ADVOCAT ANNOUNCES FOURTH QUARTER RESULTS

 FRANKLIN, Tenn. - (April 3, 2001) - Advocat Inc. (Nasdaq OTC:AVCA) today announced its results for the fourth quarter and year ended December 31, 2000.  The Company reported a net loss after taxes of $4.2 million, or $0.76 per share, in the fourth quarter of 2000 compared with a loss of $13.9 million, or $2.55 per share, for the same period in 1999.  Net revenues for the fourth quarter of 2000 increased 8.5% to $50.1 million compared with $46.2 million in the same period of 1999.

 “Advocat made progress in 2000 in stabilizing operations and benefited from a slight increase in revenues and basically flat expenses compared with 1999,” stated Charles W. Birkett, M.D., chairman and chief executive officer of Advocat Inc.  “Although we are showing progress related to our previously announced debt restructuring, we continue to face uncertainties regarding industry regulation andskyrocketing professional liability insurance costs.”

 “Our fourth quarter and year end financial results were affected by two central issues, professional liability exposure and GAAP treatment related to our debt restructuring.  GAAP required Advocat to recognize, as current non-cash expense, future lease escalators that totaled $260,000 in the fourth quarter and are expected to be approximately $1 million in 2001.  With respect to professional liability exposure, the entire long term care profession is experiencing dramatic increases in loss exposure.   As a result, reasonable levels of insurance coverage have become unattainable.  The escalation of loss exposure, as determined actuarially, required Advocat to significantly increase its self-insured reserves in the fourth quarter of the year, reducing fourth quarter income by approximately $1.5 million. These increased costs caused the Company to violate certain financial covenants with its lead bank. As a result of the increased insurance costs and the difficulty in obtaining adequate coverage and the financial covenant violations, our independent auditors voiced a going concern issue in the year-end audit. ” 

 Dr. Birkett continued, “It is most disconcerting to be faced with these issues at a time when the efforts of the company’s management team are beginning to bear fruit.  We are in discussion with our bank regarding the financial covenant issue and are focused on resolving this in the near future.  Failing resolution, the company may be forced to take significant steps to protect its interests.”

 Net revenues for 2000 increased 7.7% to $196.0 million compared with net revenues of $182.0 million in 1999.  Patient revenues increased to $150.1 million in 2000 from $141.0 million in 1999 as a result of increased Medicare utilization and PPS rate increases at several facilities effective April 2000.  The increases were offset somewhat by lower occupancy rates and a facility that was closed in July 2000.  Resident revenues increased to $41.9 million from $37.9 million in 1999 as a result of three facilities opened in the second quarter of 1999 and rate increases.

 Total operating expenses increased 0.7% to $153.7 million in 2000 compared with $152.6 million in 1999.  The Company continues to implement cost reductions in response to the Medicare reimbursement changes.  Operating expenses represented 80.1% of net patient and resident revenues in 2000 compared with 85.3% in 1999. 

 The Company reported a net loss after taxes and the cumulative effect of the change in accounting principle of $3.9 million, or $0.70 per share, in 2000 compared with a loss of $21.7 million, or $3.98 per share, for 1999.  The net loss for 1999 includes a $7.6 million tax provision resulting from a $12.8 million increase in the Company’s valuation allowance against Advocat’s deferred tax assets due to the uncertainty surrounding the realization of the future benefits of those deferred tax assets.

 Forward-looking statements made in this release involve a number of risks and uncertainties, including but not limited to, factors affecting the long-term care industry in general, governmental reimbursement, government regulation, health care reforms, the impact of future licensing surveys, changing economic and market conditions and other risk factors detailed in the Company’s Securities and Exchange Commission filings.

 Advocat Inc. operates 120 facilities including 56 assisted living facilities with 5,425 units and 64 skilled nursing facilities containing 7,230 licensed beds as of December 31, 2000.  The Company operates facilities in 12 states, primarily in the Southeast, and four provinces in Canada.