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Six analysts and top management from seven sector firms examine the Health Care Facilities sector in this special 64-page issue from The Wall Street Transcript, available at (212/952-7433) or http://www.twst.com/info/info386.htm

TWST: Do you expect to see the existing companies expand, or to see new companies enter the nursing home arena?

Mr. Kumpel: Here’s the thing. What makes the nursing home arena a little bit different from a lot of other healthcare segments is that Certificates of Need ultimately restrict the development of new nursing home beds. They act as an artificial limitation on supply. So you’re not going to see significant new operators just come in and develop across the country. To some degree that safety valve has been picked up by the assisted living operators. Given the restrictions on developing new nursing homes, there was relatively little in the way of restriction in the form of assisted living operations. Assisted living centers were attempting to deal with increasing long-term care demand and limited supply. You may see, technically, new companies evolve, but they’re not likely to build a slew of new beds. They’re likely to be aggregating existing assets under a different aegis.

TWST: What’s the outlook for nursing homes in various markets? Are there any markets that you particularly favor?

Mr. Kumpel: Generally, if you’re an operator, you want to be in states that do not have the kind of liability exposures that we’ve seen in Florida, in particular, but also in California and Texas. What’s common to those states are patients’ bills of rights, which have really lowered the threshold for suing nursing home operators. In these states, there is a kind of cottage industry for lawyers who are no longer pursuing tobacco money. In Florida, at least, we did not even have a medical malpractice standard for lawsuits. People could sue nursing home operators for violating their dignity. With such loose standards, lawyers found nursing homes to be an absolute prime target. The number of lawsuits took off and the average size of settlements exploded. Liability insurers wanted no part of it and began a mass exodus from the state, which has led to significant premium increases. In Florida, liability costs are about 12 times the national average.

TWST: Jim, would you like to quickly review your other coverage for those who would like to know what you cover besides long-term care?

Mr. Kumpel: I appreciate that, yes. We predominantly cover healthcare information technology companies, and pharmaceutical informatics companies. I enjoy having exposure to both the provider side, as well as to the vendor side, which is the healthcare information technology and pharma informatics arena. HIT is actually enjoying a significant rebound in 2001 due to a confluence of a lot of macro fundamentals. Number one, hospitals are actually doing a lot better in 2001 than they were two or three years ago. They are no longer worried about Y2K, the reimbursement from Medicare has improved markedly, and their margins have improved dramatically.

TWST: So that’s where Quintiles (Nasdaq:QTRN) and IMS Health come in.

Mr. Kumpel: Yes. IMS Health (NYSE:RX) is probably one of the two or three most consistent year-over-year operators in all of health care, right up with Cardinal Health (NYSE:CAH), I would say. IMS is very dominant in the provision of market intelligence to the pharmaceutical industry worldwide. You can’t name a major pharmaceutical company that is not a customer of theirs. The company has improved its management team, improved their financial reporting, and they remain one of the most consistent 15%-20% EPS growth stories in health care.

This special issue includes:

1) Health Care Facilities - In an in-depth (12,400 words) Analyst Roundtable, Adam Feinstein, Vice President in Equity Research at Lehman Brothers, Leslie Henshaw, Managing Director at ING Asset Management, Gary Taylor, Vice President of Equity Research at Banc of America Securities LLC, examine the outlook for the sector including, volume trends in hospitals, demographics and share specific stock recommendations.

2) The TWST confidential Off-The-Record survey of management performance at seventeen sector firms asked market insiders about the ability of management teams to create shareholder value.

3) Investing in Health Care Facilities - In an in-depth (4,700 words) Analyst Interview, James Kumpel, Health Care Services Analyst at Raymond James & Associates, examines the outlook for the sector and shares specific stock recommendations .

4) Specialty Healthcare Providers - In an in-depth (3,500 words) Analyst Interview, Peter Emch, Director-Equity Research at Credit Suisse First Boston, examines the outlook for the sector and shares specific stock recommendations.

5) Hospital Management Stocks - In an in-depth (3,300 words) Analyst Interview, Leo Murphy, Vice President-Senior Analyst at Pioneer Investment Management USA, Inc., examines the outlook for the sector and shares specific stock recommendations.

6) CEO interviews (average 2,500 words). Top management of seven sector firms examine the outlook for their firm and the sector.