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Universal Health Services profit falls $3 million in second quarter, for-profit hospital operator lowers outlook

Expense growth and charges tied to broad EHR installations hurt the company's bottom line, despite revenue gains.

Beth Jones Sanborn, Managing Editor

Photo courtesy <a href=""> UHS </a>Photo courtesy UHS

Pennsylvania-based Universal Health Services on Wednesday posted a $188 million profit in the second quarter, dropping three million dollars from a year ago due to expense hikes tied to a host of operational issues.

The for-profit hospital operator did see a slight uptick in revenue in the quarter ending June 30 posting $2.61 billion in revenue compared to $2.43 billion from the same period last year, a 7.5 percent increase. Diluted earnings per share were $1.94 compared to $1.91 a year ago, the company disclosed in its financial statements.

In addition to the profit dip, UHS  lowered its full-year profit projection to $7.50 to $8.00 per diluted share from the previously provided range of $7.70 to $8.20 per diluted share, a decrease of roughly 2.5 percent.

[Also: Universal Health Services to spend $445 million buying back minority stakes in 6 Las Vegas hospitals]

Operating expenses crept up slightly year over year, including salaries, wages and benefits, supplies, depreciation, lease and rental expenses, as well as other expenses. The system also said they suffered a negative after-tax impact of $4 million due to the implementation of EHR applications across their acute care hospitals.

While for-profit hospitals benefit from investor's money and may have more control over what services they offer, it's nonprofit hospitals that have grabbed the spotlight over the last year, leading in mergers and acquisitions activity over for-profits, according to Kaufman Hall.

[Also: Universal Health Services picks Cerner for revenue cycle platform]

A Health Affairs study also said they are actually proving more profitable than their actual for-profit counterparts, with seven of the 10 most profitable U.S. hospitals actually being nonprofits.

A recent report from investor group Moody's said the for-profit hospital industry is experiencing challenges like swelling wage and benefits expenses, nursing shortages and increased physician employment.

However, the group also said margins will increase as hospitals integrate their acquisitions and offload facilities that are not as profitable.

Twitter: @BethJSanborn

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