Pediatrix Medical Group, Inc. (NYSE:MD) Q3 2023 Earnings Call Transcript

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Dr. Jim Swift: No. Brian, we are going to have an outside vendor for much of the back end. The problem and what we identified when we made the decision to transition is that, obviously, the labor costs were an issue. The turnover of labor was always an issue. And then there was a big component that we expected in our current vendor that there was going to be a technology solution available to us, because we were going to have to invest millions of dollars on a technology transition. That never happened. We do believe that there are vendors out there who can and will help us with that. But I think the cost — we looked at it through the cost of maintaining a workforce and a technology on — in the previous setting and knew that there were efficiencies by bringing in an outside vendor, hence the reason we made that change.

Finally said, what we learned and what we believe and we will strongly standby is that it has to be a hybrid model. We have to own the front end and what we do at the level of patient care and at the physician practice level and then have a vendor who has more efficiencies on the back end.

Brian Tanquilut: Awesome. Thank you.

Operator: Thank you. [Operator Instructions] We will go to the line of Kevin Fischbeck with Bank of America. Please go ahead.

Unidentified Analyst: Hi. This is Li [ph] on for Kevin Fischbeck. So the first question is just regarding non-same-store revenue. It sounded like non-same-store revenue was a headwind to growth. So what drove that?

Charles Lynch: Hi. This is Charlie. You will notice through the course of this year that that has largely been the case. Not in a very material fashion, but in something of a fashion and I think there is some comparability in that to what Jim mentioned around our review of our footprint and our portfolio. We have had some practice exits and the like through the course of this year as we reviewed the portfolio and our footprint and that is where you see that net negative in the non-same unit side.

Unidentified Analyst: Okay. Thank you. I guess I just have one follow-up. We have been hearing from the hospital companies a lot about increased professional fees. Do you have an ability to go back and get subsidies to offset the margin pressure?

Charles Lynch: Well, so, we have had a great relationship with our hospital partners and as it relates to those fees and the structure of those fees, we have done very well to continue to place those fees when we need them. We are not somebody and you need to understand that, that we are not reliant to a large extent on those contract fees. However, for those services that have smaller volumes but higher intensity, we do look at that, and so we will, whether it be on new opportunities in OGI’s or whether current pressures result in increased costs, we will go back and see what we can do on those fees with our health systems.

Unidentified Analyst: All right. Thanks. Super helpful.

Operator: Thank you. With that, we have exhausted the queue at this time. Please continue.

Dr. Jim Swift: Well, Operator, thank you. Thank you everyone for being on the call. We are — I am available with the team throughout the rest of today and please reach out if you have additional questions.

Operator: Ladies and gentlemen, that does conclude our conference for today. Thank you for your participation and for using AT&T event conferencing. You may now disconnect.

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