UHS Credits Tough Negotiating Stance with Payers for Favorable Rates

Playing hardball with payer rates has paid off for behavioral health behemoth Universal Health Services.

Despite the challenging supply-demand dynamics during the pandemic, Universal Health Services demonstrated resilience and adaptability, reporting strong payer rates in its behavioral health business.

“We just had more optionality in negotiating with payers being able to get our payers to pay us what we thought was an adequate rate for the care of their patients,” UHS CFO Steve Filton said at RBC Capital Markets Global Healthcare Conference this morning. “In those cases where we couldn’t get payers to pay us those adequate rates, we were probably more willing than usual to cancel contracts, etc. If you cancel contracts with your lowest payers and you’re able to fill those beds with other patients, it has the impact of improving your cosmetic pricing.”


While this dynamic began in the pandemic, the demand for behavioral health services remains elevated.

“The pricing in behavioral [health] has shown a fair amount of residual strength,” Filton said. “I think that’s a function of the high level of demand for those services and doesn’t seem to be diminishing anytime soon.”

Meanwhile, the labor market has improved, which has allowed for an improvement in capacity.


“I would say broadly, the labor situation has improved quite measurably in behavioral but we still find pockets where it can be a challenge,” Filton said.

Still, the company is looking to expand its services, particularly in outpatient care. Filton said the company’s ability to provide a continuum of care is an advantage over some of the smaller players in behavioral health that only provide a niche segment of services.

“We think that there’s an advantage both to a patient and whoever pays and pays the bill for the patient, whether that’s their insurance company, their employer, etc. to really have a provider who can provide a much more fulsome continuum of care and that’s, that’s our goal,” he said.