Friends Hospital’s corporate owner says the company has started ‘admitting patients whose insurance will pay us more’

Universal Health Services Inc., the largest operator of behavioral health hospitals in the nation, said that tight labor suppliers have been allowing the King of Prussia company to focus on patients with better-paying insurance.

“We’ve been going to our lowest payers and either demanding increases from them or canceling those contracts that we view to be inadequate and simply admitting patients whose insurance will pay us more,” Steve Filton, UHS’s chief financial officer, total Wall Street analysts last week.

“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,” he said Wednesday during a conference call on the company’s second quarter earnings.

Becker’s, a trade publication, reported Filton’s remarks Saturday.

UHS is a major behavioral health player in the Philadelphia region, with more than 900 inpatient psychiatric beds at seven facilities: Friends Hospital (192 beds) and Fairmount Behavioral Health System (172 beds) in Philadelphia, Keystone Center in Chester (83 beds); Brooke Glen Behavioral Hospital in Fort Washington (146 beds); the Horsham Clinic in Ambler (206 beds); Foundations Behavioral Health in Doylestown (60 beds); and Hampton Behavioral Health Center in Westampton, Burlington County (120 beds).

At some of those locations, UHS has additional beds used for partial hospitalizations and other programs.

UHS also has a joint venture with the University of Pennsylvania Health System to operate a behavioral health hospital in Lancaster County.

In the three months that ended June 30, UHS’s 355 behavioral health facilities had $1.5 billion in revenue and $263 million in operating income, which amounts to an operating margin of 17%.

UHS also operates 28 acute care hospitals, though none are in the Philadelphia region. Those hospitals had an additional $2 billion in revenue and $130 million in operating income.

In the behavioral health arena, UHS plans to stick to the strategy of focusing on insurers that pay higher rates.

“We’ve terminated or issued notice of termination in a great many markets to a great many payers,” Filton said. “We’re pursuing this strategy pretty aggressively and feel like there’s runway to do so for the foreseeable future.”

The company did not respond when asked whether any of those contract terminations were in the Philadelphia region.