The outpatient behavioral health space has been a hotspot for investment activity and dealmaking. But now legacy providers are beginning to eye the space as a potential for expansion.

Universal Health Services (NYSE: UHS) is best known for its acute inpatient behavioral health services. While the provider has a history of outpatient facilities, the bulk of these facilities have been in the step-down care segment.

“We’ve always had a presence in outpatient care in our behavioral business; it has historically been focused on what we call downstream referrals,” Steve Filton, chief financial officer at UHS, said during the KeyBanc Capital Markets Virtual Healthcare Forum on Tuesday. “These are patients who are being generally discharged from our inpatient facilities. But still require some level of care, in some cases … intensive outpatient or partial hospitalization [programs]. These people are continuing to get four or six hours of care a day, they’re just not staying overnight, and that’s historically been the bulk of our outpatient business.”

However, the provider is now looking to expand its outpatient services to patients with less acute behavioral health care needs. Filton explained that UHS has outpatient services that are typically located separate from its large inpatient campuses.

“What we have found is that patients who are not necessarily being discharged from an inpatient facility but are sort of new to the system often feel more comfortable being treated in a setting that’s in a strip mall, some location that is not on the campus of an acute behavioral hospital,” Filton said.

While UHS sees opportunity in the outpatient space, there are challenges for the legacy inpatient provider.

“I think the outpatient market is growing,” Filton said. “We’ve, I think, struggled to get our share of that because I think of our inpatient focus. So in the coming years, we’re going to try and do a better job, more efficient job, of retaining the outpatient volumes.”

The company plans to add about a dozen outpatient facilities a year. Still, Filton said that the changes will likely not “change the landscape of the business.”