| The physician practice management industry in the United States generally, and in the Southeastern United States specifically, is highly competitive. The restructuring of the United States health care system is leading to rapid consolidation of the existing highly-fragmented health care delivery system into larger and more organized groups and networks of health care providers. The company expects competition to increase as a result of this consolidation and ongoing cost containment pressures among other factors. The company will compete with management services organizations, for-profit and nonprofit hospitals, HMOs and other competitors seeking to form strategic alliances with physicians or provide management services to physicians. The company believes that the quality of its management services, experience in developing, managing and administering capitated managed care contracts, the breadth of the ENT medical and surgical services provided by physicians practicing at affiliated practices and the utility of the Capitated Network System positions it to compete favorably for affiliation with additional ENT and complementary group practices. The company is unable to predict the extent of future competition because of changing competitive conditions, changes in laws and regulations, government budgeting, technological and economic developments and other factors. However, there are certain companies, including hospitals and insurers, that are expanding their presence in the health care industry and are significantly larger, provide a wider variety of services, have greater experience in providing health care management services, have longer established relationships with customers for these services and have access to substantially greater financial resources than the company. The company believes that competition for fee-for-service revenue is dependent upon, among other things, the geographic coverage of affiliated practices, the reputation and referral patterns of affiliated physicians, the breadth of ENT medical and surgical services provided by physicians practicing at affiliated practices and the composition of the physicians at such practices. The company's ability to compete successfully for specialty capitated managed care contracts may depend upon, among other things, the company's ability to increase the number of associated physicians and other health care professionals included in its network provider panel through asset or equity acquisitions of additional specialty practices and by entering into network agreements with independent physicians. There can be no assurance that suitable acquisitions can be accomplished on terms favorable to the company or that financing, if necessary, can be obtained for such acquisitions. In addition, there can be no assurance that the company would be able to operate profitably any facilities, businesses or other assets it may acquire, effectively integrate the operations of such acquisition or otherwise achieve the intended benefits of such acquisition. |