- The latest COVID-19 surge is pushing back Universal Health Services' ability to meet earnings projections and expectations it had set heading into 2022, CFO Steve Filton said during J.P. Morgan's annual healthcare conference Tuesday. Shares fell after Filton's remarks.
- The fourth quarter did not play out the way the King of Prussia, Pennsylvania-based health system expected. Executives were hoping the fourth quarter would mark a turnaround in the pandemic, similar to the second quarter, ushering in more manageable COVID-19 volumes, a rebound in patient demand and a more stable labor market.
- That is not what happened. Instead, UHS experienced a dramatic rise in COVID-19 cases and more intense labor shortages.
Filton's detailed remarks about UHS' challenging experience over the last month comes as COVID-19 hospitalizations in the U.S. reach a record high, surpassing last January's peak as the highly contagious omicron variant spreads rapidly. The nation's top infectious disease doctor Anthony Fauci provided a bleak outlook Tuesday and said the variant "will find just about everybody." Though vaccinated people are likely to fare better and avoid hospitalization, Fauci said.
Filton said Tuesday during JPM's virtual healthcare conference, "The timeline has been elongated in the recovery that we thought was going to occur throughout the fourth quarter."
"We are three, four, five, six months, kind of delayed from what our projections were, and our expectations were back at the end of October," he added.
The latest surge is pushing hospitals to the brink as many don't have enough staff for the level of demand.
Filton laid out the many operating challenges facing his health system from the sudden onset of the omicron surge. As volumes rise, so does the need for more staff. Once again, the problem is finding enough nurses to respond to the latest surge.
"We certainly have more employees on the sidelines, currently, than we've ever had before in the pandemic and that is creating all sorts of challenges," Filton said.
At its 27 acute care hospitals, UHS has enough beds, ventilators and ICU rooms, but the biggest constraint is on the labor side, he added.
Health systems like UHS have had to pay "wildly expensive premium rates," to temporary and traveling nurses to appropriately staff facilities, Filton said. Labor issues are a top concern for many health leaders across the sector, not just UHS.
It's also difficult to discharge these patients, Filton said, as long-term care and skilled-nursing facilities are all struggling with the same labor shortages. And some patients are "staying longer than really is clinically justified."
Like its acute-care business, the pandemic has also created challenges for its behavioral health unit, with 333 facilities.
The system has lost nurses to attractive COVID-19 pay elsewhere, and although UHS is willing to pay higher rates, Filton said, they sometimes can't find enough nurses. The impact has muted volumes and patient days in some instances at behavioral health facilities, he said.
But when COVID-19 cases and hospitalizations eventually subside, UHS expects these operating challenges to stabilize, similar to its experience in the second quarter of 2021.