Operator: Thank you. Next question is coming from Ben Hendrix from RBC Capital Markets. Your line is now live.
Ben Hendrix: Hi, thank you very much. Certainly, appreciate the sequential color on improvement in agency cost in SW&B. But could you talk a little bit about how that impacted inpatient capacity constraints, specifically, your peer HCA noted decline in rate of admission, declines as a percentage of inpatient volume? And I hope you can give us an idea of how that has trended for the acute segment, how you see that progressing this year given your labor strategy? Thank you.
Saum Sutaria: This is Saum. As I indicated before, I think probably the most important marker that we look at is the contract labor rate. I mean, we’re building up our workforce. We’ve been focused on that for over a year. It has been slow going. It’s improving quarter-over-quarter-over-quarter, which is a good thing in terms of recruiting and retention. But ultimately, the structural shortages in the market from a labor perspective haven’t just disappeared as we move from 2022 to 2023. And so contract labor is still an important resource, but as those contract labor rates begin to normalize, you can use that contract labor more freely to open up capacity. For us, the math equation, if you will, on where we open up capacity and how varies a bit, because our markets are in different stages of recovery, different kind of cost structures, even different contract labor rates that we face in different markets.
And so we kind of take that market by market. I think part of the volume strength that you saw in Q1 reflected the fact that, as we indicated, opened up access to some of our services a bit more than we had in the past. And that’s good, because it’s not only testing whether the demand is there, but it’s also our ability to service it at healthy margins. And that ended up being a good test for this quarter. And so we’ll keep pushing on that. But we are also very focused on trying to drive contract labor unit rates back towards pre-pandemic levels. And though they won’t get all the way there, perhaps, we’re driving in that direct action this year.
Ben Hendrix: Thank you.
Operator: Thank you. Next question is coming from Andrew Mok from UBS. Your line is now live.
Andrew Mok: Hi. Good morning. Adjusted admits were up 6.7% in the quarter and outpaced inpatient admissions by about 240 basis points. Can you help us understand what’s driving that spread? There weren’t any obvious drivers in the outpatient stats that would blend adjusted admits higher. Thanks.
Daniel Cancelmi: Yeah. Hey, Andrew, it’s Dan. It’s just a mix of the intensity of the outpatient volume, the gross revenue in relation to the inpatient side. That’s the primary driver there. Obviously, our volume strength in the quarter was very strong. We’re pleased with what we saw and it was consistent throughout the quarter, which was encouraging, too.
Andrew Mok: Got it. So mix and acuity on the outpatient side was a driver of the strength there.
Daniel Cancelmi: Yeah, that’s a contributor to. And as I said, what was encouraging not only on the hospital side, but also on the USPI side, the volumes were generally speaking strong throughout the quarter.
Andrew Mok: Got it. Thank you.
Operator: Thank you. Next question today is coming from Jason Cassorla from Citigroup. Your line is now live.
Jason Cassorla: Great, thanks. Just wanted to ask about uncompensated care trends, it looks like bad debt in the quarter was up pretty decently year-over-year that could be a comp issue, but any color on what drove that bad debt expense higher and just overall uncompensated care of 12% year-over-year in 1Q? I think that uncompensated care stat was up about 10% back in fourth quarter too. So just any color on uncompensated care trends would be helpful. Thanks.
Daniel Cancelmi: Yeah. Hey, Jason. It’s Dan. Listen, I would say the year-over-year comp is probably more last year in seeing some lower levels. I would tell you overall the uncompensated care, we think, it’s been manageable. We spend a lot of time with our Conifer team and hospital resources doing everything possible for when someone who does not have an insurance, we assist them and we do an incredible job of finding other forms of insurance through our eligibility enrollment program. So I wouldn’t say you’re never concerned about uncompensated care, but the trends are essentially in line with what our expectations were so far this year.
Jason Cassorla: Okay. Got it. Thank you.
Operator: Thank you. Our final question today is coming from Stephen Baxter from Wells Fargo. Your line is now live.
Stephen Baxter: Yeah. Hey, thanks for the question. I want to ask another one on the Ambulatory side. It’s a little bit of a longer-term question. I was hoping you could talk a little bit more about the outlook for ortho procedure growth and the opportunity here over the next couple of years. We’ve had this massive shift of ortho procedures from the inpatient hospital setting to the outpatient hospital setting compared to where we were pre-COVID. I guess for the ASCs, do you think about this shift as having pulled forward the opportunity there in a meaningful way? And then second, what do you need to do strategically to help migrate these procedures into your ASCs? Thanks.
