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Seeking sensible growth

August 02, 2018

A lot has changed in the healthcare landscape since 1979, when Alan B. Miller founded Universal Health Services (UHS), an organization that has become one of the largest providers in the nation with revenue now exceeding $11 billion. Whole-person care has now become a strategic expectation, meanwhile, value propositions are ever more important as stakeholders look for the best balance of quality and cost.

By all accounts, the business is on a consistently upward trajectory. UHS’s 300 behavioral health sites have been recording a continuous rise in admissions, licensed beds and patient days. Most notably, in September 2015, UHS completed its $350 million deal to acquire Foundations Recovery Network—one of the legacy brands in addiction treatment. Additionally, last year alone, UHS added more than 400 behavioral health beds as part of its ongoing capital expansion. The division reported 3% growth in the first quarter of 2018.

As chairman and CEO, Miller still speaks of the almost 40-year-old enterprise as if it were a small entrepreneurial business.

“We’re not concerned with being the biggest,” Miller tells Behavioral Healthcare Executive. "We just want to have the most efficient patient care aspects.”

He believes too many prominent healthcare companies have failed because they outgrew their capabilities and failed to deliver on what they promised. Miller wants UHS to remain an organization that never takes on more than it can manage, in spite of the constant flow of new investment opportunities in mental health and addiction treatment services today.

There are no immediate plans to build additional locations under the Foundations brand. Instead, Miller says, the staffing level is being built up and training is being offered.

”We can only expand when we feel we have excellent staff that can properly address the patients’ needs,” he says. “We’re not interested in dazzling Wall Street. We’re interested in taking care of patients, and Wall Street will follow. Obviously we need investors’ money, but we’re in a very strong financial position—I think without question, the strongest in the industry.”

A publicly traded company, UHS also operates acute care facilities and a healthcare real estate investment trust. The behavioral health operations saw $810 million in profits before taxes last year on $4.9 billion in net revenue. By comparison, the acute-care facilities saw $459 million on $5.5 billion in revenue.

Partnership models

On July 9, UHS opened the $30 million Lancaster Behavioral Health Hospital in Pennsylvania—a facility operated as a 50/50 partnership between UHS and Penn Medicine Lancaster General Health. With a total of six units and 126 beds, the freestanding Lancaster facility will offer services for co-occurring disorders on the psychiatric-medical unit, as well as service in intensive adult and women’s trauma units.

“What we’re finding now is that the future [includes] people believing we’re going to have affordable care networks,” Miller says. “Big nonprofits realize they have concentrated well on acute care and have not paid attention to mental health. So when they want to expand and cover their portfolio, they come to us to partner and handle the mental health portion.”

UHS is advancing additional partnerships—including a $31 million, 100-bed psychiatric hospital near Des Moines, Iowa, slated to open in 2020—as well as other strategies for integration. Looking toward the future, the healthcare system at large is increasingly relying on comprehensive health measures for quality reporting and value-based payment models.

“We’ve always talked about the fact that when people are physically better from some acute care operation or treatment, but mentally, they’re not up to it, then they’re not well,” Miller says.

The same is true for addiction treatment. He says he regards addiction as a chronic condition and recovery as a journey.

“In mental health or addiction treatment, people don’t talk about a cure,” he says. “They talk about being well.”

Chronic condition care

Clinicians agree that recovery requires a lifelong care plan. Karen E. Johnson, UHS senior vice president, clinical services and division compliance officer, says that medication assisted treatment is one way of forwarding patients’ progress in recovery.

“We’re starting to see it more broadly in our hospitals, in our drug and alcohol treatment centers and in our outpatient centers,” Johnson says. “And that has become a more prevalent treatment modality over the years that we’ve utilized.”

She says UHS mostly offers buprenorphine, but some of its Foundations Recovery Network facilities are using naltrexone. It’s a treatment choice that represents a potential growth area for UHS, she says.

Telehealth is also emerging for the substance use disorder patient population. UHS has leveraged the remote service capability for its psychiatric hospitals and plans to expand its use.

“With a focus on addiction as a chronic illness, telehealth allows us to connect and do family work, which is key to creating a network around each individual and a support system that allows people to fully engage,” Johnson says.

In most markets, payer protocols tend to favor more outpatient treatment for behavioral health services. Telehealth could be a less costly touchpoint that helps patients remain engaged, however, reimbursement will continue to be the main driver of telehealth adoption.

“I don’t see how someone with a serious problem can have a few days’ stay and expect to recover with outpatient visits at best,” Miller says. “Many don’t go [to outpatient appointments] or only go for a short time, and they don’t follow up.”

What’s next

For the future, the outlook for UHS will continue to include the acute and behavioral health sides of the business. It’s the key differentiator that defines the company, Miller says.

“Over the years, I’ve heard advice saying we should sell the psychiatric division because acute care is more revenue and people will always be sick or injured,” Miller says. “I chose not to. I also heard other advice saying that mental health is the future, so why sell? We’ve been stubborn and stuck with both.”

His advice for treatment center operators is to hire good people and a build a reputation that resonates with communities.

Julie Miller is a freelance writer based in Ohio.

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