Dive Brief:
- More of Universal Health Services’ patients are going uninsured than originally expected, increasing the financial hit to the health system, according to UHS’ second quarter results.
- UHS is the latest for-profit hospital operator to flag the trend, in which basically all people previously covered by the Affordable Care Act exchanges are going uninsured after steep price hikes for the coverage, executives said during a Tuesday call with investors.
- Growing uninsured patients added to the hospital operator’s woes in the second quarter, including lower volumes than expected and unexpected losses in some of its facilities. UHS downgraded its 2026 earnings outlook following the results.
Dive Insight:
Hospital operators have been ringing warning bells about the rise in uninsured patients in the second quarter, which appears to be driven by enrollment losses in the ACA exchanges, executives say.
Premiums in ACA plans spiked this year after Congress declined to extend more generous premium tax credits for enrollees. Millions of Americans left the ACA exchanges this year as a result, and most appear to be going uninsured — a concerning trend for hospitals having to contend with higher uncompensated care costs and other negative impacts.
Health systems have raced to quantify how the insurance coverage shift could impact their bottom lines. Some for-profit hospital operators are bracing for a major impact, such as HCA Healthcare, which expects around $1 billion in losses this year. Others like Tenet Healthcare are projecting losses of hundreds of millions of dollars.
UHS, which has less exposure than its peers to the ACA, originally expected to lose around $75 million from the trend.
But now the operator expects to lose around $85 million. On the Tuesday call, executives said they had originally assumed that some enrollees dropping ACA coverage would replace their coverage with other forms of commercial insurance.
Instead, “it felt like virtually everyone who lost their exchange coverage became an uninsured patient,” according to UHS CFO Steve Filton.
Growth in UHS’ uninsured patients depressed UHS’ income in the quarter. UHS posted profit of $358 million, roughly flat year over year, on $4.6 billion in revenue.
The system posted an adjusted EBITDA net of some non-recurring costs of $678 million, up slightly year over year but below Wall Street’s expectations.
Other factors ate into UHS’ bottom line, including a slower-than-expected timeline to profitability for Cedar Hill Regional Medical Center, a Washington, D.C.-based hospital that UHS built in partnership with the city. The facility, which has suffered from staffing shortages, was originally expected to break even during the first half of the year and positively contribute to earnings starting in the second half.
But now, Cedar Hill is expected to break even on its finances in the fourth quarter this year, and lose UHS about $30 million in 2026 overall until then, Filton said.
UHS also expects to continue losing money on one of its behavioral health centers in Texas that lost its Medicare certification after failing federal health and safety requirements. Laurel Ridge Treatment Center should regain its certification back next year, but until then it will lose between $5 million to $10 million per quarter, according to the system.
Those factors, including an increase in legal liability insurance, prompted the system to downgrade its financial expectations for 2026.
UHS now expects between $2.61 billion and $2.71 billion in adjusted earnings before interest, tax and amoritzation, minus nonrecurring items. That’s down from its original expectation of $2.64 billion to $2.79 billion.
UHS also lowered its volume expectations for the year. The system now expects volumes to grow by 1.5% to 2.5% in its acute care segment compared to the prior year.
Behavioral health volumes are expected to grow by 1% to 2%, compared to the system’s original expectation of 2% to 3%, a longterm goal for its unit.
