Our new report about UHS shows that some of the most interesting information about the company can be found in the fine print of its financial filings.
The report — “Universal Health Services: Behind Closed Doors” — delves deep into the “Legal Proceedings” section of UHS’s just-released 10-K to retrieve this nugget: The U.S. Department of Justice has further expanded its investigation of the company and is now probing 19 of its behavioral health facilities.
That’s one of many important new findings in the report. (Click here to download a PDF copy.) Not only does it include UHS’s latest financial numbers, it also offers a comprehensive survey of the patient care practices and finances of UHS’s behavioral care division over the last decade. Following are some highlights of the report:
• For every dollar UHS’s behavioral division received in revenue in 2014, nearly a quarter of that went into profit.
• UHS cut staffing costs in its behavioral division to their lowest level in the last decade, with just 48.6 percent of revenue going to staff compensation.
• UHS dramatically expanded its behavioral business over the last decade, with inpatient admissions rising over 450 percent and profits increasing seven-fold to $944 million in 2014.
Medicare and Medicaid paid $2.2 billion to UHS’s behavioral division in 2014, which was more than half of the division’s net revenue. UHS also received up to $395 million from the U.S. military to provide behavioral health services to soldiers and their families.
Are High Profits Taking a Toll on Patient Care?
The report finds that UHS may be putting an unhealthy emphasis on profit. UHS Chief Financial Officer Steve Filton has told investors that the company’s high profits are tied to cuts in staffing costs. Inadequate staffing was a factor in many of the disturbing incidents documented in the report. For example:
• At UHS’s Rock River Academy for girls in Illinois, a recent investigative series by the Chicago Tribune found the facility was “violent, chaotic and under-resourced.” Residents often ran away from the facility and some were lured into prostitution.
• At The Vines Hospital in Florida, a psychotic patient left unsupervised for two hours killed his roommate in 2012. Afterwards, a worker told state officials “sometimes there are not enough staff to care for residents.”
The Expanding Federal Probe of UHS
The federal investigation of UHS began in 2013 when the Department of Health and Human Services’ Office of the Inspector General issued subpoenas to 11 UHS facilities, and it has steadily expanded since then. The Justice Department’s Criminal Fraud Section is now investigating three UHS facilities in Florida.
The government has not publicly released details of the ongoing investigation. But UHS’s recently released earnings report offered a description of the probe. According to UHS, “The DOJ has advised us that the civil aspect of the coordinated investigation in connection with the behavioral health facilities named above is a False Claim [sic] Act investigation focused on billings submitted to government payers in relation to services provided at those facilities.”
In recent years, UHS has paid millions of dollars to settle lawsuits alleging that it fraudulently billed government health care and education programs:
• In Virginia, federal officials intervened in a lawsuit by former therapists at UHS’s Keystone Marion Youth Center who charged that the center didn’t provide the therapeutic level of care it claimed to. UHS paid $6.85 million to settle the suit in 2012.
• In California, parents and staff alleged that several UHS day schools “warehouse[d]” students in classrooms without qualified teachers, filed false claims and failed to fulfill contracts with local school districts. UHS denied liability but paid $4.25 million to settle the case.
UHS Lacks an Independent Corporate Compliance Committee
Unlike other large investor-owned hospital companies, UHS has no independent committee on its board of directors where caregivers can report quality of care or compliance issues. Former UHS employees have said they were retaliated against for reporting abuse or bringing safety concerns to supervisors — even when their professional and personal ethics required them to do so:
• In Florida, two therapists at UHS’s National Deaf Academy in Florida allege they were fired in 2012 shortly after they reported multiple concerns about care through the company’s corporate compliance program.
• In North Carolina, a mental health technician at Keys of Carolina charged that she was fired for raising issues about unsafe staffing. UHS settled the suit confidentially in 2012 and has since closed the facility.
The report concludes that UHS needs to create a dedicated committee on its board of directors to oversee quality of care and compliance with health care laws and regulations. The committee should be staffed by independent medical and compliance experts, and they should monitor all allegations against UHS facilities and have the authority to make needed improvements.
The findings and recommendations in “Universal Health Services: Behind Closed Doors” are based on an analysis of hundreds of sources — including federal and state regulatory complaints obtained through Freedom of Information Act requests, legal filings by whistleblowers, UHS reports to investors as well as links to many news stories about the company. Most of the primary sources referenced in “Universal Health Services: Behind Closed Doors” can be downloaded from this website.