Jamie Perse: Hey, thank you. I’ll add my congrats and thanks to Dan as well. My question is just on the labor environment. There were some headlines around some union contracts during the quarter. You mentioned it earlier. There’s also the California minimum wage. Just wondering if you can give us an update on what you’re seeing broadly with labor, if something structural has changed, if you’re thinking about the next few years any different from rate of increase of labor? And then just if you can size anything on the California minimum wage in 2024 and then 2025 once that gets fully implemented? Thank you.
Saum Sutaria: Yes, hey it’s Saum. On the California minimum wage piece and the impacts of that that was covered in Dan’s commentary around headwinds. We haven’t called out what it is specifically. We may do that in the future, but it was kind of covered within that broad category of headwinds. In terms of ongoing contract negotiations, I’m not going to comment on those, but we’re obviously aware of them and deeply engaged in them. And I wouldn’t say the environment has changed tremendously. I did note, we’ve worked on and settled 30 labor union contract negotiations relatively peacefully over the last couple of years, and we continue to work in good faith on all the contract negotiations we have. Obviously, there are things that complicate that environment in the middle of the wage bill in California being passed. But that’s just something that we’re going to work on with our employees and the union and we’ll move past that at some point.
Operator: Thank you. Next question is coming from Calvin Sternick from JPMorgan. Your line is now live.
Calvin Sternick: Is there any way to quantify how much capacity you’ve added so far this year? What the impact on volumes has been? And then going to next year when you talk about organic growth, how should we think about order of magnitude from further capacity expansions? And then any color on which markets or service lines are the biggest growth opportunities there? And when we think about California minimum wage, I mean, I think that should be manageable for you guys, but just wondering if that impacts how you think about the capacity expansions in those buckets? Thanks.
Saum Sutaria: Well, so there’s a few different things to unpack in your question, but let me start with probably the most salient point around how we think about the hospital capacity. We’re very cognizant of the service lines that we have prioritized market-by-market and maintain access for those service lines. And we have, even through this strategy of reducing our exposure or access, in some cases, in markets because of the contract labor expense. So, through this year, I would say that we have maintained capacity or added a little bit back, but it has not been a significant change in our strategy this year with respect to managing contract labor. And by the way, the consequence of that is the contract labor reductions have been steady and progressive and now the basis of them has changed from reducing capacity to succeeding in hiring and retention.
So, that’s — and at the beginning of the year, I think we said the basis of the labor environment in 2023 must change, in our view, towards hiring and retention away from capacity reduction. So, we feel pretty good about having achieved that and selectively, as I noted, adding certain service lines. That’s why I try to highlight them in every quarterly update at three or four of our hospitals, service lines that we’re adding, where we’re adding that capacity and putting that investment to work in things that we believe we’ll want to do. I don’t know if — I think the question was largely focused on the hospitals, but at USPI, we don’t have as much of an impact of contract labor impacting our capacity. And so we have continued to expand access in centers across the country as the demand has risen.
And the nice thing is that in a robust demand year, we’ve proven the ability to staff, staff it appropriately and maintain our margins with the growth that we have been able to deliver this year without creating a bunch of extraordinary expense in contract labor. So, for USPI, I see the environment differently and we feel like this won’t be as significant an issue going into 2024.
Operator: Thank you. Next question is coming from Pito Chickering from Deutsche Bank. Your line is now live.
Pito Chickering: Hey good afternoon. And again, adding the thanks to Dan. It’s a pleasure working with you for like all these years. On 2024 commentary, a quick clarification and a question. For clarification, if you take the midpoint of the guidance of $3.415 billion and pull out $10 million for Ramon and $14 million grant income and $34 million in cyber security, is $3.357 billion the right launchpad for 2024? And then the question is on the $100 million of headwinds you talked about, contract labor year-to-date is about $300 million. So, if I add another $100 million in the fourth quarter, it’s about $400 million of contract labor in 2023. The reduction in the last two quarters there have been about 28% or so. So, while you aren’t guiding for 2024, could we think about contract labor settings — contract labor savings offsetting those $100 million of headwinds you identified?
Daniel Cancelmi: Hey Pito, it’s Dan. I’m not going to get into specifics in terms of the guidance for next year and what the launching point is, but we wanted to give you some high-level overview of those numbers. And again, roughly $100 million for the government funding type of reductions and the wage matter as well. And then grant income, you obviously see the grant income on a year-to-date basis of about $14 million and the cyber income year-to-date is about $34 million. And in terms of Q3 to Q4, as we mentioned a few minutes ago, when we think about the sequential walk from Q3 to Q4 for the hospitals as we talked about. We’ll probably see some additional medical fees sequentially. And we’re being cautious and when we think about contract labor in the fourth quarter and whether we need to potentially invest more to meet volume demands.
Operator: Thank you. Next question is coming from John Ransom from Raymond James. Your line is now live.
