UHS sees slowdown in volume growth in Q4

By | February 28, 2020

Dive Brief:

  • UHS reported volume growth for both the fourth quarter and full-year 2019 in results late Wednesday. Adjusted admissions at its hospitals increased 2.1% during the quarter and nearly 5% for the full year. Still, analysts pressed for answers on why volumes decelerated from the third to the fourth quarter.

  • Volume at the Pennsylvania-based system’s behavioral health facilities slightly increased with adjusted admissions up 0.8% for the quarter and 1.2% for the year, compared to the prior-year periods.  

  • Analysts questioned executives about the novel coronavirus as the outbreak continues. UHS leadership said they’re making efforts to be prepared and stockpile supplies. 

Dive Insight:

Despite volume growth during the quarter, particularly at its acute hospitals, executives attempted to address questions about the slowdown in growth from just the prior quarter. CFO Steve Filton characterized it as a natural downtrend. 

“We’ve really had industry-leading and what I would describe as historically extraordinary acute care volume growth for several years now. And I think we’ve been preparing ourselves, and investors as well … that at some point our volumes would moderate to more historic normative levels and I think you saw some of that in the fourth quarter of 2019,” Filton said during UHS’ earnings call on Thursday.

Total adjusted admissions for the fourth quarter on a same-facility basis increased 2.1%. By comparison, adjusted admissions jumped 7.4% in the third quarter of 2019. 

Still, Filton pointed to its Las Vegas market that has experienced rapid growth historically, noting though there is a slowdown there, the hospital operates at pretty much full capacity “around the clock.”

“Growth there has slowed and on an overall basis that has muted the overall growth,” he said. 

To encourage volume growth, the King of Prussia, Pennsylvania-based hospital chain plans to spend between $ 775 million and $ 825 million on capital projects that include new facilities and updates to existing ones. UHS also plans to add more freestanding emergency rooms and behavioral health facilities over the next year. 

As health officials warn U.S. residents to prepare for an outbreak of the coronavirus, UHS executives didn’t want to speculate about the potential impact. However, executives said they’re prepared and making every effort to ensure they have the supplies in the event of supply chain issues.

Net revenue increased to about $ 11.4 billion for the year while income from operations increased to $ 1.2 billion. 

UHS released its 2020 forecast and expects revenues to be between $ 11.9 billion and $ 12.1 billion for the year and adjusted earnings to be between $ 1.8 billion and $ 1.9 billion.

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