Providing health-care services is not an easy business model. Companies like UnitedHealth (NYSE:UNH) want to pay as little as possible for services, and the costs of equipment and personnel (when you can find them) keep going up. Yet in certain cases -- like with, say, PsychiatricSolutions (NASDAQ:PSYS), Pediatrix (NYSE:PDX) or United Surgical Partners (NASDAQ:USPI) -- it's still possible to generate attractive returns for shareholders. Thus far, though, the jury is still out on whether U.S. Physical Therapy (NASDAQ:USPH) can join that short list of value-creating health service providers.

As the name may suggest, U.S. Physical Therapy is in the business of operating free-standing physical therapy clinics. The company generally forms partnerships with therapists who give them a financial interest in the ongoing success of their clinic. And while government-sponsored programs like Medicare and Medicaid do matter (contributing roughly one-fifth of revenue), commercial insurers are more commonly the payors for the services that the company's clinics provide.

There's a definite tinge of good news/bad news about this company. The balance sheet is clean and the company generates attractive returns on capital. Unfortunately, growth has not been all that exceptional. In this quarter, for instance, revenue was up a bit more than 6%, on a 6% increase in patient visits, but operating income fell about 19%. While a significant part of the problem can be assigned to higher compensation costs tied to newer facilities, flat same-store revenue suggests that there are problems apart from investing in new facilities.

If U.S. Physical Therapy could find a way to reignite growth (without compromising the balance sheet or standards of care), there could be some scarcity value here. After all, we all know the Baby Boomer story, and as those folks get older, it's reasonable to assume that they'll need more physical therapy services. What's more, there is plenty of competition in physical therapy (including competition for relatively scarce therapists), but other public companies like HealthSouth, RehabCare (NYSE:RHB), and Horizon Health (NASDAQ:HORC) are, at best, imperfect plays on that theme.

You could certainly do worse than take a flier on a cash flow-positive company with strong margins in a market with reliable and repeatable demand. Expense control and partner recruitment/retention are issues to monitor, but if the company can find a way to return positive leverage to the income statement, these shares could leave investors in better shape.

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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).