Brian Tanquilut: That makes sense. And then maybe, Kevin, as I think about your guidance, the implied guidance for Q4 is showing kind of like a 13.7% margin at the midpoint. I know in your slide deck, you still point to kind of like a mid-teens margin target. So, how are you thinking about driving that sequential margin lift and then incremental margin opportunities going forward to get to that mid-teens target?
Kevin Hammons: Sure. I think there’s a number of things. So as we’ve mentioned a number of growth initiatives, investments in expanding capacity, as we continue to grow and leverage fixed costs, a much bigger portion of that growth will flow through to the bottom line, which will add to our margin. We expect our rate lift to be a little higher next year. Our Medicare rate, if you think about this year, although the base rate was fairly significant in 2023. A big portion of that was offset with take backs. The majority of those take backs by the government are completed now. So we should have a better Medicare rate lift going into 2024, and we’re seeing similar commercial rate lift kind of in that 4% to 6% in 2024 that we had in 2023.
So I think there’s some more runway there on the commercial side as well. And then the work we’re doing on expenses, we continue to manage expenses really well. Our Project Empower as that continues to be rolled out into 2024. And then into 2025, we think there’s – that’s going to lengthen the runway on us being able to capture additional kind of margin improvement in expense reduction.
Brian Tanquilut: Awesome. Thank you, guys.
Operator: The next question is from A.J. Rice with UBS. Please go ahead.
A.J. Rice: Thanks. Hi, everybody. Just on your payer mix trends. I wanted to just ask about two things. I know in your slide deck, you comment on a little bit of an uptick in self-pay you’ve seen off a very low base. Is that really related to re-verifications dynamic? Or is there something else going on there? And then also on the commercial side there, you generally – you’re sort of flat year-to-year in your percentage from commercial or I think, call it, managed care and other. Some of the other companies are pointing out that they’ve got a lift from the public exchange enrollment. Is that – are you seeing that as well in your markets? And does that then say that the rest of the managed care and others somehow off a little bit and anything behind that if you have it?
Kevin Hammons: Sure. So I’ll point out a couple of things and Tim, feel free to jump in. Relative to self-pay, it is a very small base, and there’s nothing really there. There was a small adjustment just on collectability that we had good collectability this quarter on some self-pay, but again, a very small amount and nothing really there. We’re not seeing any material increase in self-pay volume. And as it relates to redetermination, we’re not seeing a decline in – a significant decline in Medicaid volumes either. So we don’t believe that that’s having a negative impact on us. Relative to the commercial, we did see kind of year-over-year increase in both commercial business and Medicare business in terms of volume.
Some of the commercial rate was offset because of – we did have more outpatient business this year so that it’s more of a mix between inpatient and outpatient that had an effect on the net revenues, but we are seeing a lift in commercial volumes as well –
A.J. Rice: Okay –
Kevin Hammons: Medicare side, we are seeing continued shift out of Medicare fee-for-service into MA business and that always continues to pressure the revenue, because we collect less on MA compared to traditional fee-for-service.
A.J. Rice: Okay. And then my follow-up, you mentioned that you’re running at least in this quarter, the 3% year-to-year trend in underlying labor cost, wage increases, et cetera. I mean that sounds like it’s back to sort of pre-pandemic levels in your mind? Is that something we can carry forward an expectation for next year that you’re in that sort of 3% zone on wage increases?
