Carey Hendrickson: Sure. Sure. Yeah. So I would say — first of all, it’s early for us to look at that and give any color really related to ’24 yet, we’ll be ready for that certainly the next time that we have our earnings call for the end of the year. But I would say it’s going to — we’ll see where Medicare ends up. Right. So how much of a hurdle we have there. But we do, as I mentioned, have momentum in the other payer categories. And we have, as Chris noted earlier, put in place step increases. So it may be that we have an increase of a total of 12% or 13%. And we have a step in over three years where it’s 5%, in year one, 4% in year two, and then another 3% in year three. We have those kinds of step increases that we’re building into our contracts that will have continued increases.
So I think we will have continued momentum in both commercial and worker’s comp. And both of those and — so I think certainly I feel good about our ability to — as we sit here today, I feel great about our ability to offset the Medicare rate reduction going into 2024.
Christopher Reading: Yeah, Larry, the short answer is I mean, the final rule just came out Thursday, late Thursday afternoon last week. We’re still in the middle of our budgets and a lot of analysis. And we’re pushing really hard on these contracts. But we’re not at a point where we can give you a clear conclusion yet unfortunately for next year. Just too many moving parts and too short a period of time yeah, but we’re working hard at it.
Lawrence Solow: That’s fair. In terms of you mentioned a lot of good internal growth, especially last year, in this quarter on the de novo side of dimension nine and five in September lot. I know de novos don’t cost a significant amount to get on their feet. But is there I suppose some inefficiencies initially? And even with the acquired clinics that just by themselves, it’s in the acquisitions and the de novo ramp, you have some sort of built in a little bit of dry powder to improve margins just from those two points. Is that a fair statement?
Christopher Reading: Eric, do you want to take that?
Eric Williams : Chris, sorry about that. My phone blinked out a little bit. Go — can you –?
Christopher Reading: That’s okay. No, I got it, I got it. Yeah. Larry, on the de novo side, while they don’t cost a lot of money to get out of the ground, it’s not really the issue. They do bleed us a little bit, particularly in the first six months before they or until they break even some break even much quicker than that. But early on, certainly those ones we opened in September are going to be a drain from then. Then on the acquired clinics, yeah, there is, you refer to as dry powder, there is usually some upside that occurs, oftentimes an rate reset at the point where we do the deal, we credential that deal in 60 days before closing, through date certain bases, and then we get a pickup in rate usually, not across every contract, certainly, but across some of the contracts.
And then there are other things that take a little bit more time that may be may be a little slower to happen. Program development and productivity or efficiency changes over time, those take a little bit longer. I’m more patient with those because we don’t — we want to make sure that relationship because the clinical levels are really strong and stay strong. And we’re able to do that. So there is upside in the acquired clinics. There is some short term downside in the de novo clinics.
Eric Williams : And Chris the one comment, I would add to that, the one comment I’d add on the de novo clinics is there’s none of those de novo clinics are flyers. It’s not building a network com, and those clinics were built because there were established referral relationships in the community. The biggest challenge in potential drag on those de novo clinics goes back to staffing. Typically, staff who might be relocating from an existing facility to help staff it. A lot of times, again, those clinics, we take advantage of the opportunity to open them, when we have the support, but sometimes very difficult to challenge right out of the gate. And that tends to be the biggest hurdle in terms of how fast they ramp.
Lawrence Solow: To follow up on how is the staffing, obviously, it’s been a couple of years of a tough stretch in staffing labor. Certainly labor pricing is much higher today. But does feel like at least you guys are having much more success in getting that. I don’t know about quality, but hopefully quantity of labor.
Christopher Reading: Go ahead Eric.
Eric Williams : Yes, no question. I mean, I think the recruiters are doing a great job. As I said earlier, our retention is at an all time low here over the course of the last five years. And I think we do a better job filling positions than most other organizations. But there’s no question. It’s a challenge. And Chris referenced this earlier in his opening comments as it relates to PTA usage. I mean, our facilities, our staff of licensed physical therapist and licensed physical therapist assistants. And we’ve had to rely, especially with the growth spurt that we’ve had, on bringing PTAs on board in order to service the patient volume, as opposed to not servicing it. And again, with roughly 33% of our business being federally funded, every time that PTA touches a patient that has an impact.
And you saw, if you see the breakdown on our rate, every category has gone up from the net revenue per visit perspective, with the exception of that federally funded bucket that includes Medicare and Medicare Advantage. We got very aggressive this year in terms of turning Medicare Advantage programs that we felt did not pay us the appropriate amount of money below our actual cost of providing service. I think we’ve done a nice job there. We’re just going to continue to have to push in this category. And to Chris’s point regarding these de novos the rolling out of additional programs takes a little bit of time, and in particular, the workers compensation initiative, which has really been successful this year. I mean, that’s an initiative that’s really just over a year old.
We’ve grown rate for three consecutive quarters, and our third quarter ’23 was almost 4%, higher than our third quarter ’22 in terms of workers compensation rates. So these types of programs do have an impact, but they take a little while to roll out in new Nova clinics, as well as new acquired partners.
Lawrence Solow: Okay, I appreciate that. If I can just sneak one more in just on the acquisition. It sounds like in the Q on the PT, side, on the physical therapy side, it kind of sounds like you’re queuing opportunities remains strong and you want to put your capital to work. Can you just comment just on that the ergonomic software and sort of the IP acquisition, you made, a little bit different than your de novo acquisition, how you — any color on that, how you plan to leverage that?
Christopher Reading: Thanks. Yeah, so these are some people that I’ve known for a number of years. They’re really, really good folks. They’ve been working on the software, product, software sales product, software service product, a number of years. It’s really, really strong. Enable us we have — we employ ergonomists, we do virtual ergonomic programs, but some of our customers don’t want — they want to do it themselves. And yet, they don’t have the tools really available to do that. And so we think that we can deploy this software not just to new customers who are new to us, but to existing customers, across our portfolio. And as well, with many, many, many more sales people than niche, the niche folks have had in their own company utilized our sales force to ramp that up.
