Eric Evans: And Kevin, one point of a little additional clarification, I think Wayne answered that question 50-50. I think he’s roughly right, probably more on the side of acuity than rate. I want to be clear on this. This is — we have a really trombeat that’s been based on really nice acuity growth this quarter. We’ve had some nice managed care rates, but I wouldn’t say that half of that 14 is managed care. So we’ve got some rates. We’re certainly working on that, but the majority of this is finding and attracting the right high-end cases and driving into our facilities.
Jason Cassorla: Great. Awesome. Thank you for the clarity. And then just a follow-up. I wanted to ask on capital deployment, I guess, relative to your $200 million plus for the redeployment of divestiture activity target. I guess given year-to-date spend at $135 million and your comments on your pipeline, just curious on the timing of that spend has seemed to slow a bit in the third quarter, is that just kind of timing related? And I guess, just broadly, any commentary or incremental commentary on the capital deployment environment would be helpful. Thanks.
Wayne DeVeydt: Great. Let me start by saying, in the six years that this team has been together, the current pipeline of opportunity and what we have under LOI is greater than we’ve seen in any single year. And we don’t see that slowing down as we head into the new year. Regarding timing, we actually anticipate with the over $200 million under LOI that some of these will get closed in the fourth quarter and still feel pretty confident about our targeted $200 million goal for the year. If it was to slip, we’re really talking about slipping into the first half of next year, which we don’t really see as a good turn towards our long-term growth algorithm. But actually no concerns on our end. We continue to apply appropriate due diligence on all facilities.
And Eric and Dave continue to remind the teams that we don’t manage to the quarter. We manage to the long-term growth algorithm. And so we’re not necessarily going to accelerate a close to achieve a near-term goal. But I would tell you, no concerns at all on the kind of run rate of $200-plus million. And if anything, I would argue we’re probably going to jump out of the gate even stronger next year.
Jason Cassorla: Great. Thank you.
Operator: Our next question comes from Whit Mayo of Leerink Partners. Please go ahead.
Whit Mayo: Thanks, good morning. Dave, can you go back and maybe just unpack the comments on the managed care actions that you undertook in the quarter? And I guess the corollary to this question is really just maybe an update on the revenue cycle initiatives, the focus on revenue conversion, now that you’re, I think, on one clearing house. My sense is these numbers aren’t small. So maybe just any update around those would be helpful. Thanks.
Eric Evans: Hey, good morning. I’m going to jump in on the managed care question, I’ll turn it to David for revenue cycle. There was no specific managed care actions in the quarter. I mean, other than our normal contracting, we clearly continue to develop strong relationship with payers, explaining and using math to show them our value proposition. I think we’re getting increased traction with that over time, as they see the benefit of what’s primarily an independent model as [in docs] (ph), the benefit we bring to them from a cost perspective. And so as Dave mentioned, we do have 90% of that of our planned increases for next year already in place contract-wise, but there’s always negotiations happening there. As we add new service lines and procedures, so it has a chance to go back and say, hey, we’re going to create a bunch of more value for you, how do we work together for a win-win.
So I’m really, really proud of our managed care team. They’ve made a lot of gains. But I also think some of the gains they’ve made is being proactive in getting us set up to take on those higher acuity cases. And so some of this is just access to the right payers with the right incentives for physicians and some of it is ongoing rate negotiation. But there was nothing particularly different in this quarter. With that, maybe talk about revenue cycle.
Dave Doherty: Yeah. Maybe just one additional point or context as to why I said what I said, 90% and they’re like, we’re in the middle of doing our budget process. And so Eric and I had the pleasure of talking to our Board about kind of progress and our confidence that we have going into 2024. And some of — some of what you see, as Eric was mentioning, managed care is an ongoing effort that we do, right, day in and day out, our dedicated team kind of focuses on this. And what gives us some degree of confidence when you look at the contributions on the top line side, is how much work that team has done and contracted going into next year. So when we give guidance and as we give the visibility into 2024, our confidence is driven by the fact that we’ve already got 90% of or contracting baked in this space.
So that’s why it’s there. And it is, again, when you go back to what we have — what we have built over the past several years is a consistent plan that allows us to have some degree of predictability to it. And I’m glad you asked on the revenue cycle front. We had talked about this in the past. Revenue cycle represents two opportunities for us. One is cash flow generation on a faster basis. It also allows us to get greater yield through our results. And in rev cycle, kind of the — it’s a difficult job, as you know, in the healthcare services sector for us. We deal with payers that are constantly trying to find the right way to move business into our facilities. And so we’re always dealing with the managed care providers, making sure that we’re following their protocols appropriately and making sure that we do the right things on the front end, to make sure that we decrease denials on the back end.
And then when we do have denials on the back end that we’re actively managing those in accordance with our contracts with the payers. When you do that properly, you get increased yield opportunities. We’ve done a pretty good job of that, in the build that we have done over the years. We get to apply that logic every time we do an acquisition. So this is one of the values, that we provide when we do M&A. So when we often talk about buying companies and then taking a turn off of those effective multiples in the second year and half years of ownership, part of that is applying our rev cycle approach, getting better yield and accelerating cash.
Whit Mayo: That’s helpful. One just follow-up. Can you just — of the seven divestitures that you’ve made year-to-date, can you just maybe size kind of how you’re tracking relative to that $100 million target? Thanks guys.
Dave Doherty: Yeah. So in the quarter, we estimate roughly $35 million, plus or minus, of revenue, that we’re jumping over this year from revenue that we incurred last year in the third quarter that we don’t have this year from the seven acquisitions. So we don’t spike that out separately. We do that intentionally because I think we’re proud of the growth that we have. But that’s the business that we would have disposed of earlier this year.
Whit Mayo: Thanks. Appreciate it.
Operator: Our next question comes from Brian Tanquilut of Jefferies. Please go ahead.
Brian Tanquilut: Hey, good morning guys and congrats on the quarter. Maybe Wayne or Eric, as I think about your comments on GLPs, maybe if you can just walk us through, maybe a little more detail on how you think that is a positive and if there’s a near-term benefit from procedures getting done just because people are healthier. Just maybe if you can help us think through the modeling of that impact, at least near term and medium term. Thank you.
