Transcript Generated by AI 00:00 Mark Parkinson back with Park Place and very happy to again be in the studio here 00:05 in Manalapan with Mark Zimmet and loves the studio, 00:09 which it's fun to be back here. 00:11 You know, I think we thought initially we would do 00:13 a lot of production in the studio. 00:15 Our virtual platform has turned out to be pretty good, 00:17 but it's still fun to be here in the studio. That's great. 00:19 I sleep on the floor when nobody's around. 00:23 So we're here today to talk about Arizona. 00:25 We've been doing a deep dive and looking at Arizona, Great operators there, 00:29 love Dave Voepel who runs the state. 00:31 It's just, it's just a really good state. 00:33 One things I like that you've done in the last year is that you've developed an 00:37 objective way of grading each state's Medicaid system and developed a letter 00:41 grade around it. 00:41 Tell us before we talk about Arizona specifically, tell us about your, 00:45 your grading system. 00:46 So we look at the result before we look at the cost. 00:52 So we, we start with the number of facilities, 00:56 the percentage of facilities that had positive patient service income. 01:01 So we're not talking about interest or grants or anything. 01:05 We want to look at dollars earned from patient service revenue. 01:10 So the higher that that, that percentage, the better the grade. 01:14 So it's an ABCD, the A facilities have the highest share 01:17 of profitable facilities, the Ds have the lowest. 01:21 So when you look at Arizona, where does it line out? 01:23 It's a solid B improving. 01:28 You're a hard grader. 01:29 So B is really a pretty darn good grade. 01:30 It's a it's all, it's all numbers. 01:33 B is a good grade and they're improving. 01:35 They're not going to hit A status, you know, this year, 01:39 but it's B is a solid grade. 01:40 And what, what are some of the characteristics that 01:42 make them a B? 01:43 So there are there are three main factors that drive performance in the in the 01:49 state. 01:50 Anyway you slice it, it is occupancy, it is Medicare share and it is the 01:55 percentage of net patient service revenue devoted spent on direct care. 02:00 Now depending on those 3 variables, the rest has to be picked up by Medicaid. 02:06 End the story. 02:07 Medicaid is the residual payer. 02:09 So the Medicaid program has been serviceable but the structurally the 02:16 state is solid. 02:18 So occupancy, Medicare share is, is very strong and rational costs. 02:27 Arizona is also one of those states where you have some big, you know, markets, 02:32 but a lot in between those markets. 02:36 So it's rare to see a state like Arizona as a 2, 02:39 the same issues going on everywhere. 02:43 It's, it's evenly dispersed, which makes it easier to say manage or 02:48 develop policy. 02:50 They do have one little, one little quirk. 02:53 We, we look at the percentage of Part B 02:56 revenue as a as a function of of total patient service revenue. 03:00 It is a little bit higher than national average, but not much. 03:04 That's important, but it doesn't change the the grade. 03:07 So and the, the second part of it, I think I skipped over it is the 1234. 03:13 So A1 through D4. 03:15 The the second part, the 1234 talks about how evenly dispersed 03:20 those factors are. 03:22 So if you have a 4 facility, an A4, that means a lot of facilities are 03:26 profitable, but they're profitable for all different 03:29 reasons. 03:31 2 is and Arizona has a B2. 03:33 Yeah, B2 with pretty consistent, pretty standard, again, more of a, 03:38 a function of, of the structural needs in that state, 03:42 higher occupancy. 03:44 And again, a state that if you looked at their 03:47 occupancy today versus 2019 pre pandemic, you'd say, OK, it's just about the same, 03:52 but it's actually higher demand, you know, because the number of beds changed. 03:57 So occupancy is higher. 03:58 It's a, it's a sustainable state and it's oh and, 04:02 and very interesting, higher acuity than almost any state, 04:06 the highest acuity state from a nursing perspective, 04:10 the scoring for any state that does not use a case mix system for adjustment. 04:17 That is there are a lot of specialty units and it's interesting state. 04:22 One of the things we've learned is they have a lot of specialty programs with 04:25 specific Medicaid funding. 04:26 So I guess that explains it well. 04:27 A B2 sounds like a pretty solid grade and good news for for folks that are 04:32 operating in Arizona. 04:34 Absolutely. 04:34 Well, they're doing a good job. 04:35 Yeah, yeah, so, well, thanks for that report. 04:38 And very interesting, I think overall we looked at Arizona, 04:40 it looks like a really good regulatory state and really good reimbursement state 04:44 and overall a very United state with great leadership. 04:48 Thanks Marc for the report and thanks all of you for your support at Park Place.
