Universal Health Services (UHS) capped off its third quarter with above-expected performance across its acute care segment that was "largely offset" by its hamstrung behavioral care business.
Overall, the for-profit system brought in $218.4 million in net income, or $2.60 per diluted share, during the third quarter of 2021, a dip below the $241.3 million it reported during the same time last year.
Net revenues improved 8.4% year over year, growing from $2.91 billion to $3.16 billion during the quarter.
The report places UHS’ year-to-date net income at $752.5 million, up from the $635.2 million it reported for the same nine-month period of 2020. Year-to-date net revenues during the same intervals increased 10.6% from $8.47 billion to $9.37 billion.
RELATED: Despite raising guidance for 2021, UHS still has concerns about COVID's strain on labor markets
During the past quarter, UHS saw a 12.4% and 10.9% year-over-year rise in adjusted patient admissions and adjusted patient days, respectively—increases partially fueled by COVID-19 patients returning to the system's hospitals.
However, UHS said that it was also able to haul in more revenue from these and other acute care patients than it had in previous waves.
Excluding the impact of government stimulus received during 2020, net revenue per adjusted admission and net revenue per adjusted patient day increased 1.3% and 2.7% year over year, respectively. Quarterly net revenues generated from acute care services increased 13.4% during the same periods, again excluding 2020's governmental stimulus.
"This COVID surge resulted in increased revenues due to the higher acuity and incremental government reimbursement associated with COVID patients," Filton said. "Unlike previous surges, however, non-COVID volumes including emergency room visits and elective and/or scheduled procedures were not crowded out and in fact were running at or near pre-pandemic levels. As a result, acute care revenues were higher and managed to offset the premium labor costs and increased supply expense associated with the COVID patients.”
UHS’ behavioral health care services saw a 2.7% and 2.1% year-over-year decline in adjusted admissions and adjusted patient days as the most recent COVID-19 surge presented "significant challenges" for the segment, Filton said.
"Volumes were pressured throughout the quarter due to the capping of bed capacity, in some cases to properly isolate COVID patients and in other cases because of a shortage of appropriate patient care personnel," he said. "Generally behavioral patient days during this quarter ran 4% to 6% below comparable pre-pandemic levels."
Filton characterized the workforce shortage as the primary factor limiting its business. But whereas acute care hospitals are able to raise wages to secure contract nurses and maintain services, UHS had trouble finding anyone to fill in for the lower-paying behavioral nursing positions, he said.
These labor pressures have so far been "very much tied" to COVID-19's resurgence, with UHS seeing greater vacancies—and therefore reduced services—in markets that were hardest hit during the delta wave, Filton said. As vaccination rates increase and new cases taper off, he said he was optimistic the system will see relief on the labor front.
"We remain pretty bullish about the idea that if COVID volumes overall recede, as they have started to do, I think, in the last four, five, six weeks, we’ll start to see some easing of those labor pressures," he said. "Maybe not immediately, because I do think there is a time lag associated with a lot of these commitments of traveling and temporary nurses, and I think we saw that in Q1 where even as COVID volumes declined as early as January 2021 it took a while for us to enjoy the benefits of that.”
RELATED: HCA posts $2.2B profit after 'most intense surge' of COVID-19 in Q3, higher labor costs
In the meantime, UHS has continued to combat the high levels of workforce churn with retention initiatives and a "record" number of new hires, Filton said.
King of Prussia, Pennsylvania-based UHS owns and operates 27 acute care hospitals, 40 outpatient facilities, 333 behavioral health facilities, an insurance offering and other related services. It employs approximately 89,000 people.
The system reported $11.6 billion in full-year 2020 revenues, which was up 1.6% from the previous year’s $11.4 billion despite the pandemic.
UHS' latest earnings fell below the street’s consensus estimate of $2.76 earnings per share, whereas revenue exceeded analysts’ expectations of $3.11 billion for the quarter.
As of Sept. 30, the system said it had roughly $190 million of cash and cash equivalents.
The Pennsylvania-based system’s performance lags that recently reported by fellow for-profit systems Tenet Health and HCA Healthcare. Both acknowledged the return of COVID-19 cases and patient volumes but improved their net incomes compared to the third quarter of 2020.