UHS to Use Behavioral, Acute Businesses as Payers Prioritize Holistic Care

Universal Health Services’ (NYSE: UHS) behavioral health and acute care business segments could be more connected in the future.

While the two segments have largely remained siloed, the move towards holistic care could give the publicly traded company leverage in the future.

“To be perfectly candid, historically our two business segments have not enjoyed a lot of synergies between them,” Steve Filton, chief financial officer at UHS, said Wednesday during Morgan Stanely’s Annual Global Healthcare Conference.


UHS and its subsidiaries own or operate 403 inpatient and outpatient facilities. Its portfolio includes acute care hospitals, ambulatory centers, freestanding emergency departments and urgent care centers, along with behavioral health facilities.

The acute care and behavioral health businesses have operated independently and, in many cases, in different markets, Filton said. But that could be changing.

“I think we have a view that as we move into the future, more employers, more insurers, more people who are paying the health care bills, are interested in organizations that can deliver an integrated, cohesive continuum of care,” Filton said. “We have a feeling that having a strong footprint in both behavioral and acute care segments [is important]. We’re in a position to do that.”


While Filton didn’t completely rule out the businesses separating in the future, he did say the timing was not right. Specifically, the companies have seen a slow recovery in volume since the COVID-19 pandemic.

“The businesses are significantly undervalued at this point in time,” Filton said.

The company’s main focus in the short term is improving the businesses and exploring the synergies between the pair. For example, the company will look at how improving a chronically ill patient’s mental health could help improve their physical illness.

Both business segments have faced significant staffing challenges during the COVID-19 pandemic. This issue continues to persist in the behavioral health business.

“On the behavioral side, quite frankly, we’ve had some amount of temporary traveling nurses and premium pay,” Filton said. “But the reality is, for the most part, we’ve been unable to fill all of our vacancies on the behavioral side and so that labor shortage on the behavioral side has manifested itself not so much through higher cost, although there’s some of it, but to more muted volumes, because we’ve simply not been able to treat all the patients who present themselves to us.”

Filton said that the labor situation is improving but the customer volumes are still lagging. During its Q2 earnings call the company announced that it lowered its earnings estimates for 2022 by 19%.

“I think the disconnect [from] our original expectation or forecast was that volumes would recover almost completely in sync with the labor improvement,” Filton said. “I think for a variety of reasons, there’s been some disconnect between the two and the volume recovery has been somewhat slower than the labor improvement which we are seeing.”

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