Universal Health Services plans to lower premium pay for staff as well as fill workforce vacancies as providers throughout the country continue to struggle with rising labor costs and inflation, CFO Steve Filton told investors Wednesday.
“I think if we can do that, No. 1, that will drive higher volumes which will help us offset some of that inflationary pressure,” he said.
Filton said that while he doesn’t believe premium pay will return to pre-COVID-19 levels in the foreseeable future, a lull in coronavirus cases could give UHS an opportunity to reduce those costs as demand for contract labor drops.
COVID-19 volumes for UHS decreased from 16% of admissions in the third quarter of 2021 to 6% of admissions in the third quarter of this year, the CFO said.
Costs for salaries, wages and benefits were up 4.7% at acute care facilities and nearly 8% for behavioral health hospitals in the third quarter, according to financial statements.
Filton said UHS will take an “aggressive stance” when negotiating with commercial payers as inflation continues to be a concern for the system. He noted, however, that half of the company’s revenue comes from government sources, which are “simply not keeping up with inflation.”
UHS posted net income of $183 million for the third quarter of this year, down 16% from $218 million in the prior-year quarter. The hospital operator boosted revenue by 5.7% to $3.3 billion. Both revenue and profit beat Wall Street expectations.
SVB Securities analysts characterized the results as “better than feared,” noting revenue from acute care hospitals was below their model but behavioral health revenues came in higher than expected, up 8.4% year over year.
The analysts said the numbers “look pretty decent against exceedingly low expectations.”
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