Hospital care for poor complicates Universal Health Services earnings

Posted: November 01, 2013

If there is any document that illustrates the dizzying interplay between government and the business of health care, it might be Tuesday's third-quarter financial report from Universal Health Services Inc.

The King of Prussia-based company operates more than 210 behavioral-health and acute-care hospitals nationwide, so the expectation would be news about admissions and patient days.

Instead, it's those numbers, complicated by millions of dollars in delayed government reimbursements to Universal's hospitals for care they provided to the poor

Steve Filton, Universal's chief financial officer, said that the reimbursements relate to care for the uninsured who need hospital services, but have no money to pay for them.

That's an issue, he said, that the Affordable Care Act is intended to address.

The financial reports also describe millions of dollars in pretax federal incentives for switching to electronic health records, mainly offset by the expense to do so.

Those incentives were part of the American Recovery and Reinvestment Act - the economic stimulus bill, passed in 2009.

Chief executive Alan Miller said that his company isn't seeing much - yet - from the Affordable Care Act, passed in 2010 but open for business now, computer challenges notwithstanding.

Most of those provisions will begin in 2014, with a major provision - that everyone sign up for insurance - pushed back to March 31 due to the monumental software glitches.

"Everybody is anticipating it, but we're not seeing anything to speak of," Miller said.

He expects a major bump when 30 million people who are not now covered for mental health services gain coverage through the act. Miller said half the company's revenues come from its behavioral-health facilities.

In the third quarter, revenues increased to $1.82 billion, up from $1.68 billion reported in the 2012 third quarter.

Net revenues at acute-care hospitals opened for more than a year increased 6.6 percent and revenues per admission also grew. Revenues for behavioral health were up 3.4 percent.

Net income was $114.6 million or $1.15 per share, compared to $71.8 million or 73 cents a share for the same period in 2012.

Some of the increase was improved performance, but the majority is attributable to debt retirement and the receipt of delayed Medicaid payments, primarily from Texas.

For the nine months, revenues grew 5.5 percent to $5.48 billion from $5.20 billion. Net income grew to $386.2 million or $3.89 per diluted share, up from $308 million or $3.15 per share.



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