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UHS net income cut in half as system predicts COVID impact will persist through 2022

Dive Transient:

  • Common Well being Companies’ revenue halved within the second quarter in comparison with the identical time final 12 months amid a punishing operational surroundings, with operational bills ticking up throughout each line merchandise of its monetary assertion.
  • Web earnings attributable to UHS was $164 million, in comparison with $325 million within the second quarter of 2021. That’s regardless of income rising on a year-over-year foundation to $3.3 billion from to $3.2 billion.
  • Nevertheless, the well being system — which warned traders it was experiencing a big shortfall in operational leads to June — nonetheless carried out higher than analysts anticipated, beating Wall Road expectations for earnings and income. Friends Tenet and HCA have additionally reported notable year-over-year earnings drops within the quarter.

Dive Perception:

UHS is likely one of the largest operators within the U.S., with 28 acute care hospitals and a whole bunch of behavioral well being, outpatient and ambulatory services, together with a doctor community and insurance coverage providing.

The system’s acute hospitals noticed a big decline in COVID-19 sufferers within the second quarter in comparison with the identical time final 12 months. That drop wasn’t offset by a corresponding improve in non-COVID-19 utilization, UHS stated, “leading to important shortfalls in revenues and earnings as in comparison with our authentic forecasts.”

Although the decreased volumes have helped alleviate the system’s staffing shortages and ensuing prices, restoration from labor pressures is happening at a “considerably slower tempo than anticipated,” the system stated in a Monday launch on the quarter.

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The nationwide scarcity of nurses and different workers has been a big working subject for UHS and its friends. Labor shortage is straining sources, main methods to pivot to costlier non permanent labor, or improve wages and advantages to retain present staff.

In some instances, it’s additionally impacting affected person care.

“At sure services, significantly inside our behavioral well being care section, we’ve got been unable to fill all vacant positions and, consequently, have been required to restrict affected person volumes,” UHS stated.

The operator has been affected extra closely by labor pressures than a few of its opponents. Within the second quarter, HCA’s bills for salaries and advantages rose simply 6% whereas Tenet’s fell 7% on a year-over-year foundation. By comparability, UHS noticed its salaries, wages and advantages prices rise 14%.

UHS expects these components to proceed having an unfavorable impression on its operations for the rest of 2022.

In June, the system slashed its monetary forecast for the 12 months after grim operations in April and Could, following comparable strikes from HCA and CHS. The brand new outlook assumes that staffing vacancies and the corresponding premium labor prices will proceed to say no sequentially within the again half of the 12 months, and that non-COVID-19 volumes will enhance, although at a slower tempo than beforehand thought.

The system reiterated that it plans to proceed workers recruitment and retention efforts to spice up operations, together with an aggressive stance on contract negotiations with its managed care payers to get a greater deal on cost for providers rendered.

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