Parth Mehrotra: It’s hard to do. And yeah, and kudos to our healthcare economics team and data analytics team. We have some of the best in the industry that see these trends and keep us out of trouble. We think some of these regulatory changes would have pretty significant impact. You’ve heard it from all the payers. We think V28 would be a pretty significant impact. I think you’re seeing some of that in 2024 when payers have reset expectations. We do think 2025 would be the first year where you’ll actually see the impact downstream in the provider groups. And knowing that, we’ve actively restructured our book and protected the downside risk for both our providers and our shareholders, I think. Look, our view is we’re on the right side of history.
We are building multi-specialty medical groups at scale with community doctors, which are lowest cost setting in the communities that we serve. Any payer wanting to do value-based care at the end of the day would rely on such a network. And we just think you’re in an environment where obviously everybody protects their turf. The payers are going through a pretty challenging phase. Things do normalize. The MA business goes in cycles. We’ve seen this over the last 20 years and we think once we get through 2024-2025, things will normalize. Our ability to work with the payers and make sure we do the right thing by providers that are actually undertaking total cost of care management and helping the payers lower total cost across different books of business, including commercial, is very differentiated.
And the payers are willing to work with us. So I do think to answer your question directly, once we get through 2024-2025, we should see some normalization.
Lisa Gill: Great. Thank you.
Operator: Thank you. Our next question comes from the line of Ryan Daniels with William Blair. Your line is now open.
Jack Senft: Hey, thanks, guys. This is Jack Senft, I am calling for Ryan Daniels. Thanks for taking the question. Just kind off of the provider question asked earlier, I guess, in terms of the implemented providers and as you previously alluded to, you’re looking to add about 400 providers in 2024. And in 2023, the provider adds was a bit more back half-weighted. Can you just discuss the cadence you expect for added providers over the year like, should that be more linear and kind of weighted equally or maybe back half-weighted and similar to 2023? Thanks.
Parth Mehrotra: Yeah, absolutely. So usually, they should be pretty linear with the exception of new market entries. So what happened in 2023 was we entered South Carolina, we entered Washington, both of those came with some implemented providers day one. And so that led to that increase. And then obviously, we blew through the numbers. 699 was one of the best years we’ve had. That just speaks to the strength of the model and the momentum that we have. But other than that, we should expect it to be pretty linear. We are not including any new markets in our guidance as we’ve done previously in previous years. So as and when we enter new markets and if that comes with implemented providers, that would be additive to the guidance we’ve given.
Operator: Thank you. Our next question comes from the line of Elizabeth Anderson with Evercore ISI. Your line is now open.
Sameer Patel: Hi, guys. This is Sameer on for -– Sameer Patel on for Elizabeth Anderson. Thanks for the question. I just wanted to confirm, as it relates to you guys moving the capitated contract, those lives over, are there any like fee-for-service economics that you’re going to be now gaining on this, or is this strictly like shared savings?
Parth Mehrotra: Yeah, thanks for the question, Sameer. So there’s always fee-for-service economics even when we move lives into capitation because we are deeply in the workflows and processing claims. So we earn a fee-for-service administrative fees on any claims that go through even when the lives move into capitation. What happens is the fee-for-service spend is captured also as medical expense if we are getting capitated payments up top. So that’s the nature of the business, but we do earn fees on both the fee-for-service book and then any shared savings on the value-based book on the same patient. I do think that differentiates ourselves and we’re able to get pretty good unit economics on the same life if we can process both fee-for-service and value-based care payments.
Operator: Thank you. Our next question comes from the line of David Larsen with BTIG. Your line is now open.
David Larsen: Hi, congrats on the good quarter. Can you talk a little bit about your relationship with BASS Medical and I’m assuming your retention levels with your groups are high and maybe talk a little bit about your choice to exit Delaware? Thanks very much.
Parth Mehrotra: Thanks, David. So on the first one, we have a pretty good relationship with BASS Medical Group, long-standing relationship where we are helping the group grow and we obviously have a joint venture MSO entity. So that relationship remains pretty strong. They were looking for a joint venture partner to establish a California risk-bearing organization that took delegated risk downstream from the payers. It’s not a business Privia is in. We do work with other such entities that do that. As an example, we work in North Texas with WellMed that is owned by Optum for certain MA contracts. Our economics are unchanged. We continue to get 40% of shared savings on all providers participating in value-based arrangements. And so we’ve been discussing that with the BASS Medical Group and we respect the decision to establish such an entity and we expect to participate in some of those contracts and hopefully that helps the group to grow.
The Delaware question, look, it was purely an economic decision. We underwrite some of these businesses looking at the utilization trends. And if that changes, as we noted in our prepared remarks, given what we were seeing in the marketplace, we didn’t think that ACO would have generated any shared savings for our provider partners or EBITDA for previous shareholders for the foreseeable future. Sometimes that happens. And the flexibility in our model is that we can prudently dial back risk or exit these ACOs when we can in an appropriate manner. And we’ll keep monitoring the situation. If the opportunity arises in the future, we’ll enter back in.
