Universal Health Services Bets on Hospital Recovery as Medicaid Payments Fall in 2027

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Universal Health Services (NYSE:UHS) expects improving performance at three struggling hospitals to help offset a significant decline in nonrecurring Medicaid supplemental…

Universal Health Services (NYSE:UHS) expects improving performance at three struggling hospitals to help offset a significant decline in nonrecurring Medicaid supplemental payments in 2027, Chief Financial Officer Steve Filton said at an investor conference.

The hospital operator is also counting on its August acquisition of Talkspace to accelerate outpatient behavioral health growth and expects lower capital spending to support continued share repurchases.

Filton said volumes recovered as 2026 progressed after a soft first quarter, and the company was pleased with third-quarter volumes in both its acute care and behavioral health segments. The biggest unexpected challenge, he said, was underperformance at two newer hospitals and a San Antonio behavioral health facility that lost its Medicare certification.

The three facilities generated approximately $80 million to $100 million in losses through the third quarter, Filton said. He expects a meaningful portion of those losses to be recovered in 2027, though he did not provide a specific forecast.

Cedar Hill in Washington, D.C., and Alan B. Miller Medical Center in South Florida continue to improve, he said. At the Florida hospital, which opened in early summer, volumes have increased and losses have declined each month.

The San Antonio behavioral facility remains open with a small number of patients while it pursues recertification. Filton said the company hopes to regain certification sometime in 2027, but the timing remains uncertain. He said the facility generated approximately $25 million to $30 million in 2025.

Darren Lehrich, vice president of investor relations, said reaching break-even at the three hospitals would recover the $80 million to $100 million loss level, with potential for further growth beyond 2027.

Against that potential improvement, Filton identified $175 million to $200 million in out-of-period Directed Payment Program Medicaid supplemental payments received in 2026 that will not recur in 2027.

Filton…

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