Good afternoon. My name is Lisa Gill, and I'm the Healthcare Services Analyst here at JP Morgan. I am incredibly happy to have with us this afternoon Privia Health. Privia Health is a physician enablement company. We're gonna kick off the presentation with Shawn Morris, who then will introduce some of his other management team. Shawn, you wanna kick things off? Thanks so much for coming this afternoon.
Oh, thank you, Lisa. It's always a pleasure. We've been doing this, I guess, goodness, I don't know, three, four years now. We've enjoyed it. I have Parth Mehrotra with me. Parth, the President and CEO. I'd also like to introduce Jeff Sherman. We announced Jeff last week, and I'm gonna turn it over to him, let him introduce himself here for a minute or so, and then I'll jump back in. Thanks, Jeff. Go ahead.
Thanks, Shawn. Really excited to join Privia. I've been in healthcare finance for over 30 years with the exception of one of those years with public companies. I've worked in hospitals for 25 years as a hospital CFO, divisional CFO, treasurer, and company CFO for companies like Humana, Tenet, and LifePoint. I spent a year in the post-acute industry, and I spent the last six years with HMS, a publicly traded company that was focused on eligibility, payment integrity, and population health management. I helped lead the sales process of HMS to Veritas Capital in 2021. Very excited to join the team with Shawn and Parth and excited to be here today. Thanks.
Thanks, Jeff. As you can imagine, we're excited for Jeff to be on board. We've got a lot of momentum. We're growing, and he's gonna really bring and add value. I'm gonna go to slide two for those following along. It's our disclaimer slide. I'm definitely not gonna read this as Robert typically does in a speedy way. I think we've all seen these and just protecting ourselves with a disclaimer. Moving on to slide three. Just kind of the way we'll progress as I'm gonna do this slide, tell you a little bit about Privia. I know a lot of you folks know who we are. We've presented at the conference for years now. We'll turn it over to Parth, and he'll run through the remainder.
As Lisa mentioned, we'll do some frequently asked questions. At Privia, we're really, I think, the good thing about what we're trying to accomplish here, and as the slide says, building the next generation, what we would say, delivery system out there. We really had the luxury of almost eight years ago now doing this in a manner, and we've all been around for a while. As Parth likes to remind Jeff and I. He and I are a little bit longer than he has, but we allow him to do that to us. Really the key there is where I'm headed is to kinda not to make the same misalignment struggles that I think you know history would you know has done so in the past.
We're really trying to avoid those misalignments. Really, we know that physicians like autonomy, and I don't just mean independent, fiercely independent doctors. We all know that. Just generally speaking, whether employed or fiercely independent, doctors want autonomy. They wanna lead. They wanna see their patients. More important, they want a partner that can help them be successful. Not just in a niche product such as Medicare Advantage. We all know the importance of that. We have a lot of that business, and Parth will kinda get into our dashboards and so forth. It's really important to Privia, and it's that sector of patients is, you know, at least, you know, more deserving, if not anyone else, to have great healthcare. Really across the board, commercial, Medicaid, traditional Medicare, as well as Medicare Advantage.
The differentiating model, our business model is what we've been able to do is take that single tax ID medical group that we've built in every one of our markets from really literally from 4 physicians eight years ago to over 3,200 now. That single tax ID, wrap that with a risk-bearing entity. In our model, we call that an ACO, and then enable that with the clinical and performance platform, which Parth, again, Parth will touch on pretty significantly throughout the presentation. I think the other differentiating things is, I've touched on it already before, it's across all provider types. It's regardless if they're employed with or if they're fiercely independent, all reimbursement models. We've got over 70 value-based care arrangements today.
We take care of over 3 million patients in those value-based arrangements, over 750,000 attributed lives. They cover, like I said earlier, from commercial to in upside, all the way to fully capped Medicare Advantage, which we announced last week. It's a proven model. I think you know we've been able to prove that across, you know, over the last seven years, grow the business tremendously. We've got a lot of momentum, and we're very pleased with where we are, and we come to work every day, work for our physicians, partner with them in order for them to have a sustainable model long term. Again, we partner upstream with our payers.
With that, I'll be back when we get to the Q&A, and Lisa's got several of those on tap, and I'm gonna turn it over to Parth. Parth.
Thanks, Shawn. On slide four, this is our national footprint. Two quick points here. First, as to what Shawn said, the fact that Privia is able to partner with all kinds of providers, single specialty, multi-specialty, health system, employed, affiliated, all kinds of specialties, in every setting and all kinds of reimbursement models, allow us to access what we believe is one of the largest TAMs in this physician enablement space. Our model is applicable in every single state in the country. We are agnostic to where we enter. We usually go with areas of high population and physician density, but other than that, the whole country is pretty much open to us.
The second point I'd like to make is if you look at our stats on the right side of the page, whether it's number of providers, number of patients at 3 million, lives at 760,000, 850 locations, in seven states. We are already one of the largest provider groups in the country in aggregate. With the scale and density, which is very proven across very disparate markets. I think that differentiates us, and we're looking forward to entering many new markets over the next few years. On the next slide five, just as a macro strategy perspective, we think we have a pretty simple, elegant, and repeatable model where we enter a market, which is typically a state.
We establish these big medical groups, grow them over time organically, establish our risk-bearing entities, and increase attributed lives on those. We help organize these providers into high-performing groups and drive improvements across their entire book of business. We are helping them move to value-based care in a very unique and differentiated manner across all lines of business. Value-based care in the U.S. can happen in commercial, in MSSP with the CMS, obviously in Medicare Advantage. Again, I think we're one of the unique models that can do all of them, and we are agnostic to where a state or a geography might be in its evolution. This gives us a very sustainable model that is applicable in every single geography in the country.
Slide six just to build on that shows our value-based book, again, with about 760,000 lives across commercial, MSSP, MA, and Medicaid. We think we have one of the broadest platforms that you can play this theme across these different lines of business in 70+ at-risk payer contracts. We work with all the major national payers, with CMS, and it speaks to the sophistication of the platform. We are increasingly moving towards taking more downside risk in each bucket. We recently announced a couple of days ago in taking about 23,000 of our MA lives in capitation arrangements. We take significant risk with CMS in the MSSP book in the enhanced track one of the largest, most successful ACOs.
I think our model is really proven and underappreciated from that perspective. On slide seven, ultimately, Privia is predicated on the value we provide to our physician partners. We can demonstrate this value across their entire book of business, fee for service, expense savings, better throughput, productivity, and then obviously moving to value-based care and increasing their revenue. Over time, a Privia physician is expected to increase their top line from 30% to 100% over time, and then obviously have some expense savings, and all that leads to higher physician pay, productivity, and better satisfaction. Slide eight, t he key to our model is Privia is very capital efficient in how we've built this. We are not building practices or clinics. We're not buying medical groups.
We fundamentally believe by aligning physician practices in this unique model where they get the best of both worlds, they retain their independence and autonomy while being part of a bigger entity, a bigger medical group, allows us to influence outcomes without the ownership of the underlying practice and allows us to scale and be present in, as you saw, 850 locations with 3,200 providers already, you know, with very minimal CapEx. Our CapEx is less than $1 million. More importantly, what it allows us to do is establish medical groups where physicians are part of a common risk-bearing entity. It's physician-led. They influence the best clinical practices. We are integrating them on our technology and clinical operations platform. Fundamentally, more importantly, we are financially aligning our interests with them.
We do well when they do well. In our value-based book, we share the shared savings 60/40, and it allows us to have a level of alignment that we arguably think is more powerful than even employing or building our own four walls and employing the doctor. On slide nine shows the progression that we go with our different medical groups, where you know, we start with practice fundamentals, improve the experience, get the practice to be high-performing medical groups and physician practices.
Over time, depending on the level of risk we are taking in value-based arrangements, we increase the level of focus we have at different aspects of the clinical operations to get the outcomes that we are desiring in advanced clinical models all the way through capitation on the far right. We think we have a unique platform that's been built over the last seven, eight years to have a level of efficiency at very large scale across all lines of business. Our operating platform, coupled with our technology stack that I'll just go through, is a unique aspect of our business that allows us to do that with all kinds of physician practices in the country. Slide 10 shows our proprietary tech stack.
A unique aspect of this is, again, the ability to work with all types of provider groups across all lines of business, helping them succeed in fee-for-service, in value-based care. Our technology stack allows us to integrate more than 30 different point solutions in this entire workflow in a very unique manner that allows the physicians to have a single interface and succeed in whatever with whatever patient they are seeing in whatever reimbursement environment. We think it's fairly unique and allows us to scale pretty rapidly and manage very large pools of populations and value-based arrangements with the data that we can control. Slide 11 shows different aspects with which we can grow our business.
A unique aspect of the Privia model is, there are multiple drivers to grow this business very sustainably over long periods of time. Starting on the left, we have a very large installed base of about 3,250 providers already in 850 locations. They're all going same store, increasing their patient panels, having better contracts, moving a lot of those lives into different value-based arrangements in the yellow bucket, and then increasing the level of risk we take over time. Obviously, with the white space that we have in the existing geographies, we are adding new physicians to our existing medical groups at a pretty rapid clip. We can enter, as we said, any new.
In multiple new states with just being in seven today, and then effectively repeat green, yellow and blue here with our strategy of building these big groups and moving to value-based care. Over time, we use some of our capital to work and grow the business through acquisitions and so forth. All of that leads to you can see the progression of the business in this first year of being public. Over the last year, we increased our guidance from May through Q3. We are reiterating that guidance given the high visibility we have in the business. Obviously, a lot of momentum, as we've said, with entering new markets, entering into capitation, that gives us a lot of comfort in this guidance.
Hopefully closing out the year strong and going into 2022 with acceleration of growth. With that, just to summarize, again, really proven scalable platform, focused on all provider types. As I said, one of the largest TAMs accessible to us within the healthcare ecosystem. A great set of technology and operations capability with a great leadership team, and we look forward to creating value for our shareholders. With that, Lisa, we're open to questions.
Okay, great. Thank you for that rundown. You know, I feel like part of my first question, it's really been covered between you and Shawn, and that's really describing the difference from a competitive standpoint, right? You talked about low capital, you talked about the common tax identification number, you talked about the number of physicians that you had. But maybe, if you or Shawn can start with why a physician selects to be part of Privia rather than one of the other physician enablement companies that are out there today?
Yeah, definitely. I'll start, Shawn will add. You know, obviously a unique aspect of what we provide is a holistic solution for the entire medical group. We're not going in with one particular contract, with one particular population segment in mind. If you take a multi-specialty group that could comprise of a couple of PCPs, some OBs, some pediatricians, some specialists, we are one of the unique platforms that can offer a very holistic solution to all of them in its entirety. We are focused on the commercial book of business as well as the value-based book, which is applicable to just the PCPs.
We're not going in and saying, "Here's an NA contract with full capitation, and that's only applicable to the two PCPs for a subset of their lives." We're going in and transforming the whole practice from a technology standpoint, from a systems standpoint, processes, and enabling ultimately for that practice to succeed and grow and the doctors to benefit financially and then holistically from a lifestyle point of view. I think that's very unique to us. The last thing I would say is, you know, twofold. One is, health systems are a unique element in the healthcare ecosystem where there's near consensus they are the losing entity as the world moves to value-based care.
We think Privia is one of the unique platforms that can partner with them in a physician alignment strategy that is, again, pretty holistic and unique versus a lot of the other companies. Finally, you know, it's a capital-light model. We are very conscious of not building or buying and misaligning interests. It allows us to scale very rapidly, and it's a very self-selecting model. I think physician practices joining us are self-selecting into the Privia model and it shows in our high retention.
Yeah. I think, Lisa, I think what we're trying to do, and of all the things we just touched on, is physicians are realizing that everybody understands the lure of being able to manage Medicare Advantage and what the advantages are when they do that. I think what they're looking for is a solution that covers every patient in their practice, whether they see them virtually. They don't wanna be opting out and using some tool that's not within their workflow. Whether they see them face-to-face, whether it's commercial, it's fully cap. They want a solution and a partner that's really inside their workflow and also helping them when the patient's not even in the office. Regardless of, you know, of the type of patient it is, as we've touched on.
That kinda leads to my next question, which is really around the single tax ID for a medical group. Not every state allows that, but for many states that do. I understand the financial reporting benefits, but what's the benefit to the practitioner themselves in being under that single tax identification?
Yeah, definitely. A minor correction. We established a single tax ID in every state. Whether we own it as a corporation or not is determined by state laws. In every single market we are in or state, we established a medical group, we established a risk-bearing entity. Look, the benefits are as follows. Number one, you know, Privia is the delivery organization. Us establishing the medical group and the entity where physicians join is a key aspect of the business. We are not at arm's length with the medical group. We are establishing that entity in the first place. I think that's an important, you know, underlying factor. The second is, you know, we touched upon that page where we are able to influence outcomes without owning the practice.
I think it's a very unique model where, physicians joining, one entity where they are contracting as one, where they are governing themselves from a clinical perspective as one, is very important to achieve the outcomes in our view. It gives a sense of ownership. It aligns them financially, economically, and holistically from a clinical practice perspective. We are treated as one from payers and other constituents in the ecosystem as one single entity. This is not a business where, thousands of physicians are joining disparate fashion, and we are, you know, again, enabling or servicing them in an ad hoc manner and just getting fees. It is one medical group, one risk-bearing entity that is treated as one by different constituents in the healthcare ecosystem.
That's important from a scale perspective, depending just given how the ecosystems evolved over time, with managed care, with health systems and so forth.
You know, Parth, if I think about it, especially your background, how do we think about comparing the actual technology platform for Privia versus some of the others that are out in the marketplace? What do you think are really some of the key differentiators for Privia?
Yeah, great question. Given my years at athenahealth, you know, unique insight into what worked or not. I'll hit on two or three key points. One is just given the breadth of our offering, which is holistic to all provider types, all reimbursement models, all specialties, the platform's much more broader, we feel, relative to, I think, most other enablement companies that maybe just focused on one particular aspect of the business. We have 55+ specialties today within Privia, 3,200 providers, everything from a solo doc to a health system medical group.
Just the breadth of the nature of the number of providers and the types we are servicing, and 70-plus at-risk contracts, by their very nature, require that our tech stack scales across all of it, and we are able to service and perform, ultimately help them perform well in all, in fee-for-service and value-based care across that breadth. That's one. Second is, I think what's unique about us is, we are very agnostic to building, buying or partnering. We didn't wanna go reinvent another EMR and spend millions of shareholder dollars doing that. I did that in my previous life and experienced that.
I think what we were trying to solve for at Privia is there's really no ERP for a doctor's office, and there is 100+ different point solutions, really cool, great SaaS companies, that solve one particular aspect of the whole encounter with a patient. Everything from the time a patient starts to look for a doctor, takes an appointment, visits the doctor, all the data comes in from different parts of the ecosystem to what happens at home. If you're wearing a wearable device and does that data go back to your doctor if something happens on the weekend. I think, you know, we are agnostic to building, buying, partnering.
We are trying to give one unique platform to all our providers, but on the back end, we are partnering with multiple different companies to give the best possible solution in a single instance way. We are partnering with 20+ or 30+ different point solutions. For the physician that joins Privia, they don't need to worry about any of that or the integration. I think our open architecture allows us to again be very capital efficient. You can spend a lot of R&D dollars on technology for little to show for. I think we're very mindful of that. Ultimately, look, the proof is in the pudding. We eat our own cooking. We don't sell the tech stack separately. We don't charge for it separately.
This is our medical group and our risk-bearing entities using this at scale to get the results. I think, you know, the proof lies in there.
Yeah, I know I've asked you this question, you've heard this so many times from investors around, you know, moving towards a full risk capitated Medicare Advantage contract. You announced it last week, 23,000 lives. Can you or Jeff talk about, you know, the impact? We understand the top line impact, but what should we expect around care margins, EBITDA contribution? You know, how much do you know about these members that you're now taking risk on?
Yeah, I'll start. Jeff just got here, so I don't wanna put him on the spot. If anything goes wrong, you can blame me for a year, hopefully. But look, you know, consistent with what we've said before, you know, we take a very thoughtful approach, and you've heard us say it's called risk for a reason. I think the markets are getting there and understanding that. We are very focused on EBITDA and free cash flow as we are on top line. We understand the whole revenue recognition that comes with capitation. You can see, you know, overnight we're recognizing multiple hundreds of millions more on the same book of business.
We kept saying apples to apples, our FIF's, our current top line massively understates our value-based book, and you're seeing that with the MA book. We've demonstrated that in Q3, on our Q3 call with the MSSP book, where we don't even recognize close to $1 billion in spend, just given how GAAP accounting works. Keeping that aside, you know, we'll be thoughtful. Look, we hope that when we take capitation and dial up risk, the worst case outcome is that we are break even, and that's the worst case outcome. You can make some money, but why would you take more risk if you can't make money? That's our view. In our model where we are aligning our interests with our physicians. They are sharing that risk 60/40 with us, upside and downside.
We don't want our doctors to lose money. Our hope is, as we've done this, that even in the first year, if there is, at best, a break-even scenario, that the operating leverage shows up in years two, three, four. We like to be conservative. You know, we'll give our guidance in a couple of months here, so I'm not gonna be specific, but you know, you should expect us to be conservative in year one, make a little bit of money, and then years two, three, four, you know, obviously get that operating leverage as we manage these lives better. What we are hoping to do, hopefully in a differentiated manner, is not have any J curves.
We've not talked about cohorts and show you all kinds of data that show you in this geography with this cohort, with this group that we started five years ago, we're doing better or worse. EBITDA is EBITDA. It's at the corporate level. Free cash flow is free cash flow. We're managing a pretty diversified book of business, and our hope is when we take risks, you should expect us to get some return for that risk for our shareholders.
As we think about that risk, you know, and we think about the timeline of potentially taking that risk, is this gonna be just a January first kind of time thing, where each year we're looking at January first? Or are there other opportunities to take risks at other times during the year? You know, Shawn, I don't know if you have specific thoughts on that.
Yeah. I think it. You know, just typically speaking, Lisa, these are gonna be January first. Now, would that ever preclude us from kinda coming in mid-year? As you know, we add a lot of providers year-round, and some of those can, depending on kinda their experience and our experience when we get to know them. You know, maybe they're joining an existing arrangement. I think that'll be provider by provider, market by market. From a Medicare Advantage perspective, most of these things are gonna be, kinda tend to be at the beginning of the year.
We know that you've had very impressive savings and value-based programs like Medicare Shared Savings programs. How would you compare your ability to manage costs in those programs versus, you know, these now full risk arrangements like the global capitation that we're talking about here? Do you think that it's indicative of the potential results you could see in full risk? Is there really comparability, I guess, is the question between the two?
Yeah. I'll start on this, Parth. I'm sure he has his thoughts on it. No doubt. I mean, we talk a lot about starting and migrating across that value-based continuum. You think about what we did, and we've been in the MSSP program for going on six years, and we started with, you know, in A and B, and we've migrated to E. You'll see that here in the coming when we do our earnings. We'll, you know, talk about, you know, how we're migrating the rest of our ACOs. No doubt it's a good partnership, aligned incentives, and we'll continue to do that with our providers and really it should show us progression and do well. You know, we feel it's a good partnership, aligned incentives, and we'll continue to do that with our providers and really it should show us progression and do well.
I think as you've always said, we would kinda jokingly say, "Hey, it's risk for a reason," but we're confident, you know, that we've got the tools and the talent necessary, then, and especially even as we're growing physicians and really establishing physician leadership, that we're creating the right platform to perform well over a period of time.
Yeah. Look, generically, just to add to that, just holistically, Lisa, you know, a Medicare-eligible patient or a person is a Medicare-eligible person, whether the payer is CMS or a national payer or a Health First, that's just a payer taking financing that care. We're in the business of managing the total cost of care on a particular life over a life cycle. I think from a capability standpoint, our proven results in MSSP, you know, should give a lot of comfort that the system works, technology works, processes work, clinical operations capabilities. I mean, those things are very common as to how you manage the cost of, the total cost of care for a 65-, 70-, 80-year-old with multiple conditions.
I think that those are common threads that are very scalable in our platform that we can apply market to market.
You know, Parth, we had this conversation a little earlier. I think you just kinda put in there when we think about you versus competitors and think about, you know, practice collections instead of GAAP revenue, and again, that kinda goes back to the medical identification number . How is it simply that it's comparing it more apples to apples to competitors when we think about, you know, practice collections versus GAAP revenue? Or is there another reason why, one, you think we should be focused on that? Secondly, you know, majority of your practice collections are driven by fee-for-service today. We saw with the Medicare capitated arrangement, right, that changes your revenue a little bit, but how do you see that mix changing over time as well?
Yeah. A great question, and we get this one often, and I think hopefully investors and sell side and you all are understanding it better. Look, I'll make two or three points that hopefully clarify it further. One is we have this anomaly of corporate practice and medicine law. So that's medical groups that we can own as a corporation or not, that leads to the difference between GAAP revenue and practice collections. If we are to simply define what we collect across all our medical groups in every single state, irrespective of that state law, across all lines of business, you know, it leads you to practice collection being the number that we manage. That's how we manage the business.
We charge a management fee on that practice collections number, whether it's fee for service or value-based, pay the physicians, and that's what translates to care margin in our model. There's no direct correlation to the reported GAAP revenue and care margin from that perspective. That's why practice collections is the right top line that we've guided to. We mentioned both, obviously, from our guidance. The other anomaly is what you alluded to is the value in the value-based book.
Revenue recognition rules prevent you from recognizing the medical spend unless the provider entity is taking a certain level of risk and is responsible for a certain level of the total cost of care. The way it's defined, we showed this with MSSP, we're managing $1.1 billion of spend. We are taking very significant risk. It's an open access product, and the way the rules are written, we're not able to recognize the full $1.1 billion. What's in practice collection and GAAP revenue is just the $50 million, $56 million of shared savings. That significantly understates our top line, whichever way you want to define it.
If you just look at the financial statement disclosure, you'll say, "Well, it's largely fee-for-service," but here's $1 billion of spend on which we are saving, in aggregate 7.7%. In our best ACO in Mid-Atlantic, it's 9.4%. You know, it's massively understated. Now you're seeing the same thing in the MA book, where, you know, you saw what happened with 23,000 lives. We, in our press release, said that that'll have a $230 million impact on a gross basis. Net basis will be a little bit lower given the fee-for-service takeout. We have +70,000 other lives that could, you know, if you just did the same math, would be another $750 million of collection.
Our top line apples to apples, you could just do a simple math and say, well, it's understated by $1.7 billion. Then we leave you to, you know, whatever multiple you wanna apply to anything like that. I think that's the anomaly, and that's what's been tripping investors and analysts up. I think it's again an education process. Look, there were a lot of these companies were not public, didn't have perfect comps. Ultimately, we're focused on EBITDA and earnings, and that's what matters. That's why, again, from a perspective of taking full capitation or more risk or less risk, it's all about can we manage that book to generate the level of earnings for our shareholders?
Right. Cash flow, EBITDA, that's where we gotta be at the end of the day, right? Which leads me to. Let's bring Jeff in on the conversation here for just a minute. You know, Jeff, you recently joined the company. Give us some initial thoughts on your thoughts on Privia and why join Privia at this point?
Sure. Thanks, Lisa. I mean, it's a pretty active marketplace. I looked at a lot of opportunities. Privia really stood out for me for several reasons. First, just at a macro level, the significant total addressable market with multiple avenues for growth, you know, in the marketplace that Privia operates in. The market's continuing to move to value-based care and health plans, health systems, and physicians are all looking for help in navigating that transition, and Privia is well positioned to help meet that demand. I think the macro level sets up very well. On a company specific basis, I think the management has a great leadership team with Shawn and Parth.
The board has deep healthcare experience, and they put together a model that's really focused on helping physicians practice in their current reality, as they've said today, across all payer types, aligning incentives, providing flexibility for physicians and autonomy, and a technology solution that's integrated and works to ease the administrative burden on physicians as well as helping improve quality. I think all are, you know, key factors. You know, the ability to scale on a national level and as Parth just noted, you know, a balanced approach to both revenue growth and earnings growth. Then finally, I would just say, you know, all that coupled with a very strong financial position, a balance sheet with a net cash position, profitable and producing positive free cash flow. And lastly, just a very capital efficient model.
I think all those things, great macro, great company specific opportunities, and I think great momentum were all the kind of factors that led me to conclude when it was offered that this was the best opportunity for me to join.
Great. Well, I look forward to working with you.
Thank you.
Welcome to the conference. Let's come back to the discussion here. One of the things that stood out to me, Shawn, is that you talked a little bit about solutions for health systems, and that's not an area that a lot of your competitors are really talking about today. Maybe you can spend a couple of minutes talking about why health systems are attractive. Are you competing in that market against players like Evolent that kind of lays out a blueprint or a roadmap for some of those hospital system providers?
Yeah, it's Lisa, it's interesting. The health system environment or the environment for health systems now is, you know, most of us would say as value-based care, you know, gets more of a, you know, kinda embedded and takes on, you know, kind of more cap, all those different things, as we go across that continuum. I think most people would tend to say the health system is the real loser. I think we're on the front end of this wave. Who we're competing with and who we're not, I mean, you know, I don't think all health systems are created equal. We tend not to be speaking with the health systems that are kind of the, you know, that big behemoth, big fee-for-service, you know, the largest one in the market.
It's the transition of employed physicians, you know, attracting the attraction of what we can help a system do is why they're calling. If you think about the difference, 50% of the doctors are out there in the health system today, you know, arguably, some I've even seen some statistics as much as 60. The health systems I mentioned earlier aren't really created equal, but they're all struggling. In the top 5, when you ask them the question of, "Hey, once you get past this issue of your employees and, you know, kind of the how you'll handle nursing and all those things," almost second to that is, "I need a physician alignment strategy.
I've been buying doctors. You know, that's not for whatever reasons, be it a balance sheet board. I'd prefer not to continue to do that. Is there a lower cost entry strategy to having relationships with community doctors? They've been out there. We've got a relationship with Health First. It's working really well. People are paying attention to that. It's an efficient model, capital efficient. They would like to not buy as many doctors when you sit down and talk to a lot of them in private. The second bullet is their CINs don't perform well. All of them have them. They're not performing. They're kind of an aggregation.
They, you know, payers are asking them to take risk in those or even just move a little bit down that value-based care continuum, and that's not working. They're looking to those CINs, another answer there. You know, and the other, the last one is even where these health systems are more sophisticated, have gotten to risk, maybe even have their own insurance product, all kinds of things are going on with that. Their employed doctors, they need help with, their, the doctors that are out there with the membership in that one, the solo practice to ten. They need some structure around those. They're really like, look at Privia and say, "Here's a company, doing the doctors, you know, very low attrition. People, the doctors aren't leaving at all. They're providing a lot of value to them.
They're not having to purchase with them, and they're managing this book of business over 70-plus contracts that range from upside all the way now to fully capitated risk. I think the ones that are really looking at is they're looking at five and ten years down the road and said, "I need a model like that in order to grow and have different relationships with my physicians.
Is that-
The one thing I would add, which I think it's important is, you know, we are not approaching this as providing a point solution to a health system. We are not going with just the tech stack or just a help to their ACO. We are the medical group and the risk-bearing entity that is going to form in partnership with them for that particular geography. We are, when we go into a partnership with Health First, it is one medical group that we are now, in partnership with Health First, are managing for the entire state of Florida. That is the fundamental difference. I think you have to do it in that level of integration with them, where you and them effectively become one.
It's a JV entity or a joint venture kind or a partnership type of approach, where it's not ad hoc solution provider that is, that doesn't have skin in the game. And it's a very long-term relationship, and you're effectively doing it to establish presence in that market for many decades to come, from that perspective.
You know, Parth, as I think about that, you know, you announced the expansion to California, West Texas, those two physician groups. You got into risk this fall. There's a lot of things that you guys have been doing. As we think about things like, for example, on the health system side, are those incremental opportunities that can happen in 2022? I mean, we talked about the fact that capitated risk generally is gonna happen each January first. You talked about only entering one incremental market in 2022. You're now entering two. Is it that, there's incremental opportunity within health systems or is it, hey, Lisa, we've got a lot on our plate and we need to, you know, really manage this in 2022?
No, we're going full steam ahead. Look, we like to underpromise, overdeliver.
We like that, too.
We have Jeff on board for a reason. You know, we're investing in leadership, processes, system, business development, sales. I mean, the momentum that we have is truly remarkable. I think going public has helped us with the public profile of the business, a lot of inbound. You know, what keeps us up at night just to execute day in, day out. You know, the model's proven. We make money. We operate in very unique different healthcare geographies between Mid-Atlantic, Florida, Texas, California now. You know, this is not a one-trick pony, and I think it's proven out and people are seeking us out. I think we like to keep executing and entering into as many states as we can, as fast as we can, and keep executing for our shareholders. Then that's our focus.
There's no stopping us. I mean, there's no limit to the business. Execution is key, and we're focused on just grinding it out. But again, if we can open three new markets this year, we will. There's no limit to what we can do or not.
Well, I look forward to seeing what 2022 brings. I'm obviously very disappointed we're not together in person, but I'll reach out to Robert. I would love to come and actually spend some time with you guys face-to-face. That's my goal for 2022, is to see everybody in person. Thanks again to everyone that tuned in this afternoon. If you have any questions, by all means, reach out to me or to Robert on the IR team. Thank you so much, Shawn, Parth, and Jeff for your participation. I appreciate it.
Thank you, Lisa.
Thank you.