Jeffrey Garro: Congrats on the quarter. I have a couple that I’ll lump together on the capitated MA book. I was hoping that you could discuss the profitability for that book year-to-date. It looks like a pretty favorable inflection quarter-over-quarter. And it looks like you benefited from a small prior period development in the quarter. So good to see that reverse, but would love to get more detail there? And lastly, how should we think about year-to-date performance influencing Privia and providers’ interest in growing that portion of the business in 2024 as you collectively make decisions about contracts for next year?
David Mountcastle: So you are correct. We are seeing some positive momentum in our full risk cap business. Again, our process for estimating that amount is the same. It’s been this year as it is in years past. The more data that we receive from the payers as we get farther into the year, obviously, the better estimates that we have. And again, we’re seeing some favorable trends in that business. Primarily, I would say, sort of a mix of higher premium yields and lower medical costs.
Parth Mehrotra: And on the second half of the question, I think we are going to be very consistent with our process in assuming more risk. As we’ve stated previously, we take a much more thoughtful, very deliberate approach. We’re now backstopping risk. We do it together with our providers, together with our medical groups. We look at each state, each risk pool and make that determination with the payer partner. We ideally like to have some payers have skin in the game versus jumping into 100% risk. That’s just our preferred methodology. If you see the broader MA environment, again, with benefit design changes, some of the utilization commentary that you’re seeing from a pretty broad number of managed care companies, some of the B-28 changes coming down the pike, new drugs being approved, so that impacts Part D from a risk equation perspective.
I just think our thoughtful approach is more prudent in this kind of an environment. We don’t think it’s an environment where you blindly take risk. So we are looking, as we have said previously, to maximize shared savings, maximize earnings power for the payers, for us, for our providers. And so we’ll just tally all that up and see if it makes sense to dial up the risk. You have to recognize our providers are not going anywhere, the patients that they see don’t go anywhere. So then it’s just a financial contract and a determination every year. And if it makes sense in this environment to dial up risk, we will. And if it doesn’t, we won’t. So I think we’re just going to continue to take a very thoughtful approach.
Operator: Our next question comes from the line of Gary Taylor from Cowen Inc.
Gary Taylor: Sorry to go back to the shared savings for a minute, but I was just hoping for a more direct answer that down $19 million sequentially is far more than the typical quarterly variability we see. So did you have to lower your accruals for the ’22 performance year? Are you lowering what you’ve accrued year-to-date for the ’23 performance year? And I mean the primary reason I ask is we just want to think about the run rate going forward, that line had been up 60% in the first half of the year, now only up 11%. So is it weighed upon by an accrual adjustment here and how to move back higher what we’ve been seeing in the first half of the year? Is that the way to think about the go-forward modeling?
Parth Mehrotra: Yes. So again, as I talked about earlier, I mean, again, I would really look at a 12-month view of this. So the change in the quarter was a mix of 2022 and 2023 estimates. It’s not one or the other. We’ve got 100-plus contracts out there and some of the timing of this depends upon when in the year we get the final results from 2022. And if you look sort of our years over years, certain years, they come in at different times. It’s really when we get the final information from the payers. So again, from a future modeling perspective, I’d really stress looking at a 12-month view and not looking at it on a quarter-by-quarter basis.
David Mountcastle: And Gary, the other color I would give is, this is spread across commercial MSSP MA. So unlike a one-line focused business, we can have variability that adjusts to David’s point, some of the data and the results in commercial can be more lagged than you typically see in MSSP or MA. CMS is very consistent in how they give us the data. It’s a very structured program. Everybody gets it at the same time. That’s not how it is in commercial sometimes. So again, our book of business is pretty diversified, and you can see some of that variability as a result. So the annual run rate is probably the best way to go about it. We understand that, that causes some quarter-over-quarter jumps like it did this quarter. But we’ve kind of maintained our view of the year. And when we give guidance, that’s what we’re looking at.
Operator: Our next question comes from the line of Jamie Perse from Goldman Sachs.
Jamie Perse: Can you give us an update on how your implemented provider or partners breakdown by primary care versus specialty, how growth is trending between the two, if there’s been any kind of mix shift? And just how to think about unit economics between those two categories.
David Mountcastle: So the broad mix on our 4,000-plus providers remains pretty consistent. We have about 60 to 65 that what we call as gatekeeper providers, so that’s primary care, family medicine and total medicine. We also include OB/GYNs and pediatricians. So whoever is the first point of contact in the family. And then the remaining 35% to 40% given the states can be specialists. And again, there, we are more focused on the nonsurgical specialties endocrinology, pulmonology and so forth in some of the states where we have a health system partner that’s on the platform, Florida is a good example with help for us. You can see the specialty mix skew the other side, as you would expect. But as we grow that business across the rest of the states and add more stand-alone independent providers, that mix kind of normalizes.
So it just varies a little bit by state, but that’s the overall mix. And so what we’ve implemented this year reflects that mix. To the second question, the unit economics are pretty similar on both primary care and specialty on the fee-for-service book. we price that, obviously, specialists earn more per provider in certain specialties. And so the pricing reflects a very consistent unit economics. On the value-based book, obviously, the primary care has — once we start MSSP, MA and start to get into some of the risk contracts, the unit economics significantly increased. The take rate is 40% on those shared savings versus the management fee on the fee-for-service. So the unit economics over time really increases in the primary care, and that’s what we like to see in the business.
Operator: Our next question comes from the line of Jessica Tassan from Piper Sandler.
Jessica Tassan: So I think the strength in commercial value-based care has really stood out to us. At the time of the IPO, I think we’re thinking about those lives as a low single-digit PMPM. So just interested to know if that’s still a reasonable assumption on those lives. And then is there an opportunity to sustain these really robust 2023 growth rates in 2024 through either lives growth or pricing or kind of both?
