Behavioral Health
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UNIVERSAL HEALTH SERVICES, INC. OUR PATIENTS ALWAYS COME FIRST 2017 ANNUAL REPORT Universal Health Services, Inc. (UHS) At UHS, superior quality patient care is our top priority. Our continued growth and development are testament to the positive impact we have on the patients and communities we are privileged to serve. Hospitals and affiliated healthcare facilities continue to be key focal points of the healthcare delivery system. We focus on strategic growth through expansions, de novo builds, acquisitions and joint venture partnerships. OUR MISSION To provide superior quality healthcare services that: Patients recommend to family and friends, Physicians prefer for their patients, Purchasers select for their clients, Employees are proud of, and Investors seek for long-term returns. 2017 Highlights ACUTE CARE BEHAVIORAL HEALTH 2.6 300,000 MILLION patient admissions 468,000 TOTAL PATIENTS inpatients served SERVED 1.3 million patient days 6.4 million patient days 1.2 million $ outpatient visits 24 facilities 558 offering Patriot MILLION 33,435 births Support Programs INVESTMENT IN 465 inpatient beds EQUIPMENT, FACILITY 5 Accountable Care Organizations added to existing EXPANSIONS AND facilities RENOVATIONS (ACOs) FINANCIAL HIGHLIGHTS Percentage Year Ended December 31 2017 2016 Increase 2015 Net revenues $10,409,865,000 $9,766,210,000 7% $9,043,451,000 Adjusted net income attributable to UHS (1) $725,459,000 $720,239,000 1% $692,047,000 Adjusted diluted earnings per share attributable to UHS (1) $7.53 $7.32 3% $6.87 Percentage Year Ended December 31 2017 2016 Increase 2015 Patient days 7,694,021 7,255,577 6% 7,054,125 Admissions 765,212 730,126 5% 708,734 Average number of licensed beds 29,278 27,763 5% 27,034 2017 2016 2015 2014 (1) Calculation of Adjusted Net Per Per Per Per Income Attributable to UHS Amount Diluted Share Amount Diluted Share Amount Diluted Share Amount Diluted Share (in thousands except per share amounts) Net income attributable to UHS $752,303 $7.81 $702,409 $7.14 $680,528 $6.76 $545,343 $5.42 Other combined adjustments (26,844) (0.28) 17,830 0.18 11,519 0.11 36,410 0.36 Adjusted net income attributable to UHS $725,459 $7.53 $720,239 $7.32 $692,047 $6.87 $581,753 $5.78 The “Other combined adjustments” neutralize the effect of items in each year that are nonrecurring or non-operational in nature including items such as: the cost incurred and incentive income recorded in connection with the implementation of electronic health records applications; adjustments to our reserves relating to prior years for self-insured professional & general liability and workers’ compensation claims; gains and losses on sales of assets and businesses; reserves for settlements and legal judgments, and; other amounts that may be reflected in a given year that relate to prior years. Since “adjusted net income attributable to UHS” is not computed in accordance with generally accepted accounting principles (“GAAP”), investors are encouraged to use GAAP measures when evaluating our financial performance. To obtain a complete understanding of our financial performance the information provided above should be examined in connection with our consolidated financial statements and notes thereto, as contained in this report. Net revenues Adjusted net income per Hospital patient days (in millions) diluted share attributable (in thousands) to UHS (1) $10,410 7,694 $7.53 $9,766 7,256 $7.32 7,054 $6.87 $9,043 6,686 $8,205 $5.78 14 15 16 17 14 15 16 17 14 15 16 17 2017 ANNUAL REPORT 3 LETTER TO OUR SHAREHOLDERS 2017 marked another year of solid performance. In spite of volatile market conditions, we remained steadfast, made prudent investments and delivered the kind of care our patients need and expect of us, each and every day – across all the markets we serve. For nearly 40 years, Universal Health Services (NYSE: UHS) has been recognized as a leader in the healthcare management industry. National, state and local organizations continue to honor UHS employees and facilities for achieving high outcome clinical measures and quality metrics, and for our commitment to community service. I am proud that UHS has again been recognized UHS personnel and facilities also supported areas as one of the ‘World’s Most Admired Companies’ impacted by national disasters during a record by Fortune magazine, that we rank #276 on hurricane season with major storms hitting Texas, the Fortune 500 list, and that UHS made Forbes’ Florida, Puerto Rico, and other islands in the Gulf inaugural list of America’s Top 500 Public of Mexico. Once again, members of the UHS team Companies. Our consistent recognition is testament met the challenge of providing care and saving to the tremendous work done every day by our lives in very challenging environments. 83,000 employees and their commitment to exceptional patient care – treating the mental BEHAVIORAL HEALTH DIVISION – MORE CARE FOR MORE PATIENTS and physical health of our patients. Today, we operate nearly 300 behavioral health With a strong portfolio focusing on physical facilities in 37 states, the District of Columbia, health, mental health, an insurance offering, a Puerto Rico, the U.S. Virgin Islands and the physician network, and various related service United Kingdom. offerings – and a partnership strategy that aligns us with other leaders in our markets – we are During the past year, the Behavioral Health well-poised for continued growth. Division continued to expand the delivery of care nationally and internationally – providing more 2017 – SERVING PATIENTS IN THE services to more patients. The cornerstone of our AFTERMATH OF VIOLENCE growth is our ability to identify and execute on UHS was in a unique position to respond to the strategic opportunities. critical needs of the communities we serve across In the U.K., we received a favorable regulatory the nation. In June, the George Washington decision from the Competition and Markets University Hospital delivered aid in the aftermath Authority review of the Cambian Adult Services of the ambush at the congressional baseball acquisition. We immediately initiated the process practice. In early October, our healthcare of fully integrating the newly acquired facilities professionals at the six Las Vegas area UHS under Cygnet Health Care, hereby becoming one hospitals provided life-saving care to those injured of the largest providers in the U.K. With a total of during the worst mass shooting in U.S. history. 108 facilities, including a brand new 56-bed facility We responded heroically in treating and caring in Coventry, we offer a full spectrum of behavioral for a total of 232 patients who arrived in our health services and capabilities. emergency departments. 4 UNIVERSAL HEALTH SERVICES, INC. In the U.S., the Behavioral Health Division We increased the accessibility and expanded added 471 inpatient psychiatric beds via the delivery of emergency care services in a expansions, acquisition and new construction in number of our markets with a turnkey design and 2017. Looking ahead to 2018, we are particularly construction model for Freestanding Emergency proud of the joint venture partnerships with the Departments, which are separate entities yet University of Pennsylvania and with Providence strategically affiliated with our nearby full- Health, for which new hospitals are currently service hospitals. under construction in Lancaster, Pennsylvania, and Spokane, Washington, respectively. POISED FOR CONTINUED SUCCESS UHS’ leadership team and I are confident that Lastly, UHS proudly demonstrates its commitment the company is well-positioned to continue to to members of the military and their families deliver superior quality patient care, attract and through its Patriot Support Program, which retain talented healthcare professionals as an treated 6,500 individuals in 2017. We are very employer of choice and contribute meaningfully proud to offer this Program as a national network to our local communities. of now 24 behavioral treatment centers across 13 states dedicated to treating active military, By focusing on our core strategies and initiatives, veterans and their families to help them cope remaining adaptable and meeting the needs of with the emotional and psychological effects of our constituents, we look forward to continued combat and related triggers. They deserve all success in 2018 and in the future. that our professionals can offer. Sincerely, ACUTE CARE DIVISION – GROWTH AND EXPANSIONS Our Acute Care results are strong – and our trajectory is healthy. Of particular note, we led the industry in our admissions growth, meaning that more patients and more physicians are Alan B. Miller choosing UHS hospitals. Chairman of the Board 2017 saw expansions in a number of our facilities Chief Executive Officer and the growth continues. For example, since the opening of Temecula Valley Hospital in October of 2013 the growth in patient volume has been remarkable. As a result, the hospital is now in the midst of a $40 million expansion project to include additional operating rooms, cath labs, and additional radiological imaging systems that will allow the hospital to continue to meet the growing demand in the community. This project is expected to be completed and operational by Q3, 2018. And in Southern California at Corona Regional Medical Center, we are investing $38 million to add 15,000 square feet of space, a total of 30 new treatment beds. 2017 ANNUAL REPORT 5 AK UNIVERSAL HEALTH SERVICES, INC. WA MT ACUTE CARE HOSPITALS + AMBULATORY CENTERS BEHAVIORAL HEALTH OR FACILITIES FREESTANDING EMERGENCY 350 DEPARTMENTS ID FACILITIES URGENT CARE CENTERS WY 37 STATES NV PLUS WASHINGTON, D.C., UNITED KINGDOM, PUERTO RICO AND U.S. VIRGIN ISLANDS UT CO 83,000+ CA EMPLOYEES For a full state-by-state list of AZ NM facilities, please visit our website: www.uhsinc.com UHS is a registered trademark of UHS of Delaware, Inc., the management company for Universal Health Services, Inc.