Good morning. My name is Lisa Gill, and I head healthcare services here at J.P. Morgan. With us this morning, we have Privia Health. Presenting for Privia Health is CEO Parth Mehrotra. Close? I always get this wrong. After Parth Mehrotra is going to join me, and we're going to do a little fireside chat after the presentation. So with that, Parth Mehrotra, I'm going to hand it off to you.
Thank you, Lisa Gill, for inviting us. Always a great conference to kick off the year. So some prepared remarks just tell everybody about the story and refresh it. Privia Health is looking to build one of the largest primary care-centric delivery networks in the country. Our footprint today is 14 states+ D.C., where we partner with over 4,600 providers that practice medicine in close to 1,200 distinct care center locations, taking care of over 5 million patients. And then 1.2 million of those patients are attributed in some value-based arrangements. We partner with providers in every single specialty. You can see pretty high retention rates at 98% and very high patient NPS. Our business model comprises of three fundamental components.
In every state that we operate in, we establish a multi-specialty medical group where the providers join and access all fee-for-service contracts to see every single patient, every single payer, every single age cohort. We partner that up with a risk-bearing entity that allows our providers to participate in different value-based programs across the spectrum. And then we have a full integrated tech and services platform that supports those two entities, where we go very deep in the workflows of our practices, transform them, make them high-performing. This deliberate business model allows us to access the broadest possible TAM in healthcare, where we can partner with every type of provider, overseeing every patient in every single payer contract across all age cohorts. And that allows us to be relevant in almost every state in the country.
We have a pretty consistent strategy where we enter a state, establish our three components with a full physician-led governance model. We organize providers wherever they may be in the healthcare ecosystem: independent providers, those affiliated or attached to a health system, those in clinically integrated networks or IPAs, and other facility-based providers. We drive growth and profitability and deliver very tangible value to them. And then over time, our aim is to move, transition these practices to do as much value-based care across all lines of business: commercial, Medicare Shared Savings with CMS, Medicare Advantage, and then Medicaid. Privia Health sits solely in the intersection between providers of healthcare and payers on one side. And this slide shows our tangible value that we offer to both of those constituents.
At the end of the day, our job is to transform our providers' practices into very high-performing ones and increase their take-home pay on a net basis. We do that with better fee-for-service contracts, improvement in revenue cycle, enhanced productivity, increased revenue through value-based care, and then growing these practices on a same-store basis. And to the payers of healthcare, we give them access to a very sophisticated, large community-based multi-specialty medical group and a delivery network, the ability to perform value-based care at scale, a very flexible strategy that adapts to the local dynamics in every single state, and then an ability to have providers stay autonomous and thriving in the communities versus being forced to close their practice or sell it and de-risk in these times. And then finally, obviously, we help generate very significant shared savings across the entire population.
A key moat around our business is our ability to go very deep in the workflows of our practice, and we have a very methodical process that we use to help providers move to value-based care. Starting with practice fundamentals on the left, we partner with practices across the spectrum here, which you can see. Over time, the objective is to move them towards the right and participate in very advanced risk models, and we are helping our providers do all of this work at the bottom of the page. That's the day-to-day grind in healthcare. It allows us to be deeply involved in the workflows, influence those workflows, make these practices really efficient, and deliver value that I just talked about, both to the providers and then the payers of healthcare. The second component of our services platform is our technology stack.
You can think about this as a cloud-based ERP to manage and run a very sophisticated integrated medical group and a risk-bearing entity that we form. There is no one company that we know that can truly come up with a cloud-based platform that supports all aspects for every single patient going around this racetrack in every reimbursement model, every payer, every state, every age cohort. We have partnered or built components of this racetrack over the years. We partner with about 30+ companies that innovate day-to-day on different components and optimize it. I think that's a core value we add to all our medical groups and practices so they don't have to worry about this, and we stay at the forefront of innovation across all of these components. Privia Health is one of the most diversified value-based platforms in the country today.
As I mentioned earlier, out of the 5 million patients, 1.2 million of those are in some value-based arrangements. And you can see the split here between about 800,000 lives in commercial value-based, about close to 500,000 lives in government value-based programs. This makes us a truly unique asset. We're doing commercial value-based in about 800,000 lives, of which 35% of those are in downside risk arrangements. We are only a handful of entities in the whole country that operate at this scale in the commercial risk spectrum. Within the government lives, we have close to 200,000 in the Medicare Shared Savings Program with CMS, in which we take downside risk in 76% of the lives in the Enhanced Track, the maximum permissible risk that we can take in that program. In the Medicare Advantage book, three-quarters of the book is in upside-only risk arrangements.
One-fourth of the book is in significant downside risk arrangements given the current environment. And then Medicaid, we're just doing upside risk just given how the programs are structured for that population. We've consistently said that it is called risk for a reason, and so you need pretty extensive experience in managing risk, especially if you're trying to do this profitably. And we try to do that by diversifying risk and managing close to $9 billion of medical spend across 100 value-based programs. We have robust oversight. And then ultimately, the operational execution, our ability to be very deep in the workflows of these practices allows us to really influence the behavior of our physicians and manage the total cost of care for the patients in a very deep manner that allows us to be very profitable while we're taking risk. All of that translates into pretty superior unit economics.
A key aspect of our business is the competitive advantages compound as we grow at scale, and our vision is to be one of the largest medical groups and risk-bearing entities in every state that we operate in, so as you can see, from 2018- 2023, we significantly declined our customer acquisition costs by close to 40%. Platform contribution per provider increased 30-plus %. Our payback period declined by over 50%. Lifetime value to CAC increased by over 100%, and these stats are some of the best I've seen across my career, across any industry, given our very high retention rates. Those unit economics ultimately translate into very superior, consistent financial performance, so this is literally the money slide, pun is totally intended, and you can see our performance.
These are the seven metrics all the way down to free cash flow that we guide annually and then update every quarter. You can see our performance through market cycles, economic cycles, healthcare cycles, pre-COVID, COVID, post-COVID. We've consistently compounded this business, added our units, both implemented providers and attributed lives, increased our top line, increased our bottom line, improved our margins. The beauty of this business model is, on average, we've converted 100% of EBITDA to free cash over the last six years. We're really proud of that. This business has effectively zero CapEx and really good cash flow profile. All of that translates into a very strong balance sheet and capital position. You can see we're going to, at the end of Q3, we would have close to $500 million of cash, $475 million, no debt.
And that gives us a very strong balance sheet to continue to compound this business as we grow the medical groups. We're formally reiterating our guidance that we gave at the end of Q3 to the high end of the range for all of our metrics, with attributed lives being above the high end of the range. We feel really strong about closing out 2024. We've had a record sales year in 2024, as we've mentioned on our Q3 call, and that gives us a lot of visibility going into 2025. So we feel pretty good from where we stand. And with that, I think we're ready for some questions.
Great. Thanks so much, Parth Mehrotra. So just given your position in the market and the large fee-for-service book you have, you probably have some visibility into current utilization trends. Can you maybe talk about what you've been seeing from a demand and utilization over the last year and going into the end of the year?
Yeah, absolutely. I think utilization continues to be pretty strong. And we've always distinguished utilization between ambulatory utilization with community-based practices and then downstream utilization with some of the specialists and then in the facilities. We continue to see elevated levels, and we actually think this is the new normal. And that's what we bake into our assumptions in the value-based book. And then we have a pretty significant fee-for-service book, so that benefits from increased utilization.
Are you seeing any differences in the specialty versus ambulatory?
No, I think it's across the board. So there's no real difference. I think we continue to see pretty strong trends across all lines.
This slide is a great slide. Looking back on 2024, as we think about 2025, I know you're not ready to give guidance yet, but you talked about a record selling season for 2025. Is there anything you can share at this point about how you're thinking about 2025?
Yeah, so our business is really predictable. When we start beginning of the year, 95% of the P&L and all of these metrics are pretty much locked in, which allows us to give very narrow guidance ranges. You've seen our consistent performance over the last four years as a public company. So unless something exogenous happens in the year, usually it's pretty predictable. So we'll give guidance in five weeks. But as I'd mentioned, we had record sales year. We're closing the year strong, so that gives us a good jumping-off point. So we feel really good about 2025, as we said, based on our previous comments on our ability to grow EBITDA 20 %+ in this environment, despite there being pretty significant head-winds in MA and in the value-based book of business in general.
We've assumed that we won't get much tail-winds at all and then manage all the head-winds. So the ability of our business to continuously compound, and if you see, we've grown EBITDA 25% at the high- end of the range in 2024, and then we continue to expect to keep at that pace of 20%+ in 2025. So I think we feel pretty good where we sit today.
You've called out a couple of pockets of variability in your business, namely the potential to misjudge the value-based care book of business, the impact of utilization trends, and the impact to new market entrants. Which, when we think about that and then we think about the pressures of any one of those pockets, how should we think about whether it's new market? We talked a little bit about utilization. We've talked not directly, though, about what's happening in MA. How do we think about how some of those will impact 2025?
Yeah, so it'll be very consistent with previous years. So when we give our guidance, we don't include any new market business development. And that could be pretty accretive if we enter a new state with a pretty big asset or be a little bit dilutive if we have to spend some money and we start from scratch. But either way, that's not included in guidance. So we'll update our guidance during the course of the year as we enter new states. I think we've been very prudent about our accruals across the entire value-based book. I think it's served us well. We've got all the data we have to close out 2023 performance year and now exiting 2024. So we'll continue to be very prudent, but there could be some variability in the value-based book. I think our track record seems pretty good in how we've managed expectations.
But I think that continues to be the main source of variability. I think the fee-for-service book will be very stable. But again, we feel really good given how predictable this business has been from that perspective.
You talked today about commercial value risk. You talked about your full risk arrangements. Where do you see the value proposition for fully capitated arrangement models going from here? I know you called out 2025 as being challenging again on the MA risk side, as we've seen that really in 2024 as well. But where do you see some of the opportunities?
Yeah, our value proposition has been very consistent since our inception. We're trying to offer something to the entirety of a physician practice, every single physician, every specialty, every patient walking in the door, and as mentioned, we try to do value-based care across all lines of business. That is very differentiated. A lot of companies are there that are just focused on one particular line of business with the MA population taking full risk. We think it's important to understand, and we've been saying it for long, the most optimal arrangements are where the payer of healthcare, an entity like Privia Health or any other enabling providers, and then the provider all have skin in the game. Our providers are asking us to enable them to take more ownership of the total cost of care.
They don't wake up every day and say, either a current Privia Health provider or a prospective provider, they don't wake up saying, we want to do full risk because that's the new buzzword, and the whole investing community is focused on it. They say, look, we understand that our job is going to be increasingly to be taking ownership of the total cost of care or big pieces of it. And then we'll get paid based on how well we do in that endeavor. And then number two, we don't have the skills, capabilities, actuarial abilities, data analytics, a tech stack, all disease management capabilities to do that. So you, Privia Health, or company XYZ, come and help us. And we don't want to lose money. We've been in medical school for 35 years. Till we are 35, we come out with a lot of debt.
We like to do all the work to take care of patients, but you try and help us in this endeavor to do this profitably. I think that's been misconstrued as full risk is the only avenue to take risk. So there's a distinction. You got to distinguish between the ability to take risk and manage total cost of care and the willingness to take a full risk contract from a payer. That's purely a financial arrangement. And so we've been really successful in enabling our practices to do this profitably from day one and do it across the spectrum of risk.
If I remember correctly, it's a 60/40 share. Is that correct on both upside and downside?
That's correct, so the providers, for every $1 of shared savings, Privia Health keeps $0.40, and our providers take $0.60 up and down, so they have real skin in the game.
You talked about the commercial market, which I think is, again, I think most investors focus on Medicare Advantage and taking risk in Medicare Advantage. If I look back to the 1990s, there were a number of plans that took risk on the commercial side and weren't able to make it work, in my opinion, because we didn't have technology, right? You're taking risk and you don't know what's going on with your patient, and then you're getting the bill afterwards. When we think about the future of the commercial market specifically, we've seen pockets, for example, Southern California seems to really work because of the way the provider relationships are. Is it for you? Are you seeing that as well, where there's pockets where the physicians really know and understand how to do this?
Do you think that this can be rolled out across the country when we think about the commercial market?
Yeah, we're really excited about the commercial business. I'm glad you bring it up. I mean, 50% + of the population is commercially insured. And as long as there's working-class America, all of us in this room, that's not going anywhere. We all know about the significant cost pressures on inflation in the commercial book and what employers are facing, self-insured or insured employers. And our ability to create very dense medical groups in communities close to the homes of the people, managing their care, their significant other's care, the children's care. So this is the pre-Medicare population. I think it's very differentiated. I think you need a lot of scale. You need very good technology, as you mentioned. And you need physicians to kind of have that muscle power or muscle memory to do that. Now, I don't think you take full risk or significant downside risk in commercial.
It's open access product. We're doing it with close to 800,000 lives. It allows us to fundamentally change or add to how these doctors are paid. So you take a simple fee-for-service payment for a visit and you convert it into four income streams. You start getting an added PMPM. You get bonus payments based on quality metrics, which include things like annual well visits, vaccination rates, cancer screenings, so on and so forth. Then ultimately, our pitch to the payers is that we'll help lower the MLR for the self-insured employer. And that becomes really differentiated as we take this network, which I think is for all the focus on MA, we think there's a massive opportunity.
But you need real scale and you need to be embedded in the workflow of the practices and do all the dirty work, all the revenue cycle work, paying every single claim every day of the week. And I think that gives us a lot of competitive advantage.
Jamie Dimon spoke yesterday about the fact that we spend so much money on healthcare as an organization at J.P. Morgan. We spend $2.77 billion each year on healthcare and that we don't really focus on wellness and that we need to change the system in a lot of ways of what you're talking about. Do you think there's opportunities to grow to direct self-funded employers with physician networks and offering these services? I'm not looking to circumvent Managed Care, but a lot of the largest employers are self-funded.
No, I think you're totally right. And I think managed care has a role to play. I mean, as you know, most self-insured employers rely on a lot of share.
For the network, yep.
For the network to manage as a TPA and to provide certain services. So they have an important role to play. Ultimately, care is delivered by doctors in the community. So we think a business like ours is on the right side of history. This is the best setting, the best relationship with a patient, a child with a pediatrician, a mom with the OB-GYN, all of us with our primary care family medicine. We don't change our PCPs unless something really bad happens to them or us or we move locations. That's a 10- 20 year relationship. There's an embedded level of trust that goes generations, and that person and their practice is uniquely positioned to take ownership of that total cost of care, whether it's wellness programs, disease management, behavioral health, mental health, directing us downstream. The power of their pen is very strong.
But I think you got to enable them. You have to compensate them for all that good work. And I think they've been treated unfairly from an economic value capture perspective relative to the value they can add. And so that's where a company like us comes in the mix, where we are enabling their practices to do that.
As we think about that competitive landscape, when you're out there and you're talking to doctors, why do they choose Privia Health versus one of the other MSOs that are out there in the market?
Yeah, so I mean, we've talked about it. One is our business model consciously develops medical groups. The MSO is an attached element to it. The risk-bearing entity is an attached element to it. There are very few entities that are forming medical groups nationally. There's Optum Care, Optum Health. We do it. A few others do it in select geographies. I think that's fundamentally the difference. These are run and governed by physicians. So we're not a separate entity than the medical groups. It is one entity and delivery network that we get. The second is all of the workflow that we are embedded in, all of that work that I showed on the slide that we do, and then the technology stack allows us to be deeply embedded to improve these practices. I don't think you can take risk.
I don't think you can enable physicians to take ownership of the total cost of care if you're not deeply embedded in the workflow. You have to do the dirty work. You can't layer up some thin layer of tech stack or some data analytics on top of a practice. You have to align incentives, so they have to have real skin in the game. You can't backstop their risk just because you want to get some lives or get docs on the platform. So I think from a long-term perspective, our ability to form multi-specialty medical groups for every single doctor, every single patient, having those patients in some value-based arrangements with every single payer, that's a very hard thing to do. We've constructed the company consciously with that DNA.
I think you're seeing the benefits of scale where our competitive advantage compounds over time as we get scale. You're seeing that in the unit economics. You're seeing that in the financial profile. If you take a step back, we're still at 4,600 providers. There are a million providers in this country credentialed. Even if you said half of them are stuck somewhere.
That they're owned by a hospital or something, right? Yeah.
Even those come out over time. Since the PhyCor days in the 1990s, it's not like the doctors cannot leave their legacy place. You can have this kind of a financial profile with just not even 5,000 providers. So we think we can take this from 5,000 to 10,000 to 15,000. And there's a lot of providers out there that will like a model like this that can allow them to be part of something bigger, but yet have their autonomy in how they practice.
So when I think about the drivers of growth over the medium and longer term, is it simply that, really driving and adding incremental physician groups across the country?
Yeah, so our two units are, you get providers in existing states, in new states. They take care of more patients. And then can we move those lives into value-based arrangements? And Privia Health gets compensated. We charge, as you know, our pricing model, 11%-12% on fee-for-service, but 40 cents on the dollar on shared savings. So we are highly motivated to move payment streams into some form of value-based arrangements to align ourselves with payers of healthcare. And that compounds the business. But you have to do it profitably. You have to do it thoughtfully. I think we have a business model that is extremely profitable, free cash flow positive at pretty small scale. So I think this can just compound at very good rates across healthcare cycles for many years to come.
It feels like investors think value-based care is a bad word these days. A number of companies have not performed well in this value-based care environment, but you have. Has that translated at all to the physicians? Are the physicians still very interested in these kinds of programs?
Yeah, again, you'll have to distinguish between doctors don't wake up reading The Wall Street Journal and saying, which, I mean, they do interact with certain companies that may go out of business and they make bad choices because the companies just gave them a heads you win tails you don't lose deal and they chase some shiny object or gave them enough compensation to join them. We've seen this in healthcare services, healthcare IT for 20- 30 years. I mean, you've covered a lot of companies. And every time there's too much investment dollars that flow towards a particular type of subsector within healthcare, call it value-based care, a lot of Silicon Valley money, private equity money, it's just a natural shakeout. I think a lot of companies don't develop a lot of capabilities and the economic and the more I described in really doing the hard work.
They try and take risk when they cannot manage risk, and I think we've seen some of that play out in the last four or five years, just unfortunately, with a lot of companies filing for Chapter 11, having significant drawdowns in the public markets. I think the broader MA landscape with some of the reimbursement changes doesn't help. You've seen pretty significant pressures on the managed care industry as a result. You've documented that pretty well. It's well understood, so when you have those kinds of pressures, you need a business model that can survive through all of that and support these practices, and so it's very conscious what we've built with every single patient in mind, every single type of specialist in mind, and trying to do value-based care across all lines and across the risk spectrum.
You've done really well in Medicare Shared Savings. We will have a change in administration next Monday. As we think about that change that's coming, anything that's top of mind for you, anything that you anticipate could impact your business going forward?
Yeah, the short answer is no. I mean, this is my 10th year at Privia Health. We had President Barack Obama, President Donald Trump, President Joe Biden, back to President Donald Trump. I think the MSSP program across all of those administrations has really thrived and grown. It's one of the success stories out of CMS. It is one of the most widely adopted programs with community-based doctors, with very good results, empirical results that are published every year. And I think they have a stated objective of moving every single MA life into some value-based arrangement.
Wait, wasn't that originally the plan, by 2030, more than 50% of people would be in value-based care arrangements?
Yeah. So if that's the stated objective and this program has run well, we just don't think this business is on the right side of history. That program's on the right side of history enabling community docs. So I mean, there'll be tweaks to it and they've changed it over the years, made it better, taken feedback from ACOs performing. So I think you'll continue to see some evolution of it, but we don't see any fundamental change.
You know, when I look at your cash flow and I look at your position and I think about the market and you talked about how a number of other entities have not done as well, how do you think about the M&A landscape? How do you think about, are there opportunities to acquire incremental practices or other companies that are out there? Is there any capabilities that you feel like that you need that somebody else has today?
Yeah, absolutely. So I don't think there's fundamentally new capabilities we need, but it'll be adding our two units. So if we can enter new states, if we can enter new states, add more providers, add more lives, I think we have a pristine balance sheet, close to $500 million of cash, no debt. And I think we're looking to take advantage and be aggressive in compounding the business. So I think you'll continue to see us do deals that we've done. We can do bigger deals, acquiring medical group, tax IDs, MSO entities, IPAs, and then organizing them in our model and making them more efficient. I think we've had a good track record of doing that. So I think hopefully we'll continue to do that.
A couple of years ago, you signed an agreement with Surgery Partners to partner in certain markets. How's that gone versus your initial expectation? And do you see other opportunities to partner?
Yeah, I mean, we worked with them in Montana with their group there. I think we have a lot to offer to specialists around models like that where they can be part of our integrated medical group. We can impact a lot on the total cost of care downstream from the PCP. We can influence site of service in ASCs. And so you'll see us continuing to expand on that strategy with them and with others as the opportunity arises.
Has your approach to entering and ramping in new markets changed at all as we think about 2025?
No. I think we're looking, we're in 14 states. We aspire to be in all 50 states at some point in our history. So I think you'll continue to see us add new states.
Even North Dakota? You want to be in North Dakota?
I mean, ultimately we're chasing population, and this business can actually thrive anywhere. Anywhere there's a doctor, they can join Privia Health, whether it's we manage it out of some other state or combine some of these states into a bigger region, but all else being equal, we're going to chase population density, provider density, so that's not a high priority state, but unless an opportunity comes, just like Montana was and then Surgery Partners came calling, we didn't look to be in Montana, just given some of the demographics there, but we can be there and have a good business.
How do I think about the new provider adds and potential visibility that we have at this point for 2025?
Yeah, we mentioned on our Q3 call and we'll reiterate. I think we've had a record year of new provider adds. We don't guide to sales. We guide to implemented providers. Our sales translates into implemented providers with a four- to five- to six-month lag as we get these providers credentialed. So that's the beauty of the business. As we sit on January 1, if we are closing the year strong and we've had a record sales year, that gives us amazing visibility into the next 12 months. So that gives us confidence to have a pretty good 2025.
Anything to call out from a margin perspective as you think about integrating existing providers versus adding new ones?
Yeah, I mean, you've seen we've consistently grown our EBITDA margins. You can see on the slide over seven years, EBITDA as a percentage of care margin has increased consistently. And this includes all new market entry costs. And that's the beauty of this business. Despite us entering new states, adding new providers, we'll continue to expand these margins and the financial profile is pretty robust.
But it's not the traditional J- curve in your model like we see with some of the others that take risk, right?
Yeah, I mean, this is a boring compounding business that does this over seven years. I mean, luckily we now have seven years of empirical publicly available data. We went public in 2021. Our S-1 had three years' data prior to that. So this just speaks for itself. And there's a lot of anxiety on what one program might do, what some reimbursement change might do. And you've seen in different pockets of healthcare services over 20 years, you had managed care, you take labs, you take distributors, you take home health, you take hospice. The surviving companies are multiple times their market cap of what they were 10- 15 years ago. You can pick your favorite company. The sector consolidates, some of the capital chases, you get a natural shakeout. But these businesses, most of them did have some aha inflection year.
They kept compounding, slow, steady, wins the race, profitably, cash flow positive, and that's healthcare services for you. So you're just grinding it out.
Yeah, there's a grind in healthcare services. So as I think about that goal of getting potentially to all 50 states or in 14 states today, how do I think about how you map that out? Is it more driven by the physician relationships? Is it driven by, in essence, how do you pick the next state you want to be in?
Yeah, so all else equal, I mean, this is our map again on the slide. So all else equal, I think you'll see us target states where there's significant population density, states with heavy MA population because we like to do more value-based care, provider density. And then so that'll lead you to believe, okay, there's a lot of mountain region states that are very good there, Midwest states, Northeast states. So I think that's going to be a priority for us as we do. But this model can exist in any state. So if an opportunity arises and a particular entity reaches out to us and says, "Hey, we'd really like to partner with you," and we are in a state that may not have enough population density, we can still be there.
As I look at this, right, obviously you have a lot of density in New York and in the Northeast, but you're not really there today. Is that, again, just so I understand, when you're thinking about that, going into that state, is it, "Oh, there's this physician group that's available, wants to come under our tax identification number, right, and we're going to work with them," versus, "We're going to go and specifically look for physician practices in Central?
It's a combination of the two. It's what's available or where we can go. Sometimes we get inbound. Sometimes physician groups are stuck in some other big entities. They're not happy. They come out. So a lot of changes happen in healthcare. I think our business model with our strategy, and now that we've done this for 10 + years and figured out in 14 states, we have a lot of flexibility. We have the balance sheet. And I think we can be the partner of choice for a lot of groups that may be stuck in situations that they really don't like. And so I think we feel pretty excited about how we can execute.
We touched on this a little bit, but in the last two years, it's been a really tough environment for Medicare Advantage and where you have not taken that risk, and to your point, a lot of those doctors are probably in tough positions right now. Maybe thought the stock of the company that they were part of was going to be worth a lot more. Is that creating an incremental opportunity for you to be able to go to them and say, "Hey, look, guys, you know what? At the end of the day, we understand why you went in that direction previously, but let me talk to you about why this compounds, why this is the right way to take this."?
Yeah, absolutely. So our value prop is more proven and differentiated, and they have their colleagues in existing states or new states where there's a lot of referrals in our sales network. So when we talk about, we've had a record sales year, there's a long tailwind to our sales team that we think we can continue for many years as these practices break free, these doctors come out of these arrangements. So I think organically we can just grow very significantly. And then as we enter new states, sometimes we are the only when we enter a state, these doctors didn't even have an option like Privia Health. So before we showed up, the options were sell to private equity, sell to a health system, sell to a big entity like an Optum Health, or struggle on their own and figure everything out.
When we show up, they're like, "Okay, we just didn't have this fundamentally, this option that we could stay autonomous, yet be part of something bigger, and you're going to enable us to succeed, and we'll retain our legacy ownership structure so we don't have to do anything irrational." And we have skin in the game, so we're totally aligned with how to do this across every single doctor in the practice. We're not singling out just the PCPs or just the pediatricians. And I think that's a fundamentally unique value prop. So once we show up, I think a lot more TAM opens up naturally for us.
And you talked about that timeline of four to six months to get them ramped. But what's the timeline from that initial conversation to the close? Is that a very?
It varies by size of group, so a typical small practice, I would say, is about three months, so zero to five doctors, one to five doctors, 20-50 provider groups take a little bit longer because they're a bigger practice. They need to make decisions. They are democratically owned by all the senior doctors. That's probably six months, and then we have some very large practices that could take up to a year when they make that decision, so that just depends. We do have a lot of later doctors, so we've been in Virginia for 10 + years. 1,400 providers out of 4,600 are in Virginia, and I'm just surprised even now how many new providers we are able to add because.
In Virginia?
In Virginia, Maryland, D.C., and Mid-Atlantic, given that 70% of the pipeline for the sales team is coming from referrals. So their colleagues who've been part of Privia Health for three, four, five, ten years are telling them, "This has worked. This has stood the test of time. We have empirical data on how well we've done. It's time for you to join." And you're seeing that in the unit economics. To have our cost of acquisition decline by 40% and have LTV to CAC go up 100%, I've just not seen that in many companies, even at this scale. We're sitting at 4,600.
We haven't either. When I think about 2025, we've talked a lot about the potential tailwinds of physician practices coming out, etc. Is there any headwinds that we should be aware of as we're thinking about 2025?
Look, I think we'll have to continue to manage through a pretty tough MA environment. I just don't think it's easy to make money and manage risk in value-based care. You're seeing a lot of companies struggle. I think we pride ourselves in having a great actuarial team, data analytics team, tech team that is piping into all the payers, and you have to manage that risk. I just don't think it's easy. It's a day-to-day grind managing total cost of care. That's where you're seeing, unfortunately, a lot of companies not do well, and that's causing a lot of the bad sentiment in the space where you're seeing significant revisions to guidance or earnings power of businesses, and investors are losing faith. So I think we just have to muscle through that every single day, and I think that's the unique value prop and the moat around the business.
I think that's the biggest head-wind.
Okay. I know we have only one minute left. Anything, one, that we didn't cover we want to make sure that we cover? And two, what do you hope that investors over the next 12 months will better appreciate about Privia Health that maybe they don't today?
No, I mean, you've covered us since the day we went public. So we covered everything in the questions. Our hope is, I'll go back to this slide with our seven-year empirical performance. I mean, this is a business that I'm hoping investors evaluate on its own merits. And this slide speaks for itself. You don't need me or any other CEO of a company like this to come up and stand. I mean, so I'm just hoping we control the business. As the saying goes, management teams run the business, and the markets determine the multiple. I don't determine the multiple. But we are hoping that this gets recognized, and we'll just keep our heads down and keep executing day in, day out to continue this trajectory.
Great. Well, thank you very much. Thanks, everyone, for joining us.
Thanks for having us.
Thank you. That is an impressive slide.