David Mountcastle: We would agree. I think that’s a very underappreciated part of our business. You can almost think of our business model as on the fee-for-service side, it’s a very ERP-like pricing model that has inherent inflators with the rates. So as we have inflators in the contracts, the management fee generally increases, and we are also looking at same-store provider, on a poor provider growth with patient panel increases. So that really helps on the same-store basis. Then if you add the PMPMs, that I would say is a very — from an analogy perspective, a Netflix like $2, $3, $4 PMPM that’s on top of the fee-for-service reimbursement we get. That’s a very good margin business, and that adds to a very good annuity stream on top of that.
We are doing very good work with a very broad population. And like we said previously in one of the questions, this really bends the curve for the payers. You can bend their MLR. You can bend the MLR for self-insured employers. We are having very advanced discussions with some of the payers on how do we take this model forward on the commercial book, very few medical groups take commercial risk and our density and the strength of our network and the platform allows us to do it at a very large scale in some of the geographies. So I think we’re pretty excited about this book of business. Again, from a next year perspective, we’ll guide in February, but it will be a combination of growth in providers, commercial attributed lives, contracts that we enter.
As you can see, we serve 4.7 million patients, and the value-based book is about 1/4 of that or less than 1/4 of that with commercial at just $675,000. So our operating model is you get the providers, you get their lives, you optimize fee-for-service and then we layer in these value-based contracts, commercial MASS on top. And that can take two or three years in some of the new markets, but we think the earnings power is pretty strong and very stable when all that machinery works. You’re seeing some of that play out in the numbers this year.
Operator: Our next question comes from the line of David Larsen from BTIG.
David Larsen: Can you talk a little bit about how volumes trended in the quarter relative to your own expectations? And can you comment on obesity, diabetes, GLP-1s. It looks like your cash collections growth was very good. Are more volumes a positive for your fee-for-service book or a headwind because of the risk? Or does it all sort of net to be neutral?
Parth Mehrotra: So as we’ve said on previous calls, you almost have to distinguish between ambulatory gatekeeper doctor volumes, which we have in a pretty predominant way in our book versus inpatient and surgical utilization. So the former has been running pretty strong. We expect it to be fairly strong from all the data we see. You see that in the numbers. And that’s good utilization in our minds as individuals are seeing their primary provider across the age cohorts. I think the latter, you’ve seen some of the commentary from managed care companies. That has been trending high, but that does not impact us directly on the fee-for-service. On the value-based book, given the diversity of our book between commercial, MSSP and MA, we’re fairly hedged in spikes in surgical or inpatient utilization.
The commercial value book. We’re not taking downside risk. It’s very PMPM-based with some upside risk shared savings. So you don’t see too much impact. MSSP is a relative benchmark program. So again, there could be some impact, but it’s not that acute. And then what we are exposed to obviously is the MA book, and we’re trying to manage that as much as we can. So from an overall perspective, I think we are seeing favorability across all lines of business. And to the second question, look, it’s too early on GLP-1s, I know it’s a pretty hot topic given all the media news. I think we’re still about 12, 24 months away to see some real empirical data. Our hope is that as utilization of these drugs takes up, gatekeeper providers, nonsurgical specialties, those that we have predominantly in our network should see more patient interaction as patients try to see the impact of these drugs and try to have more of a conversation as to how it’s impacting their existing chronic condition or whatever it might be.
So again, we think the ambulatory utilization should go up as a result. And then on the value-based book, as is broadly expected, if this leads to lower chronicity if it leads to lower surgical volumes as people are much more healthier, then that should impact positively on the value-based side. So we’ll see how the empirical data plays out. But overall, I think we should be positive.
Operator: At this time, I would now like to turn the conference back over to Mr. Parth Mehrotra, for closing remarks.
Parth Mehrotra: Thank you for listening to our call today. We appreciate your continued interest and support of Privia and look forward to speaking with you again in the near future.
Operator: This concludes today’s conference call. Thank you for participating. You may now disconnect.
