So it is somewhat of a net 0 impact. But then what we’re not having to incur is the markup that we’re paying a third party for and the subsidy payments when they aren’t able to bill, which is — so we’re removing that drag from the EBITDA calculation.
Operator: The next question comes from Josh Raskin with Nephron Research.
Josh Raskin : I wanted to just get back to a big step down in SWB, both year-over-year and sequentially and understand the contract labor. But just on the base wage rates, it sounds like are you anniversary-ing some of those increases? Should we be thinking about wage increases getting back to more normal historical levels? And then just second question is you kind of reposition further the portfolio of assets and get rid of West Florida, et cetera. Should we expect CapEx — is there an opportunity for CapEx to step down? Or are you really not investing a ton in some of these noncore markets. So we should think CapEx is just being — it wasn’t really allocated to some of these divested facilities, so maybe not a big step down.
Kevin Hammons: Sure. So with regard to the salaries and wages, yes, to your point, about anniversarying some of the higher wage increases is certainly on point, we are anniversarying those larger increases that we had last year. I think last year, second quarter is about 8.5% wage inflation. So we did anniversary that. We are also benefiting from some productivity gains and reducing over time and premium pay as we’re adding more full-time nurses and getting rid of some of the contract nurses take some of the pressure off those full-time employees to have to work over time and have premium pay. And so that’s been a benefit. The other component of that, and there’s probably a number of moving parts here, but it’s skill set and mix, using additional LPMs in some of our teen nursing concepts that we’ve put in place has been beneficial.
And a number of our nurse hire and we talked about in the first quarter or new graduates. So bringing in a number of new graduates that obviously come in at a little lower rate than your longer tenured nurses. So a number of those things in terms of mix have impacted that as well. And then on your question on capital, I think you’re right. As we work through some of these divestitures, they do take some time to work through. We’ve talked about for a couple of quarters, some deals that we were in conversations on, we weren’t sure if they were — would come to fruition. When something — when a hospital or market gets on the radar like that when conversations start to become serious, we’re certainly maintaining those hospitals, but not investing a lot of additional growth capital in those — during those negotiations.
So I would not expect us to see a big decline in capital investment. But as we think about which markets we’re targeting, we do look and consider kind of the risk of future capital investments in those markets and what the return risk profile looks like. And by divesting some of these, it certainly helps us reallocate what may otherwise have been future capital to other markets where we believe we have a higher growth profile with less risk.
Operator: The next question comes from Andrew Mok with UBS.
Andrew Mok : First, I just wanted to clarify a few items around the outsourced physician staffing costs. Can you put some numbers around the total dollar cost for these expenses today? And are you expecting the absolute dollar cost to decrease on a same physician basis? Or do you simply expect this to be less of a year-over-year headwind in the second half?
Kevin Hammons: We’ve not quantified the exact dollar amounts at this point. We’re still working through kind of all the onboarding and working through that. I would say that it’s not going to be overly material for the remainder of 2023. And we’ll have probably some more clarity that we can give on 2024 if we believe it becomes more material.
