of Raj Kumar with Stephens Inc. Please proceed with your question.
Raj Kumar: Hey, this is Raj on for Scott Fidel. A quick question on just when we think about ’23 and all the momentum gain across the three business lines, where do you see the most upside in 2024 among the three business lines?
Jeff Shaner: Raj, good morning, and thanks. Great question. I think all three of our business lines have the ability to grow materially and produce great, great results. As Matt mentioned, we’ve really been focused the last 18 months on cost efficiencies, cost synergies. So we’ve got our corporate overhead, some place where we think we are in a really nice place to oversee a business, but to do it at good leverage. I think the business that you will hear us be probably most proud of is the rebound of our Home Health & Hospice business. I think everyone saw 1.5 years ago, we were in a difficult spot in our Home Health & Hospice business. And we’re still finishing the integration of four companies, still transitioning to home care, home-based, getting our arms around clinical outcomes and financial outcomes.
Where we sit today entering 2024, we are just focused on growing the business, and producing great clinical outcomes and both — not either but both. And really proud of Shannon and Mary and the entire team who lead our Home Health & Hospice team, they have absolutely turned that business around for us. Have got us in a great place as we enter 2024. We have great momentum in our PDS business. We have great momentum in our AMS business in ’23. But turning around our Home Health & Hospice business was one of our top five priorities in the company and just incredibly proud of that team and the discipline that we have instilled to not try to be a solution for everyone in Home Health & Hospice, but to be a solution for those payors that are willing to reimburse on an episodic basis.
