Through our subsidiaries, we own and operate general acute care hospitals and
psychiatric hospitals in non-urban communities. We operated 47 hospitals, consisting
of 45 acute care hospitals with a total of 6,337 licensed beds and two psychiatric
hospitals with a total of 142 licensed beds. We operated facilities located in
Alabama, Arkansas, Florida, Georgia, Kentucky, Mississippi, North Carolina, Oklahoma,
Pennsylvania, South Carolina, Tennessee, Texas, Virginia, Washington and West
Virginia.
Services provided by our hospitals include general surgery, internal medicine,
obstetrics, emergency room care, radiology, oncology, diagnostic care, coronary
care, pediatric services, behavioral health services and psychiatric care and,
in several of our hospitals, specialized services such as open-heart surgery
and neuro-surgery. Our facilities benefit from corporate resources, such as
purchasing, information services, finance and control systems, facilities planning,
physician recruitment services, administrative personnel management, marketing
and public relations.
Market
Our market for operating and acquiring acute care hospitals is primarily non-urban
areas of 30,000 to 400,000 people in the southeastern and southwestern United
States. Typically, the acute care hospitals we acquire are, or can become, the
sole or preferred provider of health care services in their market areas. Our
target markets generally have the following characteristics:
' A history of being medically underserved. We believe that we can enhance
and increase the level and quality of health care services in many underserved
markets.
' A growing elderly population. We believe that this growing population uses
a higher volume of the services our hospitals provide.
' The existence of patient outmigration trends to urban medical centers. In
many instances, based on community needs, we believe that we can recruit new
physicians based on community need and purchase the new equipment necessary
to reverse outmigration trends.
' States in which a certificate of need is required to construct a new hospital
facility or add licensed beds to an existing hospital facility. We believe that
states which require certificates of need have higher barriers to entry and,
in many instances, permit us to be the sole or preferred service provider in
a geographic area.
' Areas in which marketing does not play a major role in patients' selection
of health care.
We continually seek to improve the quality of the health care services we deliver
with the help of our company-wide proprietary QSM patient quality management
program. Surveyed patient's are asked to fill out a confidential survey that
seeks their perception of the hospital's health care services, including medical
treatment, nursing care, the hospital's attention to patient concerns, the administration
process, cleanliness of the facility, and the quality of dietary services. Each
hospital management team utilizes information provided by our QSM program to
improve and enhance services.
Competition
In many of the geographic areas in which we operate, there are other hospitals
that provide services comparable to those offered by our hospitals. Generally,
such competition is limited to a single or small number of competitors in each
hospital's respective market service area. In fact, with respect to the delivery
of general acute care services, we believe that most of our hospitals face less
competition in their immediate market service areas than they would likely face
in larger communities. In market service areas where our hospitals do face increased
competition, we believe that they distinguish themselves based on the quality
and scope of medical services they provide.
Certain of our competitors may have greater resources than we do, may be better
equipped than we are and could offer a broader range of services than we do.
For example, some hospitals that compete with us are owned by governmental agencies
and are supported by tax revenues, and others are owned by not-for-profit corporations
and may be supported to a large extent by endowments and charitable contributions.
Such support is not available to our hospitals. In addition, outpatient treatment
and diagnostic facilities, outpatient surgical centers and freestanding ambulatory
surgical centers also affect the health care marketplace.
A majority of our hospitals are located in states that have certificate of
need laws. These laws limit competition by placing regulations on the construction
of new hospital or health care facilities, the addition of new beds, or the
addition of significant new services. We believe that such states have higher
barriers to entry and, in many instances, permit us to be the sole or preferred
service provider in a geographic area.
The competitive position of our hospitals is also increasingly affected by
our ability to negotiate service contracts with purchasers of group health care
services. Such purchasers include employers, preferred provider organizations,
or PPOs, and health maintenance organizations, or HMOs. PPOs and HMOs attempt
to direct and control the use of hospital services by managing care and either
receive discounts from a hospital's established charges or pay based on a fixed
per diem or a capitated basis, where hospitals receive fixed periodic payments
based on the number of members of the organization regardless of the actual
services provided. To date, HMOs have not affected the competitive position
of our hospitals. In addition, employers and traditional health insurers are
increasingly interested in containing costs through negotiations with hospitals
for managed care programs and discounts from established charges. In return,
hospitals secure commitments for a larger number of potential patients. We believe
that we have been proactive in establishing or joining such programs to maintain,
and even increase, hospital services. We also believe that we are able to compete
effectively in our markets, and do not believe such programs will have a significant
adverse impact on our business or operations.
We are in an industry that has a competitive labor market. We face competition
for attracting and retaining health care professionals. In recent years there
has been a nationwide shortage of qualified nurses. In order to address this
shortage, we have been improving hospital working conditions, fostering relationships
with local nursing schools, and implementing our NurseSelectTM internal nursing
agency in four of our markets.