Dive Brief:
- Universal Health Services’ labor expenses remained elevated during the fourth quarter and full year 2022, though contract pay softened through the year and is expected to ease in 2023, CEO Marc Miller said on a Tuesday call with investors.
- COVID-19 activity also declined significantly through the year, allowing UHS to reduce labor vacancies and stop capping bed capacities at behavioral health hospitals, he said.
- Net income fell about 27% year over year for the fourth quarter and about 30% for the full year, while expenses were up 7.5% for the fourth quarter and nearly 10% for the full year.
Dive Insight:
Like other hospital operators, UHS has been dealing with heightened labor costs throughout the pandemic and particularly during the past year as contract labor use remained elevated. Those costs and other rising expenses amid inflation continue to pose challenges to systems.
Labor expenses were up about 5% in the fourth quarter compared to the same period last year and were up about 10% for the full year.
But premium pay declined from a peak of $153 million in the first quarter of 2022 to $85 million by the fourth quarter, CEO Marc Miller said on a Tuesday call with investors.
The system expects to be able to reduce that pay by about a third this year compared to last year’s levels, he said.
UHS has focused on boosting hiring rates and reducing turnover, with the system seeing improvements through recent recruitment and retention programs. It also increased permanent staff pay and began offering sign-on bonuses amid other incentives, he said.
Volumes were mixed, with adjusted admissions on a same facility basis at acute care hospitals rising 5.5% in the fourth quarter compared to the same time last year, and rising 0.7% at behavioral health facilities.
At acute care hospitals, adjusted patient days rose slightly in the fourth quarter compared to the same time last year, while net revenue per adjusted admission fell.
At behavioral health facilities, adjusted patient days also rose slightly in the fourth quarter compared to the same period last year, while net revenue per adjusted admission rose.
While overall surgical volumes recovered near pre-pandemic levels, “there was a measurable shift from inpatient to outpatient, resulting in further overall revenue softness,” Miller said.
UHS “envisions 2023 as a year of continued transition into a post pandemic world,” he said. The system is projecting revenues between $14 billion and $14.3 billion for the full year.