The tone of the Universal Health Services (UHS) investor call last October was generally hopeful as the for-profit chain enjoyed greater-than-expected acute care revenues and projected a steady decline in COVID-19 complications with the coming new year.
Speaking today at the virtual J.P. Morgan Healthcare Conference, however, Chief Financial Officer Steve Filton acknowledged that his company’s hopes have been put on pause for at least three months due to the latest omicron surge.
“As we think about 2022, we feel like our overall view of the businesses has not changed dramatically but the timeline has been elongated and the recovery we thought was going to occur throughout the fourth quarter has now been postponed to sometime in the first quarter,” he said.
The company’s acute care operations are being challenged, but not quite to the extent they were one year prior, Filton said.
The high transmissibility but relatively less severe nature of omicron infections means that acute care volumes are high but proportional ICU utilization is lower during the current surge, he said. Alongside the COVID-19 cases, consumers have not stopped lining up for the procedures and non-emergency care services that were at risk early in the pandemic.
“We don’t believe that … the underlying and fundamental demand for both of these business segments has really changed during the pandemic,” Filton said.
The major issue across UHS’ business has been labor, Filton said, with its behavioral segment still at risk for staffing-related service shutdowns as behavioral health nurses leave for higher-paying acute positions.
The company is continuing to eat the increased costs of contract workers, he said, and is working under the assumption that the labor market will restabilize during the months after national COVID-19 cases have finally wound down.
The new wrinkle of omicron is that more workers than ever are being sidelined by their own COVID-19 infections, he said.
While this has made the last month’s labor situation more difficult than during the earlier pandemic, there is the silver lining of less severe illness and quicker returns to work, he said.
On the flip side, less severe COVID-19 patients have not translated to shorter length of stay at UHS hospitals, Filton noted, and challenges discharging patients into downstream care settings keep the need for hospital staff high.
“We’re finding almost across the board difficulties in discharging patients on a timely basis because the facilities to which we’re referring are experiencing all the same issues that we have,” he said. “So, in whatever the community is, the nursing home has 20% of their beds home, the rehab center has two floors closed or whatever because they can’t find enough folks and they’ve got all the same issues I described in the beginning.
“Again, our hope and expectation as the omicron situation starts to stabilize and volumes go down, is that stabilization occurs throughout the continuum and we’ll get … relief.”