"We are pleased to report continued progress in the 3rd quarter," stated Chief Executive Officer Ronald Heineman. "Our restructuring, which began in February, has better aligned the business with the current choppy economic environment."

Because hospitals often put the doctors on flat salaries without the financial incentive to see more patients, doctors "weren't working as hard as they were before their practice was acquired." In fact, Jessee adds, "the first thing a lot of physicians did is take a vacation." Hospitals lost a lot of money and ended up divesting most of the practices. This time, hospitals are providing incentives like some of those Casey receives, such as bonuses based on how many patients they see.

[H]owever, underscoring the company's preference for units in the 4,000- to 5,000-square-foot range, he added, "the real challenge we see on the acquisition front is a lot of stores on the market are smaller stores."

“The new mandate driving the next heat wave of hospital consolidation is sheer survival,” says Myers. “In the new economy, the case for hospital consolidation has shifted from the revenue side of the equation to improved efficiency and reduction of expenses. Health systems that historically relied heavily on investment income to bolster operating income are now forced to confront the stark reality of expenses accelerating faster than revenue.”

The outlook revision is attributable to our concerns with the difficult operating environment that is contributing to an inability to improve liquidity with anticipated sizable cash contributions needed in the near term to fund the large underfunded defined benefit pension liability and to support needed capital investment. With the decline in the Michigan economy that has led to declines in the population, especially in the metro-Detroit area, along with increased competitive pressure on the fringes of the service area from newly opened hospitals in the last two years, we believe increased pressure will be placed on volume metrics and revenue growth.

All three agreements contain wage freezes for the length of the contracts, which extend the current pacts by two years, incorporates the hospitalization plan proposed by Ardent Health Services Inc., which had sought to purchase Forum, and provides a 401(k) contribution match, Connelly said.