For-profit health system Universal Health Services reported higher net income in the second quarter of 2020, despite dwindling patient volumes during the quarter.
King of Prussia, Pa.-based UHS grew profit 6.3% to $256.5 million, beating analysts' projections in a quarter that was expected to be rough for hospitals as the COVID-19 pandemic shut down elective procedures and routine care appointments. The results came a week after HCA Healthcare reported a 38% jump in profit.
UHS said its bottom line in the second quarter was helped by $218 million in net revenues from federal stimulus funding, mostly from the CARES Act. The company has received $320 million in stimulus funds as of June 30. Additionally, during the quarter it received $375 million in Medicare accelerated payments, which it said did not affect earnings.
In a call with analysts on Tuesday, CFO Steve Filton said UHS cut expenses to mitigate the decrease in revenues by reducing labor and supply costs and pulling back on planned capital spending. UHS reduced operating expenses 5.5% year over year to $2.4 billion. Salaries, wages and benefits totaled $1.3 billion, a decrease of 5.5% over the same quarter a year ago. Supplies costs dropped 7% to $283.6 million.
UHS said its revenue fell 4.4% to $2.7 billion compared with the same quarter in 2019. Revenue for both acute care services and behavioral health services decreased. Adjusted admissions in acute care hospitals fell 24.8% year over year on a same facility basis, while adjusted admisisons at behavioral healthcare facilities decreaed 15.4%.
The company said that while significant declines in patient volumes continued from the first quarter into the first half of April, volumes began to rebound in May and June as many states lifted restrictions on elective procedures. However, in late June and July, most UHS hospitals experienced an uptick in COVID cases, though the resurgence hasn't come with "the same magnitude of non-COVID case declines that we experienced in the first wave in the March and April timeframe," Filton said.
Filton noted that UHS was better prepared for this second wave in COVID cases with more personal protective equipment and greater ICU and isolation room capacity. Challenges remain in getting COVID-19 test results back quickly, he said.
On the behavioral health side, UHS experienced a decrease in referrals from acute care Eds and schools during the quarter. But by mid-June, behavioral patient volumes had returned close to pre-pandemic levels.