Universal Health Service (NYSE: UHS) has reported strong annual financial performance – as well as concern regarding potential Medicaid budget cuts.  

Medicaid changes have negatively impacted UHS’s behavioral health arm before. In 2024, the provider attributed low behavioral health patient days, in part, to Medicaid redeterminations. 

“We acknowledge that the current political environment has created a level of uncertainty, especially as it relates to ongoing Medicaid reimbursement,” Marc Miller, CEO of UHS, said Thursday on the company’s Q4 2024 earnings call. “Our 2025 forecast is based on current Medicaid reimbursement projections in connection with various programs that could be subject to change.”

The company announced net income of $332.4 million in Q4 2024, compared to $216.4 million in Q4 2023.

Despite the political uncertainty regarding potential budget cuts, Steve Filton, executive vice president and chief financial officer, reported confidence that provider tax and directed payment programs maintain broad support.

“There is a fair amount of support throughout the country for Medicaid programs and protecting Medicaid programs,” Filton said. “There hasn’t been a whole lot of discussion specifically about directed payment programs, but we believe that there’s a significant amount of political support at the state level for those programs in a great many states.”

Both Republican and Democratic states support these programs, Miller added.

UHS is basing its 2025 forecast on government programs that have historically been approved, Filton said.

The company’s behavioral health services performed strongly in Q4 2024 and throughout the entire year.

Same facility revenues generated from behavioral health hospitals increased by 11.1% during Q4, which Miller said was driven primarily by an 8.7% increase in revenue per adjusted patient day. The company forecasts 2.5% to 3% increases in same-facility patient day growth in 2025. The company sees demand for behavioral health services as still “solid.” 

Still, patient days lagged behind projections in the second half of December 2024. UHS ended Q4 at 1.6% growth for adjusted patient days, below its earlier forecasts. Miller attributed this dip to Christmas and New Year’s holidays falling in the middle of the week, leading to softer-than-anticipated results, especially among child and adolescent populations.

“We did see a fairly dramatic decline in our patient day volumes in behavioral in the back half of December,” Filton said. “Volumes tended to rebound in early January, which led us to believe that that was really kind of a temporary, transient sort of thing. We’ve struggled a little bit over the last month, mainly because of difficult winter weather around the country, particularly in places that, quite frankly, are not generally used to or equipped for winter weather.”

Since the limiting factors were temporary, Filton said that achieving 2.5% to 3% patient day growth “should not be a heroic metric to achieve.” The company outlined behavioral health revenue growth of between 6% and 8% in its 2025 guidance.

UHS is also continuing to invest in its behavioral health hospitals and has accelerated technology investments, including electronic health record (EHR) implementation and expanded use of patient monitoring automation.