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UHS sees income jump 15.3% under ACA


By Beth Kutscher
Posted: April 24, 2014 - 7:15 pm ET
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(This article was updated at 2:55 p.m. ET on Friday, April 25, 2014.)

Universal Health Services saw a 2% to 3% reduction in uninsured volumes, with a commensurate increase in Medicaid and commercial volumes as a result of healthcare reform, company officials said on an earnings call Friday.

The effect was most pronounced in California, which has made a big push to promote its insurance exchanges; Nevada, which has had strong Medicaid enrollment, and the District of Columbia, the King of Prussia, Pa.-based operator said.

UHS on Thursday was the first publicly-traded chain to report earnings for a quarter that reflected the impact of insurance expansion effective Jan. 1.

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It saw a 15.3% improvement in net income and a 4.8% bump in revenue as margins improved in its acute-care business and remained strong in behavioral health. First-quarter net income came in at $138.1 million on revenue of $1.9 billion compared with net income of $119.8 million on revenue of $1.8 billion during the prior-year period.

Patient volumes continued to slip, with the chain reporting that adjusted admissions fell 0.5%. However, revenue per adjusted admission increased 6.3% as adjusted patient days also increased 4.6%. In addition to the boost from healthcare reform, the chain saw increased surgical volume due to the improving economy, Chief Financial Officer Steve Filton said on an earnings call.

The company's operating margins in the acute-care business improved to 19.8%, up from 16% in the first quarter of last year.

Gross charges for charity care, uninsured discounts and provision for doubtful accounts decreased slightly year over year. Last year, UHS said it was forecasting a 3% boost from the Patient Protection and Affordable Care Act on its acute-care division.

But payer mix improvements also were evident in non-expansion states that could be attributable to factors such as physician recruitment or narrow network contracts, Filton said on Friday's call.

“We certainly feel there was a benefit from reform for the quarter but it's difficult to quantify with precision,” he said.

In behavioral health, a historically strong division, UHS reported a 2.3% increase in adjusted admissions and flat revenue per adjusted admission. Margins decreased to 27.9% from 28.5% in first quarter 2012.

There was no visible impact of healthcare reform on the behavioral health business, Filton said.

UHS also reported the completion of a deal in which it acquired a 124-bed behavioral health facility, the Psychiatric Institute of Washington in the D.C.

Follow Beth Kutscher on Twitter: @MHbkutscher


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