Hello, everyone, and welcome to this next session of the 24th Annual Needham Virtual Healthcare Conference. I'm Matt Shea, and I help with Needham's digital health research efforts. In this session, I'm pleased to be joined by DocGo CEO, Lee Bienstock. Thank you for joining me today, Lee.
Thanks, Matt. It's great to be with you.
We have about 40 minutes for our fireside chat today. We'll save, call it, the last 5- 10 minutes for audience Q&A, so feel free to send questions into the chat or email me directly, and we can get those covered in our time today. With that, let's get into it. Lee, for those who are maybe less familiar with DocGo, how about a brief overview of the business?
Sure. DocGo is a mobile healthcare company. We bring care to patients where they need it, when they need it. We do that at enormous scale today. Last year, we drove 8.8 million miles to serve 1.5 million patient interactions. We have a proprietary tech platform that allows us to orchestrate all of the mobile vehicles, of which we have 1,000 mobile units in the field every day, with 5,000 W-2 clinicians going and serving care in the field to where patients need it. We have a tech platform that optimizes the right vehicle with the right clinicians, with the right licensure, with the right credentialing, with the right equipment and diagnostics, all for the right patient need, stacked up in a way so that we could see the most patients with the highest quality possible.
Today, we do that in 30 states and the U.K. Our clinical practice is licensed in 48 states. That's basically a brief overview of the business.
Perfect. We'll definitely jump into the different businesses from there. Before we get to the core business, let's hit the migrant-related portion of the business. You experienced an accelerated wind down relative to prior expectations. Maybe just for those that aren't up to speed, what was the catalyst that drove that expectation, and how much visibility do you have to the remaining migrant-related work, and how has that business trended so far in 2025?
Absolutely. For folks, this migrant-related work that Matt's describing is a contract that we had with HPD. We also have a contract with NYC Health + Hospitals to provide medical care and wraparound services to the migrant population coming to New York City, of which there were over 200,000 asylum seekers and migrants that arrived in New York. We had a large, famous contract providing medical care and other services to that population. Really, when we started, it was core to our mission, right? Our mission is to serve the underserved, is to bring care to patients who need it. We were hoping not to get involved in any political commentary relating to that, right? There's a little girl who's the same age as my daughter's children that needs a vaccination, a life-saving vaccination, or perhaps somebody suffering from depression and needs social work and counseling.
We were there to provide that. Of course, it became politicized, and that's sort of why people are talking about it, and it became a big portion of our revenue in 2023 and 2024. We wound down the HPD component, the housing and preservation component of that project in December. When we talked about the accelerated wind down, we had put a cushion in that wind down where we said, "Hey, let's start winding down these sites in the beginning of December," thinking that perhaps asylum seekers won't exit the sites upon first notice or as quickly, and we would have this buffer between the beginning of December to the end of December to sunset that program.
When we started to wind down those sites in Upstate New York in the beginning of December, a lot of the asylum seekers exited those sites quite quickly and were able to find more long-term permanent housing and sort of found their next leg of their journey. We ended up sunsetting that probably about three weeks faster through the course than we had anticipated, and that was reflected in the Q4 financials. Into this year, we shared that we expect about $50 million of migrant-related revenue in 2025, with the vast majority of that coming in Q1 and the first half of Q2. That is our medical-related work, vaccinations, infectious disease control, depression screening, urgent care that is happening at the remaining migrant sites that are winding down here in New York City. We think that will be done sometime in Q2.
Got it. That's helpful. That $50 million target you guys set was prior to this accelerated wind down. Maybe just for background, despite the accelerated wind down, you're maintaining that expectation. Given where you are in the year, how are you feeling about that target, especially with Q1 being a large portion of that?
Yeah. When we shared the $50 million for this year, we had already basically discounted that number. We entered this year at a higher, basically monthly run rate. We were entering this year at sort of an $80 -$100 million monthly run rate from last quarter. We understood post-election and the change in administration and seeing the numbers of border crossings and people coming to New York City dropping, which has been widely publicized. We basically said, "Let's be very conservative on that number, and let's just peg it at $50 million, break it out, and disclose it," which we did. We were quite conservative on that number. We still feel like that is an accurate number. We feel like we've gotten that pretty accurate, give or take around the edges there. $50 million is the best estimate.
Given also that a lot of that revenue is coming in Q1 and sort of the first half of Q2, we feel like that's been pretty spot on.
Okay. That's great. Yeah. I think the discounting portion is maybe a detail that gets lost in translation. That's helpful. Aside from the revenue components of it, the other major topic of discussion related to the migrant work is the cash collection. Can you provide an update on when you expect to collect the remaining cash you're owed for the migrant contract? Given the recent clawback of payments from FEMA for migrant contract-related services, do you have any concerns about your ability to collect the remaining portion at this point?
Yeah. Matt, we basically had, we shared on our last earnings call, about $150 million of receivables relating to the migrant-related work. With about $20-$30 million of payables associated with those receivables, call it net $100-$120 million of cash. We expect to collect that. We've been collecting that. We expect to collect that here between now and the next couple of quarters, maybe through the end of the year, depending on how quickly we can work through all the invoicing and the payment cycle with the city. Candidly, I think our partners at the city and the finance side, they're understaffed, and obviously, they've worked pretty hard. We're working through the cadence of all the invoices to get those paid out. We absolutely expect to collect on those invoices.
We expect to collect here between now and, call it, Q3, maybe the end of the year, depending on how long that payment cycle stretches. That is the expectation. They have been paying, and they have been good partners so far, working through the invoicing process with us.
Awesome. It's good to hear.
Matt, in terms of your question relating to the clawback, that was, again, another widely publicized news event there where there was, again, we don't know a lot about it. We're a medical service provider. Our understanding is that the budgets for the programs that we're working on are sitting at the agency levels, right? They've already been assigned to the agency. They're sitting in those agency accounts. They're waiting to be paid out. That was the direction that we were given from those finance departments. In terms of those clawbacks, we haven't been notified or involved in any way in any of that conversation. Our understanding is that the budgets are sitting with those agencies. In addition, part of the big conversation around all of these budget processes was very little money was coming from the federal government to begin with.
That was a topic of conversation where the cities and the states were being very heavily burdened by the cost of this. Our understanding is quite little of the funding was coming from the federal government. In addition, the funding for all of our programs was already sitting with the agencies with which we were serving.
Yep. Sounds set up and insulated. That's good to hear. Okay. Regardless, even if you were to fall short on some of this migrant-related revenue or cash, you've made it clear that you can make it up with other opportunities, with one principal opportunity being the burgeoning payer business. You're leading with care gap closures today, which is in high demand among payers right now. How do you see growth playing out in this segment? How much opportunity is there to expand with, say, your existing clients versus how much of this is an effort of going to win new logos?
I would say it's both. We have an active pipeline of new logos, and then we also have quite an active pipeline of expanding the payers that we're working with. It's actually twofold. One is the agreements that we have with our payers to do care gap closure work, and we could talk, Matt, about what that looks like. There's opportunity for us to do additional services for the same payers that we're working with today. We should really talk through that. What's happening today? We talked about this insurance business. Really, the whole advantage and the great aspect of our program is that we go and meet patients where they are. In many cases, we meet patients in their home. Why is that important? Because a lot of patients are not being well served by the traditional healthcare establishment today.
They have accessibility issues. They have mobility issues. They have childcare issues. For whatever reason, they are not getting the care they need from the traditional clinic infrastructure that is set up today. Our whole approach is we call patients, and we meet them where they are. We go into their homes, and we close gaps in care. What the payers are doing, they have a cohort of patients that are unattributed, that are drifting. These are their words. They have not seen their primary care provider in many cases in over a year. We get a list of those patients and what gaps in care those patients have. We engage those patients and go see them in their home and close out those gaps of care.
The payers are very focused on this, one, because the more patients and the more members of their health plan that are being addressed, the better higher quality plan they have. The higher quality plan they have, the more patients want to be a part of that plan, will choose their plan, as an example, on the Medicare Advantage portal. They get higher reimbursements. There is this great halo that happens when they have a high-quality plan. In order to be a high-quality plan, you have to be serving as many or all of your members as best you can and close those gaps in care. The other piece is if a member of the health plan has a gap in care, it's something that could result or precipitate into a high-cost catastrophic event. To give you an example, we get a list from the payers.
About a year and a half ago, we started doing this business. We had one payer give us a list of 2,000 patients. Today, we have a multitude of payers that have given us over 700,000 combined patients with which to go and provide services to, provide proactive care to. On that list, we get a patient. The patient may be suffering from diabetes. They need an A1C check. They need a diabetic retinal scan. Maybe they need vaccinations. They need an annual wellness visit. We'll go to the home and close out as many of those care gaps as we can.
In addition, if we can't close the care gaps, or we come back and the diabetic retinal scan is actually alarming and the patient's at risk of losing their vision, we alert the plan, the health plan, that this patient could become much sicker and become, as a result, much more costly. This wonderful insight that we're able to give to the plans and hopefully either close the gap in care, which means they have a high-performing plan, or identify patients that still have open gaps in care that could become much more expensive and much more sicker patients in the future, that's really the value of the whole platform. It's enormous. It's in its early innings today. The ability to go into a patient's home is something very valuable. All the health plans are looking at this. The patients absolutely love it.
We have a Net Promoter Score. We just got back some data. Our most recent Net Promoter Score was a 90-plus. The patients love it when we come to their home. It feels custom. It feels tailored. It's obviously incredibly convenient. At the same time, the plans love it because every single one of these patients were patients that were not being addressed or they haven't been successful with before in the past. That's really kind of the very exciting component of our business right now. All the infrastructure we built around medical transportation and mobile clinics and bringing care into communities and the tech platform we built is being leveraged for this business. We think this business has enormous, enormous potential in the coming months and years. We're investing heavily into it. We could talk about what all those investments look like.
We feel like if we can provide a great service to these payers, we could expand into more services with them, and we could expand into more geographies with them. The opportunity is immense.
Yeah. I mean, before we jump to the additional services, just within care gaps alone, it seems like there's plenty of reasons your list should continue to grow, whether it be saving the catastrophic events, helping with star ratings. There's a variety of problems that payers are dealing with that you guys can help address head-on. When we think about increasing the visits from those lists that they give you, actually getting the member to engage with you seems to be the biggest challenge for DocGo, as in many ways, there's a reason that these members have lacked engagement with the healthcare system. What is your approach to driving engagement with the assigned member populations you have today? Are there any strategies you've found to be the most effective? Are you able to then leverage that across the markets?
How has this care gap closure program sort of developed over the last year, year and a half?
Yeah. Engagement, you mentioned, not just for us. It's really the whole point is we say, "Give us your unengaged." I mean, that's what we're asking for here. And we think we can make great progress with this patient population, meeting them where they are. We've been doing a tremendous amount of capability building, experimentation, A/B testing, of course, dozens and dozens of variables. Really, first and foremost, it starts with a partnership with the health plan. We co-brand and send out materials. First, it comes from the health plan. Say a large health plan saying that DocGo is going to be reaching out to you to schedule a very needed health screening or health exam. That primer has gone out. We're even experimenting on how quickly we contact the patient.
I'll tell you, Matt, in the early days, I might have shared this story with you. For folks listening in, I was maniacal with the team. I said, "The second that mailer from the health plan, that day that it hits, I want us calling that patient." We did lots of different experimentation. The team set out to effectuate that plan. They come back to me quite happy to tell me that I was wrong. The best day to call the patient is actually 21 days after they receive that mailer and all of the various different testing that we did. Why? Because a lot of the patients live in apartment buildings. A lot of the patients have mailboxes, and they don't check those mailboxes every single day. They check them a few times a month. Just this incredible insight that we have there.
We know certain demographics like to be called on Sunday mornings. Certain demographics do not like to be called on Sunday mornings. We know certain age of population likes to be called by a certain gender clinician that is reaching out on our side. We have done all this different experimentation to understand truly who the patient is. First and foremost, it is co-branded, and it is initiated by the health plan partner. We invest heavily into that to understand what the best messaging there is. We have a sequence of scientific-backed, statistically significant-backed cadence of engagement that happens depending on who the patient is, what demographic they fall into, and all of that has been under experimentation. We are just getting better and better at it. In addition, in our tech platform, we have an automated dialing system.
When we first started doing this in the earlier days, our clinicians were dialing up and letting the phone ring. Now we have a system that we've built that in the background, all the phone calls are happening. When there's an actual patient on the phone, that's when it connects to one of our human beings on the phone to connect with them to schedule the visit and discuss what healthcare they're needed. We are making all these investments in the capability to make us more efficient as we go forward to take on bigger and bigger lists of patients. We are getting incredibly insightful and scientific and data-backed on how we engage the patients to convert the highest percentage that we can. Every single patient that we're able to convert and engage is an extra patient that the health plan wasn't able to.
It is incredibly accretive.
Yeah. Those efficiency gains seem great. It seems like with the A/B testing, that should continue and help you kind of pursue this opportunity. When you have an opportunity this big, it often breeds competition. You have commented in the past that the care gap space is in a bit of a land grab right now. From DocGo's perspective, how often have you guys been running into competition? How are your customers comparing you versus the top competitors? Maybe where has DocGo been successful in standing out relative to the competition?
Yeah. There is a lot of competition that's being funded in the space. What's great about our company is we're self-funding a lot of this. We're not raising capital to go out and do this. We're self-funding it from all of the various different businesses that we have. We're leveraging the infrastructure from those other businesses and applying it here. We have a lot of advantages that, frankly, new entrants into the space just simply don't have. We have scale that new entrants don't have. We have other capabilities that we're taking from other components of our business. Again, we're funding a lot of the growth there. We feel really excited about that. There are absolutely people coming into the space.
I think it starts with CMS themselves and Bain & Company and McKinsey & Company and everybody really raising the flag here and saying a huge percentage of the healthcare dollars are going to find their way into the home. If everybody just follows sort of that trend, you have an aging population. More than half of the country by 2030 is going to have at least one chronic condition. You're talking about 160 million Americans are going to have at least one chronic condition. Being able to bring care to the patient is obviously a tool that every single health system and health plan is going to need to have in their arsenal. We feel like we're enabling that. There are other companies that are coming into the space, a lot of them venture-backed. We see that there.
I think from a competition standpoint, first off, we want them all to be successful. It's sort of this wonderful environment where you have a lot of other companies, in addition to us, evangelizing how good this is for patients, how good this is for the system, how much better off the savings could be and the health outcomes can be improved through this mobile modality. The way I view it is the other companies in the space doing it alongside us are just helping us evangelize, helping the whole industry evangelize really the need for this. There's just such an enormous opportunity where I think there's room for, and I hope we're all successful. I think we will be.
I think for us, our big competitive advantage is both having that medical transportation and the other infrastructure that we've built over the last 10 years that we're now applying, the tech platform that allows us to orchestrate all those thousand mobile units in the field at scale really very few other companies have. We are applying that to this business. That is a big advantage for us. The other piece that we've been told is a big advantage for us is the breadth of the scope of practice that we have. We are now up to 35, 40-plus clinical offerings that we're providing in the home.
The way I call it is we're sending our clinicians, we're training them in all of these different care gap closures and the ability to do annual wellness visits and even some of the higher acuity care gaps we're able to close. That breadth of practice is something that we've been told is a big differentiator for us. We sort of send these Swiss Army knives into the home that are able to do a multitude. We had one patient, which I share. We closed six care gaps in one visit because our clinicians are able to do such a wide breadth of practice. I think when you think about the infrastructure, the licensure, the tech stack, and the breadth of practice that we're bringing to the market, we should be quite successful.
That's great. Beyond and beyond solely care gap closure, the ability to convert these patients then to primary care patients or remote patient monitoring patients is important to the long-term opportunity. You mentioned that earlier. Not only does this require patient buy-in, it also requires amendments to existing payer contracts. As we think about going after that long-term opportunity of converting these care gap patients to additional programs, what has that process been like to add these inclusions onto existing payer contracts and any way to think about the % of payer contracts today that have these inclusions?
Yeah. Matt, it's a great point. When we first started doing this business, we were signing care gap closure contracts. They didn't contemplate PCP. They didn't have this sort of gradient of risk, right, which we should talk about. We said, "Hey, you'll give us a list of patients. We'll go and close care gaps, and you'll pay us our custom in-home rate." That's the way we started. Actually, we've been inching that rate up as we've gone through and signed newer contracts that have higher rates in them. When we were going into the home and providing these visits, we found that one in four Americans, if you go down the street and you count four Americans, one of those four Americans doesn't have a primary care provider.
Actually, we were finding in the patients we were serving, actually a much higher incidence of that, close to almost half did not have a primary care provider at all. We started to say to ourselves, "Now we are in the home. The patients open the door to us, and they do have gaps in care. They need somebody to quarterback and be their primary care provider. We can do that through our own primary care practice." Not only go and close care gaps, but also be their primary care provider. That is the journey that we launched basically at the end of last year. We started enrolling patients in our primary care practice. It is still very early days for us in that.
We feel fundamentally that if we're in the home, we're getting a 360-degree view of the patient and their social determinants of health and their home environment and a much deeper understanding for truly how to manage their care. Then we're closing care gaps. We're in their home. Now we're quarterbacking their care as their primary care provider. Now perhaps through our remote patient monitoring platform, we're getting their blood pressure every other day. Who is better than us to manage risk or enter into value-based contracts than us? We're being very thoughtful about it. We're not entering into value-based, risk-bearing, downward risk contracts because we want to go into that with the most data and the most educated view of the patient. We're taking a very graduated and evolved approach to this. We're basically starting with fee for service.
Once we're in the home, we'll start to build up our PCP panel. Eventually, we think we will be in the best position to take on risk, maybe in 2026, maybe in 2027, and beyond. We're being very thoughtful about our approach to that. That's really the big vision here. I think companies that are in the home, like ours, are going to be far more insightful about truly managing the total cost of care. Certainly, I don't want to take risk on a patient that won't open up their door to us, as an example, or that I'm not quarterbacking their care. Our practice is not. Those are the pieces that we need in place to do it well. I think, again, everybody will benefit.
The health plan will benefit because we'll truly be able to manage the total cost of care and drive costs down. Patients certainly will benefit. The way you drive costs down is patients are healthier, so they need the healthcare system less. If patients are healthier and the health plans are doing well, then we'll have our value that will be unlocked that we'll be able to benefit from as a company. The more value that we can unlock as a company, the more patients we can help, the more patients we can help, the more we can grow our business. That is really the way we look at it. Those are the pieces. We're in early innings. We're investing into this. Right now, we're really getting that critical density and capability around the care gap closure.
I think there'll be capabilities we add either organically or inorganically as we go through here to add those other pieces I was just describing. The company has a great balance sheet with which to capitalize on to go and make those additional investments, both organic and inorganic, that we feel we're going to be very ambitious about over the course of this year and definitely heading into next year.
Okay. I want to double-click on the risk comments because I think that that's the right prudent approach to how you want to approach it, where start with fee for service, especially given the patients that you have. Then over the next couple of years, we could see you scale into risk. As we think about how that plays out, how do you envision the level of risk and how that progression looks over time? Would you flip from fee for service to, say, an upside downside with some risk corridors and then move to full capitation? With that, what kind of buy-in do you need from the payers? What kind of contract amendments would that take? I'm sure that you're already in discussions. Maybe any kind of feedback that you've gotten from your payer partner so far.
Yeah. Exactly. That would be the gradient we want to follow, which is no risk today, fee for services is what we're in right now, and then adding sort of an upside-only risk component. Of course, if it's upside-only, then it's sort of capped in some way. It can't be the full benefit. Eventually go to full risk, upside and downside. The way we're approaching it is the first early contracts we signed in the care gap space did not have the PCP component of it. We really feel like we need the PCP component of it in order to truly manage the total cost of care. Right now, we're going back to some of those original contracts, and we're adding on either an amendment or a brand new PCP contract to go alongside the care gap contract that we're having.
In that PCP contract, there's that gradient of capitation that happens once we reach a certain patient panel size and what the capitation looks like. Sort of the capitation inherent in that capitation is the risk associated with that patient, right? That's sort of a PMPM model where perhaps we're getting $80 per member per month. If it costs us more to care for that patient, then we have to bear the cost of that. If it costs us less and the patient's healthier, then we would benefit from that. Really getting that capitation right is something we're very focused on. Being able to truly be a great PCP partner and truly be the best PCP in the world, we feel like we have the ability to do that. We're adding capabilities there.
The better we are on the PCP side, the better we can drive that capitation and sort of the margin in that capitation. That's really what they'll end up looking like.
Right. Exciting things to come. You know I could spend this entire fireside chat talking about the payer business, but you also have two other businesses that we should probably hit on in our time today. One of those large customer bases is health systems, where you're expecting to generate about $250 million in revenue in 2025 from these customers. Maybe for those a little less familiar, what's the mix across transportation and mobile health within that segment? Where are you seeing the greatest opportunity for growth within that business today?
Yeah. For hospital systems, the vast majority of what we do with them today is medical transportation, which I described, which essentially allows—we have this deep integration within Epic that allows a discharging nurse to click a button and see exactly when the ambulance is going to arrive to pick up the patient. There is this wonderful cascade of events that happen where, again, we come to pick up the patient. The nurse knows when to get the patient ready. Intake knows when the bed's going to be freed up for the next patient. Housekeeping knows when to come get the bed made ready for the next. The receiving facility knows when the patient's arriving. All this wonderful integration happens when you digitize a really, frankly, old business like medical transportation and bring it into the next century. We've been very successful in doing that.
We feel like we can do $250 million of revenue with the hospital systems this year. $225 million of that will be approximately medical transportation. Medical transportation, we feel like, will grow 15% year over year. In some years, we've done a lot more than that. In some years, perhaps been a little bit less. That 15% growth rate is really what we target on the medical transportation side. The remaining will be programs with hospital systems that help avoid ED readmissions or basically patients bouncing back to intake and to the emergency room. Hospitals get penalized when patients bounce back within a 30-day window. We have a transitional care program where we'll go to the patient's home after they've been discharged to work and help that patient not to recede back to the emergency room.
We have a bunch of programs that we're running there. As an example, we have a program with L.A. Care in California and some of their participating hospitals. It's sort of a payer-hospital hybrid approach. We've been successful in reducing ED readmissions from a very high LACE index score patients with length of stay, acuity, chronic condition, very high acute patients. We've been successful in reducing readmissions by 60% in that cohort. Now we're in big expansion mode on that. That's really what the hospital system will look like between basically medical transportation, which is the vast majority of it, 90% plus, and sort of these transitional care programs and hospital home-style programs that we're now just starting to scale.
Okay. That's great. Yeah. And the health system is really underscored by that consistent 15% transport growth. It's really made the health system end market a durable business for you guys. How durable do you think this end market is longer term? Is there a lot more opportunity out there for you to continue to pursue and see a good line of sight to that 15% growth continuing? In addition to that, how do you make sure that you continue to hit those 15% plus growth targets on the health system side and maybe not get distracted by how much excitement and opportunity is on the payer side?
Yeah. On the hospital system side, absolutely. I think it's a $9 billion industry, of which, again, we have $225 million. Keep in mind, too, we have a team in the U.K. that's servicing the national health system with this medical transportation business as well. We have that market. We have this U.S.-based market. Right now, we're focused on growing the states we're in. We did launch in Dallas-Fort Worth sort of in the back half of last year. We feel like Texas could be a very large market for us. We operate in San Antonio. We have licensure in different parts of the state. We feel like Texas, as an example, will expand by launching new markets. Chief among them is Texas, which we did at the end of last year.
We also launched in Chattanooga, Tennessee, which was a sort of neighboring market to Nashville, Tennessee, which we already operated in. We feel like growing the markets we're already in, we can get to the 15%, or launching new markets, very thoughtfully launching new markets with an anchor customer is really the approach we're taking on the medical transportation side. It's still a very fragmented industry. It's a very durable industry. We're seeing actually more investment come into this space now. We see private equity coming into the space now. Absolutely, we feel like this is going to be a great industry and a great business for us. It's been durable. We've been growing it quite extensively. We tend to keep the contracts we win, and we tend to win contracts. We have been very pleased with the performance of that business.
We have great leadership in that business, a great dedicated team there. We're quite excited about that. In terms of distraction, I think, first off, it's always a balance, right? We have our team, great leadership that's running the medical transportation business, right, as a perhaps more mature business within our portfolio and growing steadily on that 15%. We have another team that shares best practices and leverages some of the shared infrastructure, but a team really focused on hyperscaling the insurance business and sort of solving for a different set of metrics on that side of the business. Of course, very heavy communication across all the different teams servicing different customers.
Yeah. That's great. Yeah. I think that durability point continues to be the theme with the hospital end market. Maybe as you compare where you are with the payer business today, are there any parallels that you see in the early days of the payer business that remind you of the health system or transport end market that maybe gives you the belief that that, too, can be a durable business long term?
Oh, yeah. I mean, we don't even have enough time for that, Matt. We don't have enough time for that question. Yes, so many corollaries between the two businesses. I mean, first off, you have the fleet component, which I think we're, frankly, we're light years ahead of where we are on the mobile health side and the payer side because of all the ambulance work that we've done over the years and how to manage a fleet and so forth. There's corollaries on the fleet. There's corollaries on billing. There's corollaries on sort of predictable flow of patients that once we get the flow of patients from a payer, just like we do from a hospital system, we know when their busy days are. We know when their seasonality.
One of the things we're finding on the payer side, which, again, we found out on the medical transportation side, Friday at 2:00 P.M., and everyone in the business knows this. It's not like we figured out a medical transportation. Friday at 2:00 P.M., that's the busiest, right? There's this weekly ebb and flow to that business. There's also a seasonal ebb and flow to the business. This year, a lot of hospital executives and CEOs were telling me flu season was quite bad. Their ERs were quite full. There was a lot of infectious disease control with flu and really flu season this year that was inundating their emergency rooms. We saw a big surge there and during flu season. Same thing we'll see on the seasonal side of the payer business.
At the end of the year, a lot of these health plans are really pushing to close out these care gaps and to really check those boxes relating to those care gap closure. Q3, Q4, we expect to be big for us in that business. That really is kind of what we're learning in terms of the seasonality and what the cyclicality of the different times of the year and when their busy seasons are and when the medical transportation busy seasons are and kind of taking all those learnings. Absolutely. The other piece, I think, we didn't talk about, Matt, is the municipal side of the business. I mean, we talked about migrants.
By the way, Matt, a lot of times when we would do these fireside chats, most of the call was about the migrants and not about all the stuff we've been talking about. Quite refreshing to get a chance to talk about really a lot of the great areas we're excited about. I think on the municipal side, we see the migrant piece, which we talked about, waning. We also are starting to think through what are the actual municipal-style programs that we want to pursue as a company. I know this is one of the things you and I sort of talked about in exchange before doing the fireside chat was really we're now focused on the municipal side on programs that are population health-oriented. They're not tied to sort of disaster relief or emergency response.
They're not tied perhaps to some sort of political side of the spectrum. As an example, one of the pieces of work we're doing with the VA is to do health screenings and bring medical care to our veterans. I would hope most people would agree that's a worthwhile endeavor and that no matter where you sit in the country, supporting our veterans, making sure they get the medical care they need is absolutely an endeavor worth working hard on. Those are the types of things we're looking at. I definitely think, I mean, obviously, very topic du jour today, very zeitgeist is really what's going on in the municipal government. We absolutely see that also playing out on our side of the business, less on the reimbursement piece or perhaps funding piece.
We are hearing from a lot of municipalities that they're implementing some of this flurry of executive orders, and they're inundated with that. They're waiting to kind of hear what's going to happen with certain programs. As we go through here, we're going to have to think through how we really approach this municipal piece, which has been a very big piece for the business, but at the same time, making sure that we're being thoughtful about the type of municipal work we're doing so it's not disruptive to really our strategy, and then also make sure that that payer business absolutely has the resources it needs, less from medical transportation and maybe more from that municipal piece of the business.
Perfect. I was only going to ask you one question on the municipal business anyway. I think we covered it. We wanted to cover other topics today, right? Okay. Maybe stepping back then in our last couple of minutes here, I want to talk about margins more broadly. As the business continues to transition away from the migrant contract work towards these newer opportunities we've talked about today, going through a bit of a transition period where you're retraining clinical resources, which has a near-term impact on margins while you retrain and drive that new revenue. Maybe for those that are newer to the story, help us understand the retention and retraining initiatives that go along with these kinds of transitional periods. When do you start to break even on those retraining costs?
How should we think about margin inflection as you exit those retraining periods?
I would say margin on the medical transportation side and sort of that more core mobile health we've always seen in sort of the 35%, mid-30% range, give or take. On the payer side, we feel like we can get to 40%+ gross margins. It will take us some time, exactly as you're describing, Matt, to retrain some of the staff to be able to do those 40 care gaps in the home and understand how to use the tech platform to send back the diagnostics we need to oversee some of these visits and treatment plan. I would say in the shorter term, the margins, there's actually two pieces happening on the margin side. One is we're retraining some of those staff to go into the home and do these care gap closure and PCP-style work.
We are investing heavily into that because now we are taking somebody that might have been doing a vaccination in a municipal-style program, and now they are doing 30-plus different engagements in the home, care gaps, closures in the home. The other piece is that it is not on the gross margin. It is actually an SG&A relating to really the SG&A as a percentage of revenue. Those are the pieces that really are weighing on profitability in the short term here. Long term, we feel like medical transportation should be in the mid-30%. The payer business should be around 40% once it gets to full maturity. As the revenue base grows, we can grow back into that SG&A base that right now is really set up for growth and a higher revenue base.
That's great. A lot of margin and creative opportunities in the future then as we kind of scale into those. I think with that, unfortunately, we are out of time. We obviously could keep going for another 40 minutes. For today, we'll leave it there. Lee, thank you so much for joining us. Thank you, everyone, for tuning in. Good luck with the rest of the conference.
Thanks, Matt. Same to you. Thanks, everyone. Be well.