Tony Koblish: Well, let me start by saying, we’ve never implemented a GPO in a clean environment, right? HealthTrust started as COVID started. So I think we’re learning. And maybe the premier uptake, I think, it’s going to be a little different than this third GPO. So this third GPO does not want us to mention their name, so we will certainly abide by that. But they are a smaller GPO, roughly 150 or so hospitals, but very disciplined, tough, I would say, in compliance. So getting on contract there, I think, shows the value proposition that our product offers. The character of all of our GPO contracts, as they become available to us and we win them, are getting better and better. And I think this last GPO is a good example. We’re in the biosynthetic category, which means we can compete almost across the whole portfolio of hernias, which is great.
It’s a dual-source contract, which means many, many competitors are eliminated, including the market leader, which is unbelievable. So that shows we’re in rarefied air, good company, and that means we have an 80-20 sort of ratio to compete for. So theoretically, over time, we can compete for at least 80% of that business. And again, that’s tied to what we believe is tiered pricing for volume. So we’re getting contract structures now that are usually reserved for the big incumbent dominant players. And I think that means our product set is special, and we’re delivering great value. That said, we’re still feeling our way to understand the best implementation process and the length of time that it takes. Right now, my best guess to be, I hope conservative, is somewhere in that three- to six-month period, we’ll start to see these contracts get rolling.
And I think that’s probably the rule of thumb that we should use going forward.
Operator: The next question is coming from Matthew O’Brien of Piper. Your line is open.
Phillip Dantoin: This is Phil on for Matt. Congrats on the quarter. I guess just to touch on Q4 performance and specifically as it relates to the less-than-expected volumes from Premier, were there any particular reasons for the volume miss in that GPO specific to Premier? And has that ASP discount rolled off at this point?
Roberto Cuca: Well, so two parts. So when we sign up a new GPO when we enter into a contract, it’s often the case that we’re already selling to some of the hospitals in that GPO. We may have gone through the VAT committee already, and so those units that previously would have been a price x will now go through at a slightly lower price because of the discount. So that discount takes effect as of the first day of the contract. So compared to the day before, you have a little bit of ASP headwind. Now the big bonus of a contract is, it opens up a lot of new hospitals to purchasing because physicians can access the products without going through their back, assuming that each hospital has administratively entered the terms of the contract into their purchasing systems.
So what we found is that over the course of the fourth quarter, that process hospital by hospital to get our products into their systems under the new contract took a bit longer than we originally expected. That seems to have resolved itself by the end of the quarter, such that we’re now seeing the sort of volume we expected to hit earlier coming through in the first quarter, but it was transient challenge and something that we’ve now worked through and learning that we’re going to be applying to our future contracts going forward.
Phillip Dantoin: No, that’s helpful. And shifting gears here, just wanted to touch on that mostly hernia-related backlog. Assuming you haven’t seen much, if any, of that recapture, can you speak to how large that backlog is? I think you’ve characterized it about 100,000 procedures in the past. And maybe when we can start to see hospitals operating above 100%, call it, in order to start to work through that and recapture some of that backlog?
