Universal Health Services (NYSE: UHS), one of the nation’s largest hospital management companies, is doubling down on its Behavioral Health Bed Occupancy Strategy following notable improvements in staffing metrics. With recruitment and retention trends heading in the right direction, UHS is now turning its attention toward occupancy growth across its behavioral health portfolio.
During the company’s Q3 2023 earnings call, UHS executives made it clear that boosting bed occupancy within behavioral health facilities is the next critical growth lever. “Broadly increasing occupancy is the most significant opportunity we see in our behavioral business,” said Steve Filton, UHS’ Chief Financial Officer. “We absolutely have the ability to increase occupancy significantly. There’s a handful of important initiatives in behavioral, but all would fall under this umbrella of being able to increase occupancy.”
UHS currently operates 331 inpatient behavioral health facilities, alongside 27 acute care hospitals and 43 outpatient centers across the U.S., Puerto Rico, the U.K., and D.C. The scale of its operations makes it one of the most influential players in behavioral healthcare — and one that’s closely watched by industry analysts, payers, and competitors alike.
Recruitment and Retention as a Launchpad
The backbone of UHS’ Behavioral Health Bed Occupancy Strategy lies in its workforce. After years of staffing challenges intensified by the pandemic, the company has made meaningful progress in hiring and retaining critical staff, including nurses, mental health technicians, and therapists.
However, challenges remain. “We remain constrained in some markets in some facilities by a lack of staff,” Filton acknowledged. “That could be nurses, therapists, or mental health technicians. But generally, we continue to improve our recruitment and retention metrics.” These improvements are expected to unlock capacity in many facilities and support the company’s larger goal of filling more beds.
Broadening Services to Drive Volume
A key element of the Behavioral Health Bed Occupancy Strategy is expanding the types of care available. In a strategic move, UHS recently announced plans to add medication-assisted treatment (MAT) to its behavioral health services — a shift away from its historically traditional approach to substance use disorder (SUD) care.
This expansion positions UHS to serve a broader spectrum of patients and diversify its revenue streams. The company is also investing in growing its telehealth and outpatient behavioral health services, rounding out a full continuum of care that can guide patients from crisis stabilization to long-term recovery.
Financials Reflect Mixed Trends
In Q3 2023, UHS reported a net income of $167 million, down from $182.8 million in Q3 of the prior year. Despite the income drop, behavioral health net revenues grew by 7.6% compared to Q3 2022, signaling stronger demand and pricing power in this segment.
Adjusted admissions increased by 0.8%, while adjusted patient days rose by 1.1% — modest gains that suggest room for further occupancy growth. Notably, Filton pointed out that acute behavioral hospitals outperformed residential programs in terms of patient day growth, which also contributed to stronger revenue per patient day.
This data reinforces the importance of the Behavioral Health Bed Occupancy Strategy, particularly in acute care environments where margins tend to be higher and patient needs more immediate.
Navigating Policy and Payer Shifts
While UHS pushes forward on occupancy, external headwinds remain. Medicaid redeterminations — the process of re-evaluating eligibility for Medicaid enrollees — have begun to impact patient volume, especially in child and adolescent residential programs.
“It’s been reported that there’s been at least a million people redeemed off the rolls in Texas,” Filton said. “The number of calls and inquiries that we’re getting that qualify from both a clinical and financial perspective have declined a little bit in the quarter.”
A significant share of UHS’ revenue is tied to Medicare and Medicaid programs. As such, any change in payer mix or eligibility can create ripple effects. The Behavioral Health Bed Occupancy Strategy must therefore include efforts to broaden payer sources and improve payer diversification — particularly in markets vulnerable to Medicaid fluctuations.
Residential Challenges and Regulatory Hurdles
Although acute care behavioral hospitals have seen volume gains, residential treatment centers have struggled. Filton attributed some of this to “specific and nuanced” issues involving regulators and referral partners.
These challenges make it even more important for UHS to execute on its Behavioral Health Bed Occupancy Strategy, as underutilized residential beds represent a missed opportunity. Regulatory smoothing, relationship-building with referral sources, and strategic service line adjustments will be key to turning this around.
A Return to Pre-Pandemic Trajectory
As 2024 approaches, UHS is increasingly seeing its operations normalize. “Every path and quarter continue to resemble more of our pre-pandemic operating environment,” Filton said. “Broadly, that’s the way we’re thinking about 2024.”
This stability offers a strong foundation for executing on its Behavioral Health Bed Occupancy Strategy, especially now that staffing is more manageable and new services are in play. If successful, UHS could significantly boost both occupancy rates and revenue per bed — making it more resilient to industry and economic fluctuations.
Conclusion
UHS’ Behavioral Health Bed Occupancy Strategy is more than just a volume play — it’s a multifaceted initiative designed to grow patient access, improve financial performance, and solidify the organization’s leadership in the behavioral health space. Through expanded service lines, improved staffing, and broader payer strategies, UHS is positioning itself for sustainable growth despite macroeconomic and policy challenges.
As behavioral health continues to gain national attention, strategies like these will serve as a blueprint for other providers seeking to scale responsibly in a dynamic and often unpredictable healthcare landscape.
