2. PROPERTY AND EQUIPMENT

6 Months Ended

Sep. 30, 2013

Property, Plant and Equipment [Abstract]

NOTE 2 - PROPERTY AND EQUIPMENT

Property and equipment consists of the following:

	September 30, 2013			March 31, 2013
Buildings	$	36,536		$	36,536
Land and improvements		13,523			13,523
Equipment		30,462			28,534
Assets under capital leases		13,263			13,267
		93,784			91,860
Less accumulated depreciation		(32,078	)		(27,872	)
Property and equipment, net	$	61,706		$	63,988

Accumulated depreciation on assets under capital leases as of September 30 and March 31, 2013 was $6.9 million and $6.2 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 September 30, 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.