Universal Health Services (NYSE: UHS) leadership said it’s too early to tell if its $535 million legal case will impact the company’s strategy in the future. 

During the company’s Q1 earnings call, leadership answered a number of questions about the litigation’s potential impact on the company.

UHS subsidiary Pavilion Behavioral Health System has denied any liability in a case that alleged that an underage patient was sexually assaulted by another underage patient in 2020.

“That verdict was, as we noted in the 8-K, unprecedented, both in terms of our own history and cases with similar fact patterns,” Steve Filton, executive vice president and chief financial officer, said during the company’s Q1 earnings call. “We think there still is a great deal of uncertainty around how that specific verdict will be ultimately adjudicated. As a result … we haven’t really had any measurable impact on our financial statements until there is some level of greater certainty around what the ultimate outcome will be.”   

UHS, which has both an acute care and a behavioral health business, reported a net income of $261.8 million or $3.28 per diluted share in the first quarter of 2024. That’s up compared to $163.1 million or $2.28 per diluted share in the first quarter of 2023. Overall, the company reported that net revenues increased by 10.8% year over year to $3.8 billion.

In its behavioral health business, adjusted admission decreased by 0.8%, but adjusted patient days increased by 2% from the first quarter of 2023. In the call, the company’s CEO, Marc Miller, noted that the company projects that patient day volumes will gradually move to more historic norms of growth in the 3% range.

“Behavioral patient days… improved slightly from the pace of the last four few quarters. Our expectation is that it will continue to improve during the year incrementally,” Filton said. “Our underlying guidance for the year seems we’ll get to a 3% patient day growth level. What gives us that confidence is simply that, as we’ve said many times over the last several years, we believe the underlying demand is there. That’s evident in the amount and volume of inbound inquiries we get.”

Filton noted that improving that metric is really about the company’s ability to staff sufficiently and have the capacity to treat the volume of patients in demand of care.

Staffing has also become less of a barrier for the company than in previous years.

“I think we’re seeing wage rate inflation decelerate from the peak levels that it was running at the height of the pandemic,” Filton said. “We’ve made a number of productivity adjustments in both business segments. Over the course of the last six months, as we came out of the pandemic, we reevaluated our products in both segments, particularly in our nonclinical areas, some of which I think grew ahead of the actual need for those resources during the pandemic.”

The company is also benefiting, both in its behavioral health and acute care segments, from a significant increase in Medicaid supplemental payments, which Miller said will help “compensate for several years of inadequate reimbursement levels that have failed to keep up with the costs we had to incur to properly care for our patients.”

Still, Medicaid enrollment trends could see more patients struggling to access behavioral health services in the future.

“I think as a result of Medicaid disenrollments, more patients are moving to exchange coverage, that tends to be a net positive on the acute side,” Filton said. “On the behavioral side, it’s a bit of a toss-up because a lot of these exchange coverages have pretty significant copays and deductibles and given the fact that behavioral care on an absolute basis tends to have a much smaller bill, I think we find that patients who have exchange coverage the bill will not cover their copay and deductible. So sometimes that’s which for Medicaid to an exchange coverage is not a favorable development on the on the behavioral side. It may contribute to the slower growth and patient pay volumes on the behavioral side.”