Kevin Hammons: Sure. So coming into the year, we anticipated about a 4% wage inflation on an average hourly rate basis for the year. If we think about the sequence last year of inflation. It was high early in the year, began to moderate in the back half of the year where we saw wage inflation in the third and fourth quarter in the low 3% range. That has carried over into the first quarter, although we expect for the year, there could still be some pressure on wages and maybe some potential in individual markets, maybe not across the board, but in certain markets, we can see higher wage growth than other markets, and we do believe there could be some pressure in the back half of the year. It is a nice start to the year, and we think that’s very favorable in terms of our outlook and where it could ultimately end up for the full year.
Tim Hingtgen: Yes, Ben, I’ll add on to that. This is Tim. I think the other item that we baked into our guidance was more of the insourcing of some of these hospital-based specialties and a higher average audit rate on those professionals. So with anesthesia, more in-sourced ED and hospice programs in our pipeline, we anticipate that we’ll have some increase or had some impact on the average on rate increase as well. We also have a good strong pipeline of physician recruitment into our clinics, which also hits our SWB line as well.
Kevin Hammons: And maybe the last comment that I would make in terms of the mix, as Tim mentioned, the mix of employees coming in, many at a higher rate that could drive that up. We’ve also been very effective at bringing in some allied health workers and changing – or making changes to our care delivery model that allows us to treat patients with more LPNs, nursing assistants and making those adjustments that had a favorable impact on our salaries, wages and benefits.
Ben Hendrix: Great. And if I can just follow-up on the in-sourcing comment. Clearly, you guys have made some really good progress there. But I was just wondering if there are any risks of in-sourcing, maybe could bringing in more ED and the hospitalist impair your ability to flex staff to volume fluctuations in any way? Or is that not a concern? Thanks.
Tim Hingtgen: Sure, Ben. I’ll start answering that one. I don’t see any real risk in relation to that. We have a good mix of employed and contracted personnel. So some of the the staffing mechanism is through a per diem or a per day rate type of arrangement. So that is pretty flexible in terms of how we run the model.
Kevin Hammons: Yes. We’ve mentioned this before, and maybe it hasn’t been completely clear, but even where we’ve in-sourced these programs, not all of those physicians become employees, although the majority do. A number of those physicians are still 1099 employees, and that 1099 expense is down in our other operating expenses still. So that gives us some of the flexibility, I think, to address what you’re talking about.
Ben Hendrix: Makes sense. Thank you.
Operator: The next question will come from A.J. Rice with UBS. Please go ahead.
A.J. Rice: Hi, everybody. First, I was just going to ask, when I look at some of your volume metrics, same-store admissions up 3.8%, adjusted admissions $1.9 million and surgery is up 0.4%. It’s a little unusual to see the inpatient side growing faster then and puts it in that the outpatient side. Can you comment on any dynamics you are seeing there? And was that surgery mix was there a divergence between what you saw inpatient versus outpatient on the surgeries?
Kevin Hammons: Sure. I will start off and Tim, please feel free to jump in. We have done a lot of work around length of stay management. And by doing that, we have opened up capacity by getting patients appropriately discharged and timely. That’s helped open up capacity, allowing more admissions to be brought in. Our transfer center that we have talked about for some time, contributed significantly, particularly in those markets where we were able to add that capacity through length of stay management. So, I think that has been a big favorable mover and has allowed us to grow inpatient at the faster rate this past quarter. As we look out for the remainder of the year, we have also, as Tim mentioned, opened up the bed tower in Knoxville, Tennessee, on April 1st.
So, that’s going to give us some additional capacity going into Q2. And then we have the bed tower in Foley, Alabama, it’s opening up in the fourth quarter. So, we still see opportunities. We are growing both inpatient and outpatient, but still being able to bring in additional inpatient throughout the remainder of the year.
Tim Hingtgen: Yes, I agree. And A.J., in terms of the surgery mix, we saw growth on both the inpatient and the outpatient side, so pleased to see that. On the outpatient side, I think we outpaced it on absolute numbers just with our ASC growth and our focus on driving some really strong outpatient surgical sites of care. So, we are pleased to see that happen. Going back to the inpatient growth in the quarter, as Kevin said, the transfer center is performing as designed. We also added new specialties into markets where we had insights that we weren’t able to accept those patients in prior periods. So, it’s good to see our service line and acuity agenda are really delivering better access to patients in the communities we serve and yielding the expected growth in acuity and revenues.
A.J. Rice: That’s great. And maybe my follow-up, just to ask you on the payer mix, it looks like managed Medicare was up about 90 basis points and fee-for-service was the one that was down. Can you comment – are you seeing outsized volume growth in your managed Medicare, or is it rate or what’s driving that increase as a percent of revenues? And any update on just general contracting with managed care.
