An increasing shift toward outpatient surgeries and slower-than-expected ramps to profitability at some of its hospitals dinged Universal Health Services earnings in the third quarter.

Patients have been increasingly getting surgeries in outpatient facilities, including ambulatory care centers and physician offices, enticed by lower costs and more convenient care options. Hospital operators have been attempting to capitalize on that shift, buying outpatient facilities and integrating them into their networks.

UHS’s portfolio, which includes 30 inpatient acute care hospitals and over 340 inpatient behavioral health facilities, skews more inpatient. Most of its medical admissions, meaning those that aren’t surgeries, come through UHS’ emergency rooms and surgeries tend to be elective, CFO Steve Filton said.

Surgeries are a lucrative service line for operators, and a decline in volumes can ding earnings: In the third quarter, UHS’ same-facility surgeries declined 0.7% over the prior year period. At the same time, medical admissions “significantly outpaced” surgery volumes, according to Filton, (acute care volumes increased 4.3%), which brought down UHS’ net revenue per admissions.

Although surgeries have been shifting more to outpatient, elective procedures across the board have been declining as patients postpone care due to cost and more people lose health insurance. Both inpatient and outpatient surgeries declined by similar levels, according to Filton.

UHS reported $308 million in net income during the third quarter, an approximately 17% decrease from the prior year. Revenues increased over 5% to $4.7 billion.

Slower-than-expected progress on some of its new hospitals also pressured UHS’ earnings in the quarter.

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