Question-and-Answer Session
Operator
Thank you. (Operator instructions) Our first question is coming from Kevin Ellich with RBC Capital. Please state your question.
Kevin Ellich – RBC Capital Markets
Hello. Good afternoon. Thank you for taking my question. First question has to do with Catasys. I was wondering – Rick mentioned the care coach position. I was wondering how many care coaches you guys have or are being enrolled in the program.
Rick Anderson
From a care coach perspective, we currently have two care coaches that are operating, and we expand that as we need to cover the members that they are coaching.
Kevin Ellich – RBC Capital Markets
And how many members can each coach kind of efficiently cover?
Rick Anderson
What we are looking at right now is that each one can at any given time – and obviously, it will depend on – as the volume flows through that they can cover 80 people each. Each of those people are available for calls that are incoming as well as outgoing calls as part of the coaching process, which is part of the developed programs, and each of the coaches is trained on the relapse prevention program that provides part of the psychosocial as well. So that is part of what integrates all the pieces together.
Kevin Ellich – RBC Capital Markets
So they are basically like, it’s kind of like a buddy system or kind of like a – just like a support group basically?
Rick Anderson
We tend to refer to it sometimes as a virtual sponsor, which – that kind of concept, yes.
Kevin Ellich – RBC Capital Markets
I understand. Excellent. Then going back to the financials, maybe Chuck can handle this. With the operating expense reductions going down to $6.6 million and $5.6 million in Q3 and Q4, where are those savings coming from? Is it just overhead and personnel?
Chuck Timpe
It's a number of fronts. First of all, we would no longer have the non-recurring cost that we experienced in the first and second quarter. And then going into the fourth quarter from third and fourth quarter, our clinical research expenses will be declining. But we are continuing to make reducing operating expenses in various areas as we are concentrating on our managed care opportunities.
Terren Peizer
And keep in mind while we are reducing expenses across the board, and a large part is also reallocation of expenses, so while we might be reducing as we mentioned earlier, that we reduced our private pay resources by 73%, we are also reallocating some of those resources to Catasys, which is obviously our emphasis. So that's why we've been actually impressed that we've able to maintain this revenue by reducing our cost 73% in private pay, but again we've been allocating it over to Catasys.
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