Workforce shortages remain one of the biggest challenges at Universal Health Services, but executives express hope this year marks a transition to better operating performance.
The King of Prussia, Pennsylvania-based for-profit system on Monday reported net income of $174.82 million in the fourth quarter, a 27% decline from the $239.12 million reported a year ago. Revenue grew 5.2% to $3.45 billion.
Operating expenses jumped 7.6% to $3.19 billion, due in part to increased costs for salaries and wages, supplies and changes to asset values. That included a write-down on Desert Springs Hospital Medical Center in Las Vegas, which will discontinue impatient care in March. Almost all employees have been assigned to another facility.
Last year, Universal Health Services subsidiary Valley Health System broke ground on a nearby hospital in West Anderson–viewed as a replacement for Desert Springs–and plans to open it in 2024.
A shortage of workers remains a big challenge, creating a "material unfavorable impact" driven by high labor costs and a need for contract labor, the system said in a news release. It said its behavioral healthcare facilities in particular have been unable to fill job openings and, as a result, been forced to limit patient volumes.
On the earnings call with investors Tuesday, Chief Financial Officer Steve Filton said he expects the behavioral health segment to stabilize in the year's second half. Universal Health is reducing its reliance on registered nurses in that segment, instead looking to hire licensed practical nurses or mental health technicians.
The system’s acute care segment has struggled with the decline of higher-acuity COVID-19 patients and a larger shift toward outpatient care, Filton said.
“One of the lessons that we’ve learned during the pandemic is that even as COVID volumes decline, there is this sort of transition period as nurses return to their regular jobs and physicians return to their regular practices and patients return to their regular utilization practices,” Filton said. “I would say probably the back half of 2023 looks a lot more like maybe the back half of 2019, the last COVID-free capital year that we experienced.”
Universal Health operates 28 acute-care hospitals, 331 inpatient behavioral-health facilities and 39 outpatient facilities and ambulatory care locations across 39 states, plus Washington, D.C., Puerto Rico and the United Kingdom.
For the full year, it reported $675.61 million in net income, compared with $991.59 million in 2021. Revenue increased 6% to $13.4 billion, and operating expenses rose 9.9% to $12.4 billion.
In February 2022, the system's board approved the repurchase of as much as $1.4 billion of the system's shares. At year's end, $947 million of that pool remained available.
Shares for Universal Health closed at $146.08 each on Monday, a 2.4% increase year-to-date. They opened at $129.89 each on Tuesday.