Operator: [Operator Instructions] And you have a question from the line of Kevin Fischbeck from Bank of America.
Kevin Fischbeck: Great. I guess a couple of follow-up questions. When you said that the going in-network is usually a positive for the company, were you talking about positive on the rate perspective? Are we talking about this dynamic with the outpatient volumes usually getting a boost once you go in network?
Charles Lynch : I was referencing the rate our experience over the last several years is that when we are in an out-of-network position. The reimbursement we’re receiving from payers tends to be quite low, hence, the arbitration processes that we enter. So we’re generally unfavorably positioned when we are out of network from a rate standpoint. Jim, you want…
Jim Swift : Yes, Kevin, it is volume too, right? It is volume on the ambulatory services, particularly, and although we had strong numbers on our maternal field medicine practices. But if you think about it, when that is impacted in that outpatient setting, that does an impact — that does impact some of the inpatient if that is a mother who’s directed away from 1 of our practices that might not deliver at 1 of our facilities. So again, that captures that volume back, which we’re very pleased with.
Kevin Fischbeck: Okay. And then if I — just want to make sure I got the numbers right. I think the reported same-store pricing in the quarter was minus 50 basis points, and you’re saying add back, 2% and then another 40 basis points. Do you kind of look at overall pricing in the quarter is like a positive 1.9% on a normalized basis? Is that the right way to think about it?
Marc Richards : That’s right. That’s right. So if you walk through the pieces, same unit revenue quarter-over-quarter is down about 1.5%, at about 1% of that is attributed to volume, which brings same unit rate down to about a 50 basis point decline. We’ve got some cares in there. And then, of course, you referenced the other component related to the guarantee last year.
Kevin Fischbeck: Okay. So when you said that your revenue guidance assumes stable volumes and stable pricing, when you say stable, you mean flat year-over-year? Or do you mean stabilize in like still about 2% pricing?
Marc Richards : No. When I say stable, I mean, effectively flat, continuing off of the end of ’23. So effectively, the rate — the exit rate in ’23 is what we anticipate driving ’24.
Kevin Fischbeck: Okay. Is there a reason why you’re not getting rate update that you’re in-network, I would think that you should be getting at least some sort of cost of living, is there something else about payer mix assumptions or anything else that you’re assuming in there?
Marc Richards : No. I mean we assume our payer mix has been relatively flat year-over-year. If you look back in the 10-K, we’re assuming that as well. There are, of course, puts and takes in rate. Of course, despite the fact that we’re anticipating a stable rate through ’24 and a flat volume, there is a little bit of growth in the top line. The timing of that, I’d say, is counterbalanced with both our RCM transition and the like.
Kevin Fischbeck: Okay. And then I guess as far as the guidance, it doesn’t sound like it’s assuming anything from a capital deployment perspective? Or do you expect to be active on that front?
Marc Richards : Well, we still are looking at and I think there was — we had a certain amount of caution why we were out of network, but now being back at network largely in our bigger markets, we do have the opportunity to deploy capital in terms of acquisitions and practices. And we’re certainly identifying in the core, those practices that would make sense for us to acquire. So yes, we still have an attitude of deploying capital in that regard.
Operator: Next, we’ll go back to the line of Pito Chickering from Deutsche Bank.
Pito Chickering: Just a quick modeling question. Sort of looking at the guidance, if we’re modeling SARs and benefits to the 30-basis point sort of headwind. Is that generally how we should be thinking about 2024?
Charles Lynch: Where are you referencing the 30 basis points, Pito, sorry?
Pito Chickering: Sorry, just looking at your guidance from revenue you’re saying that G&A is going to be flat. I mean just — I guess let me ask you differently, like how do you view sales and benefits as a percent of revenue in ’24 versus ’23?
Charles Lynch : Yes, I think you can partially solve for that. And I think you have within the range we provided on revenue and adjusted EBITDA at a high level, our view on our goal is that the ’24 represents safe stabilization of our margin profile as compared to 2023 following some of the headwinds we faced over the last year or 2. So that’s by and large, how we have formulated that outlook, if that’s helpful to you.
Pito Chickering: Yes. And then which – I think for ‘25 and beyond, what – I understand your G&A levers and you guys have done a good job with that and excellent jobs for dealing with the RCM issues that have occurred. But as I think about sort of 2, 3 years down the road, is there an ability to stabilize SMB from turning from a headwind into a tailwind? Or is this like a sort of a permanent sort of headwind that be offset with G&A leverage?
