Universal Health Services Inc. (NYSE: UHS), one of the largest healthcare facility operators in the United States, is grappling with ongoing workforce challenges, underscoring the healthcare workforce shortage 2022 that continues to impact the industry. Despite earlier hopes that rising labor costs would stabilize, the company is still facing significant staffing expenses and a shortage of qualified healthcare professionals — issues affecting its behavioral health operations as well as the broader organization.
Labor Shortages Persist, Driving Up Costs
When UHS issued its financial forecasts for 2022, it anticipated that the sharp rise in labor costs experienced during the pandemic would begin to ease as workforce conditions normalized. However, this has not materialized. CEO and President Marc Miller highlighted during the company’s first-quarter earnings call that “the labor scarcity has not moderated as quickly as we were expecting,” a primary factor behind the company’s shortfall. This ongoing healthcare workforce shortage 2022 continues to strain the company’s operations and finances.
The labor crunch has led to a heavy reliance on staffing agency workers, who command substantially higher wages than permanent staff. For instance, while UHS previously paid nurses approximately $65 to $70 per hour, temporary traveling nurses currently cost the company around $225 per hour — more than triple pre-pandemic rates. This wage inflation has severely strained UHS’s earnings, particularly in its behavioral health business segment, which is deeply affected by the healthcare workforce shortage 2022.
Behavioral Health Business Faces Unique Challenges
UHS’s behavioral health operations, encompassing 336 inpatient and outpatient facilities in the U.S. and the U.K., have been especially impacted by the healthcare workforce shortage 2022. The scarcity of qualified nurses and other clinical staff has forced the company to moderate patient volumes, limiting its revenue potential.
The behavioral health sector’s staffing difficulties reflect broader industry trends. A 2021 study projects that by 2030, the U.S. will need to produce more than 510,000 new nurses to fill the gap between supply and demand. This shortage is acute in specialized areas such as behavioral health, where the demand for services continues to grow, fueled by the ongoing healthcare workforce shortage 2022.
Financial Results Illustrate Workforce Impact
Despite robust revenue growth of 9.3% in the first quarter, reaching $3.3 billion and beating expectations by approximately $50 million, UHS’s profitability has suffered. The company reported earnings per share (EPS) of $2.02, below analyst estimates of $2.46, and net income of $154 million — a 28% decline from the previous year.
These results underscore the financial pressure from increased labor costs driven by the healthcare workforce shortage 2022. Staffing agency wages and turnover have eroded margins, while revenue gains have been constrained by operational challenges such as reduced patient capacity.
Managing Costs and Capacity Amid Labor Pressures
In response to the ongoing staffing crisis caused by the healthcare workforce shortage 2022, UHS is employing a number of strategic measures. CFO Steve Filton noted that the company may temporarily close units or reduce capacity in markets where labor shortages are most acute until conditions improve.
However, these decisions are also influenced by reimbursement dynamics. UHS will be more inclined to cut capacity where managed care providers refuse to provide rate increases that reflect rising labor costs. Filton emphasized, “Unlike some providers, we don’t have the point of view that we’re going to pay whatever it takes for a nurse.” Instead, the company is focused on rationalizing capacity and managing volumes to align with sustainable reimbursement levels.
Operational Adjustments to Alleviate Nurse Workloads
To mitigate staffing pressures, especially within behavioral health, UHS is shifting certain care and administrative duties away from registered nurses (RNs) to licensed practical nurses (LPNs) and licensed vocational nurses (LVNs). This approach is designed to optimize the use of highly skilled RNs by relieving them of non-clinical tasks such as clerical work, answering phones, and other routine responsibilities.
Filton explained, “We’re not having people practice above their license…we’re trying to relieve our RNs from doing more clerical and administrative work than they need to do.” This strategy aims to maximize clinical efficiency and help retain nursing staff by reducing burnout, a critical goal given the ongoing healthcare workforce shortage 2022.
Broader Industry Impact: HCA Healthcare and Beyond
UHS is not alone in facing these workforce-related financial pressures. HCA Healthcare Inc. (NYSE: HCA), a major competitor operating 182 hospitals and numerous outpatient facilities in the U.S. and England, also reported rising labor costs that have forced it to revise down its 2022 financial guidance. HCA lowered its full-year EPS forecast from $18.40–$19.20 to $16.40–$17.60 due to workforce cost inflation fueled by the healthcare workforce shortage 2022.
These challenges reflect systemic issues across the healthcare industry, as many providers confront nurse shortages and wage inflation. The pandemic accelerated these trends, making it difficult for health systems to staff safely and efficiently.
Long-Term Workforce Trends and Outlook
Despite current struggles, UHS management remains cautiously optimistic that the workforce challenges are temporary. The company has hired clinical staff at record rates over the past six to eight months, especially in behavioral health. However, turnover rates remain elevated, complicating efforts to stabilize operations.
Filton suggested that rising wages could eventually attract more workers into the nursing profession, potentially easing shortages over time. “If we ultimately replaced those nursing hours that we were paying $225 at $75 — even though that’s a reasonable increase from what we had been paying pre-pandemic — it’s still an enormous improvement over where we’re sitting right now,” he noted.
Workforce Shortages: A National Healthcare Challenge
The nursing shortage is a well-documented national crisis. Multiple factors contribute, including an aging workforce, burnout, and insufficient capacity in nursing education programs. This shortage not only increases costs for providers like UHS but also threatens patient care quality and access.
The growing demand for behavioral health services further complicates the picture. As mental health needs surge nationwide, facilities must find innovative ways to deliver care with limited staff. UHS’s shift to optimize nurse workloads and recruit aggressively reflects this imperative and highlights the ongoing impact of the healthcare workforce shortage 2022.
Conclusion: Navigating Uncertainty with Strategic Adaptation
Universal Health Services’ experience in early 2022 highlights the complex interplay between workforce dynamics and healthcare financial performance. Persistent labor shortages and rising wages have forced the company to reconsider operational strategies, including capacity adjustments and workforce role realignment.
While the short-term outlook includes cost pressures and constrained margins, UHS’s commitment to recruiting and optimizing staffing models positions it to weather the storm. The broader healthcare industry faces similar challenges, but rising wages may ultimately attract new talent and stabilize staffing over the long term.
For now, healthcare providers must balance cost control with quality care delivery amid an evolving labor market — a test that will shape the future of healthcare operations and financial health.
