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Third quarter sees growth, losses for ASC operators

Ambulatory Safety Monitor, October 28, 2004

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Financial reports for the third quarter of 2004 indicate a mixed bag for the operators of ambulatory surgical centers (ASCs) nationwide, with one up-and-coming David improving its situation while a Goliath in the industry suffers the slings and arrows of outrageous fortune and natural disasters.

HCA Inc., the largest for-profit hospital operator in the country, reported last week that its earnings fell 26% in the third quarter of 2004, according to the Associated Press. Meanwhile, AmSurg Corp. has moved up the Forbes Magazine "200 Best Small Companies" rankings, from 89th last year to 84th this year, according to the Business Wire news service. AmSurg also reported a 14% increase in third quarter earnings in 2004 from third-quarter earnings in 2003.

HCA, which operates 91 ASCs, had warned investors that the string of hurricanes that ravaged the Southeast this year, along with a glut of uninsured patients and an overall decline in patient income, would lead to the precipitous drop.

The company plans to repurchase shares of its stock contingent on financing from outside organizations. In the meantime, Standard & Poor's has reportedly cut HCA's bond rating to junk status, and further reductions may be forthcoming.

AmSurg Corp., however, managed to avoid similar pitfalls, despite having the Florida hurricanes affect 25 of its centers and delay the opening of two new centers in the state, which are now scheduled for late 2004. AmSurg develops, acquires, and manages physician practice-based ASCs, owning a majority interest in 117 such facilities nationwide.

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