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Leading analyst and top management from three sector firms examines the Healthcare Services sector in this special 20-page issue from The Wall Street Transcript, available at (212/952-7433) or http://www.twst.com/info/info416.htm

TWST: Are there any other segments of healthcare services that you see becoming attractive as areas of investment over the next few years?

Mr. Mains: I just picked up coverage of AmSurg (Nasdaq:AMSG). AmSurg specializes in office-based ambulatory surgery centers, or ASCs. Ambulatory surgery centers are facilities that provide same-day surgery services, where the procedure doesn’t require an overnight stay. The two predominant procedures done in AmSurg facilities are cataract removal and various endoscopic procedures for gastroenterologists. Another familiar outpatient surgery procedure is arthroscopic joint repair. I think that ambulatory surgery is a growth business for a couple of reasons. In 1985, 80% of surgeries were done on an inpatient basis. In 2000, 70% were done on an outpatient basis. That’s a 180-degree turnaround, and the trend is continuing. I think that outpatient surgery will continue to grow, partly because technology is allowing surgeons to perform procedures on an outpatient basis that used to require a two- or three-day hospital stay. Equally important is that every constituent prefers outpatient surgery. Doctors like it because they can schedule surgical suites in advance and not get bumped because of emergency inpatient procedures. Patients like it because they don’t have to go into an institutional setting and they can return home after the surgery is completed. And payors like it because typically an outpatient procedure is 25%-50% less expensive than an inpatient procedure. So I think there is secular growth that will continue to fuel that industry, augmented by demographics. In the case of AmSurg, its two predominant procedures (colonoscopy and cataract removal) are aging-related services that I think will continue to drive the unit growth that the company has experienced to date, which is consistently around 10%.

TWST: In conclusion, what would your message be to investors who are contemplating putting new money into healthcare services over the next year or two?

Mr. Mains: I think that 2000 was such a good year that it could have led to some indiscriminate buying by some investors. I think that investors have to be a little more selective in 2001, going into 2002. A lot of the valuations that were dirt cheap in 1999 and the beginning of 2000 are now looking a bit dicey, and I think investors have to critically look and determine whether they are accurate representations of what growth rate can be sustained. I think that some industries, such as the hospital industry, continue to have very favorable internal and exogenous dynamics, while other industries, such as the HMO industry, could be under some pressure as a result of the economy and legislative threats. The challenge of investing in healthcare services is that it’s not just the internal issues, it’s the external issues; it’s the reimbursement and regulatory controversies that investors have to stay on top of. There are segments of the industry that currently have these factors working in their favor, and I think they are where the best returns are going to be in the near term.

This special issue includes:

1) Healthcare Service Providers - In an in-depth (6,300 words) Analyst Interview, Robert Mains, Senior Healthcare Analyst at Advest, Inc., examines the outlook for the sector and shares specific stock recommendations.

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