We think that will continue to get better in 2024 as we have capital coming online, as our hiring patterns continue to improve. Our turnover as I mentioned in my commentary has also improved. We’ve been very intentional in trying to create a great environment for our people with good leadership; resource capabilities and just overall trading to support the efforts so that they can be successful in what they do. And we think that will help us push through 2024 and hopefully have more capacity available and be able to receive the patients that want to get into our system.
Operator: Great. Thanks, Lance. And our next question comes from the line of Josh Raskin with Nephron Research. Josh, please go ahead.
Josh Raskin: Hi. Thanks. Good morning. I’ll thank Bill and congratulate him on the retirement, and congrats to Mike as well. Could you speak to the increase in CapEx guidance again, this has been a multiyear trend for guidance? And maybe how returns on CapEx have trended? I’m just curious if there’s more mix to outpatient, is that actually improving returns or are you getting to a point where the returns are coming in a little bit lower for the incremental project as you sort of continue to go down the list? Thanks.
Bill Rutherford: Josh, this is Bill. I’ll start on the returns. Our returns remain very solid. I mean, we’re in the upper teens returns. We have a very disciplined process where we evaluate these projects and we actually do look backs to validate some of our assumptions. And to me the growth in the capital spending is a reflection of the growth of the opportunities we see to deploy capital to continue that growth. So we’re very pleased with the returns on those. I think as Sam mentioned earlier in the Q&A, the mix between inpatient and outpatient, it varies from time to time, but mostly similar. We do have some newer outpatient facilities coming on. They generally have very good returns and quick returns when they do come online. So I think the capital program, we’re pleased with; it’s an important component to our growth formula, as we’ve talked about, and we’re pleased with the overall returns in the interview.
Sam Hazen: Yes. And the only thing I would say, and Bill alluded to this, our outpatient platform tends to be short cycle returns. We get a real efficient sort of capital allocation with outpatient facilities. And then on the hospital side, we are a hospital-centric health system. And as we invest in our hospitals, those are long-lived assets and they have a longer cycle to them with respect to returns, but they’re critically important to the overall value that our outpatient facilities can generate for our system in the sense that we’re able to navigate the patient further into the health care system if they need more acute care offerings. So we have to look at it in both manners. I think to Bill’s point, we have had strong returns, a pattern of strong returns, we have occupancy on our inpatient hospital side in the low-70% which is a pretty high occupancy level up over where it was pre-pandemic even with the additional beds that we’ve added.
So we think the network model that we highlighted for you all at the Investor Day is working and is complemented by the outpatient facilities integrated with the hospital system in a manner that produces really positive enterprise returns for our company.
Operator: Great. Thanks, Josh. And our final question comes from the line of Cal Sternick with JPMorgan. Cal, please go ahead.
Cal Sternick: Yes. Thanks for squeezing me in, and I’ll add my congratulations to Bill as well. So two follow-ups. First, on the redeterminations, it sounds like that’s a slight benefit to the 2024 guide but not really material yet. Just wanted to clarify if this does develop better than you’re anticipating? Is it something you think could be material to 2024? Or is the upside more annualized in 2025 after the redeterminations are completed? And then my other question was on the quarter itself. So one of the payers called out higher COVID inpatient costs per case. Can you talk about the COVID acuity levels that you saw in the quarter and whether that developed consistently with what you’ve seen in the past?
Bill Rutherford: Yes. This is Bill. Let me start with the Medicaid redetermination. I think you’re characteristic is right, we do see some modest benefit in 2024. We haven’t adjusted to be material yet, but our range of guidance allows for some outcomes on there. We started to see some of the effects of those redeterminations late in 2023. We’re tracking those very closely. We’re seeing roughly 30% to 35% of those individuals that were potentially on Medicaid seem to show up with either HICS or employer-sponsored coverage, so that there’s some benefit in that. We’re seeing a decently large number being able to be reapplied into Medicaid because some were redetermined off for technical reasons. So we’ve been able to manage through that.
And I think with the conversion into HICS or employer-sponsored, there is some modest benefit as we go through the year. And potentially, that will continue as we go through 2024. But don’t judge that to be material at this stage. Regarding COVID, to be honest with you, we haven’t – COVID is really been stable for us over the past year. In total, our COVID admissions are roughly 2% of our total admissions. I don’t really have any data on acuity, but I think it’s very, very stable and hasn’t really been a material factor in our overall operating results of late.
Operator: Great. Thanks, all. And that does conclude our question-and-answer session. I would now like to turn it over to Frank for closing remarks. Frank, the floor is yours.
Frank Morgan: Sure. Great. Thank you for your help today, and thanks to everyone for joining us on the call. Hope you have a wonderful week, and we’ll be around this afternoon and the balance of the week if we can answer any additional questions you might have. Have a good day.
Operator: And ladies and gentlemen, that does conclude today’s call. Thank you all for joining, and you may now disconnect.
