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Strategies & Market Trends : Z PORTFOLIO
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To: Ron McKinnon who wrote (2631)4/12/1999 9:53:00 AM
From: DanZ  Read Replies (1) of 11568
 
DGN, CURE.

CURE announced that a whistleblower made allegations that the company made improper charges to Columbia/HCA hospitals as well as other hospitals. The whistleblower's complaint alleges that: "the Company's charges were excessive; the Company shifted costs fro non-allowable services to allowable services; included charges for advertising costs that were not allowable to the hospital claiming reimbursement from the Medicare program; and violated the "anti-kickback" statute because a portion of the Company's fee was based on the number of new patients seen in the wound care centers managed by the Company. The company "disagrees with these characterizations of its contractual arrangements, its services, and the fees it charges for those services"

Here's my take: I know of a case where Medicare discontinued any further payments to a private company for overbilling. This action basically shut the company down because a large percentage of their revenue came from Medicare payments. I don't think CURE is highly dependent on Medicare, and even if the allegations are true, I don't think the effect on the company warrants the selling that is hitting the stock. While CURE is a very risky investment, I think this will all blow over in a few months and anybody who buys the stock today below 5 will make a lot of money. There is huge risk here, and if anybody buys this stock, you must consider these risks.

I think DGN is a good hold but we need some money to buy more CURE.

Sold 2500 DGN 10 5/8
Bought 4000 CURE 4 1/4

Good luck to everyone,

Dan
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