Good afternoon. My name is Lisa Gill, and I'm the Healthcare Services Analyst with JPMorgan. It is with great pleasure that we have with us this afternoon Privia Health. With us from Privia Health is CEO Shawn Morris and COO Parth Mehrotra.
Mehrotra.
Mehrotra. Oh, my God, I'm terrible. Parth, you have to just change your name to, like, Cher. Like, Parth is here as well. What we're gonna do is we're gonna run through a quick presentation, and then, Shawn and Parth will join me for a Q&A.
All right.
Sean.
Yep.
Every time I screw that up.
It's Parth Mehrotra. If any of you guys know Parth, it's just Parth.
Great.
You know. No, Shawn Morris, CEO. Lisa, thank you so much. Really appreciate it. Well, I guess getting sandwiched between a couple of biotechs, we get a whole audience we've never seen before. We appreciate it. Thank you for your interest in Privia Health. I've skipped the disclaimer slide and jumped right in. Privia Health, we're a highly differentiated physician alignment model. We believe it's an intriguing investment opportunity. Work with all providers, all types of reimbursement schemes across that patient cohort. We're succeeding in a $2 trillion TAM. There's 1 million physicians out there. You'll see the numbers here. We've got a big runway to go and really a very balanced, diversified book. It really includes 80-plus value-based arrangements, 4 million patients. 850,000 of those are in value-based care.
Over 920 locations, care centers. You can begin to kinda see the scale. Great leadership team. Well, I've been fortunate enough to be in the public environment a couple of times. I've put this leadership team in the understanding of really what a value-based care contract should look like in the behalf of a physician in a care center to succeed. I'd put this team up against anybody in the industry. Kinda, you know, last but not least, it's an alignment model in the sense we are working very closely with our physicians and our care centers, and we don't... We really, the physician is our customer. That care center is our customer. We take pride in, you know, kinda being thoughtful, really kinda getting the risk in a responsible way not to mismanage that responsibility.
The model, we've been at it about eight, nine years. It's really very scalable, very replicable. There's kind of four key elements. I think this is differentiated into kind of our peer group. We established a single tax ID, a top box on the left. Think about that as a medical group in a sense, and that's where the payer contracting for the fee-for-service lot, contracts take place. That's where the clinical decision makes. You see the bottom left-hand side. I'll talk more specifically in a minute. It's where the physician governance occurs. Big part of our model. You drop down to that bottom box on the left there. Full tech stack, workflows that actually reinforce kind of what we're trying to accomplish in those value-based lives, you know, with a performance consulting team that's in working with the physicians.
Then we establish a risk-bearing entity that holds all the value-based care contracts, of which I noted earlier we have 80+. That bottom box, if you're not building physician leadership in those communities, you know, hope this doesn't offend any doctors in the room, but that's not a natural attribute for a community doctor about how to be a leader, how to bring your colleagues along, especially in the areas of taking risk. We actually, we really take pride. This year, we actually had 25 physician leaders in a governance program, really how to become that community doctor, and we spent a lot of time doing that. Really our goal is to kinda build the largest ambulatory primary care-centric model and network in every state that we enter.
Some of these become multiple regions or states within regions. A little bit of the history started in the Mid-Atlantic and actually in the Western Virginia market about nine years ago. Four family practitioners, so a handful of patients, and you can see kinda the scale we've built in this length of time. This data is as of 9/20, so about 3,600 implemented providers. It's primary care-centric, and we really look at, of course, family practice, internal medicine, pediatrics we include in there. That makes sense. We also include women's health. Women's health drives a big part of our, of our clinical decision-making, as well as women in, as we know in the world today, are making much more of those decisions for the family. That is our primary care base.
We have over 50 other specialties. We're building multi-specialty groups to take risk over a period of time. You can see again that 850,000 attributed lives, 4 million total patients. What really kinda proves the value, we have a very low attrition rate. These are contracts that are three years. The physicians are... Their well-being is being improved, some combination of administrative burden relief and financial activity. You can see kind of industry-leading NPS scores, and we're not writing a check to buy any practices. These care centers are coming and joining into our contracts for three years. A little bit of the, kinda the strategy. We always say it's simple. It's elegant, but simple, but it's also very hard to duplicate. We enter a market with an anchor practice.
We can either buy a tax ID, we can just, we can form our own medical group depending on the corporate practice of medicine, or we can partner with a medical group or a health system or a payer to do this. We begin to kind of land and expand. We begin to bring other providers into that tax ID. Along the way, we're improving the functionality of things, of basic things like rev cycle, consumer experience.
We're, you know, delivering on the tech stack and the functions of thinking about how to make a, you know, just making an appointment, getting the patient, you know, reminder to the patient, virtual care. The data coming in, driving the workflow of the provider, and we use that, excuse me, in attempt to teach them the basics of value-based care, and then the ultimate is to move that market, move those physicians over time to value-based contracting, accepting more risk along the way. A little bit about the 850,000 lives I spoke to earlier. You can see it's, again, by an 80-plus value-based care contracts. These run the course of upside commercial, maybe some corridor risk and commercial. You can see the government lives on the right. Big MSSP player. We've been doing it for years.
You can see the percentage of that's in enhanced. 77% of these lives are in enhanced. We actually operate the number one ACO in the country from a shared savings perspective, with anything over 40,000 lives, over 100,000 Medicare Advantage lives. We're it from full capitated risk to upside, and you can see some Medicaid lives there. A little bit on the just, you know. You would really, as you're moving physicians to risk, you have to kind of think about things like, you know, how are you gonna. You know, what's the oversight of compliance, audit. All those functions medical groups aren't used to doing. Think about things payers would do when they're accepting risk, you really have to execute.
Really, it's just we kind of look at this as a philosophy of we wanna work with these doctors, identify them, teach them how to take risk in a responsible way. We're aligning their incidents. They're putting up escrows right alongside of us. We're building these groups, and then we take that over a period of time, and we do that regardless if it's commercial, Medicare, you know, traditional Medicare in a direct contract with CMS, or we do that in a Medicare Advantage. You see there, we're doing it in a profitable manner. Our physicians, they're kind of self-selecting. These are physicians that have been successful in some value-based care. Some have zero, very little experience. The average practice that joins a Privia Medical Group is five. You can see this is a really...
We're organizing doctors into a single tax ID from very small groups into very substantial practices. If you don't do it in a way, these next couple slides are about results. You have to have results. We all know that it's, you know, Parth's kind of famous for saying it's risk for a reason. You can see this is in our MSSP population. We've been doing it a while. You can see kind of that second from the right-hand column there, the improvement we're seeing over our peer group, and obviously, that grows substantially even over Medicare fee-for-service. This is as of 9/30 with kind of excellent quality scores. We get this. They ask us this question. Lisa's kind of famous for asking us this question.
It's like, "Why don't you move faster?" You know, we're, again, we're just very thoughtful. Our doctors have their money in this too. We're not backstopping them as a shareholder. You're not backstopping them. But you can see kind of as a percentage of GAAP revenue, the last three years have gone from 11.4%, 12.4%. We made a big jump this year to 28%. A little bit, all this creates some momentum in how we grow. You kind of... We look at this, and this visual is kind of same store growth. Thinking about we've established that anchor group. We've made a five-year plan on any doctors that come in, and we're growing that practice in a responsible way. We assign a kind of a business professional.
We call them a performance consultant to a subset of groups. We put them on a five-year plan. What does it look like to kind of begin to grow? What kind of capacity they have, what kind of providers we need to bring in. Of course, the yellow box is we wanna move to value-based arrangements. Each one of those existing lives in that practice, how can we get higher yields by taking, you know, various levels of risk? Organically, then how can we continue to build that single tax ID medical group by attracting new providers into the group within the geography? Over 50% of our physician and clinician adds come from referrals of our physicians to their colleagues.
That fourth step and the fifth step really is then we run this flywheel in new markets. In the last couple of months, you've heard us talk about we've gone into Ohio with OhioHealth. We've gone into North Carolina with Novant, and we're very excited about that. Strong execution in the last two years since our IPO. You can see kind of the number of states there. Implemented providers have grown 44%. Practice collections, that's our top-line number. We call it practice collections versus, you know, looking at it as GAAP because of corporate and non-corporate practice of medicine states. You can see that's grown 82% in the two years.
Really, what, you know, we're most proud of probably, and we are one of the most, you know, kind of from an adjusted EBITDA perspective, we've grown EBITDA in the last two years over 100%. We're excited about that, and we're obviously continuing to grow. Strong balance sheet's important in the, in this sector. No debt. We've paid our debt off in the this year. Strong balance sheet, $342 million. Really we expect 90% of that because of some NOLs, some of that adjusted EBITDA convert to free cash flow. It's strong cash producer in a, in a, in a cash flow perspective. With that, we can-
Yeah. Coming.
Turn it over to questions.
Great. Thanks very much for the overview. you know, obviously, there's a lot of different types of models in the marketplace today. Either one of you, I don't know who wants to kick off here, but why do providers choose Privia over some of the others? and not just other models that are in the marketplace, but clearly, there's other opportunities, right? To be working for a hospital, be owned by a hospital. You know, maybe talk more broadly about why they select Privia.
Yeah, definitely. Give Shawn a break there. Look, fundamentally, providers have existed for as long as healthcare services have existed. There've been over 30, 40 years, multiple attempts to
Consolidate this, I would say, first mile of healthcare-
Right.
Which is the first point of contact for all of us, our families. We think we're on the right side of history, where not all providers want to be employed by some entity. It's been attempted, whether it's a hospital, whether it's big payer, whether it's a facility, whether it's private equity rolling up. A model like Privia, we don't think existed, where providers can retain their legacy ownership structure, no matter how big or small that might be, everything from a solo doc to a big multi-specialty group, but yet be part of something bigger.
Mm-hmm.
I think that's what we offer. They are part of this bigger entity for all of their patient panels across all reimbursement models and as those change over time in a state. I think what's catalyzing that movement is, with the undeniable situation we have, cost, co-cost quality, everything else that all of you know better, providers cannot survive standalone. They go to medical school to learn how to take care of patients. Value-based care, in its essence, is provider entities starting to assume risk, and managing total cost for the underlying populations. That is very hard to do as a small practice. Very... You know, Rule 101 of taking risk is you gotta pool the risk.
Right.
You gotta have expertise to do that from an actuarial perspective, technology perspective, capital perspective, which independent practices don't have. We offer this best of both worlds in a model where providers can remain independent, yet be part of something bigger.
Yeah.
I think that's very, very unique to us, for all kinds of providers, all specialties, all reimbursement models and all patients.
Yeah. Yeah. The only thing I would add is, I mean, I mentioned we're not buying practices. This is not we're enticing them with a big check. We're not giving them a bunch of equity. I think most practices have either maybe been successful in a contract or two, maybe, in value-based care, and some have not been as successful at all. There is a lot of pressure to move to value-based care. You know, when you see a colleague or you know someone around the country that's in Privia, and they're talking about the success, and they ask one another, like, "Would this work for me?" There's just, we all know there's some early adopters. There's people that wait. Then it... You know, what we typically started with was community docs.
Now we all know, however you measure it, there's somewhere between 40% and 60% of the doctors that are out there in a health system. You know, how do you know, these forward-leaning health systems that are faced with the exact same thing, and they've got underperforming medical groups. Maybe they have an insurance license, and, you know, they've been buying practices, and they're looking for another alternative. When they look at Privia and say, "You don't buy practices. You have great success in moving from kind of fee-for-service to value, but you also are able to manage fee-for-service and value-based care and all the flavors in between, and that's really what we're looking for. We've got a...
We, and we know that, you know, utilization is going down, so I have to have kind of a rope into the community and have a kind of a another way for physicians to kind of become part of a system that works for them.
Where do you think we are on the continuum of value-based care? I think that Privia's really differentiated in that you're talking about all payer types, right?
Mm-hmm.
Many of the other entities that are here today talk a lot about Medicare Advantage and really having a single focus around that market. First talk about, you know, in general, where you think we are in value-based care. Secondly, when do you think other models, whether it's Medicaid or the commercial market, will really start to adopt.
Mm-hmm.
you know, value-based care type of initiatives and payment plans?
Yeah.
I think it's a nuanced answer based on the patient cohort we're looking at. For the commercial population, all of us in this room, whether it's self-insured or a PPA model, it's very hard to take risks. It's open access product. We like to go anywhere we like. We like to access the best doctor wherever they might be sitting. It's very hard for a provider entity to assume risk.
Right.
We are trying to be pioneers in it, in doing that with certain corridors, with certain cost quality metrics. There's a value orientation to traditional fee-for-service, where you just show up and the doctor gets paid for that particular visit. In our books, we have about 500,000 commercial value-based lives where we are getting paid by the payer in doing bending some quality metrics, screenings, preventative measures, so on and so forth, in addition to lowering overall their MLR below a certain benchmark. I think those are early stages of value in commercial. I would say that that's probably in the first second innings.
Yeah.
If I were to calibrate that. I think that'll evolve over time as we develop big networks. You know, there are trade-offs. If you were to narrow network the product, you can manage the population much better, and I think the ability for a provider network to take risk would increase. I think moving on, the most easiest understood is Medicare Advantage, where-
Right.
I think we're probably in the middle innings. I think, both with the commercial payers, with CMS, they've stated every beneficiary would be in a value-based arrangement by 2030.
Mm-hmm.
I think whether it's the MSSP program, the ACO REACH program, and then obviously Medicare Advantage, I think that's, that flywheel's running. I think we're probably in the middle innings, but still a lot of adoption to come.
Right.
Medicaid is, probably the most nuanced because you're dealing with, a population that is challenged from a social determinant perspective.
Mm-hmm.
The state government has to play a big role. There are intertwining aspects between nutrition, transportation, income levels, in addition to managing a person's healthcare costs. I think, if the provider entity's enabled, and helped on some of those social determinant aspects, I think you'll see managed Medicaid take, you know, more scale. I think again, that's probably in the early innings. Overall, we would calibrate as pretty early innings if you were to combine the three.
When Shawn Morris was finishing his discussion, he was talking about your two new states, right? Ohio and North Carolina, where those are health system relationships.
Right.
Maybe talk about how those are a little different than, say, a standalone physician. We've seen over the years that hospitals have bought groups of physicians. Have they really managed them well? Doesn't feel like they have from the outside. It feels like there's a nice opportunity for somebody like yourself to come in and really help for them to really, truly learn value-based care.
Yeah. We, I mean, five years ago, we were approached by Health First, Steve Johnson down there. I credit Steve for a very forward-leaning CEO of Health First in the Cocoa Beach area. They had done a 18-month study, and they were really looking. They had a big medical group. They were looking for a technology solution. What they really wanted was they also had a health plan. They have Medicare Advantage plan. It was performing okay, but it was they knew that it had some additional room to run. They also went out and surveyed their community doctors, said, "What do you really want?" They said, "You know, we like you as a hospital.
We don't wanna be employed by you, but can you help us contractually? Could we all be on the same tech stack? Where we could, you know, patients have a different experience and all those things. Steve pursued us. It was interesting. You know, we were kinda like, "Well, you know, why are you talking to us?" It took a while for us to kinda iron through that. What we've learned, and I think through COVID and the tailwinds the health systems are facing, is, we've had health systems come to us, and this partnership has gone really well for everybody. I think the, you know, that we looked at it as almost like a pure TAM perspective. Half the doctors plus sit in these relationships.
Some are very unhappy, and some of the health systems are saying, "Hey, I really need a more capital-efficient model. I do own some groups, and you know what? I'm okay with them, but I need a model where if they wanna choose to go somewhere else, it's a friendly model, fall into, you know, kind of, and still refer to me as a system. You know, and I need a model that my other, the, you know, community docs don't get balled up, go to a competitor, go to a roll-up in private equity or whatever, and they need to perform in value-based care, and I'd really not rather employ them." It's, we see it as a tremendous opportunity. I'll tell you, every health system is not a Privia client.
I mean, they have to be thinking in that vein, just we wanna move towards value-based care. We, you know, we want our physicians to be successful in the community. As you know, Lisa, I mean, these two, OhioHealth and Novant, between them probably have, you know, 3,500, 4,000 physicians that are not moving to our platform. We're, you know, we fully believe we get in there and do a good job. This gives us a whole another hunting license, and why not move everybody at some point? Now we'll have to do a good job, and time will tell. We believe this is, you know, Privia is more suited to go and do this because of the attributes that I talked about that they're looking for.
Are the economics the same? If I just go back to last quarter, right? You called out $4 million-$6 million of startup costs associated with these health system partnerships in North Carolina and Ohio. And basically, it's like a license to hunt, right? You're going out, you're gonna try to sign up some physicians. Are the economics similar for these types of relationships and versus-
Do you wanna talk, Rahul?
You know, versus your kinda traditional...
Yeah, the economics are the same. Those costs are in any new state that we enter, not related to just any health system states. If you understand our model.
Yeah
...we enter a state, we establish a sales team, leadership team, we go and recruit docs to join this model. That takes a year, a couple of years.
Right.
The docs join, they get implemented, and then we get our contribution. Those startup costs are irrespective of, you know, how we enter a state. You know, we'll try and break even in years two , years three, depending on the state and the size. That's the initial startup cost in any state.
If I remember correctly, you target 400-500 new providers each year.
Mm-hmm.
You know, when you think about the visibility as we sit here today for 2023 of that 400-500, is there like a pipeline? like how do we think about the level of visibility that you have?
There are two metrics we look at. One is the visibility of the financial metrics that we guide. Sitting here, once we guide at our Q4 call, in six weeks here, we would have close to 95% of 2023 baked in from a top-line contribution perspective because those are providers and doctors that are already sold, implemented, and very few new would be sold and implemented in year.
Within the give, right.
The second visibility is, I think this is where you asked the question, like what do you have visibility in the sales pipeline to get another 300-400 in that year or 400-500 in that year? You know, we have our TAM analysis. Our penetration is low single digits across all our markets. In some of the new markets, it's zero. Even the most mature market is sitting at high single digits. The flywheel runs because the longer we are in a particular state, doctors sell best to doctors.
Right.
They are telling their colleagues to join because they've done so well. We base that metric on the funnel we see. We have pretty high visibility.
When I think about that $4 million-$6 million for the new state, regardless of the type of entity that you're going after, is that establishing relationships with doctor groups initially? Is it advertising to doctors? Is it, you know, getting your initial base of doctors that are then gonna help you to recruit others? Like how do I think about where that $4 million-$6 million goes?
Yeah. It's pretty much $2 million-$3 million per state across sales infrastructure, marketing, implementation, and getting the initial set of doctors onboarded and the leadership team to run that state. I think it's all of those costs combined is $2 million or $3 million. Again, pretty capital efficient.
Right.
We expense it all.
Right, right. Because.
-on the P&L, and.
It's right. It's in the P&L.
Yeah.
Yeah. How it's.
Yeah, the variability is the size of the state and your TAM that you're going after in that market.
You know, again, I know that you're gonna give us 2023 guidance in six weeks. Are there any key revenue or EBITDA headwinds or tailwinds for us to think about at this point for 2023?
Yeah. I mean, most of it is, given the business model, pretty well documented. We talked about these new states.
Yeah
... and the cost to enter them. You know, we're still finalizing our MA book. We have about 110,000 MA lives. We took about 30,000 of those and moved them into capitated arrangements last year. We're evaluating how many of the rest do we move or not move, all that gets finalized. We guide, I think, that could be a moving piece to the guidance. If we announce any new markets, again, we'll have to factor that in. That's one of the reasons we don't like to preannounce, because there's a lot of business development activity. If something hits between now and February, we like to include that in our guidance. You know, those will be the moving pieces.
Again, Shawn showed up the slide since IPO on the execution. I mean, we've had a couple of great years. Last 2022, we grew top line 45%.
Right.
EBITDA 50%. Again, our long-term metrics were growing top line 20%, EBITDA 30% over 10 years, and I think we've accelerated a five-year model pretty well the last couple of years. There'll be some normalization of comps, but I think we're pretty excited where we sit.
Yeah.
You know, one of the relationships that you announced last year was the one with Surgery Partners.
Mm-hmm.
in Montana, which I thought was differentiated in the marketplace.
Mm-hmm.
It's specific to Montana.
Yeah.
Can you talk about, do you see incremental opportunities with Surgery Partners to expand beyond Montana, number one? Number two, just given the experience you have to date, do you see other opportunities, kind of special.
Yeah.
specialty opportunities?
I would kind of think about the whole, you know, why would we partner with a health system is similar to working with Surgery Partners. Surgery Partners, a little easier to get there. You think they, you know, they're building surgery centers, site of services.
Right.
You know, aligns very much with, you know, us and commercial payers that are, that are looking to, you know, how can we get a lower cost of care just as high or higher quality for surgeries, that type thing. You know, we wouldn't have... Believe me, we went into Montana with Surgery Partners. They had a big group. I think, you know, they're out there looking at their pipeline of ASCs, and they run ASCs, but they also sometimes groups come with them, should they kind of partner with a Privia or somebody like us to manage that group while they manage the ASC. It fits really good into our value-based care strategy.
If we can move, you know, services from an inpatient setting to an outpatient setting and get a lower cost, obviously, our physicians are working on in a value-based care model. That helps them, and it helps the payer. It's interesting. Payers are actually interested in that type relationship also.
Right.
We work with Eric's team pretty closely, looking at opportunities and things they're looking at from time to time. We'd be, you know, we were. We didn't do that just to do Montana.
Should we expect another announcement?
I don't know. We'll have to wait and see.
They're at 5:30 P.M. today.
Lisa's really good at asking about guidance type stuff.
Well, I mean, that's my job. They all expect me to do that.
That's good.
You know, You have demonstrated a really strong result in MSSP, right?
Mm-hmm.
I mean, one of the best, if not the best. You've done it probably longer than anybody else when we think about the Mid-Atlantic region. Why are the physicians in some more sophisticated models, you know, more, not more eager? I know this gets back to that question of like...
Yeah.
-why are they not more eager to move towards full capitation away from MSSP?
Yeah, we think, I mean, we are ready, and they are ready. The question for us is, you know, you're gonna have both Medicare beneficiaries and an open access product like Medicare Advantage.
Right.
you know, like MSSP with CMS, they can choose to move to MA. One is the onus on the patient, and I think the beauty of our model is if a patient makes a choice to do MA versus be in an open access MSSP, we can capture the patient in either, so we're not constrained. Then from a physician perspective, the same thing is true. If a lot of the levers you're pulling in MSSP are same in MA, you're just managing the patients much more tightly in an MA product.
Right.
I think we are ready, the payers are ready, and it just depends, market by market, zip code by zip code, way we wanna do it. You know, we are sharing the risk and the upside with the doctors. We are very conscious.
The downside.
The downside.
I think that's different in your model.
It's 60/40 split.
Yeah.
It aligns the incentives really well. We don't go in and say, "Heads you win, tails you never lose. If we have a loss, don't worry, we've raised $1 billion, and the shareholders will backstop you." I think that's a much more sustainable long-term model where physicians are fully aligned with us, and then it's a risk-return trade-off. I think you would take more risk only if you get more return for it, all else being equal.
You talked about, I think it's 32,000 lives right out of the 110,000. You said roughly 30.
Yeah.
When you think about that determination of shifting potentially more of those, you said that's gonna be part of the guidance that you'll give this year?
Mm-hmm.
One of the variables. At what point do they have to decide that?
Yeah, it's pretty much getting finalized now.
Okay. All right.
We've ended the year.
Right
... you know.
It's eighth of January first.
Eighth of January. Yeah. It's eight to be starting.
It's in and around January, so.
Uh.
You might have one that kind of leaks over 'cause you're negotiating some final terms, but yeah, they're most of them are gonna be January.
Okay.
Over the next 10 years, I can guarantee you a lot of those 110 will be in capitated arrangements.
Can you talk about the economics and the enhanced ACO and other more advanced ACO tracks compared to what you think you could earn in ACO REACH? I know you don't really participate in ACO REACH.
I mean, we consciously don't because we evaluated and to us the economics are much better in MSSP. It's been around for long. ACO REACH is a relatively new program by CMS. They're still started as DCE, became ACO REACH.
Right.
They're still working out the kinks. We've seen that with the MSSP program, that it does take, you know, two or three or four years to get this, get this right. You know, if CMS equated the math for us and made it easy, we would surely switch. We think in our minds, we're doing really well in MSSP. Now, over time, the programs could converge.
Mm-hmm.
We'll see how it evolves.
Do you think that that's a possibility that the programs converge?
I think it is. I mean, there are really good elements to ACO REACH from a social determinant perspective, access perspective, that I think CMS is really focused on. I also think they, you know, MSSP is one of the success stories.
Right
because, you know, they view wide adoption and patient attribution as key metrics for success. They're not interested in smaller programs with smaller number of providers. I think the MSSP program has shown it's able to achieve both of those. Over the next four or five years, I think in the next evolution, you could see, you know-
Right
...more convergence, and I think we're very well positioned. You know, I mean, just to state the obvious, it's the same payer, the same doctor, the same patient.
Right.
You know, nothing precludes us from moving one to the other.
I mean, like I said, the way I'd said, if I was sitting in their shoes, I mean, A, I would kinda... I have no idea this is how they look at it. I would think they'd look at it this way. MSSP has been very successful. It's kinda, you know, A, B, C, D. I mean, you move up the spectrum and you're taking, you know, not all the risk, but what's the next jump? It would seem logical to be a program like ACO REACH to... You know, we all know they've been in Medicare Advantage for a long, long time. I mean, that program is 25, 30 years old.
Right.
They just continue to, you know, hopefully, it's two steps forward, one step back.
Yeah.
That's kinda, you know. The federal government doesn't look at things on a one, two, three-year cycle. They're looking at things for a Medicare trust fund that they're stabilizing over 50 years. I mean, I think that's natural that these will occur.
You know, I'm gonna ask you this question, and it's gonna be more of a comparison as a number of other providers have answered the question, and that's around RAPS, right?
Mm-hmm.
February 1st, they'll come out with the audits that they've done, and this is really much more of a managed care issue. Is there any mechanism that if there is some retrospective payment that the managed care companies have to pay or they're clawed back in some way, that they can come back after the providers in any way in your contracts?
I mean, I think, not in our, you know, not on our contracts.
Okay. That's.
No. They're always gonna try to do that. You know, I think, we're gonna see something. I just don't know what it is, and I don't know that it's February. We'll see. That's one of those things that-
It's supposed to be February first.
Yeah. Well, I think it's. I mean, that gets back to that government programs tend to kind of morph over time. If, I mean, if you look at MSSP, as you know, there's you know, just recently, there's not as much upside. Very limited in just pure coding. I think, you know, again, I don't sit in their shoes, but if I do, I look at that and go, "Wow, that's a really successful program." It's not that much based on coding, so the value being brought is you're truly managing in really the most open access product that exists in PPO fee-for-service Medicare.
Right.
I think they're trying to compare the two and, you know, contrast the two with what would they like to do. I don't know. I don't think the federal government rips the rug out from under.
Right.
I think they begin to kinda, you know, look at that and what would they like it to look like in five years from now. Who knows what they'll do? We'll see.
When we think about utilization trends, you know, there's a couple things that kinda stick out. One, respiratory illnesses. We had a big spike in flu, it seems to kind of flattened out. I think it'll be interesting, all of us back here in San Francisco together, to see if there's another spike in something post this from a respiratory standpoint. If you looked at the Southern Hemisphere, what happened, right, it spiked and then second week of December came down. I'm sorry, what we saw here in the US is similar to what they saw, and then who knows, right?
Mm-hmm.
Like, I mean, we had the holidays, et cetera. How do I think about, one, things specific, like hospitalizations around flu, et cetera? Is that something that can move the needle for you? Then secondly, when I think about utilization, what we heard from the managed care companies that gave guidance in the fall is that they don't believe there's pent-up demand, but they believe acuity levels could be higher.
Mm-hmm
...because of the, you know... For example, if you need a knee surgery, right, and you waited too long, maybe there's another ligament that they have to do, right? It's gonna be more complex, and therefore the cost may be higher. It's not like they're gonna do the knee surgery twice, right?
Mm-hmm.
When we think about those types of costs for, you know, your at-risk entity, how are you thinking about both of those things? You know, I don't wanna call it pent-up demand.
Yeah
higher acuity levels and respiratory illness.
I can start, Parth can weigh in on that first one. I, you know, I mean, we're building kind of the lowest cost network. I mean, these are ambulatory physicians, primary care-based, we manage 51 specialists. We're building multi-specialty groups.
Yeah.
The regardless of any managed care, you know, organization you talk to, it's like, where do you want utilization to occur? You want it to occur at the primary care level and get quick access to the specialist that they need to, but do it at the site of service and those type things that you want.
Mm-hmm.
That's what we kinda thrive in that environment. As you know, our utilization through COVID and over the last week has been really well for, you know, different reasons. I mean, we highly encourage, we measure it, how many times they're seeing their patients.
Mm-hmm.
Are they getting them in? I'd like to think, you know, technology plays a role in that, reminding people that they have a visit, and they don't forget, all those type things. You know, I just. You know, there's no doubt this, that the last quarter, and we talked a lot about it, was, you know, there was that triple epidemic.
Yeah.
you know, you have all the. Especially we saw that in our pediatricians.
Right. Right.
you know, you have respiratory-
You have RSV, yeah.
...you have RSV, you have all these things. You know, back to school, and they got sick, and they came back. I think when we look at it as utilization at the lowest cost level is really good. It is no doubt, ERs are down. You see the results.
Mm-hmm.
-we post. you know, and, but, you know, is it, you know, the, your whole comment on the, I, could they be more severe? Maybe. That's the I think the hospital industry would tell you they're seeing some of that.
Yeah.
Lower utilization, but more complexity.
Yeah.
When people start peeling it back in the ER, there's some, you know, odd things going on there. I don't know. I, that's kinda what we look at it. Parth, any?
No, I think we're net beneficiaries of utilization going up. The ambulatory utilization is really strong. Kids seeing their pediatricians, all of us seeing the primary care docs. I think you have to separate that, and I think that's very stable and sticky. The inpatient facility utilization to what you were alluding, I think is gonna be variable, and that's gonna be tricky to figure out.
We have just two minutes left. I like to leave every one of these presentations, Shawn, with what will people appreciate a year from now or about Privia that you don't feel that investors appreciate today?
You know, I... You know, we're not a capitated model where you can easily model and we have this many patients and do the math and you grow backs. I mean, it, you know, man, we have a great pipeline of growth, both in same store as well as, you know, new markets out there we're developing and, you know. Like we said, the referrals are coming from, you know, inside the company from doctors that, you know, that are, you know, are actually participating in our medical groups.
You know, we had our best years through COVID, and I think, you know, the, you know, when pressures become apparent on any type of industry, I mean, these are community docs and hospitals that are, you know, they're facing tailwinds and, you know, what's inflation gonna do? They have other troubles around labor and all kinds of things. They look for a partner that understands-
Right.
kinda how to get them through these things. value-based care is growing, and CMS is pushing it. I think we're there to lead it, and we're excited about it.
Great. Well, we'll leave it there. Thank you so much. Thank you, everyone, for joining us.