Dive Brief:
- Universal Health Services is guiding to a stronger 2024 than analysts had expected after beating Wall Street’s revenue expectations in fourth-quarter results released Tuesday.
- The massive for-profit hospital operator expects to bring in revenue between $15.4 billion and $15.7 billion this year, which represents almost 9% year-over-year growth at the midpoint. In comparison, UHS grew revenue almost 7% last year, ending 2023 with $14.3 billion. The system’s profit was $717.8 million, up 6%.
- UHS was helped in the fourth quarter from better-than-expected behavioral health volumes, despite continued cost pressures from physician subsidy expenses and the ongoing Medicaid redetermination process.
Dive Insight:
Like other hospital operators, UHS has seen its costs climb over the past year. The system’s operating expenses grew almost 6% in its 2023 fiscal year to total $13.1 billion.
UHS has attributed the rise to heightened labor costs stemming from the COVID-19 pandemic, strained relations with payers, increased physician subsidy expenses related to the implementation of the No Surprises Act and the ongoing impact of Medicaid redeterminations.
While some cost pressures might ease in 2024, the operator is still being cautious about its projections to grow its margins, Steve Filton, chief financial officer of UHS, said on a Wednesday call with investors.
“We've been a little bit cautious about our ability to expand margins,” Filton said. “Some of these expense increases [over the past several years] have been a bit unpredictable. Physician subsidies in 2023 are a perfect example. So I think we've been prudently cautious in how we look at the profitability growth.”
Pennsylvania-based UHS operates 27 acute care hospitals and 333 behavioral health inpatient facilities, as well as a network of freestanding emergency departments and outpatient facilities in 39 states and Washington, D.C., according to the earnings statement.
Patient volumes increased in UHS’ acute care hospitals and behavioral healthcare facilities last year, but behavioral health services revenue in particular drove UHS’ growth, CEO Marc Miller said on the call.
Adjusted admissions at UHS’ acute care hospitals increased 7.6% on a same-facility basis during 2023, while adjusted patient days increased by 4.7% compared to 2022.
However, net revenue per adjusted admission dipped slightly, falling 0.6% compared to 2022.
In contrast, at behavioral health facilities adjusted admissions increased 3.2% on a same-facility basis. Adjusted patient days rose 2.1%, as compared to 2022.
Behavioral health centers’ net revenue per adjusted admission increased by 4.7% as compared to 2022.
During the fourth quarter, patient growth was also greater at acute behavioral hospitals, according to Miller. The executive said he expects patient demand for behavioral services will remain “robust” in 2024.
