The Ensign Group, Inc. (NASDAQ:ENSG) Q4 2022 Earnings Call Transcript

And so again, like with some of the recent ones we’ve taken on, the pathway for kind of traditional recovery is somewhat hampered there. Getting agency out of a building in an environment like now is much more difficult, as you can imagine. So that’s one of the primary challenges that we’re facing is just to get to where we like to be as quick as we need to be is going to be challenged by the current state of labor. That said, these buildings are in really good condition clinically and have really good culture overall. I’ve been able to visit a few already. I’ve gotten to know some of the leaders of these buildings and some of the clinicians. And given the clinical stability that exists there, I think that provides us somewhat of an advantage for us to not say, it’s going to take forever.

But it will take some time, regardless in spite of that. But again, like we mentioned in our prepared remarks, we take a long-term approach to these. We’re not afraid of that challenge that exists. But we’re going to go about it methodically and do it the right way. The other thing I’ll mention, too, is just from an occupancy standpoint, the portfolio that we’re taking on sits in the low 80s in terms of percentage for California, that’s pretty low. So that will be another lever we’re going to be focused on. And then just some other cost issues that we should be able to tackle more readily, but that all said, I don’t think we’re bullish enough to say these will be accretive this year, but one never knows. Hopefully, the transition goes smoother than we hope it will, but we’re planning on it being in spite of all the challenges I’ve mentioned we’re anticipating these will be kind of on our normal cadence of being successful over the next few quarters.

From a leadership pipeline perspective, Tao, we have a really strong stable of we call administrators and training or CEOs and training. It’s as strong as it’s ever been in spite of the fact that unemployment is pretty low. And that’s a really good sign. We probably will be a little more tempered in our path of growth as we digest these 35 or so buildings we’ve taken in the last six months as we have been in the past. But we actually, in spite of that, are geared to be able to take on many more buildings, especially in other geographies where we haven’t been as acquisitive lately. So, we’ll see, we’ll be opportunistic, and we’ll take a tempered approach to that. But we obviously will have more growth this year for sure. But it will probably come more in the latter half than in the next few months.

Tao Qiu: Yes. And my second question is we noticed that the DSO ticked up a little bit sequentially. I think we also saw that in your 10-K. We updated the risk disclosure around the growth of the Medicaid managed care organizations and the potential delay or reduction in Medicare reimbursement. Just curious, if you have any general observations about the billing and collection trends, and for managed care in general, anything worth calling out there?