Note 3 - Other Revenues

6 Months Ended

Jun. 30, 2014

Other Revenues [Abstract]

Other Revenues [Text Block]

Note 3 – Other Revenues

Other revenues are outlined in the table below. Revenues from management and accounting services include management and accounting fees provided to managed and other health care centers. Revenues from rental income include health care real estate properties owned by us and leased to third party operators. Revenues from insurance services include premiums for workers’ compensation and professional liability insurance policies that our wholly–owned limited purpose insurance subsidiaries have written for certain health care centers to which we provide management or accounting services. "Other" revenues include miscellaneous health care related earnings.

Other revenues include the following:

	Three Months Ended June 30				Six Months Ended June 30
(in thousands)	2014		2013		2014		2013
Management and accounting services fees	$	4,022	$	4,596	$	8,004	$	9,428
Rental income		4,749		4,764		9,517		9,501
Insurance services		1,877		3,936		3,650		10,063
Other		275		314		514		566
	$	10,923	$	13,610	$	21,685	$	29,558

Management Fees from National

We manage five skilled nursing facilities owned by National Health Corporation ("National"). For the three months and six months ended June 30, 2014, we recognized management fees and interest on management fees of $870,000 and $1,795,000, respectively, from these centers. For the three months and six months ended June 30, 2013, we recognized management fees and interest on management fees of $865,000 and $1,777,000, respectively, from these centers.

Because the amount collectable cannot be reasonably determined when the management services are provided, and because we cannot estimate the timing or amount of expected future collections, the unpaid fees from the five centers owned by National will be recognized as revenues only when the collectability of these fees can be reasonably assured. Under the terms of our management agreement with National, the payment of these fees to us may be subordinated to other expenditures of the five long–term care centers. We continue to manage these centers so that we may be able to collect our fees in the future and because the incremental savings from discontinuing services to a center may be small compared to the potential benefit. We may receive payment for the unrecognized management fees in whole or in part in the future only if cash flows from the operating and investing activities of the five centers or the proceeds from the sale of the centers are sufficient to pay the fees. There can be no assurance that such future improved cash flows will occur.

Management Fees from Other Healthcare Centers

In February 2014, we assumed management of a 121-bed skilled nursing facility located in Des Peres, Missouri. In June 2014, we began managing a 75-unit assisted living facility located in Augusta, Georgia. As of June 30, 2014, we provide management services to six healthcare centers (other than the five National centers) operated by third party owners. For the three months and six months ended June 30, 2014, we recognized management fees of $565,000 and $1,102,000, respectively, from these centers. For the six months ended June 30, 2013, we provided management services to 21 healthcare centers operated by third party owners. For the three months and six months ended June 30, 2013, we recognized management fees of $1,379,000 and $2,997,000, respectively, from these centers. The decrease in management services revenues is due to the discontinuation of management services to the non-profit entities SeniorTrust and ElderTrust. Effective September 1, 2013, we began leasing and operating the former ElderTrust facilities from National Health Investors, Inc. ("NHI"). The revenues from these seven facilities are included in net patient revenues in the interim condensed consolidated statement of income.

Insurance Services

For workers’ compensation insurance services, the premium revenues reflected in the interim condensed consolidated statements of income for the three and six months ended June 30, 2014 are $1,184,000 and $2,280,000. For the three months and six months ended June 30, 2013, the workers' compensation premium revenues reflected in the interim condensed consolidated statements of income were $1,781,000 and $5,390,000. For the six months ended June 30, 2013, there was a non-recurring positive insurance settlement reached with one of the states in which we provide workers' compensation insurance. The 2013 prior period event helped increase other revenues in the amount of $502,000 and $2,769,000 for the three and six months ended June 30, 2013, respectively. Associated losses and expenses are reflected in the interim condensed consolidated statements of income as "Salaries, wages and benefits."

For professional liability insurance services, the premium revenues reflected in the interim condensed consolidated statements of income for the three months and six months ended June 30, 2014 are $693,000 and $1,370,000. For the three months and six months ended June 30, 2013, the professional liability insurance premium revenues reflected in the interim condensed consolidated statements of income were $923,000 and $1,885,000. Associated losses and expenses including those for self–insurance are included in the interim condensed consolidated statements of income as "Other operating costs and expenses".