732247--10/10/2006--CONSOLIDATED_RESOURCES_HEALTH_CARE_FUND

related topics

{regulation, government, change}

{cost, regulation, environmental}

{operation, natural, condition}

{control, financial, internal}

{competitive, industry, competition}

{cost, contract, operation}

The nature of our business exposes us to litigation risks. As a result, our insurance costs may increase. Our business is subject to extensive regulation which increases our costs and may result in losses. We depend upon reimbursement for our services by third-party payors, and changes in their reimbursement levels could adversely affect our revenues, results of operations and financial position. See Business Governmental Regulation and Reimbursement . A significant increase in our labor costs may have a material adverse effect on us. Our business may require regular capital expenditures. Our business is highly competitive and we may be unable to operate profitably. Failure to comply with existing environmental laws regarding the management of infectious medical waste could harm our business. We face periodic reviews, audits and investigations under our contracts with federal and state government agencies, and these audits could have adverse findings that may negatively impact our business. We are required to comply with laws governing the transmission and privacy of health information. If we do not achieve and maintain competitive quality of care ratings from CMS in our skilled nursing facilities our business may be negatively affected. Our revenues are sensitive to occupancy levels and changes in the resident mix. If we fail to cultivate new or maintain existing relationships with the physicians in the community in which we operate, our patient base in our facilities may decrease. Our facilities are located in areas that may be subject to flooding or susceptible to tornadoes. We are required to comply with the Sarbanes Oxley Act of 2002, Section 404, or SOX, that involves an in-depth evaluation of our internal controls and compliance with the reporting requirements.

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732247--10/10/2006--CONSOLIDATED_RESOURCES_HEALTH_CARE_FUND_II