Question-and-Answer Session
Operator
Thank you. (Operator instructions) And our first question comes from the line of Mike Lamb with Wealth Monitors, Inc. Please proceed with your question.
Mike Lamb – Wealth Monitors, Inc.
Good morning, gentlemen. A couple of questions. First of all, Michigan, that flowed through and was problematic through June, if I understand it correct?
Richard Hallworth
Yes.
Mike Lamb – Wealth Monitors, Inc.
You didn't receive notification until August, is that correct?
Richard Hallworth
We received the surprise in August – is when we received the claims that were related to the second quarter over and above the levels that we had expected, when we got a large froth of claims reported to Etnar by providers.
Mike Lamb – Wealth Monitors, Inc.
Are the state employees now utilizing your system of daily notification of transfer out of the facility, the reason for that, et cetera? So that there is a direct line of communication currently?
Richard Hallworth
The system has been in place since April 1. We got a six-week start-up on this contract and the system was designed to have the state employees logging those inmates who are being transported off-site. The system was in place as of April 1. The compliance with that system was not nearly as accurate or as complete as we would have liked. Over the last several months, through training and re-training of employees, refinement of systems and protocols, cooperating with Michigan DOC to train their employees, we have seen much improved adherence to that. We have seen a marked improvement in the days and the trend in the off-site transports for both emergency and inpatient days as I mentioned earlier over the first few months of the contracts to the current time and right through October to date.
Mike Lamb – Wealth Monitors, Inc.
Is this somewhat a function of going from a cost-plus structure that was previously there to a risk-sharing format that is currently in place?
Richard Hallworth
There are significant differences in the contract structure from the prior vendor to ours. The structure that was in place before had that off-site costs were – the cost of those off-site trips were borne by the State and the vendor received a percentage of the costs that were incurred.
Under the model we have with the Michigan DOC, under our contract, is a shared-risk model, where we are both incentivized to make sure that the care is appropriately rendered, either on-site or off-site, but incentivized to try to render as many of those services on-site as possible. That is a change in the culture of the Michigan DOC for both the providers that we now employ as well as for the Michigan DOC employees. And it is a full culture shift as well as a financial and risk model change from the prior contract. It takes time to effect that kind of change.
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