Universal Health Services Class B Earnings Call Nuggets: Inpatient Acute Care Volumes and Trends in Behavioral Care

Universal Health Services, Inc. Class B (NYSE:UHS) recently reported its third quarter earnings and discussed the following topics in its earnings conference call.

Inpatient Acute Care Volumes

AJ Rice – UBS: Couple of questions if I could ask. First of all, it’s good to see a return to the positive on the inpatient acute care volumes. Can you give us a little more flavor? Do you have a sense of how much if any, the flu impacted that or maybe in terms of geographies, was that Vegas-driven churn, was that more broad-based, any color would be helpful?

Steve G. Filton – SVP and CFO: Sure AJ. I think that like everybody we experienced a busier flu season this past winter than we’ve had in several years, although again I think as most hospital providers have reported for us, it was probably more of an ER dynamic and more ER visits than actual inpatient admissions. I think we believe we had a bit of a pick-up in inpatient admissions but don’t believe it to be a material number or certainly a material impact from a financial statement perspective for the quarter. As far as the improved, I think both volumes and payor mix in the acute division for the quarter I think that strength was relatively pervasive throughout the division. It was not focused in one or two markets, but more of a trend that we tended to see throughout the facilities and throughout the portfolio.

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AJ Rice – UBS: On your 2013 guidance, I know you gave us the numbers for the HITECH incentives and so forth. How about just operating assumptions, are you assuming any kind of churn either in the acute business or steady statement side, can you give us a little more flavor for some of the key underlying assumptions there?

Steve G. Filton – SVP and CFO: Yeah, I think that the guidance for next year is generally premised on stabilizing trends underlying the business. On the acute side, I think that it is reflective of the sort of revenue growth that we saw in the third quarter that is kind of in the 2.5%, 3% range split sort of evenly between pricing and volumes. Obviously, we have factored into our guidance as our peers, the effective sequestration beginning in April and the effect of both the disproportionate share encoding cost that will become effective in October as part of the affordable care act. On behavioral side I think just generally more of the same 4% or 5% revenue growth and mid-single-digit EBITDA growth and then obviously we got a full-year of the Ascend facilities in our guidance for next year.

Trends in Behavioral Care

AJ Rice – UBS: And then just a last question maybe, I don’t know how much you say on the OIG but clearly a lot of the regulatory and questions that have been related to the site business over the – really the last decade have been more clinical type of questions as opposed to billing questions, is there any way to look at the wording of thing and make any assessment as to whether it’s watching those two directions that seems to be going?

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Alan B. Miller – CEO and Chairman: I think A.J. as you suggest the trend in behavioral care has been and have these investigations focused on clinical practices and I would say that the content of the subpoenas would suggest that that’s largely the focus here. I will say that I believe the government often pursues the technique in which they are trying and tie together what they perceived to be clinical issues and quality deficiencies than with an argument that false claim has been filed because there is not adequate care et cetera we have no idea that’s where the government is going in this case and you certainly couldn’t predict that.