The behavioral health arm of Universal Health Services (NYSE: UHS) is seeing growth in its outpatient services following a management reorganization that assigns leaders dedicated to the development of care outside of the legacy inpatient business.

The King of Prussia, Pennsylvania-based health care facility operator reported a roughly 6% increase in behavioral health outpatient revenue in the third quarter of 2025, a notable increase compared to other quarters. So far this year, outpatient behavioral health revenue is up 2.4%.

UHS, a large acute care and behavioral health care facility operator, has long focused on its inpatient behavioral health business. Executives at the company said during its third-quarter earnings call on Tuesday that it has always had outpatient services at its hospitals but never emphasized them within the operation of the business or considered detaching them from those campuses.

“Where we haven’t really had much of a presence historically is what we describe as step-in business,” Steve Filton, executive vice president and CFO for UHS, said during the call. “These are patients who enter the behavioral system in an outpatient setting, and often are not comfortable doing that and entering the system on a hospital campus.”

Filton said earlier in the year that part of UHS’ focus on the behavioral health side was to improve retention of the “step-down” care for patients discharging from inpatient stays and to better emphasize care that doesn’t start at a UHS hospital.

By year’s end, UHS intends to have opened 10 new “step-in” outpatient programs under local brands as well as the fledgling UHS Thousand Branches Wellness brand, UHS CEO Marc Miller said during the call. It launched the brand in 2024.

Thousand Branches Wellness locations are freestanding outpatient facilities that offer in-person and virtual services. Specific service types include intensive outpatient, medication management and individual therapy. Overall, Thousand Branches treats adolescents ages 12 to 17 and adults.

During the company’s 2025 second-quarter earnings call, Filton said it intended to open 10 to 15 freestanding outpatient centers each year over the next few years.

The Thousand Branches website lists 11 locations, three of which are virtual only. UHS opened four locations in 2024, according to its annual report. 

UHS outpatient services operating under an existing hospital’s license are branded as Branches.

In the future, UHS hopes to better compete for the increased demand for outpatient mental health services in the U.S. being offered in spaces other than dedicated behavioral health spaces, such as emergency rooms, urgent care settings, nursing homes, retail pharmacies and “mom and pop operations.”

“Given the clinical product that we can offer in our in- and outpatient facilities, given our in-network position with many of these managed care companies, etc., we believe that there’s an opportunity for us to capture an incremental amount of that,” Filton said.

Inpatient behavioral health revenue increased about 9% to $3.07 billion in the quarter.

Across all behavioral health services, net revenue increased 9% to about $1.86 billion in the third quarter. Revenue for the division is up about 8% to $5.49 billion for the first three quarters of the year.

Revenue growth in the behavioral health division was driven by increases in net revenue per adjusted admission. For the quarter, that revenue figure is up about 9% for the quarter and about 8% for the year so far.

Admissions have increased modestly in the quarter, up about half of a percent. That increase is 0.2% for the year so far, according to a press release from UHS.

Salary, wages and benefits increased about 9% in the behavioral health division. Filton attributed that partly to hiring related to the company’s increased focus on outpatient care.

“Obviously, that focus and those facilities require additional staff, and we’ve been staffing up for that,” Filton said, adding that the added costs for new staff are preparing UHS to “treat and absorb more patient volume.”

Filton added that the new outpatient centers would not require “a tremendous amount of new capital,” adding that it would take $1 million to $2 million to open a new facility, on average.

“I think the bigger challenge in most places is finding the appropriate number of therapists more than it is a significant capital spend,” Filton added.