The Right Course For Healthy Returns

American Shared Hospital Services is set for future growth

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During the ’60s and ’70s, colleagues deemed Dr. Ernest Bates brilliant and creative because of his successful San Francisco neurosurgery practice. Today, they refer to him as a visionary entrepreneur and shrewd investor.

The founder of American Shared Hospital Services (ASHS), Bates has recently set his sights on the operating room for the 21st century. His company, which leases medical equipment, is helping to reengineer the entire surgical operating suite with laser surgical tools, robotics and other major new technology.

In 1983, Bates incorporated ASHS to provide diagnostic imaging and radiotherapy services to hospitals, medical centers, clinics and physician’s offices in 22 states. Despite doubting peers, he pursued the commercial potential of mobile magnetic resonance imaging units. MRI utilizes magnetic fields and applied radio waves to obtain computer- processed, cross-sectional images of the body. A year later, ASHS went public, trading at $5 a share.

ASHS’s profits increased each year as medical facilities became increasingly dependent upon the company’s equipment for early detection of diseases and disorders. Clients were able to avoid the high cost of owning the specialized equipment by renting it on an as-needed basis; rather than hiring staff technicians, they could use personnel provided by ASHS.

ASHS’s profits started to plummet in 1990 as clients began to take advantage of attractive discounts and favorable purchase options offered by competing medical equipment manufacturers.

In an effort to stop the bleeding, Bates acquired CuraCare Inc., a provider of respiratory therapy services to acute-care hospitals. The move increased ASHS’s revenues–but not its bottom line: From 1990 to 1993, the company’s revenues fell sharply, and its cash flow and profits were severely curtailed.

Since 1994, Bates and his management team have intensified moves to reduce expenses. They have identified and sold nonessential assets, negotiated favorable concessions from major creditors and offered enhanced contracts and equipment utilization deals to clients.

ASHS’s belt-tightening strategy is starting to pay off. The company reported a profit for the second quarter ending June 1996. In addition, Bates is steering ASHS in a new direction toward the gamma knife, which treats certain vascular malformations and intracranial tumors without surgery. He recently signed letters of intent for gamma knife installations in the U.S. and Brazil.
Moreover, a newly formed subsidiary of ASHS is the African-American Church Health and Economic Services, which will provide health care insurance to members of African American churches.

Given its present direction, ASHS’s progress bears a close watch. At press time, its stock was trading at $1 1/2. Investors following the stock should look for increasing revenues and continued profits–signs that the company is on the right course.
President, Duke Lambert, Vice President, Cromwell, Miller & Greet Inc. in New York City







Company Symbol Exchange



Price Yield P/E
American Shared Hospital Svcs. AMS AMEX












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