Encompass Health (EHC)

Risks

• Quality reporting requirements could adversely affect the Medicare reimbursement we receive.
• Reimbursement claims are subject to various audits from time to time and such audits may negatively affect our operations and our cash flows from operations.
• Delays in the administrative appeals process associated with denied Medicare reimbursement claims could delay or reduce our reimbursement for services previously provided.
• Delays in collection or non-collection of our accounts receivable could adversely affect our business, financial position, results of operations and liquidity.
• Efforts to reduce payments to healthcare providers undertaken by third-party payors, conveners, and referral sources could adversely affect our revenues and profitability.
• The ongoing evolution of the healthcare delivery system, including alternative payment models and value-based purchasing initiatives, in the United States may significantly affect our business and results of operations.
• Other legislative and regulatory initiatives and changes affecting the industry could adversely affect our business and results of operations.
• Compliance with the extensive laws and government regulations applicable to healthcare providers requires substantial time, effort and expense, and if we fail to comply with them, we could suffer penalties or be required to make significant changes to our operations.
• The use of sub-regulatory guidance, statistical sampling, and extrapolation by CMS, Medicare contractors, HHS-OIG, and DOJ to deny claims, expand enforcement claims, and advocate for changes in reimbursement policy increases the risk that we could experience reduced revenue, suffer penalties, or be required to make significant changes to our operations.
• The Hospital Pricing Transparency Rule could adversely affect our business and results of operations.
• Efforts to comply with regulatory mandates to increase the use of electronic health data and health system interoperability may lead to enforcement and negative publicity which could adversely affect our business.
• If any of our hospitals or home health or hospice agencies fail to comply with the Medicare enrollment requirements or conditions of participation, that hospital or agency could be terminated from the Medicare program.
• If we are found to have violated applicable privacy and security laws and regulations or our contractual obligations, we could be subject to sanctions, fines, damages and other additional civil or criminal penalties, which could increase our liabilities, harm our reputation and have a material adverse effect on our business, financial position, results of operation and liquidity.
• The proper function, availability, and security of our information systems are critical to our business and failure to maintain proper function, availability, or security of our information systems or protect our data against unauthorized access could have a material adverse effect on our business, financial position, results of operations, and cash flows.
• We face intense competition for patients from other healthcare providers.
• If we are unable to provide a consistently high quality of care, our business will be adversely impacted.
• If we are unable to maintain or develop relationships with patient referral sources, our growth and profitability could be adversely affected.
• We may have difficulty completing investments and transactions that increase our capacity consistent with our growth strategy.
• We may make investments or complete transactions that could expose us to unforeseen risks and liabilities.
• We may not be able to successfully integrate acquisitions or realize the anticipated benefits of any acquisitions.
• Competition for staffing, shortages of qualified personnel, union activity or other factors may increase our staffing costs and reduce profitability.
• We are a defendant in various lawsuits, and may be subject to liability under qui tam cases, the outcome of which could have a material adverse effect on us.
• We may incur additional indebtedness in the future, and that debt or the associated increased leverage may have negative consequences for our business. The restrictive covenants included in the terms of our indebtedness could affect our ability to execute aspects of our business plan successfully.
• Our ability to develop adjacent service offerings for our home health and hospice business is subject to a number of risks.