Sarah James: Thank you. As we move past the pandemic, most of the providers have been talking about kind of repricing on the commercial side in the mid-single digit range for hospitals. Can you give us an idea, given the timing of your repricing, how much of that – how much of your book was already at this higher rate in 4Q? How much do you expect to be in the rate for 2024? And is there any aspect of that includes covering some of the unreimbursed physician fees for the third party anesthesiologist. So is that being worked into the rates at this point?
Saum Sutaria: Yes. Hey, it’s Saum. Thanks for the question. Again, in a little bit of reverse order, I mean, obviously, we take into consideration all aspects of inflationary pressures, whether that be contract labor, physician partnerships, supply, I mean, all of it, right I mean into the way in which we approach our negotiations with our health plans. And I mean that – as we’ve indicated in the past, it’s not like somebody’s come forward in the last few years, government or private pay and just offered up CPI, right. But the thing is, we have annual escalators in all of our contracts. We’re mindful of the fact that to deliver value, obviously, we need to have annual escalators given inflation, but it is also partially our responsibility to continue to find efficiencies in our business in order to remain valued partners to our stakeholders, again, both government and private pay.
So that’s how we think about it, and that’s how we’ve been able to expand our margins over this period of time. Look, my view is we’re generally pretty well contracted for 2024, and the bit of tailwind that we see from the recent higher than average contract negotiations should be and is part of our guidance in 2024. And my guess is it’ll flow a bit into 2025 as well, right. And then we’ll see when the next round of negotiations come up, how that goes. It’s really important to understand that part of our strategy in our net revenue per case improvement over time also relies on our ability to continue our acuity of case mix in our hospitals, so that together we’re giving ourselves an opportunity to generate that net revenue per case improvement over time.
And I think the fourth quarter represented a lot of acuity that we saw in the quarter, which is why the number was so attractive. Sun?
Sun Park: Yes, Saum. I would just to confirm kind of what you said, we said, historically we’re seeing commercial rate increases in the 3% to 5% range, and going into 2024, we’re about 90% contracted. I wouldn’t try to segment that too much deeper than that, only to say that those rates are kind of what’s embedded into our 2024 guidance that we provided.
Sarah James: Thank you.
Operator: Thank you. Our next question comes from the line of Pito Chickering with Deutsche Bank. Please proceed with your question.
Pito Chickering: Hey, good morning, guys. On the hospital labor side, what are you guys modeling for full time wage inflation for 2024? And how much more savings can we get from contract labor? And because you’re including Conifer in that segment now, can you tell us what revenue per just admission is guided to be for this year? And is it safe to think about Conifer EBITDA growing faster than hospital EBITDA for 2024?
Sun Park: Hey, Pito, this is Sun. Let me try to take some of those. From a base wage standpoint, obviously, we’ve been managing base wages efficiently overall, as evidenced by our SWB metrics. I would say 2023 was still elevated compared to our historical rates. That’s more in the 2% to 3% range. We are assuming more normalized rates in fiscal 2024 guidance, but probably not fully back to those historical rates yet. I would just add we’re continuing to make investments into our workforce in the right areas on our base wages. And then on contract labor, to your point, I think Saum mentioned earlier, we do still expect some savings from contract labor going into fiscal 2024 guidance. That would primarily be in the first half of 2024, because if you look at our Q3 and Q4 rates of 2023, they were about 3% and 2.8%. So I think the room for improvement in the second half of the year for 2024 is much lower.
Saum Sutaria: And then, I’m sorry, your question on Conifer. Yes, now that we’ve changed our reporting segment methodology. I don’t know that we will provide that level of detail.
Pito Chickering: All right, great. Thanks so much.
Sun Park: Thank you.
Operator: Thank you. Our next question comes from the line of Jason Cassorla with Citi. Please proceed with your question.
Jason Cassorla: Great, thanks. And congrats on the quarter. Maybe a question on cash flow. It looks like you’ll still generate enough free cash flow, less NCI cash distributions to self-fund that $250 million investment target in the ASCs for 2024, even with the tax payment from the divestiture. But I guess moving beyond this year, Tenet should be in a position to generate well north of $1 billion free cash flow, less cash NCI. And you have meaningfully reduced your leverage profile. So I guess as you think about the capital deployment priorities, right. Do you think you’ll be in a position to increase that $250 million ASC target as it does from the divestiture settles down, or how would you frame that? Thanks.
