Dive Brief:

• Universal Health Services’ net income soared in 2024, rising to $1.1 billion from $717.8 million in 2023 on strong demand for services, particularly in the operator’s behavioral health division.
• The Pennsylvania-based hospital operator plans to expand its behavioral health offerings next year to drive revenue growth, with a specific focus on outpatient services, executives said on a Thursday earnings call.
• UHS expects to take in between $17 billion and $17.4 billion in net revenue in 2025. However, the company is contending with several possible headwinds, including potential healthcare policy changes in Washington, which could impact the company’s bottom line.

Dive Insight:

During Thursday’s earnings call, executives highlighted UHS’ growth strategy, noting the company had spent $944 million in 2024 on capital expenditures and planned to keep a similar pace in 2025.

On the acute side, UHS opened West Henderson Hospital in Las Vegas in 2024 and plans to open Cedar Hill Medical Center in Washington, D.C. within the coming months.

CFO Steve Filton said UHS plans to open between 10 to 12 outpatient behavioral facilities each year. UHS is also hoping to invest further in opioid treatment, which requires a longer development pipeline, Filton said.

UHS grew its net revenue by more than 10% year over year in 2024 to $15.8 billion. The system’s behavioral unit saw revenue per adjusted admission increase by 9.8% in 2024, while the acute unit grew revenue per adjusted admission by 5.1%.

Executives also weathered questions on the earnings call about potential headwinds in 2025, including possible cuts to the Medicaid program.

UHS executives, like their peers, have been in direct discussions with politicians about the potential cuts and are lobbying to keep the program intact. Executives projected confidence that the lobbying would ultimately be successful.

“We’re clearly monitoring this very closely, talking off the record with many of the folks, not just in Washington, but in the states,” said CEO Marc Miller. “And I think that’s a key point. The folks in Congress are hearing from the governor’s offices in many of these states… it’s a bipartisan effort… So that tends to suggest that the pushback is significant.”

“One of the things that we’re learning or observing from this debate within Congress over the budget bill is that there is a fair amount of support, again, I think, throughout the country for Medicaid programs and protecting Medicaid programs,” Filton said.

Still, there is uncertainty about the fate of popular healthcare programs, including state supplemental payment programs. UHS joined its peers in noting that Tennessee and Washington, D.C. had yet to finalize payment programs for 2025.

“Our 2025 forecast assumes total consolidated Medicaid supplemental payments will decrease slightly as compared to 2024,” Miller said. 

UHS also noted it could face a $50 million headwind should ACA exchange subsidies, which allowed millions of low income Americans to access health insurance, go away, noting that 5% of their acute admissions come from exchange-covered patients. 

“We assumed that about half of those folks would lose their coverage if the subsidies went away,” Filton said.