Universal Health Services Inc (NYSE: UHS) has been seeing a high demand for health care services, even though it has also had to turn away some of that demand due to behavioral workforce shortages.

Although bed capacity is on the rise for UHS, the hospital operator believes there is more room for improvement on the behavioral front.

“At the end of the day, I think what fuels our confidence and our bullishness has always been indications of underlying demand – whether they are the volume of inquiries we get from our own patient population, or macrometrics that we get from the behavioral industry,” UHS Chief Financial Officer Steve Filton recently said during the 42nd Annual Cowen Health Care Conference.

Filton said that UHS has been adding 300 or 400 beds a year for the last 15 years. Headquartered in King of Prussia, Pennsylvania, UHS operates over 300 facilities across 38 U.S. mainland states and Alaska, as well as in Puerto Rico and the United Kingdom.

UHS’s most recent growth has come about through joint ventures (JVs) with acute care providers. Filton said that in some instances, UHS’s partners do not feel as though it can adequately handle behavioral health services.

“It’s a significant source of growth for us,” Filton said about JVs. “More than 50% of the behavioral beds in the US are run by acute care hospitals. We have found that most of those acute care hospitals seem to acknowledge that they don’t do a very good job of running that service line.”

Filton himself did not hold back his thoughts about the way in which he feels acute care hospitals provide behavioral services. 

“It’s probably their 10th or 12th priority,” he said. “They’re anxious to have somebody who’s really focused on the behavioral business come in and run that for them, but they don’t want to exit the business.”

UHS previously sounded a bullish tone about its behavioral health business during the company’s 2021 earnings call last month, where it reported revenue overall up for the year and earnings that beat estimates.

Although Filton reiterated during the Cowen conference that service demand is booming for UHS, he also acknowledged that the company is having trouble meeting that need due to staffing shortages.

UHS’s staffing issues are part of a large dilemma playing out across the behavioral health industry, as more than a third of the country currently reside in areas lacking providers due to staffing shortages.

“What has limited that opportunity over the last several years – even though we’re building the beds – is we’re having trouble staffing the beds,” Filton said. “We haven’t always been able to meet the demand created by these new beds.”

Filton said that UHS is trying to address the issues on its own turf by increasing resources to recruit and retain workers, such as through the creation of mentorship programs and education advancement opportunities. He cited nurses as being a target group for such initiatives.

“They’re making generally $15-20 an hour, and they’re critical to the patient care model in behavioral,” he said. “They’re making sure that the patients are up and about and getting to therapy sessions, and not getting in trouble.”

Filton also said that he is confident that UHS will have more workers going forward to meet the need for services, particularly for new beds.

UHS’s labor challenges – like those of other sub-acute providers – have been exacerbated by workers like nurses taking contract jobs elsewhere during the pandemic, which promise higher pay.

“We’ve all suffered through losing employees to the acute care setting, during the Covid environment,” he said. “As all these other service lines and businesses recover from the labor shortage, it will provide some opportunity for us to discharge some of these patients and have a more efficient discharge process.”