Derek Johnston: won’t make the habit of it. But on staffing levels, at 80% occupancy in senior housing, I believe that’s near fully staffed, and please correct me if I’m wrong. But the question is, what are you modeling or including in guidance for ’23 relative to agency labor as a percentage of labor expenses? And do you view this as possible low-hanging fruit to get back to pre-pandemic levels of agency especially as John and the team increase property level accountability.
Shankh Mitra: Let me try to take part of that and Tim will take part of that question. So, we do not view this as a low-hanging fruit, but we do view this as a fruit that can be plucked, right? So there’s a lot of effort that’s going on. Tim will tell you what’s modeled. Frankly, I don’t know. But I will tell you that this is — agency labor is a function of, frankly, weak management. That’s just what it is, weak leadership. And we’re working with our best-in-class operators to get the right people in the right place so that we should, over a period of time, see that improvement. As I’ve said, coming below 4% is an achievement when you start from 9%, but by no means, I want you to think that I’m actually happy with that number. That number needs to be substantially lower. And we need to really get full-time employees in the communities. This is not just a question of cost, but also, as John alluded to, it’s also a question of culture and the customer experience.
Tim McHugh: From a modeling perspective, we’re essentially in the high-3s as a percentage of compensation. So pretty flat from where we came out of 2022.
Operator: We’ll move next to John Pawlowski at Green Street.
John Pawlowski: Thanks. I just had one follow-up on the Private Letter Ruling. I guess what else needs to happen internally in terms of people, systems, technology before you’re actually able to self operate a substantial amount of IL units? I’m just curious how quickly we could actually see Welltower operate these assets.
John Burkart: Yes. So, I’ll comment on what would need to happen, but not necessarily the speed at which. But if you look at it, I mean, one way to look at it is really just to simplify the world a lot and to say what would happen when a company — from my past experience, when the two companies merge, you look and say, okay, if I step into their systems and start to fly the plane with what they have, that could happen pretty fast, right? That’s not that complex. And so, the timing of it could be — can be faster if we wanted it to be faster by stepping in that way. Obviously, what — going back to what we’re building, as I’ve mentioned previously, we’re using largely existing modules. There’s some creative stuff going on right now with the team.
But generally, it’s existing modules that are out there. And so, that doesn’t take that long either. So, the speed can go fairly fast. The bigger issue is we’re focused on success, and we’re focused on working with people to deliver the success. It’s not about us necessarily doing it. It’s about us delivering success for all the stakeholders. So, that’s where my mind is at. But the speed could go pretty fast.
Shankh Mitra: It will not surprise me to see that we start to self manage some assets — some IL assets in calendar year 2023.
Operator: And that does conclude today’s question-and-answer session. I’ll turn the conference back over to management for any closing remarks. And that does conclude today’s conference call. You may now disconnect.
