How high-deductible plans might be affecting Universal Health Services' surgery business

Universal Health Services
UHS reported profits of $234.2 million, or $2.57 per diluted share, in the first quarter of 2019 compared to $223.8 million, or $2.36 per diluted share, during the same quarter in 2018. (Universal Health Services)

As King of Prussia, Pennsylvania-based Universal Health Services reported its first-quarter earnings last week, one of the trends it noted was a sluggish start to the year for surgeries such as hip and knee replacements or stent and open heart procedures.

Specifically, there was a shift from these higher-margin, higher-revenue surgical patients to lower-margin, lower-revenue medical patients, "which is not really that sort of typical pattern particularly early in the year," UHS Chief Financial Officer Steve Filton said on an earnings call with analysts.

While that business has since shown signs of picking back up, it begged the question from one caller as to whether the growth of high-deductible plans among patients might be changing consumer behavior. 

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In short: It could be.

"We have long seen late in the year in November and December, an uptick in elective procedures as people have satisfied their deductibles and look to have those procedures and those treatments done at that time and then we see kind of a slow start in January, February as the clock resets on their deductibles," Filton said. 

But it's long been speculated that the dynamic would be exacerbated as more plans become high-deductible plans and those plans get higher deductibles, he said. 

"I think it's not an unreasonable sort of postulation that that's some of what we see happening," Filton said. But it'd be difficult to prove, he said.

"I think the payers would probably be in a better position than we are to make those sort of judgments. But there is certainly has been speculation on the part of our operators that that may be a dynamic in what's happening," he said. 

RELATED: Universal Health Services officials 'optimistic' for resolution in DOJ investigation soon

Even so, UHS reported profits of $234.2 million, or $2.57 per diluted share, in the first quarter of 2019 compared to $223.8 million, or $2.36 per diluted share, during the same quarter in 2018

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