The hospital operator's quarterly earnings still allowed it to raise its 2024 forecast.
A “flattening out” of acute care demand in the second quarter didn’t stop Universal Health Services from netting a significant profit.
The King of Prussia, Pennsylvania-based health system reported a net income of $289.2 million, which came in the face of a modest increase of 3.4% in adjusted admissions for acute care.
UHS CFO Steve Filton told investors on an earnings call that the operator viewed the 3.4% growth as “relatively flat” and pointed to expense management as a way to offset the stagnation.
“We've been talking I think for some time about the expectation that acute care volumes, both overall admissions and surgical growth, would return to pre-pandemic patterns,” Filton said. “I don't know that that's absolutely where we are right today but certainly, I think we've been preparing for that. And I think a lot of the cost management that you saw during the quarter was an expectation and preparing for that so that as we return to some of those pre-pandemic levels of revenue and volume growth, we could generate the increased EBITDA and margin expansion and remain on that trajectory for at least several more periods.”
Workforce challenges continue to be a priority for UHS as well, specifically the filling of behavioral health staffing positions. Filton highlighted that the turnover in behavioral health is usually higher than acute care, which is causing retention issues for the system.
“This is not just a UHS issue. I think it's an industry-wide issue,” Filton said. “But we are very focused on the things that we can do and want to do to reduce that turnover rate, which includes mentorship programs and educational opportunities and career development opportunities so that when we hire people, they really have an incentive to want to stay with the organization to stay with the facility.”
Nonetheless, UHS’ performance in the first half of the year has enabled it to increase its 2024 forecast for net revenue to be between $15.56 billion and $15.75 billion. The previous forecast was set at $15.41 billion to $15.7 billion.
Jay Asser is the CEO editor for HealthLeaders.
KEY TAKEAWAYS
UHS’ adjusted admission growth in acute care for the second quarter was at 3.4%, compared to 7.7% in the same period in 2023, as volume moderated.
The system’s leadership said it was prepared for demand returning to pre-pandemic levels and touted cost management strategies for keeping margins healthy.