Northstar Healthcare Provides ASC Update; Suspends Dividend



    TORONTO and HOUSTON, Jan. 12 /CNW/ - Northstar Healthcare Inc. (TSX:NHC)
today announced that it is experiencing difficulties with payments by one of
its key third party payors at Northstar's Palladium-Houston Surgical Center.
One issue relates to payments on cases performed by non-partner surgeons
operating at Palladium-Houston under use agreements with the center.
    While 2008 and 2009 revenue and cash flow are expected to be adversely
affected, the extent of the impact is not clear at this time. Northstar is
working on a number of strategies to resolve the situation but the timing and
parameters of a resolution are unclear. As a result, to maintain Northstar's
debt-free financial position, the Company's Board of Directors has suspended
dividends on Northstar's common shares. The suspension takes effect following
payment of the December, 2008 dividend on January 15, 2009.
    Northstar indicated that, given the sensitivity of the payor
relationship, the Company would be providing no further detail at this time,
but will disclose material changes as they occur. Northstar also announced
that its Kirby Surgical Center has entered into an in-network contract with a
major private insurance company, pursuant to which surgical procedures
performed at the center will be reimbursed by that payor at agreed rates. This
contract is effective January 1, 2009 for an initial period of two years,
extendible annually.
    "This contract will go a long way toward addressing the volume issues
that have resulted in reduced revenue and earnings at the Kirby Center," said
Syl Ghirardi, Interim CEO of Northstar. "While we anticipate that
reimbursement will generally be at rates below the historic norms for Kirby,
we are already seeing increased surgical volume that is expected to mitigate
this reduction."

    
    About Northstar Healthcare Inc.
    --------------------------------
    
    Northstar owns and/or manages ambulatory surgery centers in the United
States, focusing initially on Houston and other metropolitan areas in Texas.
Northstar currently holds interests in two ambulatory surgery centers in
Houston - a 70% partnership interest in The Palladium for Surgery - Houston
and a 60% partnership interest in Medical Ambulatory Surgical Suites. In
addition, Northstar manages an ambulatory surgery center in Dallas, which it
has an option to acquire, and three pain management clinics in Houston.
    Northstar was founded and sponsored by Donald Kramer, M.D. and Stewart A.
Feldman. Mr. Feldman also served as the co-principal and Chairman and Chief
Executive Officer of Healthcare Ventures, Ltd., which sponsored Northstar,
with Dr. Kramer serving as its President.

    
    Forward-looking statements
    ---------------------------
    
    This press release may contain forward-looking statements (within the
meaning of applicable securities laws) relating to business of Northstar and
the environment in which it operates. Forward-looking statements are
identified by words such as "believe", "anticipate", "expect", "intend",
"plan", "will", "may" and other similar expressions. These statements are
based on the Company's expectations, estimates, forecasts and projections.
They are not guarantees of future performance and involve risks and
uncertainties that are difficult to control or predict. These risks and
uncertainties are discussed in the Company's regulatory filings available on
the Company's web site at www.Northstar-Healthcare.com or at www.sedar.com.
There can be no assurance that forward-looking statements will prove to be
accurate as actual outcomes and results may differ materially from those
expressed in these forward-looking statements. Readers, therefore, should not
place undue reliance on any such forward-looking statements. Further, a
forward-looking statement speaks only as of the date on which such statement
is made. The Company undertakes no obligation to publicly update any such
statement or to reflect new information or the occurrence of future events or
circumstances.

    %SEDAR: 00025141E




For further information:

For further information: Philip Koven, Tel: (416) 447-4740 Ext. 235,
E-mail: info@northstar-healthcare.com

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Northstar Healthcare Inc.

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