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Universal Health Services, the big hospital chain, gives preference to behavioral health patients whose insurers pay more, and is demanding increases from insurers, a chain official told financial analysts recently.

The chain’s chief financial officer, Steve Filton, made the remarks during the company’s earnings call July 26.

Filton said that there are “capacity constraints” in the industry, caused in large part by pandemic-induced labor shortages.

“Historically, revenue per day in the behavioral division has generally increased 2 or 3% a year pretty consistently pre-pandemic,” he said in response to a question. “During the pandemic, we saw those numbers rise to something much closer to 5 to 6%. We think the main reason for that is, we’ve been able to leverage the fact that there is capacity constraints in the industry, because of labor capacity, especially.

“We’ve been going to our lowest payers, and either demanding increases from them, or canceling those contracts that leave you to be inadequate, and simply admitting patients whose insurance will pay us more.”

“In an environment where we can only treat a limited number of patients, we can be more selective about who we treat and the fairness of what we think we’re being paid.

“I think you know, generally, the pricing environment in behavioral remains strong. We remain aggressive. We’ve terminated or issued a notice of termination in a great many markets to a great many payers. We’re pursuing this strategy pretty aggressively, and feel like there’s a runway to do so for the foreseeable future.”

The system’s revenue increased 6.8% to $3.5 billion in the second quarter, compared to $3.3 billion during the second quarter of 2022. Net income was  $179.4 million, compared with $163.9 million a year before.

Mental health crisis

The nation’s growing mental health crisis as a result of the pandemic has clearly boosted the system’s abilities to negotiate higher prices.

It’s not uncommon to hear healthcare executives making statements to analysts on earnings calls that would cause outrage if they were uttered in the halls of Congress or in other public venues.

In 2022, at a conference, Filton said of the company’s behavioral health patients, “We’ve had to turn patients away. If we’re going to turn patients away, we may as well turn away our lowest-paying patients,” Behavioral Health reported.

U.H.S. has 28 inpatient acute care hospitals, 331 inpatient behavioral health facilities, 39 outpatient facilities and ambulatory care access facilities, as well as an insurance offering, a physician network and related services in 39 U.S. states, and Washington, D.C., Puerto Rico and the United Kingdom. 

In July 2020, U.H.S. reported $251 million in profits, thanks partly to a $218 million Covid relief grant from the government. In 2021, U.H.S. returned a Covid CARES act grant.

Jeanne Pinder  is the founder and CEO of ClearHealthCosts. She worked at The New York Times for almost 25 years as a reporter, editor and human resources executive, then volunteered for a buyout and founded...