Segment Information

12 Months Ended

Dec. 31, 2011

Segment Information [Abstract]

Segment Information

(13)  Segment Information

We operate predominantly in the long-term care segment of the healthcare industry. We are a provider of nursing, rehabilitative, and related ancillary care services to nursing home patients.

The following summarizes the services provided by our reportable and other segments:

Inpatient Services:  This segment provides, among other services, inpatient skilled nursing and custodial services as well as rehabilitative, restorative and transitional medical services. We provide 24-hour nursing care in these centers by registered nurses, licensed practical nurses and certified nursing aids.  At December 31, 2011, we operated 199 healthcare centers (consisting of 165 skilled nursing centers, 14 combined skilled nursing, assisted and independent living centers, ten assisted living centers, two independent living centers and eight mental health centers with an aggregate of 22,860 licensed beds) as compared with 200 healthcare centers (consisting of 164 skilled nursing centers, 16 combined skilled nursing, assisted and independent living centers, 10 assisted living centers, two independent living centers and eight mental health centers with an aggregate of 23,053 licensed beds) at December 31, 2010.

Rehabilitation Therapy Services:  This segment provides, among other services, physical, occupational, speech and respiratory therapy supplies and services to affiliated and nonaffiliated skilled nursing centers. At December 31, 2011, this segment provided services in 36 states via 517 contracts, 339 nonaffiliated and 178 affiliated, as compared to 508 contracts at December 31, 2010, of which 346 were nonaffiliated and 162 were affiliated.

Medical Staffing Services:  For the year ended December 31, 2011, this segment provided services in 40 states and derived 44.2% of its revenues from hospitals and other providers, 34.5% from skilled nursing centers, 16.9% from schools and 4.4% from prisons. We provide (i) licensed therapists skilled in the areas of physical, occupational and speech therapy, (ii) nurses, (iii) pharmacists, pharmacist technicians and medical imaging technicians, (iv) physicians, and (v) related medical personnel.  As of December 31, 2011, this segment had 35 branch offices, which provided temporary therapy, nursing, pharmacy and physician staffing services in major metropolitan areas and one office servicing locum tenens.  As of December 31, 2010, this segment had 25 branch offices, which provided temporary therapy, nursing, pharmacy and physician staffing services in major metropolitan areas and one division office, which specializes in the placement of temporary traveling therapists, and one office servicing locum tenens.

Corporate assets primarily consist of cash and cash equivalents, receivables from subsidiary segments, notes receivable, property and equipment and unallocated intangible assets. Although corporate assets include unallocated intangible assets, the amortization, if applicable, is reflected in the results of operations of the associated segment.

 The accounting policies of the segments are the same as those described in Note 2 - "Summary of Significant Accounting Policies." We primarily evaluate segment performance based on profit or loss from operations before reorganization and restructuring items, income taxes and extraordinary items. Gains or losses on sales of assets and certain items including impairment of assets recorded in connection with annual impairment testing and restructuring costs are not considered in the evaluation of segment performance. Interest expense is recorded in the segment carrying the obligation to which the interest relates.

Our reportable segments are strategic business units that provide different products and services.  They are managed separately because each business has different marketing strategies due to differences in types of customers, distribution channels and capital resource needs.  We evaluate the operational strengths and performance of each segment based on financial measures, including net segment income.  Net segment income is defined as earnings before loss (gain) on sale of assets, net, restructuring costs, income tax benefit and discontinued operations. Net segment income for the year ended December 31, 2011 for (1) our Inpatient Services segment decreased $39.9 million, or 26.5%, to $110.8 million, (2) our Rehabilitation Therapy Services segment decreased $0.8 million, or 6.1%, to $13.2 million and (3) our Medical Staffing Services segment decreased $0.3 million, or 6.5%, to $5.2 million. We use the measure of net segment income to help identify opportunities for improvement and assist in allocating resources to each segment. 

As of and for the
Year Ended
December 31, 2011					Segment Information (in thousands):
					Rehabilitation		Medical
		Inpatient			Therapy		Staffing					Intersegment
		Services			Services		Services		Corporate			Eliminations			Consolidated
Revenues from external customers	$	1,723,825		$	119,866	$	86,610	$	39		$	-		$	1,930,340
Intersegment revenues		-			132,143		2,771		-			(134,914	)		-
Total revenues		1,723,825			252,009		89,381		39			(134,914	)		1,930,340
Operating salaries and benefits		803,565			214,993		67,551		-			-			1,086,109
Self-insurance for workers'
compensation and general and
professional liability insurance		56,810			2,542		1,406		269			-			61,027
Other operating costs		514,470			9,336		11,364		-			(134,914	)		400,256
General and administrative expenses		40,280			9,410		2,277		62,335			-			114,302
Provision for losses on
accounts receivable		24,112			1,039		126		-			-			25,277
Segment operating income (loss)	$	284,588		$	14,689	$	6,657	$	(62,565	)	$	-		$	243,369
Center rent expense		147,099			531		678		-			-			148,308
Depreciation and amortization		26,779			941		746		3,620			-			32,086
Interest, net		(76	)		-		1		19,526			-			19,451
Net segment income (loss)	$	110,786		$	13,217	$	5,232	$	(85,711	)	$	-		$	43,524
Identifiable segment assets	$	396,166		$	18,231	$	19,430	$	300,012		$	20,836		$	754,675
Goodwill	$	29,888		$	75	$	4,533	$	-		$	-		$	34,496
Segment capital expenditures	$	38,244		$	1,241	$	229	$	4,432		$	-		$	44,146

_____________________________________

General and administrative expenses include operating administrative expenses.

The term "segment operating income (loss)" is defined as earnings before center rent expense, depreciation and amortization, interest, net, loss (gain) on sale of assets, net, restructuring costs, transaction costs, loss on extinguishment of debt, loss on asset impairment, income tax expense and discontinued operations.

The term "net segment income (loss)" is defined as earnings before loss (gain) on sale of assets, net, restructuring costs, transaction costs, income tax expense and discontinued operations.

As of and for the
Year Ended
December 31, 2010				Segment Information (in thousands):
				Rehabilitation		Medical
		Inpatient		Therapy		Staffing						Intersegment
		Services		Services		Services			Corporate			Eliminations			Consolidated
Revenues from external customers	$	1,687,087	$	119,613	$	89,765		$	40		$	-		$	1,896,505
Intersegment revenues		-		86,476		2,036			-			(88,512	)		-
Total revenues		1,687,087		206,089		91,801			40			(88,512	)		1,896,505
Operating salaries and benefits		832,177		171,971		67,638			-			-			1,071,786
Self-insurance for workers'
compensation and general and
professional liability insurance		54,041		1,774		1,309			13,344			-			70,468
Other operating costs		454,657		8,008		12,819			-			(88,512	)		386,972
General and administrative expenses		41,192		8,160		2,588			60,845			-			112,785
Provision for losses on
accounts receivable		19,185		929		277			-			-			20,391
Segment operating income (loss)	$	285,835	$	15,247	$	7,170		$	(74,149	)	$	-		$	234,103
Center rent expense		83,050		496		844			-			-			84,390
Depreciation and amortization		42,956		678		732			3,265			-			47,631
Interest, net		9,146		-		(1	)		33,572			-			42,717
Net segment income (loss)	$	150,683	$	14,073	$	5,595		$	(110,986	)	$	-		$	59,365
Identifiable segment assets	$	699,568	$	16,492	$	20,933		$	313,536		$	20,879		$	1,071,408
Goodwill	$	345,591	$	75	$	4,533		$	-		$	-		$	350,199
Segment capital expenditures	$	48,717	$	1,061	$	203		$	3,261		$	-		$	53,242

_____________________________________

General and administrative expenses include operating administrative expenses.

The term "segment operating income (loss)" is defined as earnings before center rent expense, depreciation and amortization, interest, net, loss (gain) on sale of assets, net, restructuring costs, transaction costs, loss on extinguishment of debt, loss on asset impairment, income tax expense and discontinued operations.

The term "net segment income (loss)" is defined as earnings before loss (gain) on sale of assets, net, restructuring costs, transaction costs, income tax expense and discontinued operations.

As of and for the
Year Ended
December 31, 2009				Segment Information (in thousands):
				Rehabilitation			Medical
		Inpatient		Therapy			Staffing						Intersegment
		Services		Services			Services			Corporate			Eliminations			Consolidated
Revenues from external customers	$	1,662,899	$	105,367		$	100,624		$	34		$	-		$	1,868,924
Intersegment revenues		-		74,166			1,930			-			(76,096	)		-
Total revenues		1,662,899		179,533			102,554			34			(76,096	)		1,868,924
Operating salaries and benefits		827,242		150,272			72,336			-			-			1,049,850
Self-insurance for workers'
compensation and general and
professional liability insurance		59,563		2,161			1,331			418			-			63,473
Other operating costs		434,050		7,620			15,713			-			(76,096	)		381,287
General and administrative expenses		41,243		6,868			2,811			62,070			-			112,992
Provision for losses on
accounts receivable		20,320		482			55			-			-			20,857
Segment operating income (loss)	$	280,481	$	12,130		$	10,308		$	(62,454	)	$	-		$	240,465
Center rent expense		71,046		480			920			-			-			72,446
Depreciation and amortization		40,964		540			780			2,808			-			45,092
Interest, net		11,878		(2	)		(2	)		37,105			-			48,979
Net segment income (loss)	$	156,593	$	11,112		$	8,610		$	(102,367	)	$	-		$	73,948
Identifiable segment assets	$	1,181,915	$	16,011		$	25,143		$	863,505		$	(528,456	)	$	1,558,118
Goodwill	$	333,688	$	75		$	4,533		$	-		$	-		$	338,296
Segment capital expenditures	$	50,777	$	589		$	76		$	2,707		$	-		$	54,149

_____________________________________

General and administrative expenses include operating administrative expenses.

The term "segment operating income (loss)" is defined as earnings before center rent expense, depreciation and amortization, interest, net, loss (gain) on sale of assets, net, restructuring costs, transaction costs, loss on extinguishment of debt, loss on asset impairment, income tax expense and discontinued operations.

The term "net segment income (loss)" is defined as earnings before loss (gain) on sale of assets, net, restructuring costs, transaction costs, income tax expense and discontinued operations.

Measurement of Segment Income or Loss

The accounting policies of the operating segments are the same as those described in the summary of significant accounting policies (see Note 2 - "Summary of Significant Accounting Policies").  We evaluate financial performance and allocate resources primarily based on income or loss from operations before income taxes, excluding any unusual items.

The following table reconciles net segment income to consolidated income before income taxes and discontinued operations for the years ended December 31 (in thousands):

		2011			2010			2009
Net segment income	$	43,524		$	59,365		$	73,949
Transaction costs		-			(29,113	)		-
Loss on asset impairment		(317,091	)		-			-
Restructuring costs, net		(2,728	)		-			(1,304	)
Loss on extinguishment of debt		-			(29,221	)		-
(Loss) gain on sale of assets, net		(809	)		(847	)		(42	)
Income before income taxes and
discontinued operations	$	(277,104	)	$	184		$	72,603