Nearly eight months after the coronavirus first swept the country, Universal Health Services (NYSE: UHS) is still feeling the headwinds of COVID-19.
At its behavioral health facilities on a same facility basis, UHS saw admissions decrease 5.6% year-over-year in Q3, while adjusted patient days decreased 3.6% as compared to the third quarter of 2019.
Despite the downturn, UHS leaders looked to the positives Friday during the company’s third-quarter earnings call, predicting continued improvement and growing behavioral opportunities going forward.
“Despite a number of headwinds, including a decline in referrals from acute care emergency rooms, from schools … and from travel restrictions on potential patients, patient days at our behavioral health facilities improved during this year’s third quarter to approximately 97% of the volume realized during last year’s third quarter,” executive vice president and CFO Steve Filton said during the call.
As the country gets back into a more normal routine, Filton is confident that trend will continue. In fact, when that happens, he predicts UHS could see behavioral demand even exceed pre-COVID-19 levels, as the virus has worsened the country’s mental health and substance abuse crises.
“I’m not exactly sure when that will be, but when that occurs, we believe that there is a reservoir of behavioral volumes still to be satisfied,” Filton said.
Based in King of Prussia, Pennsylvania, UHS is one of the nation’s largest hospital management companies. It owns and operates both acute care hospitals and behavioral health facilities. On the behavioral side, UHS has 330 facilities across the U.S., the United Kingdom and Puerto Rico.
In Q3, UHS saw net revenues increase more than 3% year-over-year, coming in at about $2.9 billion. Nearly 1.3 billion — or about 45% — of those revenues came from UHS’ behavioral health arm.
Despite the fact that behavioral admissions and adjusted patient days decreased in Q3, behavioral revenues actually increased. They were up about 1.2% year-over-year.
Filton attributed the mismatch to a number of factors.
“We found that we are getting the benefit of some higher contractual rate increases,” he said. “We’re seeing the impact of a little bit more leniency on the part of managed care companies in terms of things like denials and concurrent utilization management. There were small amounts of positive reimbursement adjustments in this quarter and also some negative adjustments in last year’s third quarter.”
As of Sept. 30, UHS had received $396 million from various governmental stimulus programs, most notably the Provider Relief Fund (PRF) created by the CARES Act.
The company’s stock was up nearly 4% as of end-of-day trading Friday. It closed at $109.55.