LabCorp 2011 Annual Report Download - page 20

18
LABORATORY CORPORATION OF AMERICA
Management’s Discussion and Analysis
of Financial Condition and Results of Operations (in millions)
2. adverse results from investigations or audits of clinical
laboratories by the government, which may include
significant monetary damages, refunds and/or exclu-
sion from the Medicare and Medicaid programs;
3. loss or suspension of a license or imposition of a fine or
penalties under, or future changes in, or interpretations
of, the law or regulations of the Clinical Laboratory
Improvement Act of 1967, and the Clinical Laboratory
Improvement Amendments of 1988, or those of
Medicare, Medicaid, the False Claims Act or other
federal, state or local agencies;
4. failure to comply with the Federal Occupational Safety
and Health Administration requirements and the
Needlestick Safety and Prevention Act, which may
result in penalties and loss of licensure;
5. failure to comply with HIPAA, including changes to
federal and state privacy and security obligations and
changes to HIPAA, including those changes included
within HITECH and any subsequent amendments,
which could result in increased costs, denial of claims
and/or significant penalties;
6. failure to maintain the security of business information
or systems could damage the Company’s reputation,
cause it to incur substantial additional costs and to
become subject to litigation;
7. failure of the Company, third party payers or physicians
to comply with Version 5010 Transactions by the CMS
delayed enforcement date of March 31, 2012 or to
comply with the ICD-10-CM Code Set by the compli-
ance date to be determined by the Department of
Health and Human Services which will be sometime
after October 1, 2013, could negatively impact the
Company’s reimbursement and profitability;
8. increased competition, including competition from
companies that do not comply with existing laws
or regulations or otherwise disregard compliance
standards in the industry;
9. increased price competition, competitive bidding for
laboratory tests and/or changes or reductions to fee
schedules;
10. changes in payer mix, including an increase in
capitated reimbursement mechanisms or the impact
of a shift to consumer-driven health plans;
11. failure to obtain and retain new customers and alliance
partners, or a reduction in tests ordered or specimens
submitted by existing customers;
12. failure to retain or attract managed care business as a
result of changes in business models, including new risk
based or network approaches, or other changes in strat-
egy or business models by managed care companies;
13. failure to effectively integrate and/or manage newly
acquired businesses, including Genzyme Genetics,
and the cost related to such integrations;
14. adverse results in litigation matters;
15. inability to attract and retain experienced and qualified
personnel;
16. failure to maintain the Company’s days sales outstand-
ing and/or bad debt expense levels;
17. decrease in the Company’s credit ratings by Standard
& Poor’s and/or Moody’s;
18. discontinuation or recalls of existing testing products;
19. failure to develop or acquire licenses for new or
improved technologies, or if customers use new
technologies to perform their own tests;
20. inability to commercialize newly licensed tests or
technologies or to obtain appropriate coverage or
reimbursement for such tests, which could result
in impairment in the value of certain capitalized
licensing costs;
21. changes in government regulations or policies, includ-
ing regulations and policies of the Food and Drug
Administration, affecting the approval, availability of,
and the selling and marketing of diagnostic tests;
22. inability to obtain and maintain adequate patent and
other proprietary rights for protection of the Company’s
products and services and successfully enforce the
Company’s proprietary rights;
23. the scope, validity and enforceability of patents and
other proprietary rights held by third parties which
might have an impact on the Company’s ability to
develop, perform, or market the Company’s tests or
operate its business;
24. failure in the Company’s information technology systems
resulting in an increase in testing turnaround time or
billing processes or the failure to meet future regulatory
or customer information technology, data security and
connectivity requirements;