Medicaid redeterminations have begun to impact Universal Health Service’s (NYSE: UHS) behavioral health arm.

Overall, behavioral health patient days were slightly lower in Q2 than expected, at a 1.4% increase compared to the second quarter of 2023. UHS CFO Steve Filton attributed the slow growth to staffing pressures, Medicaid redeterminations and some facility-specific issues. 

Filton noted that Medicaid redeterminations have hit the adolescent population particularly hard, and this population has been slow to get on commercial exchange programs.

Geography is another significant factor in redeterminations.

“Medicaid disenrollments, particularly in the southern states, Texas and Mississippi, Louisiana, Arkansas, have had more of an impact on our business as people have gotten disenrolled from Medicaid, and it has taken them some time to get either re-enrolled in Medicaid or into a commercial exchange program,” Filton said. “If they get into a commercial exchange program, they often have high co-pays and deductibles, which make meeting their financial requirements difficult at behavioral hospitals.”

Still, Filton said he is optimistic about the growth of patients for the rest of the year, noting that the initial 3% patient day growth target that was embedded in the company’s original 2024 guidance is achievable–likely not for the full year–but for later quarters in 2024.

Overall, UHS reported that its behavioral health segment increased its net revenue per adjusted admission by 11.2% and net revenue per adjusted patient day by 9.3% compared to the second quarter of 2023. Generated net revenue for the company’s behavioral health business also increased 11% during the second quarter over the previous year.

UHS, as a whole, reported a net income of $289.2 million in the second quarter of 2024, up from $171.3 million in the second quarter of 2023.

The public spotlight

UHS has come under the spotlight over the last year for allegations of abuse and neglect at some of its facilities. It was also one of the companies named during a senate hearing and report focused on wrongdoing and mistreatment of patients at at-risk youth facilities.

“We have seen virtually no impact from the Senate hearing and report. I think the greatest impact we would expect to have seen would be from referral sources,” Filton said. “But I think … the lesson is that referral sources understand the business very well. They understand this is a very difficult patient population. They understand that our hospitals do overall, a very admirable job. And I think, the outcomes and the patient satisfaction results suggest that patients are generally satisfied and highly satisfied with their care in these facilities. I think referral sources recognize that.”

Filton went on to say that the provider has seen no impact on volumes or referral sources. Additionally, there has been no incremental regulatory oversight following the hearing.