Steve Filton: Sure. So the only hospital that will actually open in 2024 is our West Henderson facility in Las Vegas, which I think at the moment is scheduled to open either late in Q3 or early in Q4. So I think it will have a bit of a drag in our 2024 results. But given that it’s relatively late in the year, given our historical success in opening hospitals in that market, I don’t think it will be a tremendous drag. Again, as we get closer to our actual guidance, we’ll put some more concrete numbers around that. But I don’t think it should be terribly impactful to our 2024 guidance.
Operator: Our next question comes from Pito Chickering of Deutsche Bank.
Philip Chickering: Can I go back to Medicaid redetermination again for a second. Is this primarily inpatient or is it residential? And looking at the referral channels and basing in Texas, are you — is there any of your patients in the ER that can’t get discharged and inpatient behavioral because they don’t have coverage or any other color on which channels you’re seeing the referrals due to Medicaid redetermination in Texas.
Steve Filton: Yes. So I think as I mentioned, and again, I want to be clear that I’m not sure that the data that we get and the space that we have is sort of absolutely precise or that we can sort of correlate it to redeterminations in a very precise way. I think what we observed during Q3 was that the number of inquiries that we’re getting, and that includes, as you suggest, referrals from third-party sources. It includes direct calls to our 800 numbers, it includes direct inquiries to our Internet sites, et cetera. We’re not necessarily down in volume, but what we were noticing is that it was a greater number of patients who did not have appropriate financial coverage. We always have some patients who don’t, but it seems — that number seemed to elevate in Q3.
And it seemed to elevate in particular geographies in which Medicaid redeterminations were high. I mentioned Texas a bunch of times. I think Arkansas, Indiana, were also states where we saw an elevated level. But again, I’m not sure that I can parse it between inquiries from referral sources or direct increase to us. And like I said, I don’t know that we can also tie it directly to what we generally are asking patients is what their current sort of financial coverage is. We’re not necessarily getting their history of had Medicaid, lost Medicaid. We will talk to them about whether we can help them get Medicaid coverage, et cetera, but we don’t necessarily document the history there. So it’s a little bit difficult to, I think, give the level of sort of precise data that you’re looking for.
Philip Chickering: Okay. So just to make sure I understand that. So the number of inbound inquiries are basically the same, but the financial ability to pay was lower.
Steve Filton: Correct.
Philip Chickering: Okay. Got it. And then a quick follow-up to Jamie’s questions on the business pressures. Thanks for giving us this number is about 30% to 40% increase for this year, moderating sort of 10% to 15% for next year. I guess, what percentage of contracts are locked in either typically multiyear contracts? So what percentage contracts are already locked in for next year? Or you’ve already gone and in-sourced this group yourselves?
Steve Filton: Yes. I think the truth is, Pito, these contracts are multiyear contracts, but they all have short-term outs. So in other words, I mean, I think the reason this physician expense issue became a crisis in 2023. And is that — even though hospitals, I think, have long-term contracts with their physician — their contract physician providers, their ER physicians, their anesthesiologist those groups were coming to hospitals and saying, look, we’re going to give you a 90-day or 120-day notice whatever our contract calls for unless you’re able to increase our subsidy or change our contract in some way, et cetera. So I’m not sure that the underlying length of the contract is all that determined because I think in most cases — for us, and I’m guessing for others in the industry because otherwise, this wouldn’t have become the issue that it did have — all have short-term out.
Operator: Our next question comes from Sarah James of Cantor Fitzgerald.
Sarah James: I wanted to go back and clarify two comments that you made. First, on what sounds like the low acuity pent-up demand working its way through. You said you expect it to phase down over time. So just wondering if that means you expect it to still be a factor in 2024, if you’re talking about phasing down through the end of this year? And the second clarification is just on the inpatient denials from insurers. Can you give us a little bit more context? Are these procedure classes that the payers are saying should have been outpatient? Or is it something about the number of hours spend or some other aspect that they’re pushing back on?
Steve Filton: Yes. I mean, so I’ve said before that it is virtually impossible for us to precisely say whether a particular procedure is a catch-up of something that was postponed or deferred during the pandemic. So in other words, when we schedule an elective surgery or an elective diagnostic test. We have no idea when that patient sort of originally contemplated that procedure or discussed it with their physician, et cetera. What we do know is that the volume of elective procedures clearly declined certainly in the early stages of the pandemic and they have been picking up since. And so we conclude and I think it’s a reasonable conclusion that there is some element of catch-up. And to be fair, if you look at it, acute care adjusted admissions for us were up like 10% in the first quarter.
Which was really kind of an extraordinary number. It’s moderated a little bit in Q2, down to like 8%, which is still a very high number, moderated to a little less than 7% in Q3. Which, again, still a very robust number from a historical perspective, but seems to be moderating a little bit. Your question about how quickly it continues, how much is left in the pipeline. The truth of the matter is I’m not sure that anybody can answer that question with precision. I just don’t know that, that data is out there in a meaningful way that anybody can capture. So look, when we, again, give our 2024 guidance, we will make some guesstimate based on trends and how it’s going and what we think acute care volumes will look like in 2024. But I think broadly, our view is that those lower acuity volumes will continue to get caught up and moderate, and we’ll get back to again, mid-single-digit acute care revenue growth that ultimately will be split between price and volume pretty evenly, whether that happens early in ’24.
Late in ’24, I think that’s yet to be determined. Your question about denials, particularly in the acute business, the issue that I think is probably, first and foremost, tends to be classification of patients between an inpatient admission and observation status. With obviously a patient who — and this is frustrating for us because A lot of these patients are in the hospital for multiple days. But from the managed care perspective, don’t meet inpatient admission criteria even though we’re treating them for multiple days and maybe then getting paid for them as if they were simply an outpatient in our emergency room. But that’s the main issue. We do get sort of flat out denials where an insurance company would say that a patient shouldn’t have been treated at all.
But the vast majority of issues that we have with insurance companies on the acute side are over patient classification between inpatient and observation.
Operator: Our next question comes from Ann Hynes of Mizuho.
