Psychiatric Solutions (PSYS) Sinks After Nevada Suspends Operating License
Piper Jaffray commented on Psychiatric Solutions, Inc. (Nasdaq: PSYS), saying the weakness in the stock is related to a notification that regulatory authorities in Nevada had suspended the operating license at West Hills Hospital.
Piper noted, "On Tuesday, the Nevada State Health Division's Bureau of Health Care Quality and Compliance suspended the license at West Hills Hospital, a PSYS operated facility located in Reno that provides inpatient psychiatric care, chemical detox, and rehabilitation services. Effective immediately, the facility is barred from accepting any new admissions and will be provided 30 days to transfer and relocate existing patients (census of ~50 patients) to other places of care. In its determination, authorities concluded that the facility cannot ensure patient safety following four adverse incidents over the last eight months, including reports that staff failed to uncover at time of admission medication that a new patient smuggled into the facility and later overdosed on the drug."
Piper said the license suspension follows investigative surveys done by the Nevada Health Division during March and April of 2009 that reported a number of violations, as well as a Medicare Validation Survey initiated in June that remains ongoing.
Piper notes that while the news is negative, PSYS has an opportunity to contest the licensing suspension by appealing to Nevada's Health Division Administrator, although the suspension will not be lifted during the appeals process. Additionally, the reported violations and incidents at the West Hills facility appear to be much less severe than those alleged at other PSYS facilities in the past. They don't expect the action will have much of an impact on Q2 results, which they expect to be strong.
Piper is maintaining their Buy rating and $31 price target.
Create E-mail AlertRelated Categories
Analyst CommentsInsiders' Blog
Stocks Mentioned
+0.00Related Entities
Sign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!
