1035688--3/28/2007--SELECT_MEDICAL

related topics

{regulation, government, change}

{tax, income, asset}

{acquisition, growth, future}

{personnel, key, retain}

{capital, credit, financial}

{financial, litigation, operation}

Government implementation of recent changes to Medicare s method of reimbursing our long-term acute care hospitals will reduce our future net operating revenues and profitability. If our long-term acute care hospitals fail to maintain their certifications as long-term acute care hospitals or if our facilities operated as HIHs fail to qualify as hospitals separate from their host hospitals, our net operating revenues and profitability may decline. Implementation of modifications to the admissions policies for our inpatient rehabilitation facilities as required in order to achieve compliance with Medicare regulations may result in a loss of patient volume at these hospitals and, as a result, may reduce our future net operating revenues and profitability. Implementation of annual caps that limit the amounts that can be paid for outpatient therapy services rendered to any Medicare beneficiary may reduce our future net operating revenues and profitability. If there are changes in the rates or methods of government reimbursements for our services, our net operating revenues and profitability could decline. We conduct business in a heavily regulated industry, and changes in regulations or violations of regulations may result in increased costs or sanctions that reduce our net operating revenues and profitability. Future acquisitions may use significant resources, may be unsuccessful and could expose us to unforeseen liabilities. Future cost containment initiatives undertaken by private third-party payors may limit our future net operating revenues and profitability. If we fail to maintain established relationships with the physicians in our markets, our net operating revenues may decrease. Shortages in qualified nurses or therapists could increase our operating costs significantly. Competition may limit our ability to acquire hospitals and clinics and adversely affect our growth. If we fail to compete effectively with other hospitals, clinics and healthcare providers, our net operating revenues and profitability may decline. Our business operations could be significantly disrupted if we lose key members of our management team. Significant legal actions as well as the cost and possible lack of available insurance could subject us to substantial uninsured liabilities.

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1035688--3/28/2007--SELECT_MEDICAL_CORP