Universal Health Services' profit took a hit at the end of 2018, but its full-year results still showed modest growth.
Net income attributable to the King of Prussia, Pa.-based hospital chain was $158 million in the fourth quarter of 2018, down 28% from the prior-year period, according to its latest financial filing. Full-year 2018 net income was $780 million, up 3.6% from 2017.
UHS reported nearly $2.8 billion in revenue during the fourth quarter of 2018, up 4% from $2.6 billion in the prior-year period. Full-year 2018 revenue was $10.8 billion, up 3.5% from $10.4 billion in 2017. Revenue exceeded the expectations of analysts with Zacks Investment Research, which projected $2.73 billion in revenue in the quarter and $10.74 billion in the full year.
Operating income dropped 23% in the quarter to $260 million, and dropped 8% in the full year to $1.2 billion.
Adjusted admissions to UHS hospitals grew 2.1% on a same-facility basis in 2018 year-over-year, and same-facility adjusted patient days grew 4.8%. Revenue per adjusted admissions was up 4.1% in that time.
On the behavioral health side, adjusted admissions to UHS hospitals grew 3% in 2018 year-over-year on a same-facility basis. Adjusted same-facility patient days grew 0.5%.
UHS' behavioral health revenue grew by 2.6% on a same-facility basis in all of 2018, which means the company missed its goal of growing same-facility behavioral health revenue by 5%. The company's Chief Financial Officer, Steve Filton, had warned on UHS' third-quarter earnings call in October that UHS likely would not meet that goal in 2018.
On the company's earnings call Thursday morning, Filton said the company is no longer projecting a specific time frame for returning to 5% same-store behavioral revenue growth. In 2019, UHS expects that metric to be similar to last year.
Much of the pressure on UHS' behavioral health revenue comes from its Medicaid patients moving from fee-for-service into managed care, under which plans tend to approve shorter lengths of stay. Filton said on the call that in the fourth quarter of 2018, at least 65% of UHS' Medicaid patients were in managed care plans, compared to 50% about 18 months earlier. Going forward, he said the company projects Medicaid length of stay will continue to decline by 1% to 2% per year.
"We are heartened by the idea that…the underlying demand for behavioral services continues to be strong throughout our portfolio and service lines, et cetera," he said. "That continues to be our view and our whole focus, is just on doing the things we have to do to be able to solve the issues, whether they're labor shortages or length of stay issues, that will allow us to get to a level of historical benefit from that underlying demand."
UHS is partnering with SoutheastHEALTH to build a $33 million, 102-bed behavioral health hospital in Cape Girardeau, Mo., Filton announced on the call.
UHS added another $102.3 million to its settlement fund related to the Department of Justice's false claims investigation into its behavioral health operations in 2018, bringing the total to $123 million at the end of the year. The fund was at $90 million as of Sept. 30, 2018.
Filton said on the call that the company and government have been in negotiations over a monetary settlement, and the $123 million reflects UHS' latest offer.
"It's worth noting that the gap between our offer and the government's demand has narrowed quite considerably," he said.
Once that piece is out of the way, Filton said he hopes other components of the settlement—such as the release terms and compliance agreement—will fall into place quickly.