Now that behavioral health staffing has stabilized, Universal Health Services (NYSE: UHS) is focusing on its expansion efforts. And in the not-too-distant future, those efforts could include more medication-assisted treatment (MAT) services for addiction care.
UHS has offered substance use disorder (SUD) treatment for years. But Steve Filton, the company’s CFO and executive vice president, said it could soon be taking a closer look at MAT, specifically.
“We’ve always had a significant presence in addiction treatment and will probably expand our capacity in medically assisted treatment, at least incrementally,” Filton said Friday morning at the 2023 Wells Fargo Healthcare Conference. “[And] continue to build out our ability to treat people with addiction illness because, unfortunately, socially, that just seems like it’s not going away as a problem.”
King Of Prussia, Pennsylvania-based Universal Health Services is one of the largest behavioral health operators in the U.S. It has about 406 acute care hospitals, behavioral health facilities, outpatient facilities and ambulatory care locations across its footprint.
MAT has become the “gold standard” for treating opioid use disorder (OUD). It typically includes medication in combination with counseling and behavioral therapies. MAT options also exist for individuals with alcohol use disorder (AUD).
UHS has cared for patients with SUD more traditionally over the years. Its offerings include drug and alcohol detox, step-down programs, sober living and aftercare.
Patients can access these services across multiple levels of care, including residential, inpatient, outpatient and partial hospitalization.
“We’ve been treating patients with addiction issues for years and years and years. We’ve tended to do that in a more traditional, therapeutic way,” Filton said. “But the business that we haven’t necessarily gotten into in a big way that our public peer has is medically assisted treatment, methadone clinics.”
Filton noted that having SUD treatment integrated into a larger continuum of behavioral health services makes sense from both care and payer perspectives.
“For a company like us that has such a broad continuum of care … across the continuum of inpatient, post-inpatient and outpatient care and across many diagnoses, … having that arrow in the quiver of medically-assisted treatment makes sense,” Filton said. “So I think we’ll continue to develop more of a presence in that business. I think it will be integrated and more synthesized into our full continuum of care, which we think is going to be most attractive to employers, insurers and to the government.”
UHS’ interest in MAT service expansion comes at a time when rates of SUD are at an all-time high. Roughly 40.3 million people in the U.S. have had an SUD in the past year, according to the 2020 National Survey on Drug Use and Health.
One of UHS’ main behavioral health competitors, Acadia Healthcare Company (Nasdaq: ACHC), has doubled down on its plans to expand its comprehensive treatment centers (CTCs), which provide MAT and medical and social support services.
As of 2022, Acadia boasted 148 CTCs, making up 60% of its total footprint. And the provider anticipates that number is expected to grow over the next few years.
On Wednesday, Acadia CEO Chris Hunter hinted that there was an M&A opportunity in the CTC space.
“We’re really bullish on M&A. Our balance sheet is very strong,” Hunter said. “I would say there are several lines of business, CTC is certainly one, where we’re seeing a number of opportunities come to us.They see us as the acquirer of choice and they know that M&A is a part of our strategy and that we’re financially strong and certainly a close is obviously very important.”
Beyond just the need for more SUD services, there could be several tailwinds propelling the growth of MAT care. For starters, opioid manufacturers and distributors are paying more than $54 billion for their role in the opioid epidemic.
The bulk of these payments will be made to state and local governments over about 18 years. States must spend 70% of the money on opioid-related expenses, including treatment and purchasing overdose reversal medications.
This could mean an influx of funding for treatment programs.
“States are frequently passing it down to the counties,” Hunter said. “It’s a windfall of dollars and [county commissions] are frequently at a loss as to how to spend the capital. So I think we’ve done a really good job in the early grants that we’ve been able to win our fair share. … I think it’s really more of a 2024 and 2025 phenomenon in terms of really driving our business, but we see it clearly as a really nice tailwind.”
Operators with brick-and-mortar locations may also have a leg up when providing MAT care.
Earlier this year, the Drug Enforcement Administration (DEA) published proposed rules that would essentially end the virtual prescribing of controlled substances, which includes MAT drugs, without in-person visits within 30 days of the prescription.
After a wave of backlash from the industry, the DEA released a temporary rule extending COVID-era telehealth prescribing flexibilities until November. But as November inches closer, there is still a lot of uncertainty around what is next for virtual providers and their patients.
As for behavioral health staffing stabilizing, UHS executives point out the situation has continuously improved as the industry distances itself from the worst of the COVID-19 pandemic.
As its ability to staff improves, the company hopes to return to its mark of adding tens of thousands of new behavioral health beds each year at its facilities.
“We’ll return to a model in which, you know, we’re pretty routinely adding 100,000 new beds a year, where the demand is justified,” Filton said. “Because we’ll be able to staff those beds.”
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