Bill Rutherford: Well, it’s hard to call. We do believe the rate of growth is too slow going forward compared to what we’ve seen this year. As I said, we’re working diligently on multiple work efforts, not only in Valesco, but working with our contracted providers as well. So again, I think we’ll see slowing growth. We think we’ve dealt with some of the more acute issues out there. But the subsidy requests are still there, but we’re managing through it and we’ll continue to do that as we continue to go on. We’ll update you on our progress. But we’re working diligently to affect and slow that rate of growth and its impact on us.
Sam Hazen: I think Bill alluded to this in his commentary earlier about the pressures we saw with contract labor, nurse shortages, capacity management and so forth. And I would submit that we’ve worked our way through that reasonably well, and we still believe there are opportunities for us to make strides forward on that agenda. We’re going to learn from that how we managed that timely, aggressively, and responsibly, and I think apply those same learnings to the situation we have here, and get to an answer that makes sense for the company. And so I’m confident, as I’ve said, that we have the mindset and the wherewithal to work through these and get us to a reasonable solution.
Operator: Our next question comes from Pito Chickering with Deutsche Bank. Your line is open.
Pito Chickering : Hey, good morning, guys. There are a lot of moving parts in the margin this quarter, but if you normalize for Florida DPP and the $50 million from prior period in Valesco, and look at the implied fourth quarter margin ramp, it looks higher than normal sequential margin improvement for the fourth quarter. So can you help bridge us or what are the key drivers to get to that implied guidance for margin for 4Q?
Sam Hazen: Yes, Pito, historically our fourth quarter is our best margin performance quarter. I mean, obviously this quarter was impacted a little higher than normal because of the Valesco 80 basis points I talked about, and the Florida DPP. Our state facility margins were over 20%, so we think our guidance is reasonable based on our outlook right now. But I think it’s a combination of maybe not having some of the immediate pressures we had this quarter, and the expectation that the fourth quarter tends to trend stronger than our average.
Pito Chickering : All right, thanks so much.
Sam Hazen: Yeah.
Operator: Our next question comes from Cal Sternick with J.P. Morgan. Your line is open.
Cal Sternick: Thanks for the question. Just wanted to go back to Valesco for a second. So is the expectation that the $50 million loss per quarter persists this level throughout next year or would you expect to end the year at a slightly lower run rate? And then just on the mitigation levers, I mean obviously it sounds like reimbursement is probably the bigger component here, but is there any way to give a sense for magnitude of the cost side? I’m just wondering if you could give some color on what those levers are, and just how much of that $50 million do you think could offset purely just with cost reductions?
Bill Rutherford: Yes, I mean, so right now as I said, probably $50 million a quarter, but we’re working diligently to mitigate that. And as we go through the next couple of quarters and into ‘24, we’ll continue to update our progress on that. We view the primary issue as revenue shortfalls, and that’s what we’re working through. There are maybe some cost adjustments we can make, but I think it’s primarily a revenue approach that we’re going to take to try to turn the results around. And I just have to put — it’s $50 million a quarter, and we have confidence that we’ve dealt with similar issues in the past, and we’ll work through that, but it’s primarily a revenue challenge that we’ll get through. I did mention it earlier, but with our increased position, we now manage the revenue cycle all the way through.
So I think that puts us in a much better position to assess and address some of these revenue trends. So we have the revenue cycle functions from contracting to coding to billing and collections. And so we think we’re in a reasonably good position to be able to at least assess those trends and then come up with appropriate actions to respond to it.
Operator: Our next question comes from Jason Cassorla with Citi Group. Your line is open.
Jason Cassorla: Great, thanks. I guess with surgeries up about 1% in the quarter, a little bit better on the inpatient side. I wanted to ask about trends within service lines, and the comp was a little bit difficult this quarter, but anything to call out there? And then Sam, it sounds like from your comments, you’re not seeing any impact in GLP-1’s and you don’t expect much there, but just making sure we caught that right. And if you have any other thoughts on potential impacts to underlying demand or trends on the line, it’ll be helpful. Thanks.
Sam Hazen: Yes, let me start with the GLP issue. We think it’s way too early to make any judgment about the effects on our business generally. I think the second point that I would make related to GLP-1 is the fact that we have a very diversified mix of revenue as a company. I mean, obviously we’ve gone through orthopedic total joints going from inpatient to outpatient. We’ve seen other drugs come into the mix, statins as an example with cardiology. We’re actually doing more cardiology procedures in the company now than we’ve ever done in the history of the company. So, I don’t really know how to judge the implications. Bariatric surgeries in our company is a really small program, less than 0.5% of overall revenue. Obviously we have patients who do have diabetes, but some of those patients aren’t going to lose it necessarily immediately either.
So, it’s way too early to make judgments, we believe, around that. When you look at the mix of business, again, as I said earlier, we had very broad-based service line performance that was solid. Very few service categories were down. We actually had a calendar headwind in the quarter with respect to surgical days and cardiology procedure days, where we had one less surgical day in the quarter than we did last year. So our performance in the face of that headwind was strong as well. So that’s what I would say. It was similar on inpatient and outpatient as far as the mix of service volume growth and so forth. So very consistent, very broad-based, again, across our geography, and so we’re pretty pleased with the output.
Operator: Our next question comes from Scott Fidel with Stephens. Your line is open.
Scott Fidel : Thanks. I was hoping you could maybe talk about some of these recent developments in the environment as it relates to the potential indicators around future wage trends, and in particular thinking about some of the union actions that we’ve been seeing and some of these minimum wage laws that are getting passed at the state level, such as in California. Just curious on sort of whether you see these in aggregate potentially creating some more pro-inflationary pressure on wages, or do you think that there may be a bit over, sort of focused on and won’t affect the overall trajectory of the wage environment? Thanks.
Sam Hazen: The market for labor has normalized in very material ways compared to where it was a year to year and a half ago. And we’re seeing it in our cost per hour as a company, which is really lined up with the expectations we’ve had for the year. And we’ve seen stabilization across the elements of our compensation programs and so forth. There are some minimum wage laws out in California that has a very de-minimis impact on our company. Most of our compensation was already in line with that. We have very few issues with that. Unionization across the country beyond the healthcare industry is an issue as everybody understands. But we have been successful in pushing through those issues organizationally and have landed in a spot that we think is not going to put too much pressure on our business in the near term.
