In announcing second-quarter results, American Health Properties said it has written down the value of its psychiatric hospital portfolio by $30 million.
The action was taken because of "continuing negative trends affecting the company's psychiatric hospitals." Efforts by payers to reduce costs by decreasing lengths of stay, moving patients to outpatient care and reducing reimbursement rates have affected cash flow at a number of its eight psychiatric facilities, AHP said.
Joseph P. Sullivan, president and chief executive officer of the Denver-based real estate investment trust, said the company is exploring strategic alternatives, including the sale of certain psychiatric hospitals and a financial restructuring that would result in the separation of its psychiatric assets from the company's "strong core portfolio" of acute-care and rehabilitation facilities.
The write-down is a non-cash charge; it doesn't affect funds from operations. But it does reduce the company's investment in psychiatric hospitals to $86 million, or 15% of its portfolio, down from $116 million.
As a result, the Denver-based REIT reported a net loss of $19.3 million, or 92 cents per share, for the second quarter ended June 30. That compares with a net gain of $5.8 million, or 33 cents per share, in the year-ago period. Revenues rose nearly 10% to $21.7 million. Funds from operations increased 22% to $14 million.
For the six months ended June 30, the REIT had a net loss of $9.5 million, or 45 cents per share, compared with a net gain of $33.6 million, or $1.95 per share, in the first half of 1993. Revenues rose 9% to $43.2 million, and funds from operations grew 18% to $27.8 million.