Kevin Hammons: So sure. Happy to take that one, A.J. So this is almost entirely resulting from inbound interest. But having said that, I still think we’re taking an [indiscernible] look because we get inbound interest on a number of locations and facilities that we don’t act on. So we’re not acting on every inbound interest that comes in, but we do happen to have some inbound interest in markets that we think may make strategic sense to transact. So we’re pursuing those further. We don’t know at this point whether they’ll come to fruition, but there is some significant interest out there that we are going through the effort to have conversations and looking to deeper and evaluate that may make sense. If — to the extent that we get proceeds in, I think we’ll evaluate the markets at the time and the other opportunities at the time on what is the best way to delever the company.
My focus is clearly on delevering and balancing our capital structure, and we can do that in 2 ways. We can pay down debt, we can grow EBITDA. And if we have the right opportunity for acquisition at the time we have cash in hand, and we think that, that could be more accretive. That’s something we would certainly take a look at. If the markets are such that debt paydown is the better play, I think we’d take a look at that. So I know I’m not giving you a specific answer here, but we’ll evaluate based on the timing that the cash comes in, what we think is the best way to delever.
Operator: The next question comes from Stephen Baxter with Wells Fargo.
Stephen Baxter : Just another 1 on payer mix. I might have thought that with the growth of the exchanges or maybe potentially some catch-up in the commercial demand that you were hoping to see in 2023 that there could potentially be upside risk to payer mix. It sounds like you’re a bit more cautious there. I just want to make sure we really are capturing all the dynamics that you want us to keep in mind. And then just to come back to AR briefly, just to manage our expectations, would we expect to see progress as soon as the first quarter? Like are you actually seeing or improve to date this year? Or should we be thinking about maybe a more gradual progression throughout the balance of the year?
Kevin Hammons: Sure. A couple of things I’ll mention on payer mix and Tim, feel free to jump in as well. So we did grow both commercial and Medicare population payer mix in the fourth quarter. So I want to be very clear, we grew both. But the MA business outpaced the commercial business by about [indiscernible] in the fourth quarter. For the full year, it outpaced the commercial 3:1. So we did make improve that proportional change was better in the fourth quarter than for the full year, but MA did outpace the growth. So as we go into ’24, we look for some moderation of that, but we’re still cognizant of keeping our eye on that payer mix dynamic. There’s 1 other — on AR, sorry, I forgot the second part of that question. On AR, I think we’ll see some early benefits in ’24 as it relates to the buildup in AR from like the Mississippi supplemental program that will largely be collected in Q1.
Some of the other buildup will probably be more moderate throughout the year, but I do expect over the course of the year for us to make improvements and to recapture the remainder of the conversion AR plus the buildup on AR from some of the movement to MA more commercial payers slowing down, that should moderate throughout 2024. And over the course of the year, I expect an improvement.
Operator: Today’s last question comes from Josh Raskin with Nephron Research.
Marco Criscuolo: This is actually Marco on for Josh. Just looking at the 2024 guidance, was wondering if you could parse out some of the $350 million to $400 million in CapEx for 2024. Is that mainly maintenance CapEx at this point? Or do you have any other notable projects in the pipeline that are coming through this year? And do you have any ability to flex that lower in 2024, if you need to?
Kevin Hammons: Sure. So we have been running approximately 50% maintenance capital, 50% growth capital over the last several years if you go back and look at our CapEx. And I would say proportionately, that’s still very similar in 2024 will be split about 50-50. As I mentioned, a couple of the large projects that are high-cost projects, the inpatient having patient towers and adding beds are winding down in 2024. And then with fewer hospitals as we actually sold 8 hospitals in 2023, that lowers some of our maintenance capital as well related to those. So overall, I don’t think we are materially decreasing the amount of maintenance or growth capital kind of comparatively. The other thing is we’ve had some capital related to Project Empower over the last year, the majority of what we’ll be spending in 2024 will be more on the expense side is now the systems and so forth for that project are built and the costs going forward are going to be implementation and training and rollout costs.
So there’s some reduction there as well.
Tim Hingtgen: The only thing I would add is, to your question is, could you throttle that back? Anything is certainly possible, but similar to what we did in 2023, we were very deliberate in our investments into the core business with the intention of, as Kevin said earlier, working on projects that will help us certainly drive stronger EBITDA performance, which is a benefit to the long-term value of the company and its shareholders. So a similar equation obviously comes into play in 2024. We have a strong pipeline of projects, as I said previously, a lot of those are on the ambulatory side of the business, not as many high dollar inpatient investments that we’re making in 2024. So I think it just is a normal settling of the capital spend, but we’re very, very deliberate in how we’re allocating our cash in that regard.
Marco Criscuolo: Great. Thanks for the color. And then if I could squeeze in 1 follow-up. You spoke to about $1 billion in potential proceeds from the divestiture opportunities that you now have identified — can you help us understand a little bit more about the cadence of how that could ultimately be realized, especially in light of some of the FTC scrutiny that we’ve seen over some of these deals more recently. And then is there any financial detail you can provide around the revenue or EBITDA contribution of those assets?
Kevin Hammons: Sure. I think it’s probably too early to tell or to say much we don’t have any agreements signed at this point, but this is inbound interest that we’re evaluating. I would say, generally speaking, all of these deals would be in the 10x plus multiple of EBITDA — of trailing EBITDA, if they are to come to fruition. Again, we’ve not made a decision and we’ve not fully negotiated on any of these deals, but we do have an inbound interest that’s very reasonable to think that if we decide to move forward, we could get deals done. That said, deals don’t move very quickly. As you are well aware, I would expect the earliest something to be completed would be probably midyear and then the potential for others to be completed late in the year or early next year.
Operator: Thank you. This concludes our question-and-answer session. I would now like to turn the call back over to Mr. Hingtgen for any closing remarks.
Tim Hingtgen : Thank you, MJ, and thanks to all of you for joining our call today. We look forward to providing you with updates on our progress throughout 2024 and to demonstrating that our strategies and initiatives are producing positive momentum and results. As always, if you have additional questions, you can reach us at (615) 465-7000. Thanks again, and have a great day.
Operator: The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.
