Firm under federal probe owns 4 of 5 most profitable Pa. mental hospitals

Nov. 17--Four of the five most profitable mental-health hospitals in Pennsylvania are owned by Universal Health Services Inc., according to a report being published Tuesday by the Pennsylvania Health Care Cost Containment Council.

The King of Prussia company, which is under federal criminal investigation for its Medicare and Medicaid billing practices at about 20 facilities in nine states, owns eight psychiatric hospitals in Pennsylvania, including three that are under investigation.

Two of those under investigation, Roxbury Treatment Center in Shippensburg and the Meadows in Centre Hall, are among the most profitable. The third is Friends Hospital in Philadelphia.

Federal authorities have been requesting documents from various UHS facilities since 2012, and in March the criminal frauds section of the U.S. Department of Justice expanded its investigation to include the parent company.

"At some point, we'll begin probably a more serious conversation with the government, but that has not occurred yet," UHS chief financial officer Steve Filton told analysts last month after being asked for an update on the investigations.

Federal investigations of fraudulent billing allegations sometimes result in financial settlements.

UHS officials did not respond Monday to an emailed request for comment.

Overall, UHS is the nation's largest operator of psychiatric hospitals. It had 204 facilities and 21,054 beds on Sept. 30. Net patient revenue during the nine months ended then was $3.27 billion, up 10 percent from $2.96 billion the year before.

Behavioral health providers have benefited from expanded insurance coverage for mental-health care under two federal laws since 2008.

The Cost Containment Council's report covered fiscal years ended June 30, 2014, or earlier. The report showed that psychiatric hospitals in the aggregate have been profitable for 10 straight years, after a decade of losses.

In UHS's case, the most recent data are from 2013, when UHS accounted for 47 percent of the net patient revenue in the state's free-standing inpatient psychiatric facilities.

The report showed that Clarion Psychiatric Center in northwest Pennsylvania topped the list of Pennsylvania's 20 private behavioral hospitals, with a total profit margin of 19.58 percent in the three years covered by the report.

UHS's Fairmount Behavioral Health System in Philadelphia ranked second, at 17.23 percent, and Roxbury Treatment Center was third, at 15.70 percent. The Meadows, with a total margin of 11.37 percent, was fifth.

Also in the top five was Pittsburgh's Southwood Psychiatric Hospital, which is owned by UHS rival Acadia Healthcare Co., of Franklin, Tenn., and had a total profit margin of 15.02 percent.

All of the top five are for-profit.

Acadia, which is managed by executives who sold Psychiatric Solutions Inc. to UHS five years ago for $2 billion, bought Belmont Center for Comprehensive Treatment from Einstein Healthcare in June for $30 million.

Belmont, in West Philadelphia, was among five psychiatric facilities that lost money, on average, in the three years ended June 30, 2014. Each of the five money-losers was owned by nonprofits.

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