Brian Tanquilut: Hey good morning guys and congrats on the quarter. Saum, just to follow up on the divestiture question, right? I mean this seems to be more opportunistic than not in terms of the assets that you’ve sold. So how are you thinking about maybe longer-term leverage targets or your willingness or interest to look for other opportunities, such as South Carolina and Southern Cal?
Saum Sutaria: Yes, they’re – both of these opportunities we’re opportunistic as you say, we were not in the marketplace looking for those, although as I just mentioned to A.J., we have a strategic sense of what we would entertain at what values. And again, we remain opportunistic. But most importantly, we remain committed to the portfolio that we have and running it at a high quality with solid earnings from that standpoint that we can deliver. So I mean, I’m not sure how to answer the question on a go-forward basis other than to say we have demonstrated thoughtful divestiture activity in a way that remains consistent with our strategy and enhances not just our leverage position, but our belief in our ability to generate free cash flow going forward.
Brian Tanquilut: Okay. Thank you.
Operator: Thank you. Our next question comes from the line of Justin Lake with Wolfe Research. Please proceed with your question.
Justin Lake: Thanks. Good morning. Appreciate all the detail and consolidating Conifer, I think was a good idea. I appreciate that, too. The – my questions were, one, the bigger question is just that there’s been some discussion out there that ahead of the two-midnight rule, a bunch of hospitals might have tightened up how they report observation versus inpatient? Curious if you’ve seen any of that internally? How have you prepared? Did you see any benefit this year? What do you think the benefit is next year? And then just a quick numbers question, how many de novo openings this year? Do you expect – I apologize if I missed that previously. Thanks.
Saum Sutaria: Thanks Justin. Well, obviously, we’re very cognizant of the impact of CMS’s commentary on the two-midnight rule, Medicare Advantage is very important to us and being a good partner to our Medicare Advantage health plans and also our medical groups and organized medical groups that participate in Medicare Advantage is something we actually are quite focused on operationally because we are focused on delivering good throughput. We only admit patients through the emergency department when appropriate. We have high standards for that. So we end up being in a position where being focused on MA is important. Now look, we also believe strongly that when people are in the hospital and are sick enough and their condition warrants it based upon the admitting physician’s judgment to be inpatients versus an alternative outpatient-based status that is the appropriate thing to do.
And we very much agree with the guidance from CMS that that should be tightened up. So operationally, we’re focused on it. Remember, we also, through Conifer, have the ability to focus on it for us and our clients in terms of ensuring that we have the appropriate documentation in order to defend that position. So we’re going to keep at that. We haven’t quantified any potential upside from that, although we have considered it, obviously in our guidance, but we haven’t specifically called out anything from that perspective. The de novo number for 2024, I’d have to — yes, I’d have to go take a look at an exact number, but it’s north of 10, potentially approaching 15. I’m sorry that I don’t have an exact number for you.
Justin Lake: Thanks.
Operator: Thank you. Our next question comes from the line of Kevin Fischbeck with Bank of America. Please proceed with your question.
Kevin Fischbeck: Great, thanks. I just wanted to dig in a little bit into the view about the Hospital business guidance for 2024. Were you talking about 4.5% normalized performance and 3.6% organic growth there, which seems a little bit low based upon – it looks like you’re looking for a pretty solid volume growth as you get pricing. But based solid volume growth, I view that labor is going to continue to improve, I’m just trying to figure out if there’s any other offsets that you’re already kind of backing out the rate pressure and labor changes in there. I would have thought that number would have been higher than the 3% to 4%.
Saum Sutaria: Yes. Hey Kevin, it’s Saum. Let me start. Look, I think a couple of points that I made. First of all, we had an outstanding year in the hospital segment. As you know, every quarter, we exceeded our expectations there. Look, for us, I mean, we took a lot of the benefit from contract labor reduction in 2023. Now don’t get me wrong, there’s an annualization effect that will improve in the coming year. The volume strength was also very good during the year. And so I think that we believe that we’ll continue to see acute care recovery in 2024, like we saw in 2023. And if we’re able to open up capacity effectively to service the demand that we want, which again is consistent with our high acuity strategy, I think that’s what gets us to the upper end of our guidance, right?
It’s really the volume potential there. And then we’re mindful of the fact that there are some things in the operating environment to think about. We did very well, but did have cost increases in 2023 in medical fees. We’re anticipating some impact of that again, but we think manageable and in the guidance from that perspective. Sun, I don’t know if you want to add anything.
Sun Park: Yes. Saum. Just on your last point, I would also add on the medical fees, we did see about 15% total increase in fiscal 2023. For 2024 we are assuming some moderation in the rate of growth here. So our 2024 assumption is in the 8% to 10% range for net fees.
Operator: Thank you. Our next question comes from the line of Whit Mayo with Leerink Partners. Please proceed with your question.
Whit Mayo: Hey thanks. Good morning. I just was curious on how you feel about the target for 575 to 600 centers for 2025 you need about 15 centers a year over the next two years to get there, about a 20% increase. So I just wanted to take your temperature on how you’re feeling about that target? Thanks.
