829608--2/29/2008--PSYCHIATRIC_SOLUTIONS

related topics

{regulation, government, change}

{acquisition, growth, future}

{debt, indebtedness, cash}

{control, financial, internal}

{personnel, key, retain}

If federal or state health care programs or managed care companies reduce reimbursement rates for services provided, revenue may decline. Other companies within the health care industry continue to be the subject of federal and state investigations, which increases the risk that we may become subject to investigations in the future. As a provider of health care services, we are subject to claims and legal actions by patients and others. We depend on our key management personnel. If competition decreases our ability to acquire additional inpatient facilities on favorable terms, we may be unable to execute our acquisition strategy. Covenant restrictions under our senior secured credit facilities and the indenture governing our 7 3 / 4 % Senior Subordinated Notes may limit our ability to operate our business. Additional financing may be necessary to fund our acquisition strategy and capital expenditures, and such financing may not be available when needed. Recently acquired businesses and businesses acquired in the future will expose us to increased operating risks. If we fail to integrate or improve, where necessary, the operations of acquired inpatient facilities, we may be unable to achieve our growth strategy. We depend on our relationships with physicians and other health care professionals who provide services at our inpatient facilities. Failure to maintain effective internal controls in accordance with Section 404 of the Sarbanes-Oxley Act could have a material adverse effect on our business and stock price. We may be required to spend substantial amounts to comply with legislative and regulatory initiatives relating to privacy and security of patient health information and standards for electronic transactions.

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829608--2/29/2008--PSYCHIATRIC_SOLUTIONS_INC