HealthSouth Corp. says it will likely miss paying $367 million in bond and interest payments next Tuesday, bringing it closer to a possible Chapter 11 bankruptcy filing.
Meanwhile, Nashville-based AmSurg Corp. says it is prepared to buy some of HealthSouth's 290 ambulatory surgery centers if they are put up for sale and the price is right.
In a release Thursday, HealthSouth says J.P. Morgan Chase Bank, heading a group of banks owed money by the company, blocked HealthSouth from making the bond and interest payments.
Last week, banks froze HealthSouth's $1.25 billion credit line, after the Securities and Exchange Commission filed suit alleging the company and its now-suspended chairman and CEO, Richard Scrushy, overstated profits by at least $1.4 billion since 1999.
In the release, the Birmingham, Ala.-based company says it is still hoping to avoid defaulting, but prospects look grim.
"HealthSouth is currently in discussions with J.P. Morgan Chase Bank and our other lenders to address the company's current liquidity situation," says acting Chairman Joel Gordon in the release. "We cannot, however, provide any assurances that an agreement with our lenders will ultimately be reached."
If HealthSouth chooses to sell off its ASCs, Ken McDonald, president and CEO of AmSurg, which has majority interest in 107 ASCs nationwide, says his company would be interested in buying some.
"There are some centers (in HealthSouth) we would like to have if the price is right," he says.
He added that the ASCs would have to fit with the company's business model. AmSurg favors single-specialty facilities, chiefly in gastrointestinal disorders and ophthalmology, though it also has some orthopedic and ear-nose-throat surgery centers.
Also, AmSurg also prefers to operate in states that do not require certificates of need to open ASCs and in geographical areas where it can achieve "market dominance," McDonald says.
Working in AmSurg's favor is the fact that HealthSouth's Gordon has ties to the Nashville company. Gordon ran Surgical Care Affiliates before selling that ASC company to HealthSouth in 1996.