1361579--2/20/2009--Virtual_Radiologic

related topics

{regulation, government, change}

{property, intellectual, protect}

{financial, litigation, operation}

{personnel, key, retain}

{system, service, information}

{customer, product, revenue}

{regulation, change, law}

{investment, property, distribution}

{product, liability, claim}

{loan, real, estate}

{acquisition, growth, future}

{cost, contract, operation}

We may in the future become subject to intellectual property rights claims, which could harm our business and operating results. If we are unable to recruit and retain a sufficient number of qualified radiologists, our future growth would be limited and our business and operating results would be negatively impacted. If we are unable to obtain proper physician licenses or hospital credentials on behalf of our affiliated radiologists, or if our affiliated radiologists lose those licenses or credentials, our business, financial condition and results of operations may be negatively impacted. If our affiliated radiologists are characterized as employees, we would be subject to employment and withholding liabilities. We may be unable to enforce non-compete agreements with our affiliated radiologists. We are dependent upon our engagement with a physician who is properly licensed to oversee our medical practice. We are also dependent on our management team, and the loss of any key member of this team may prevent us from implementing our business plan in a timely manner. As a result of our corporate structure, we are highly dependent upon our Affiliated Medical Practices, which we do not own. Interruptions or delays in our or our customers information systems or in network or related services provided by third party suppliers could impair the delivery of our services and harm our business. If our security measures are breached and unauthorized access is obtained to patient or customer data, we may face liabilities and our system may be perceived as not being secure, causing customers to curtail or stop using our services, which could lead to a decline in revenues. Any failure to protect our intellectual property rights in our workflow technology could impair its value and our competitive advantage. Our ability to update our workflow technology may be limited because we are dependent upon a third party to make corresponding enhancements to its software. If our arrangements with our affiliated radiologists or our customers are found to violate state laws prohibiting the practice of medicine by general business corporations or fee splitting, our business, financial condition and ability to operate in those states could be adversely affected. Non-compliance with federal and state anti-kickback laws could affect our business, operations or financial condition. Federal or state self-referral regulations could impact our arrangements with our affiliated radiologists. The loss of our Joint Commission accreditation or the loss of our ability to leverage our accreditation for credentialing purposes could negatively impact our business and operating results Because our customers submit claims to the Medicare program based on the services we provide, it is possible that a lawsuit could be brought against us or our customers under the Federal False Claims Act, and the outcome of any such lawsuit could have a material adverse effect on our business, financial condition and results of operations. Medicare and Medicaid rules governing reassignment of payments could affect our customers ability to collect fees for services provided by our affiliated radiologists and our ability to market our services to our customers. Future changes in healthcare regulation are difficult to predict and may constrain or require us to restructure our operations, which could negatively impact our business and operating results. Non-compliance with state and federal regulations concerning the privacy and security of patient information may adversely affect our business, financial condition or operations. Changes in the rules and regulations governing Medicare and Medicaid s payment for medical services could affect our revenues, particularly with respect to final reads. Our business could be materially affected if a HHS-OIG study results in a recommendation that Medicare only pay for reads performed contemporaneously in an emergency room setting. Changes in the healthcare industry or litigation reform could reduce the number of diagnostic radiology procedures ordered by physicians, which could result in a decline in the demand for our services, pricing pressure and decreased revenue. Although we maintain medical liability insurance covering all of our affiliated radiologists, our Affiliated Medical Practices and our Company, we are subject to medical malpractice claims and other harmful lawsuits that may require us to pay significant damages if not covered by insurance. If we are unable to retain our customers because they terminate their contracts with us or allow those contracts to lapse, or if our customers businesses materially decline, our operating results and financial condition may be adversely affected. Because our contracts with our customers contain fixed prices, we are unable to pass along any increase in our expenses to our customers during their contract term. We may be subject to less favorable levels of payment based upon third party payer fee schedules. If we acquire any companies or technologies in the future, they could prove difficult to integrate, disrupt our business, dilute stockholder value and adversely affect our operating results.

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1361579--2/20/2009--Virtual_Radiologic_CORP