As the lobbying settles down over health care reform one might ask where this battle is actually being fought in the health trenches. Smaller operations with several hospitals is the answer. There are all sorts of companies that make up the US health system that are making a profit and quietly going about their business. One never knows where this new health bill will take the system, but for now there are solid companies available for investment.

SunLink Health Systems Inc., a healthcare and specialty pharmaceuticals company, is licensed to care for elderly patients in 7 hospitals and three nursing homes with a total of 402 beds. As a compliment, SunLink also provides a full range of specialty pharmaceutical products. The company works primarily in the rural and exurban regions of the deep south and south western US.

Given that the company is working to provide care in one of the country’s poorest demographic zones for healthcare, one must wonder how costs are being handled. Although the company has been in business for over 50 years and has obviously learned a thing or two about its client base, cost would seem to be a reoccurring issue. In past quarters Medicaid 15.5% , Medicare 37.6%, self pay 14.0%, commercial 13.9% and other health oriented reimbursement programs have helped to keep revenues of the organization in line and in some instances increased levels. The signing of the new healthcare bill, all 2,300 pages of it, may help or hinder as the company determines where and how it comes into play. Today, however, revenue appears to be in a solid place with head count manageable.

Although there was a pre-tax gain of $2.3 million to reflect the sale of three home health businesses, the company has been able to maintain a fairly tight margin on its revenues. The pharmacy business has proved to be the largest revenue generator posting approximately $10 mill, a 7.5% increase. There are obviously going to be changes made as the healthcare bill gets sorted out, but SunLink Health Systems does appear to have its game together and may be worth a look.