So any change in our collections rate over a period of time will automatically get caught up in the model and the revenue would be adjusted real time. So there’s not expected to be big swings in revenue because we’ve accelerated this methodology. It’s all part of the go-forward model. And it’s been accurate. We’ve done a look back. We continue to do a look back and the cash that we’re actually collecting as a result of the contract assets that we set up is very close to the estimates that we made. So I know that’s kind of a long-winded answer, but I want to make sure that you understood the context around it because that’s an important point.
Daniel Grosslight: Yes. That’s helpful. And I guess to the last part of my question, as we think about this provision for credit losses, and you kind of addressed it with Jailendra’s question, but I’m curious, as we look forward, do you think it’s obviously high this year relative to past years. Do you think kind of this year is abnormally high? And as we think about ‘24, that should moderate? Or do you think we’ll continue to be in this area where we’re seeing increased credit losses just because of the difficult situations some of your customers are in?
Jennifer Williams: Yes. I mean a significant amount of our credit loss reserves this year were related to one specific physician customer. And I would say that’s an unusual situation. That’s not something that happens in the ordinary course. It’s very specific to the nature of that business and that customer very unfortunate for the industry and for the customer and the patients associated with it, but that was an unusual situation. So I wouldn’t expect that they would stay at the same level that we’ve had this year, but it’s one of those things that we’re going to continue to monitor. The challenges that these customers are under actually create opportunities for us, both in our end-to-end business and our modular business, where there are there’s more pushback from the payers and denials and underpayments and some of the other services that we provide.
So it creates opportunities for our business and helping them respond to the challenges, but also at times it can create issues where the systems have financial challenges resulting in ultimately bad debt. So it’s something we’re going to continue to monitor. But I would I expect to see some improvement as we move forward next year.
Daniel Grosslight: Makes sense. Thanks for the color.
Operator: Your next question comes from Glen Santangelo.
Glen Santangelo: Hi, yes. Thanks for taking my questions. I just want to follow-up on a couple of things. First, as it relates to pediatric, Jennifer, I think I heard you say that it represents in today, I guess, 1% to 2% of EBITDA. But I also heard you say that you made a fair amount of investments in this business. Will you have the ability to strip out some of those costs post the termination of the contract that might offset some of the loss to EBITDA. I just want to think about that a little bit more as it might relate to ‘24?
Jennifer Williams: As it relates to ‘24, I mean the contract termination is an effective data December of this year, so the end of the year, but there’s going to be likely a lengthy transition period, we’re having active conversations with them. We’re going to continue to support them through the transition. We expect it will be a very complex transition to move away, so there’s still some things to work out with them on what that transition looks like and the time that it will take them to move away. But I would expect that we’ll continue to see revenue through some portion of ‘24 as they transition away. Well, obviously, we’re going to do the right thing for the business and we’ll take down costs as the as they begin to transition away. But some of that is still to be determined, and we’ll give more color when we give our guidance in early January.
Glen Santangelo: Okay. Perfect. Lee, if I can just sort of follow-up. You talked about the uniqueness of this contract. But earlier in the year, you talked about integration issues, not just at pediatrics, but also LifePoint was another sort of high-profile situation. Can you give us an update there? And as you think about the rest of your book of business, do you feel comfortable with all the other contracts? Or do you feel like – or do you feel like pediatrics was sort of this just isolated incident? And I don’t know if there’s any contract renewals coming up in ‘24, ‘25 that you want to flag for everybody. Thanks.
Lee Rivas: Yes, sure. So let me just kind of start with a broader point. And there’s a bit of nuance to that kind of complexity point. I feel – we feel very good about the broader base of customers. And there’s this item we’ve talked about, which is the pressure they’re under, right? So the pressure they are under with higher labor costs, with point solutions on the technology side, pressure that comes from payers, and that makes our jobs even more important, our role even more important. That said, it puts pressure on us to perform, right? And it puts pressure on all metrics, and we’re not perfect. And we – but we broadly, as you can see from our incentive fees, are helping our customers to progress, okay? So – and I would add now just getting to the complexity point, all onboardings are complex, right?
We are installing our technology. We’re applying our best practice processes. We’re shifting people. And as you can see from some of our recent large onboardings, they have gone very well and we have a track record of success with all of our large customers. Now there is a level of complexity that is unique when it comes to certain customers and the variables I would point out, and this is not specific to pediatrics, just generally things now that I’ve – being over 10 months I look for, it’s when a customer has multiple host systems. And I don’t just mean the top two, the largest two, I mean, more than several, so lots of host systems. When they are fragmented geographically lots of small hospitals, when there are not standard processes and when there are either no technology or fragmented technologies.
My learning here as the leader of this business is we have to be really diligent about the customers that we are partnering with and also more realistic about onboarding time lines and the complexity of onboarding. So my answer to your question is, I actually feel really good about the broad base of our customers, especially the large systems that have a lot less complexity. And I would say to your last point, this is – the pediatric is a unique situation. Again, we’re going to support them, but there’s a lot of complexities and that is even distinct relative to the broader base of physician customers we have, which we are a leader in that market just based on lots of metrics. So I would say we feel very good about what we’re doing.
Glen Santangelo: Okay, thanks.
Operator: Your next question comes from Elizabeth Anderson.
Elizabeth Anderson: Hi. Can you hear me?
Jennifer Williams: Yes.
Elizabeth Anderson: Hi. Can you hear me?
Jennifer Williams: Yes.
Elizabeth Anderson: Hi. I wanted to ask about your cash balance. It looks like there’s a bit of a buildup of cash. Is this related to the fact that you may have to purchase an asset from Sutter. Otherwise, presumably it would be better to keep voluntarily paying down the 7%, 7.5% debt rather than get 5% of the cash, right?
Jennifer Williams: Yes. So we have paid down $40 million of incremental repayments above the required repayments year-to-date. And that’s something that we’re going to continue to look at and pursue opportunities to pay it down based on the obligations that we know we have and investments that we’re making in the business. So we will continue to do that, and that’s one of the priorities that we have from a capital allocation perspective is to continue to pay down debt. As far as the Sutter asset, there was a put option that was included in the Sutter agreement. Those are still conversations that we’re having with Sutter. There’s been no determination that’s been made at this point related specifically to that asset.
