Basis of Presentation

6 Months Ended

Jun. 30, 2011

Basis of Presentation [Abstract]

BASIS OF PRESENTATION

Note 1. BASIS OF PRESENTATION

     Chindex International, Inc. (“the Company”), founded in 1981, is an American health care company providing health care services in China through the operations of United Family Healthcare, a network of private care hospitals and affiliated ambulatory clinics. United Family Healthcare (“UFH”) currently operates in Beijing, Shanghai and Guangzhou.

     The accompanying unaudited consolidated condensed financial statements of Chindex International, Inc. have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and six months ended June 30, 2011 are not necessarily indicative of the results that may be expected for the year. For further information, refer to the consolidated financial statements and footnotes thereto included in our Transition Report on Form 10-K for the nine months ended December 31, 2010.

Change in fiscal yearend

     The Company changed its fiscal yearend from March 31 to December 31 each year, effective December 31, 2010.

Policies and procedures

Consolidation

     The consolidated condensed financial statements include the accounts of the Company, its subsidiaries in which the Company has greater than 50 percent ownership, and variable interest entities. All intercompany balances and transactions are eliminated in consolidation. Entities in which the Company has less than 50 percent ownership or does not have a controlling financial interest but is considered to have significant influence are accounted for on the equity method.

     On December 31, 2010, the Company’s Medical Products division was contributed to Chindex Medical Limited (CML), a newly formed entity in which the Company has a 49% ownership interest (see Note 4). Until December 31, 2010, the Company operated in two business segments, the Healthcare Services division and the Medical Products division. On December 31, 2010, the Company deconsolidated the Medical Products division upon the formation of CML, a newly formed entity consisting of certain medical device businesses contributed by Chindex and Shanghai Fosun Pharmaceutical (Group) Co., Ltd. (“FosunPharma”). The investment in CML is recorded using the equity method of accounting, effective December 31, 2010, with Chindex’s 49% interest in the earnings of CML beginning January 1, 2011.

     Due to the deconsolidation of the Medical Products division on December 31, 2010, the Company now operates in only one reportable segment based on the way the Company manages its business. Major decisions, including capital resource allocations, are made at the corporate level by the “Chief Operating Decision Maker” team, not at the regional market or hospital level.

Use of Estimates

     The preparation of the consolidated condensed financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates, judgments, and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated condensed financial statements and the reported amounts of revenue and expenses during the reporting period. Because of the use of estimates inherent in the financial reporting process, actual results could differ from those estimates. Areas in which significant judgments and estimates are used include revenue recognition, receivable collectibility, and deferred tax valuation allowances.

Revenue Recognition

     The Company earns revenue from providing healthcare services and, in the prior year, sales of products.

     Revenue related to services provided by the Healthcare Services division is net of contractual adjustments or discounts and is recognized in the period services are provided. The Healthcare Services division makes an estimate at the end of the month for certain inpatients who have not completed service. This estimate reflects only the cost of care up to the end of the month.

     The Company’s revenue is dependent on seasonal fluctuations related to epidemiology factors and the life styles of the expatriate community. As a result of these factors impacting the timing of revenues, our operating results have varied and are expected to continue to vary from period to period and year to year.

Reclassifications

     Certain balances in the 2010 consolidated condensed financial statements have been reclassified to conform to the 2011 presentation. The changes primarily relate to the Statement of Operations. Due to the deconsolidation of the Company’s previous Medical Products business, the captions in the Statement of Operations have been revised to reflect a presentation more common for companies in the hospital and healthcare services businesses.