Ex-10.55



 










Healthcare Management Consulting • Project Development • Ventures




October 30, 2003




Mr. John T. Casey

President and CEO

MedCath Corporation

10720 Sikes Place, Suite 300

Charlotte, NC 28277



Dear John:



In our phone conversation yesterday (October 29), you requested that SSB
develop a proposal to work with you and your senior management team in a series
of strategic planning sessions over the next 6-8 weeks. The purpose of these
planning sessions would be to help you and your team refine the vision for
MedCath and develop a robust strategic direction that propels the Company
forward while adding value for MedCath shareholders. Key to this strategic
direction will be prioritization of:





	1.	 	The current asset portfolio (i.e.,
maintenance/enhancement/divestiture); and
	 
	2.	 	Near-term product-service opportunities viewed through the prism of
capital requirements, cycle time to revenue and magnitude of return.





Context



MedCath financial performance over the past year has lagged Wall Street’s and
the Board’s expectations. Several months ago, the Board decided to make a
change in management. You were appointed CEO, and you brought in a new COO,
Charlie Slaton. While the new management team has been in place for less than
two months, your team has already initiated the analytical process to refine
the vision and determine strategic direction. It is your intent to complete
and be in position to communicate the new vision within two to three months.




Chairman: Jacque J. Sokolov, MD

14811 N. Kierland Blvd, Ste 500, Scottsdale, AZ 85254

Tel: 480-707-4521 - JJSPSO@aol.com




	 	 	 	 	 	 	 
	President: Mike Treacy

	 	Managing Consultant: Chris Schaefer
	 	Managing Consultant: Ted Schwab
	 	Sr. Admin Consultant: Martha Valverde
	1287 Tressler Drive

	 	8006 North Bridge Way
	 	16 A - Dudley Avenue
	 	15 Venezia
	Fort Washington, PA 19034

	 	Maumee, Ohio 43537
	 	Venice, California 90291
	 	Newport Coast, CA
	Tel: 215-542-2412

	 	Tel: 419-865-1948
	 	Tel: 310-401-0068
	 	Tel: 562-595-9595 Ext: 8
	miketreacy@att.net

	 	adbeckcons@worldnet.att.net
	 	tjschwab@earthlink.net
	 	hcca@pacbell.net







 









 





MedCath Engagement Letter

October 30, 2003

Page 2


For nearly a year, the Company’s business model has been threatened by
potential legislative changes that would outlaw or severely curtail physician
ownership of specialty hospitals. Congressional conference committee
negotiations have been underway for months, and the uncertainty surrounding the
outcome of this issue has clouded the Company’s business as well as your team’s
planning. Fortunately, it appears that the issue will be resolved soon, and
that there will still be viable options for physician partnerships.



To support your business planning, you and your management team held a planning
retreat last week at The Greenbrier Resort. SSB had the opportunity to meet
with you and the team for half a day on Friday morning to discuss issues,
challenges and opportunities. The exchanges and interactions that occurred in
that meeting were productive and useful, and form the basis for potential
further interactive planning discussions between SSB and MedCath.



In our meeting with you, we learned that MedCath is nearing completion of a
major expansion (five new hospitals), and is currently constrained in terms of
capital available for new investments.



We also learned that the Company is at a cross-roads decision point relative to
several key issues, including:





	1.	 	What to do with each component in the current asset portfolio
(i.e., maintenance vs. enhancement vs. divestiture).
	 
	2.	 	Prioritization of capital and cash flow relative to
short-term, high-impact investment opportunities, characterized by a
desire to:






	•	 	Reduce capital requirements;
	 
	•	 	Shorten cycle time to revenue; and
	 
	•	 	Increase magnitude of return.




The Company faces many opportunities for growth and expansion. The challenge
will be to assess them accurately and make critical prioritization decisions
that propel the Company forward within resource and timing constraints, as
indicated above. The opportunities mentioned so far are include these:





	•	 	Implementing the current business model in new markets;
	 
	•	 	Acquiring existing facilities (and modifying them) in lieu of
developing new facilities;
	 
	•	 	Partnering with select non-profit hospitals in the
co-development of new heart hospitals or CV service line expansion;
	 
	•	 	Expanding the service line offerings of current and future
business units;
	 
	•	 	Expansion into peripheral vascular disease treatment and
management in appropriate settings;
	 
	•	 	Placement of diagnostic CV-MRI capabilities in appropriate
facilities.





 









 





MedCath Engagement Letter

October 30, 2003

Page 3


Finally, as we discussed at length at The Greenbrier, the Company faces
increasing competition from hospitals and hospital systems who recognize the
need to fight more aggressively to protect established cardiovascular (and
other specialty) service lines. MedCath has a strong and proven business
model, but the competitive environment will be intensifying. An important
question for the Company is to determine what will differentiate MedCath from
its competitors—for physicians, patients and families.




Proposal for SSB Consulting Engagement




Areas Where SSB Can Be of Greatest Assistance



In our discussions with you, you indicated that the areas where SSB could be of
greatest assistance to MedCath are the following:





	•	 	Serving as an independent, outside, objective sounding board
to review and critique plans and decisions being made by your team.
	 
	•	 	Organizing a “catalyst” planning experience that will enable
you and your team to reach key decisions in the next 6-8 weeks
regarding refinement of the Company’s vision, determination of
strategic direction, and prioritization of investment and growth
opportunities, which in combination will lay the foundation for
actions that will boost the Company’s financial performance.





Series of Planning Sessions



To meet your needs, we are proposing a series of four planning sessions with
you and your management team, starting next week. Each session will be a day
to a day and a half long. The first two sessions have been tentatively
scheduled; precise dates still need to be set for the third and fourth
sessions. Hence, the proposed schedule would be as follows:




	 	 	 
	Session 1

	 	November 4-5
	Session 2

	 	November 17-18
	Session 3

	 	Early December
	Session 4

	 	Mid-December







Deliverables



The goal for this planning process is for you and your management team to have
in place by the Christmas holidays the following items:





	•	 	A compelling vision and strategic direction for the Company’s
future;
	 
	•	 	An evaluation and prioritization of the Company’s strategic
investment opportunities;
	 
	•	 	A plan for differentiating MedCath in the market; and
	 
	•	 	A game plan for moving forward.





 









 





MedCath Engagement Letter

October 30, 2003

Page 4



SSB Activities, Role and Responsibilities




For each planning session, SSB will do the following:





	•	 	Work with you to determine the focal points and Agenda;
	 
	•	 	Review background material as provided by you and your team;
	 
	•	 	Engage in our own internal brainstorming sessions—involving
all four senior members of the SSB team—in preparation for the
meeting with you and your team;
	 
	•	 	Attend and facilitate the planning sessions in Charlotte
(both myself and Mike Treacy will attend the meetings in person; to
hold down expenses, Chris Schaefer and Ted Schwab will participate
by speakerphone when appropriate and available);
	 
	•	 	Record and prepare a written summary of the results of the meeting;
	 
	•	 	Lead the planning effort for the subsequent planning session.





SSB Qualifications



We believe SSB is uniquely qualified to assist MedCath Hospital with strategic
planning. SSB has a wealth of experience helping organizations with
sophisticated cardiovascular and other specialty service line strategies.
SSB’s specific project experience services is described on our website at
www.ssbsolutions.com. SSB is a highly-specialized firm of senior health care
experts who bring creative solutions to a variety of healthcare organizations
facing particularly challenging issues. Organizations turn to SSB at times of
peril or stress, when ordinary solutions aren’t working, or when there is a
need for imagination, creativity and leadership. SSB’s team is known for
delivering creative, unexpected, visionary solutions that are implementable.



The firm is headed by me. I have an extensive clinical background (in
cardiology) and am a seasoned healthcare executive, experienced consultant and
advisor, and nationally-recognized speaker and commentator. Supplementing me
at SSB is a core team of talented senior health care experts, plus a
hand-picked network of experts in a variety of key healthcare niche fields.



SSB offers its clients and venture partners the following advantages:





	•	 	High-impact, rapid deployment team of executives and consultants;
	 
	•	 	Vision and creativity;
	 
	•	 	A unique perspective;
	 
	•	 	Leadership;
	 
	•	 	Credibility and rapport with key constituencies, including
physicians, board members, and investors;
	 
	•	 	An extensive network of contacts in all facets of healthcare; and
	 
	•	 	Exceptional professionalism and integrity.




 









 











MedCath Engagement Letter

October 30, 2003

Page 5



SSB Consulting Team


The SSB consulting team that will work with you and your team at MedCath is
well-suited to this assignment. The team members are listed below, and bios
for them are set forth on our website at www.ssbsolutions.com.




Consulting Team Members




	 	 	 
	Jacque J. Sokolov, MD

	 	Overall project leader; lead consultant
	Michael E. Treacy, JD

	 	Project manager; senior consultant
	Christopher A. Schaefer

	 	Senior consultant
	Ted J. Schwab

	 	Senior consultant







Project Budget




SSB is proposing a flat fee of $12,500 per planning session, plus expenses.



SSB will submit an invoice for our services, including expenses, immediately
following each planning session. If, for any reason, you have questions about
our billings, please contact us at the earliest possible time after receipt of
our statement. Accordingly, if we do not hear from you shortly after your
receipt of our statement, we will assume there are no questions.



Our normal expense policies are as follows. Travel expenses are billed at
cost, including airfare (coach), auto rental and other transportation (taxi,
etc.). Mileage for driving personal cars is charged at the IRS allowable rate.
All invoices will also include a standard charge equal to 2.5% of fees for
miscellaneous costs expended on our client’s behalf, such as facsimile
transmissions, overnight express, photocopies, on-line research, and
long-distance and mobile telephone usage. Experience has shown this to be the
most fair and practical way of recognizing expenses of this type.



There will be no charge for “travel-time” in connection with this engagement.



For the Las Vegas presentation on November 15, we will bill you for expenses
only.




Closing



If you agree to the terms of this Letter of Engagement, please sign both
enclosed copies and return one to me as soon as possible.




 









 










MedCath Engagement Letter

October 30, 2003

Page 6


On behalf of SSB, let me thank you for this opportunity to work with MedCath.
We are looking forward to getting started with you on November 4-5, and to
working with you and your team on this important and challenging assignment.




Sincerely,




SOKOLOV, SOKOLOV, BURGESS






By: Jacque J. Sokolov, MD

Chairman


The undersigned agrees to the engagement of Sokolov, Sokolov, Burgess according
to the terms described in this Engagement Letter.




     MEDCATH CORPORATION



	 	 	 	 	 	 	 
	By:

	 	

	 	Date:
	 	

	

	 	John T. Casey	 	 	 	 
	

	 	President and CEO