Re HRC (a few months old but pertinent):
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June 15, 1999/FOOLWIRE/ -- "Separating our inpatient and outpatient businesses will allow us to provide better service to our patients and payors," said Richard Scrushy, chairman and CEO of outpatient surgery and rehabilitative services provider HEALTHSOUTH Corp. (NYSE: HRC), in a statement today. HEALTHSOUTH's stock rose $1 3/8 to $15 9/16 today on news of plans to split the company's inpatient and outpatient operations into two publicly traded companies. Of course, the company extolled the virtues of its integrated service model in its April annual report, but that's all ancient medical history now. Acquisitive HEALTHSOUTH, its shares currently fetching about half their Summer '97 prices, hopes to stir up investor confidence in its outpatient business, which boasts higher profitability, more acquisition-fueled growth potential, and less reliance on government payors than the inpatient division. In 1998, same-store inpatient days rose about 33%, compared with outpatient visit growth of 28%, but revenue per inpatient day fell nearly 6% for the year compared with essentially flat revenue for each outpatient visit, exacerbating a trend also evident in 1997.
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If they are going to spin off the outpatient unit (in which case the inpatient unit would go terminal) how does this help? If revenue is flat (and no one is going to pay providers/hospitals more in the future) how much more can you squeeze out of the system on either side?
Anyone see other healthcare shorts? |
