As the behavioral health staffing landscape stabilizes, Universal Health Services (UHS) (NYSE: UHS), one of the largest behavioral health operators in the United States, is shifting its focus toward strategic expansion efforts. Among these efforts, the company is exploring the potential to expand its medication-assisted treatment (MAT) services for addiction care. This move comes at a critical time, as the nation continues to grapple with a worsening substance use disorder (SUD) crisis. With a strong foundation in traditional addiction treatment, UHS is now positioning itself to embrace MAT, a proven approach that combines medication with counseling and behavioral therapies to treat opioid use disorder (OUD) and alcohol use disorder (AUD).
At the 2023 Wells Fargo Healthcare Conference, Steve Filton, Chief Financial Officer and Executive Vice President of UHS, outlined the company’s vision for the future of addiction care. “We’ve always had a significant presence in addiction treatment and will probably expand our capacity in medically assisted treatment, at least incrementally,” Filton said. He emphasized the persistent societal need for effective addiction care, stating, “Unfortunately, socially, [addiction] just seems like it’s not going away as a problem.”
This blog delves into UHS’s plans for expansion, the growing importance of MAT in addiction treatment, and the broader trends shaping the behavioral health and addiction care landscape.
UHS: A Leader in Behavioral Health and Addiction Care
Universal Health Services, headquartered in King of Prussia, Pennsylvania, operates one of the largest behavioral health networks in the U.S. The company’s footprint includes approximately 406 acute care hospitals, behavioral health facilities, outpatient clinics, and ambulatory care locations. For decades, UHS has been a key player in providing substance use disorder (SUD) treatment, offering a range of services such as drug and alcohol detox, step-down programs, sober living, and aftercare. These services are available across multiple levels of care, including residential, inpatient, outpatient, and partial hospitalization.
Despite its extensive experience in addiction treatment, UHS has historically focused on traditional therapeutic methods rather than medication-assisted treatment (MAT). MAT, which combines FDA-approved medications like methadone, buprenorphine, and naltrexone with counseling and behavioral therapies, is widely regarded as the “gold standard” for treating opioid use disorder (OUD). It has also proven effective for individuals struggling with alcohol use disorder (AUD).
Filton acknowledged that UHS has yet to fully embrace MAT, particularly in the form of methadone clinics, which are a cornerstone of MAT for OUD. “We’ve been treating patients with addiction issues for years and years and years. We’ve tended to do that in a more traditional, therapeutic way,” Filton said. “But the business that we haven’t necessarily gotten into in a big way that our public peer has is medically assisted treatment, methadone clinics.”
The Case for Expanding MAT Services
The decision to explore MAT expansion is driven by both clinical and financial considerations. From a clinical perspective, MAT has been shown to improve patient outcomes by reducing withdrawal symptoms, curbing cravings, and lowering the risk of relapse. It also addresses the biological aspects of addiction, which traditional therapies alone may not fully manage.
From a financial standpoint, integrating MAT into UHS’s broader continuum of care makes strategic sense. The company’s extensive network of inpatient, outpatient, and post-acute care facilities positions it well to offer a seamless transition for patients requiring MAT. “For a company like us that has such a broad continuum of care … having that arrow in the quiver of medically-assisted treatment makes sense,” Filton said. He added that this integrated approach would be attractive to employers, insurers, and government payers, who are increasingly seeking comprehensive solutions for addiction treatment.
The timing of UHS’s interest in MAT aligns with the escalating SUD crisis in the U.S. According to the 2020 National Survey on Drug Use and Health, approximately 40.3 million Americans struggled with SUD in the past year. This staggering figure underscores the urgent need for effective treatment options, particularly for opioid and alcohol use disorders.
Funding Tailwinds and Regulatory Changes
One of the most significant drivers of MAT growth is the $54 billion in settlements from opioid manufacturers and distributors, which will be distributed to state and local governments over the next 18 years. These funds are part of a broader effort to hold pharmaceutical companies accountable for their role in the opioid epidemic. States are required to allocate 70% of these funds to opioid-related expenses, including treatment programs and overdose reversal medications. This influx of funding could provide a substantial boost to MAT services, enabling providers like UHS to expand their offerings.
Chris Hunter, CEO of Acadia Healthcare Company (Nasdaq: ACHC), a major competitor of UHS, highlighted the potential of these funds during a recent earnings call. “It’s a windfall of dollars, and [county commissions] are frequently at a loss as to how to spend the capital,” Hunter said. He anticipates that the impact of these funds will be more pronounced in 2024 and 2025, creating a “nice tailwind” for the industry.
In addition to funding, regulatory changes may favor providers with physical locations. Earlier this year, the Drug Enforcement Administration (DEA) proposed rules that would restrict the virtual prescribing of controlled substances, including MAT drugs, without an in-person visit within 30 days. While the DEA temporarily extended COVID-era telehealth flexibilities until November 2023, the future of virtual MAT prescribing remains uncertain. This could give an edge to providers like UHS, which operate brick-and-mortar facilities and can offer in-person services.
A Competitive Landscape
UHS is not alone in recognizing the potential of MAT. Acadia Healthcare, for instance, has aggressively expanded its comprehensive treatment centers (CTCs), which offer MAT alongside medical and social support services. As of 2022, Acadia operated 148 CTCs, accounting for 60% of its total footprint. The company plans to continue growing this segment, with CEO Chris Hunter noting that merger and acquisition (M&A) opportunities in the CTC space are abundant. “We’re really bullish on M&A. Our balance sheet is very strong,” Hunter said. “I would say there are several lines of business, CTC is certainly one, where we’re seeing a number of opportunities come to us.”
This competitive landscape underscores the growing demand for MAT services and the need for providers like UHS to differentiate themselves through integrated care models and scalable solutions.
Staffing Stability and Future Growth
As UHS looks to expand its MAT services, it is also benefiting from improved staffing conditions in the behavioral health sector. The COVID-19 pandemic placed immense strain on healthcare staffing, but Filton noted that the situation has steadily improved as the industry recovers. This stability positions UHS to resume its pre-pandemic growth trajectory, including adding tens of thousands of new behavioral health beds annually. “We’ll return to a model in which we’re pretty routinely adding 100,000 new beds a year, where the demand is justified,” Filton said. “Because we’ll be able to staff those beds.”
The ability to staff these beds is critical to UHS’s expansion plans. With a stabilized workforce, the company can focus on meeting the growing demand for behavioral health and addiction treatment services, particularly in underserved areas.
The Broader Implications of UHS’s MAT Expansion
UHS’s potential expansion into MAT has broader implications for the healthcare industry and society at large. By integrating MAT into its continuum of care, UHS can provide a more holistic approach to addiction treatment, addressing both the biological and psychological aspects of SUD. This approach not only improves patient outcomes but also reduces the societal costs associated with addiction, such as healthcare expenses, lost productivity, and criminal justice involvement.
Moreover, UHS’s efforts could serve as a model for other providers seeking to balance clinical excellence with sustainable growth. As the addiction crisis continues to evolve, the need for innovative, evidence-based solutions has never been greater. UHS’s commitment to expanding MAT services represents a significant step forward in meeting this need.
Conclusion
Universal Health Services is poised to play a pivotal role in addressing the addiction crisis through its planned expansion of MAT services. By integrating MAT into its comprehensive continuum of care, UHS aims to meet the growing demand for effective addiction treatment while appealing to payers and policymakers. With improved staffing, new funding opportunities, and a competitive edge in the regulatory landscape, UHS is well-positioned to make a meaningful impact in the fight against substance use disorders.
As the company moves forward, its efforts could serve as a blueprint for other providers seeking to balance clinical excellence with sustainable growth. In a world where addiction remains a persistent and pervasive problem, UHS’s commitment to innovation and expansion offers hope for a brighter future—one where effective treatment is accessible to all who need it.
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