MedCath Corp., Charlotte, N.C., announced that founder Stephen Puckett has stepped down from his role as nonexecutive chairman of the heart hospital operator because of potential conflicts with another company Puckett founded, Hospital Partners of America, also based in Charlotte. John Casey, MedCath's president and chief executive officer, added the title of chairman. MedCath said its growth strategy now includes selective acquisitions of acute-care hospitals, largely because of the 18-month moratorium on new physician investment in specialty hospitals that was established as part of last year's Medicare Modernization Act. MedCath said that as its strategic focus has shifted, the possibility that the two companies would be competing for an acquisition has increased, and Puckett wanted to eliminate the appearance of a conflict. HPA, like MedCath, seeks physician investors in its hospitals, but HPA is building a portfolio of acute-care hospitals, not specialty facilities. HPA owns three hospitals, one of which is a surgical hospital. MedCath operates 13 heart hospitals.
Meanwhile, MedCath reported earnings of nearly $1.4 million, or 7 cents per share, in its third quarter ended June 30, almost double its profit of $778,000, or 4 cents per share, in the year-ago quarter. Revenue was up 27% to $180.8 million. For the nine months ended June 30, profits rose 72.2% to $3.1 million, or 17 cents per share, compared with $1.8 million, or 10 cents per share, in the year-ago period. Revenue was up 28.1% to $510.7 million. MedCath credited the improved results to volume increases; same-facility adjusted admissions grew 15.6% for the quarter and 23.2% for the nine months, compared with the year-earlier periods. -- by Vince Galloro