Strong Demand and Strategic Optimism from UHS Leadership
Universal Health Services Inc. (NYSE: UHS) is expressing renewed confidence in the near-term future of its behavioral health division, with company leadership suggesting that the worst of its pandemic-induced staffing challenges may be behind it. During the company’s annual earnings call, CEO Marc Miller emphasized that demand for behavioral health services continues to surge and that recent workforce improvements signal a turning point for UHS behavioral health growth.
“With the demand being where it is, we’re very excited that — once we get the staffing stabilized and it is stabilizing and it will continue throughout this year — we should be able to pop,” said Miller.
That “pop,” or inflection point in growth, is expected to come from a significant and sustained increase in patient interest that has persisted since the early months of the COVID-19 pandemic. According to UHS executives, the company has seen a 20% increase in inbound interest for behavioral health services — a trend that has remained steady over the past two years.
COVID-19’s Impact on Behavioral Health Staffing
The U.S. healthcare labor force has experienced unprecedented disruption since the beginning of the pandemic. Nurses and behavioral health professionals left traditional employment roles in droves, opting instead for high-paying travel contracts or leaving the field entirely due to burnout.
UHS was not immune. Throughout 2021, the company reported that behavioral health growth was constrained not by a lack of demand but by the inability to staff its facilities. The behavioral health division faced a unique challenge: unlike acute care, where hospitals were forced to pay significant premiums to retain staff, the behavioral side struggled more with volume shortfalls caused by unfilled positions.
“The bigger issue on the behavioral side has been just an absolute inability to fill some of those vacancies,” said CFO Steve Filton. “And as a consequence, the labor shortage on the behavioral side really manifests itself on the volume side more so than in actual salary expense.”
Despite those headwinds, UHS incurred between $25 and $30 million in premium pay for behavioral health staff in 2021. That figure, while lower than the $120 million in premium pay absorbed by the acute care division in Q4 alone, still underscores the financial strain caused by the talent crisis — and the importance of stabilizing staffing for continued UHS behavioral health growth.
Behavioral Health Positioned for Expansion Post-Pandemic
For UHS, the behavioral health segment represents a long-term growth opportunity. The pandemic accelerated the public’s awareness of mental health needs and significantly reduced stigma around seeking treatment. More patients — across all age groups — are reaching out for help with conditions like anxiety, depression, substance use disorders, and other behavioral health issues.
Yet for UHS and other providers, demand alone isn’t enough. A qualified workforce is necessary to ensure timely access to care. As the staffing environment begins to improve, UHS behavioral health growth will depend heavily on how quickly those positions are filled and stabilized.
“While the pace of recovery is difficult to predict, we remain confident in the fundamental underlying demand in both of our business segments,” Filton noted. “The early signs of which have already been emerging in the last few weeks.”
Miller echoed this sentiment, emphasizing that resolving the staffing crisis will unlock the full potential of UHS’s behavioral health infrastructure, allowing the company to scale up services, increase capacity, and ultimately serve more individuals struggling with behavioral health issues.
Financial Performance Signals Stability and Growth
Despite the operational challenges brought on by labor shortages, UHS delivered strong financial results in 2021. Net income increased by 5.4% to $992 million, translating to earnings per share (EPS) of $11.99 — beating analyst expectations, which had projected an EPS of $11.76. Revenue for the year reached $12.6 billion, representing a 9.4% year-over-year increase.
The market responded positively to the results, with shares of UHS rising 7.5% to $146.53 following the earnings release. The performance demonstrated investor confidence in the company’s ability to navigate short-term headwinds while positioning for sustainable UHS behavioral health growth.
Behavioral Health Joint Ventures Offer Strategic Growth Path
Another bright spot in UHS’s behavioral health strategy is the continued growth of its joint venture (JV) hospital model. These partnerships — often established with regional health systems or nationally recognized names — enable UHS to expand its geographic footprint and reach more patients, particularly in underserved communities.
In 2021, UHS opened two de novo JV hospitals: one in Clive, Iowa, through a partnership with MercyOne, and another in Cape Girardeau, Missouri, in partnership with Southeast HEALTH. Already in 2022, the company has opened two more JV hospitals in Michigan and Wisconsin. A fifth JV, in partnership with HonorHealth, is expected to open later this year in Arizona.
Miller emphasized that UHS is highly selective when choosing JV partners. “There are a lot of JV opportunities that we look at that we pass on … because we just don’t see the merit long term,” he said. “If you notice, the ones that we do for the most part are recognizable, nationally known names or they’re very strong regional players, and that’s purposely done.”
Joint ventures will continue to be a key element in UHS behavioral health growth as the company expands access while maintaining clinical and operational standards.
Looking Ahead: Growth Through Stabilization
The future of UHS’s behavioral health division is closely tied to macro-level trends in public health, labor markets, and behavioral health awareness. But with signs of stabilization emerging, leadership is optimistic that 2022 will mark a year of recovery and renewed expansion.
As COVID-19 continues to recede, the opportunity to build on a 20% increase in patient demand is within reach — especially as staffing shortages ease and new JV hospitals come online.
For Universal Health Services, the message is clear: UHS behavioral health growth is accelerating, driven by strong fundamentals, a recovering workforce, and strategic investments in partnership-driven expansion.
