Scott Fidel: Okay. And then a follow-up question. Just would be interested in your thinking on the final SNF staffing rule. I know it’s somewhat second degree removed. But just really in sort of 2 areas in particular. One, as you’ve talked about the opportunity over the long term for capturing more volumes from SNFs in terms of SNF conversion, whether that final staffing rule would have any influence over that? And then just also whether any thoughts on this type of sort of staffing mandate at the federal level, if you’ve heard anything about that moving into other post-acute sectors? Obviously, IRFs would be top of mind for you in terms of any slippery slope type dynamic relating to the final SNF staffing role.
Mark Tarr: Yes. So this is Mark. And certainly, I don’t know all the details of the SNF. But just in general, we feel like we have done a really nice job with our quality outcomes and making that value proposition that helps separate us from other providers in the marketplace, whether it’s other IRFs or skilled nursing facilities. Clearly, the SNFs have been challenged the past several years through COVID and otherwise. So they have a lot of ground to make up, so to speak. But we’re very focused on what we’re doing right now around our programming and our quality, and I don’t see the SNF rule having any impact on the market share that we’ve been able to take.
Douglas Coltharp: And it really shouldn’t be applicable to IRFs in the future because our staffing is really already dictated by the mandated requirements of care. The complement of therapists that we have in our facilities is driven by the therapy rules. Again, that’s the 3 hours of therapy per day, 5 days a week. It’s got to be multi-disciplined therapy, and the preponderance has to be administered in individual versus a group or a concurrent setting. And then we also have very stringent nursing requirements that are mandated. So this was something that was lacking in the SNF industry, which is why I think you’re seeing this come down. It is not something that is applicable because there needs to be adjustment in the IRF segment.
Mark Tarr: And keep in mind, we’re already taking a pretty acute level rehab patients that’s medically complex. And as part of that, we adjust our nursing staffing to make sure that we can do a great job in taking care of those patients and not have those patients go back to the acute care hospital. So there are a lot of either rules of thumb or formal rules that are currently in place around what it takes the staff for hospitals to meet the type of patients we’re taking in.
Operator: Our next question will come from John Ransom with Raymond James.
John Ransom: I’m just kind of curious role of — there’s a lot of talk of years about the conveners and the navigators. I’m just wondering, you’re in the fight for these patient referrals, if you really notice any sort of change or things kind of settled down and the 3 legs of post-acute kind of have their share. It looks fairly stable when you look at the numbers across the 3 modalities. But how do you think about — when you talk to these discharge planners, these Navigators, how are they thinking about things the same or differently than maybe 5 years ago?
Mark Tarr: John, I think it has settled down a bit. When we’ve seen these Navigators come into various marketplaces, there might be a short-term impact on referrals or their approval for a patient to be discharged to an IRF, but that is usually somewhat short-lived. They see the issues, quality and otherwise, that come in place in the market when they try to dictate where the patient goes according to just the cost of care. And so that pops up in the marketplace then seems to go away within 30 to 45 days. So I think it’s settled down overall compared to where it was 3, 4 years ago.
Operator: Our next question will come from Pito Chickering with Deutsche Bank.
Pito Chickering: Next quarter. So digging into the OpEx leverage you guys got this quarter, you talked about sort of dialysis and recruiting as large drivers there. What have been the returns on doing dialysis yourselves? And with that also at 88 hospitals? Is it safe to model additional OpEx leverage going forward from that lever?
Douglas Coltharp: Yes. So the straight math on the dialysis conversion is when we use an outside contractor on average, it costs us about $600. When we do it internally, it cost us about $300. The reimbursement is the same because that’s basically coded into the requirements of the patient when they’re admitted to our facility. So that incremental $300 per treatment is a flow-through. And then you get the other benefits that are very difficult to quantify, such as the fact that the patients therapy isn’t being disrupted and you’re not having to incur transportation costs to go outside the facility if that’s an alternative. The — in terms of continuing leverage from that in OOE, we would expect to see that. Now bear in mind, some of that is a straight reduction in cost.
Some of it is also a geography issue. When we contract with a third party that $600, 100% of it runs through OOE as a contract services expense. When we do it internally, that cost gets spread out into other line items, the largest of which is SWB. And then we would expect that based on some of the efficiencies we’re seeing both in terms of advertising costs that are out there and some of the different modalities and approaches that we have developed within our recruiting efforts that even as we continue robust recruiting efforts to make sure that we keep pace with our clinical requirements with new hires, that we’ll continue to see some efficiencies in recruiting as well.
Pito Chickering: Okay. And then so a quick question on that one. I guess, how many dialysis patients do you guys have? And then sort of second part here is on provider tax revenues haven’t really been a big driver for you guys historically. You obviously saw $6.9 million in the fourth or — in the first quarter, I guess, how should we think about that going forward?
Mark Tarr: Yes. So Pito, somewhere between around 3% to 5% of our total patients are on dialysis care, either internally or where we have a vendor come into our hospital. So we do think that’s going to be a continued focus and look to a larger percentage of the population has issues that we’ll put them on some sort of dialysis care. So we think it’s a growing need for our hospitals.
Douglas Coltharp: Provider taxes, Pito, are notoriously hard to predict in terms of timing and magnitude — and in most quarters, where we get that kind of provider tax revenue, we’ve got the offsetting — largely offsetting expense. So from an EBITDA perspective, it doesn’t cause much fluctuation. We haven’t baked any net benefit from provider taxes into our guidance for the balance of the year.
Operator: Our next question will come from Ben Hendrix with RBC Capital Markets.
