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2. PROPERTY AND EQUIPMENT

12 Months Ended

Mar. 31, 2013

NOTE 2 - PROPERTY AND EQUIPMENT

Property and equipment consists of the following:

	March 31, 2013			March 31, 2012
Buildings	$	36,536		$	35,376
Land and improvements		13,523			13,523
Equipment		28,534			18,268
Construction in progress		–			1,160
Assets under capital leases		13,267			11,218
		91,860			79,545
Less accumulated depreciation		(27,872	)		(24,016	)

Property and equipment, net	$	63,988		$	55,529

Accumulated depreciation on assets under capital leases as of March 31, 2013 and 2012 was $6.2 million and $5.0 million, respectively.

The Hospitals are located in an area near active and substantial earthquake faults. The Hospitals carry earthquake insurance with a policy limit of $50.0 million. A significant earthquake could result in material damage and temporary or permanent cessation of operations at one or more of the Hospitals.

The State of California has imposed hospital seismic safety requirements. Under these requirements, the Hospitals must meet stringent seismic safety criteria in the future. In addition, there could be other remediation costs pursuant to this seismic retrofit.

The State of California has a seismic review methodology known as HAZUS. The HAZUS methodology may preclude the need for some structural modifications. All four Hospitals requested HAZUS review and received a favorable notice pertaining to structural reclassification. All Hospital buildings, with the exception of one (an administrative building), have been deemed compliant until January 1, 2030 for both structural and nonstructural retrofit. The Company does not have an estimate of the cost to remediate the seismic requirements for the administrative building as of March 31, 2013.

There are additional requirements that must be complied with by 2030. The costs of meeting these requirements have not yet been determined. Compliance with seismic ordinances will be costly and could have a material adverse effect on the Company's cash flow. In addition, remediation could possibly result in certain environmental liabilities, such as asbestos abatement.

- Definition

The entire disclosure for long-lived, physical assets used in the normal conduct of business and not intended for resale. Includes, but is not limited to, accounting policies and methodology, roll forwards, depreciation, depletion and amortization expense, including composite depreciation, accumulated depreciation, depletion and amortization expense, useful lives and method used, income statement disclosures, assets held for sale and public utility disclosures.

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