What changed in this filing

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Item 1. Business

2024-02-29 compared with 2023-03-01 · 88 added, 99 removed, 400 unchanged (32% of the section changed)

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We have been in business since 1985.

At December 31, 2022, we operated directly or indirectly through joint ventures with hospitals, 357 centers located in Arizona, California, Delaware, Florida, Maryland, New Jersey, and New York.

Our centers provide physicians with imaging capabilities to facilitate the diagnosis and treatment of diseases and disorders and may reduce unnecessary invasive procedures, often reducing the cost and amount of care for patients.

Our principal business segment is the provision of diagnostic imaging services.

At December 31, 2023, we operated, directly or indirectly through joint ventures with hospitals, 366 imaging centers located in Arizona, California, Delaware, Florida, Maryland, New Jersey, and New York.

Our imaging centers provide physicians with capabilities to facilitate the diagnosis and treatment of diseases and disorders and may reduce unnecessary invasive procedures, often reducing the cost and amount of care for patients.

Our services include magnetic resonance imaging (MRI), computed tomography (CT), positron emission tomography (PET), nuclear medicine, mammography, ultrasound, diagnostic radiology (X-ray), fluoroscopy and other related procedures.

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Our multi-modality strategy diversifies revenue streams, reduces exposure to reimbursement changes and provides patients and referring physicians one location to serve the needs of multiple procedures.

Integral to the imaging center business is our software arm headed by eRAD, Inc., which sells computerized systems that distribute, display, store and retrieve digital images.

Internationally, our subsidiary Heart and Lung Imaging LLC, provides teleradiology services for remote interpretation of images on behalf of providers within the framework of the United Kingdom's National Health Service.

Integral to the imaging center business is our software arm headed by our eRad, Inc.

subsidiary, which sells computerized systems that distribute, display, store and retrieve digital images.

We seek to develop leading positions in regional markets in order to leverage operational efficiencies.

We develop our imaging business through a combination of organic growth and acquisitions.

Our scale and density within selected geographies provide close, long-term relationships with key payors, radiology groups and referring physicians.

Our scale and density within selected geographies provides close, long-term relationships with key payors, radiology groups and referring physicians.

Each of our center-level and regional operations teams is responsible for managing relationships with local physicians and payors, meeting our standards of patient service, and maintaining profitability.

We provide training programs, standardized policies and procedures, and sharing of best practices among the physicians in our regional networks.

Internationally, our majority-owned subsidiary Heart & Lung Imaging Limited, provides teleradiology services for remote interpretation of images on behalf of providers within the framework of the United Kingdom's National Health Service.

We have also established an Artificial Intelligence (AI) division, that develops and deploys AI suites to enhance radiologist interpretations of breast, lung and prostate images.

The division is led by DeepHealth, and includes our acquisitions of Aidence Holding B.V.

The division is led by our DeepHealth, Inc.

subsidiary and includes our acquisitions of Aidence Holding B.V.

and Quantib B.V., both based in the Netherlands.

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The number of MRI and CT scans performed annually in the United States continues to grow due to their wider acceptance by physicians and payors, an increasing number of applications for their use and a general increase in demand due to the aging population.

Although currently small in scope, AI methods are now being employed to aid radiologists in scan interpretation by quickly allowing comparison to large imaging databases to enable pinpoint diagnosis in shorter time frames.

In addition, AI methods can keep track of individuals needing procedures on a regular basis (i.e.

mammograms, follow ups, etc.) and alert our staff to contact the patient and schedule appointments.

In recent years, there has been rapid development of AI tools for the radiology field.

In October 2023, the United States Food & Drug Administration reported it had granted marketing clearance to 405 radiology software products since January 2020.

Modern AI is built by training on large databases to recognize patterns with much higher performance than previously.

AI methods are now being employed throughout the imaging industry in a wide variety of ways, such as speeding image acquisition, providing diagnostic assistance, or prioritizing workflows.

In addition, AI methods can speed up administrative tasks, such as keeping track of individuals needing procedures on a regular basis (i.e., mammograms, follow-up exams, etc.) and alerting our staff to contact the patient and schedule appointments.

Diagnostic Imaging Settings

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PET scanning involves the administration of a radiopharmaceutical agent with a positron-emitting isotope and the measurement of the distribution of that isotope to create images for diagnostic purposes.

PET scans provide the capability to determine how metabolic activity impacts other aspects of physiology in the disease process by correlating the reading for the

PET with other tools such as CT or MRI.

PET scans provide the capability to determine how metabolic activity impacts other aspects of physiology in the disease process by correlating the reading for the PET with other tools such as CT or MRI.

PET technology has been found highly effective and appropriate in certain clinical circumstances for the detection and assessment of tumors throughout the body, the evaluation of some cardiac conditions and the assessment of epilepsy seizure sites.

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Escalating Demand for Healthcare Services from an Aging Population.

According to the United States Census Bureau estimates released in February 2022, the number of US residents age over 65 stands at 55 million, representing 17% of the population, and according to the Pew Research Center, is expected to reach 81 million, or 19% of the total population by 2050.

population is expected to trend older over the coming decades.

According to a Pew Research Center report issued January 9, 2024, the number of US residents age over 65 stands at approximately 62 million, representing 18% of the population, and is expected to reach 84 million, or 23% of the total population by 2054.

Because diagnostic imaging use tends to increase as a person ages, we believe the aging population will generate more demand for diagnostic imaging procedures .

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• use of augmented reality technologies make it possible to create three dimensional images that physicians can examine through virtual reality headsets or print using a three dimensional printer.

Additional improvements in imaging technologies, contrast agents and scan capabilities are leading to new non-invasive diagnostic imaging application, including methods of diagnosing blockages in the heart’s vital coronary arteries, liver metastases, pelvic diseases and vascular abnormalities without exploratory surgery.

Additional improvements in imaging technologies, contrast agents and scan capabilities are leading to new non-invasive diagnostic imaging applications, including methods of diagnosing blockages in the heart’s vital coronary arteries, liver metastases, pelvic diseases and vascular abnormalities without exploratory surgery.

We believe that the use of the diagnostic capabilities of MRI and other imaging services will continue to increase because they are cost-effective, time-efficient and non-invasive, as compared to alternative procedures, including surgery, and that newer technologies and future technological advancements will further increase the use of imaging services.

At the same time, the industry has increasingly used upgrades to existing equipment to expand applications, extend the useful life of existing equipment, improve image quality, reduce image acquisition time and increase the volume of scans that can be performed.

We believe the use of equipment upgrades rather than equipment replacements will continue, as we do not foresee new imaging technologies on the near-term horizon that will displace MRI, CT or PET as the principal advanced diagnostic imaging modalities.

Utilization of Artificial Intelligence

We believe the use of equipment upgrades rather than

equipment replacements will continue, as we do not foresee new imaging technologies on the near-term horizon that will displace MRI, CT or PET as the principal advanced diagnostic imaging modalities.

Impact of Artificial Intelligence.

AI has the potential to significantly change the medical imaging industry.

Current AI applications are focused on comparing images against large databases and flagging areas of concern for the radiologist.

This is expected to result in improved quality, particularly with diseases, injuries, or conditions that are difficult to detect without supplemental technology.

Current AI applications are aiding in image creation (for example, reducing the time required to perform an MRI scan, or the dose of a CT or PET scan) as well as aiding physicians performing image interpretation.

AI appears to be particularly valuable in aiding radiologists reviewing cancer screening exams, where volumes can be high and lesions can be difficult to find, such as in screening mammography.

AI can also improve business processes to better effectively serve customers and improve reimbursement and collections accuracy.

Our Competitive Strengths

Our Scale and Position as the Largest Provider of Freestanding, Fixed-site Outpatient Diagnostic Imaging Services in the United States, Based on Number of Centers and Revenue

Our competitors include independent imaging operators and smaller regional operators, as well as hospitals and hospital groups that operate their own imaging services.

In addition, some physician practices have established their own diagnostic imaging centers within their group practices.

Some of our competitors may now or in the future have access to greater financial resources than we do, which could allow them to establish more centers and provide access to newer, more advanced equipment.

We compete principally on the basis of our reputation, our ability to provide multiple modalities at many of our centers, the location of our centers, the quality of our diagnostic imaging services and technologists and our ability to establish and maintain relationships with healthcare providers and referring physicians.

We believe that the following competitive strengths differentiate us from our competition.

Our Scale and Reputation.

As of December 31, 2023, we operated, directly or indirectly through joint ventures with hospitals, 366 centers in Arizona, California, Delaware, Florida, Maryland, New Jersey, and New York.

Our size and scale allow us to achieve operating, sourcing and administrative efficiencies, including equipment and medical supply sourcing savings and favorable maintenance contracts from equipment manufacturers and other suppliers.

We are the largest operator of freestanding, fixed-site outpatient diagnostic imaging service centers in the United States, based on number of centers and revenue.

Our specific knowledge of our geographic markets drives strong relationships with key payors, radiology groups and referring physicians within our markets.

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At each of our multi-modality centers, we offer patients and referring physicians one location to serve their needs for multiple procedures.

This prevents multiple patient visits or unnecessary travel between locations, thereby increasing patient throughput and decreasing costs and time delays.

This prevents multiple patient visits or unnecessary travel between locations, increasing patient throughput and decreasing costs and time delays.

Our revenue is generated by a broad mix of modalities.

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Our business focus, scale, resources and access to technology afford us with certain operating efficiencies.

As such, we believe our fees are generally lower than hospital fees for the services we provide.

As such, we believe our fees are generally lower than hospital fees for the same services we provide.

Our Facility Density in Many Highly Populated Areas of the United States.

The strategic organization of our diagnostic imaging centers into regional networks concentrated in major population centers in seven states offers unique benefits to our patients, our referring physicians, our payors and us.

Our diagnostic imaging centers are strategically organized into regional networks concentrated in major population centers in seven states, providing a density that offers unique benefits to our patients, our referring physicians, our payors and us.

We are able to increase the convenience of our services to patients by implementing scheduling systems within geographic regions, where practical.

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Our Strong Relationships with Payors and Diversified Payor Mix.

Our revenue is derived from a diverse mix of payors, including private payors, managed care capitated payors and government payors, which should mitigate our exposure to possible unfavorable reimbursement trends within any one payor class.

Our revenue is derived from a diverse mix of payors, including commercial insurance payors, managed care capitated payors and government payors such as Medicare and Medicaid, mitigating our exposure to unfavorable reimbursement trends within any one payor class.

In addition, our experience with capitation arrangements has provided us with the expertise to manage utilization and pricing effectively, resulting in a predictable and recurring stream of revenue.

We believe that third-party payors representing large groups of patients often prefer to enter into managed care contracts with providers that offer a broad array of diagnostic imaging services at convenient locations throughout a geographic area.

In 2022, we received approximately 55% of our net service revenue from commercial insurance payors, 11% from managed care capitated payors, 22% from Medicare and 3% from Medicaid.

We believe that third-party payors representing large groups of patients often

prefer to enter into managed care contracts with providers that offer a broad array of diagnostic imaging services at convenient locations throughout a geographic area.

Our Strong Relationships with Experienced and Highly Regarded Radiologists.

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Our Technologically Advanced Operations.

In 2019, we created an AI division that now hosts the combined efforts of our acquisitions of DeepHealth, Aidence Holding B.V.

and Quantib B.V..

In 2019, we created an AI division that now hosts the combined efforts of our acquisitions of DeepHealth, Inc., Aidence Holding B.V., and Quantib B.V..

The division is currently focused on developing improved medical interpretation of scans within the fields of mammography, lung and prostate imaging.

Combined with our established eRad subsidiary, which develops and sells computerized imaging data storage and retrieval systems, we have assembled an industry leading team of software developers to create radiology workflow solutions that improve patient care.

Given the importance of training data in building modern AI applications as well as getting feedback on performance, our combination of vertical integration and scale provide advantages over other AI creators.

Alongside our established subsidiary eRad, Inc., which develops and sells computerized imaging data storage and retrieval systems, we have assembled an industry leading team of software developers to create radiology workflow solutions that improve patient care.

Business Strategy

Maximize Performance at Our Existing Centers.

We intend to enhance our operations and increase scan volume and revenue at our existing centers by expanding physician relationships and increasing the procedure offerings.

We seek to enhance our operations and increase scan volume and revenue at our existing centers by expanding physician relationships and increasing the procedure offerings.

Focus on Profitable Contracting.

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Because many of our contracts with third party payors are short-term in nature, we can regularly renegotiate these contracts, if necessary.

We believe our position as a leading provider of diagnostic imaging services and our long-term

relationships with physician groups in our markets enable us to obtain more favorable contract terms than would be available to smaller or less experienced imaging services providers.

We believe our position as a leading provider of diagnostic imaging services and our long-term relationships with physician groups in our markets enable us to obtain more favorable contract terms than would be available to smaller or less experienced imaging services providers.

Optimize Operating Efficiencies.

We try to maximize our equipment utilization by adding, upgrading and re-deploying equipment where we experience excess demand.

We seek to maximize our equipment utilization by adding, upgrading and re-deploying equipment where we experience excess demand.

We will continue to trim excess operating and general and administrative costs where it is feasible to do so.

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We intend to continue to expand in established markets through additional joint ventures, particularly with hospital systems.

We believe that these joint ventures strengthen and expand our strength in markets where we are already established.

We believe that these joint ventures deepen and expand our strength in markets where we are already established.

Leverage our investment in AI and technology to improve services and operating efficiency .

We have developed a portfolio of proprietary technologies that stretch from patient-scheduling, to image storage and retrieval, to AI applications that aid in the interpretation of scans in certain fields.

We intend to use our substantial investment in technology and AI to create differentiated service offerings in each phase of our business.

We are currently developing solutions to improve the quality and consistency of our core imaging services, expand our service offerings, and improve our operating efficiency, ranging from patient intake through billing and collection.

We offer a comprehensive set of imaging services including MRI, CT, PET, nuclear medicine, X-ray, ultrasound, mammography, fluoroscopy and other related procedures.

We focus on providing standardized high quality imaging services, regardless of location, to ensure patients, physicians and payors consistency in service and quality.

To ensure the high quality of our services, we monitor patient satisfaction, timeliness of services to patients and reports to physicians.

To ensure the high quality of our services, we monitor patient satisfaction, timeliness of services to patients, and delivery of reports to physicians.

The key features of our services include:

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For performing these management services, which include billing, collecting, transcription and medical coding, we receive management fees, that depending on the agreement are calculated at a fixed or variable rate.

The fees charged for diagnostic imaging services performed at our centers are paid by a diverse mix of payors, as illustrated for the following periods presented in the table below:

% of Net Service Fee Revenue

Year Ended December 31, 2022 Year Ended December 31, 2021 Year Ended December 31, 2020

Commercial Insurance (1)

55 % 57 % 54 %

Managed Care Capitated Payors 11 % 11 % 13 %

Medicare 22 % 21 % 20 %

Medicaid 3 % 3 % 2 %

(1) Includes co-payments, direct patient payments and payments through contracts with physician groups and other non-insurance company payors.

The fees charged for diagnostic imaging services performed at our centers are paid by a diverse mix of payors:

Commercial Insurance.

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Consistent with our regional network strategy, we locate our single-modality centers near multi-modality centers, to help accommodate overflow in targeted demographic areas.

The following table sets forth the number of our centers operated directly or managed through joint ventures for each year during the five-year period ended December 31, 2022:

The following table sets forth the number of our centers operated directly or managed through joint ventures for each year during the three-year period ended December 31, 2023:

2023 2022 2021

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Diagnostic Imaging Equipment

The following table indicates, as of December 31, 2022, the quantity of principal diagnostic equipment available at our centers operated directly or through joint venture investments:

The following table indicates, as of December 31, 2023, the quantity of principal diagnostic equipment available at our imaging centers operated directly or through joint venture investments:

Equipment Count Years Ended December 31,

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Our corporate headquarters and many of our centers are interconnected through a state-of-the-art information technology system.

This system, which is compliant with the Health Insurance Portability and Accountability Act of 1996, is comprised of a number of integrated applications and provides a single operating platform for billing and collections, electronic medical records, practice management and image management.

This system, which is compliant with the Health Insurance Portability and Accountability Act of 1996 ("HIPAA"), is comprised of a number of integrated applications and provides a single operating platform for billing and collections, electronic medical records, practice management and image management.

This technology has created cost reductions for our centers in areas such as image storage, support personnel and financial management and has further allowed us to optimize the productivity of all aspects of our business by enabling us to:

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We have developed our own Radiology Information System through our team of software development engineers, which is used as our front desk patient tracking system.

Our eRad, Inc., subsidiary develops and sells computerized imaging data storage and retrieval systems.

Human Capital Management Strategy

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therefore, we have various avenues for all to share ideas and provide feedback.

Piloting initiatives such as the Connections Roadshow and new employee listening platforms enabled senior leaders to hear from team members at all levels of the organization to gain insights on various topics including quality, engagement, innovation, customer service, patient focus, diversity, equity, inclusion, and belonging.

Piloting initiatives such as the Connections Roadshow and new employee listening platforms enable senior leaders to hear from team members at all levels of the organization to gain insights on various topics including quality, engagement, innovation, customer service, patient focus, diversity, equity, inclusion, and belonging.

Total Well-being .

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Through our east coast operations, we have entered into sponsorship agreements with the Baltimore Ravens of the National Football League and the Baltimore Orioles of Major League Baseball which permit us to state we are the imaging partner to each organization.

Both agreements last through 2023.

Both of those agreements are being renewed through 2025.

We acquire our major diagnostic imaging equipment directly from original equipment manufacturers or through third party financing companies and purchase medical supplies from various national vendors.

Our diagnostic imaging equipment represents a cornerstone investment of the company as it provides our customers the latest in imaging technology.

We employ direct purchase or finance arrangements to accomplish our needs with such firms as GE, Hologic, Key Equipment, Philips, Siemens and Spectrum.

We have excellent working relationships with our providers who are of comparable stature in the event one becomes unavailable.

At December 31, 2022, our liabilities for operating arrangements of radiology equipment amounted to approximately $13.7 million.

We employ direct purchase or finance arrangements with such firms as GE, Hologic, Key Equipment, Philips, Siemens and Spectrum for our diagnostic equipment imaging needs.

We seek to establish strong working relationships with our providers, who are of comparable stature and offer similar products, to mitigate the risk that any one supplier becomes unavailable.

If we open or acquire additional imaging centers, we may incur material equipment lease obligations.

See Note 9, Leases, to our consolidated financial statements included in this annual report on Form 10-K for further information.

Timely and effective maintenance is essential for achieving high utilization rates of our imaging equipment.

See Note 9, Leases, in the notes accompanying our consolidated financial statements included in this report for further information.

Timely and effective maintenance of our imaging equipment is essential for achieving high utilization rates.

In order to ensure operational efficiency, we have maintenance arrangements with the various service arms of the original equipment manufacturers that supply our imaging equipment.

Our competitors include independent imaging operators and smaller regional operators, as well as hospitals and hospital groups that operate their own imaging services.

In addition, some physician practices have established their own diagnostic imaging centers within their group practices.

See “Competitive Strengths” above.

Each of the Group and our third party contracted radiology practices has entered into agreements with its physician shareholders and full-time employed radiologists that generally prohibit those shareholders and radiologists from competing for

a period of two to five years within defined geographic regions after they cease to be owners or employees, as applicable.

In certain states, like California, a covenant not to compete is enforced in limited circumstances involving the sale of a business.

In other states, a covenant not to compete will be enforced only:

• to the extent it is necessary to protect a legitimate business interest of the party seeking enforcement;

• if it does not unreasonably restrain the party against whom enforcement is sought;

• if it is not contrary to public interest.

Enforceability of a non-compete covenant is determined by a court based on all of the facts and circumstances of the specific case at the time enforcement is sought.

For this reason, it is not possible to predict whether or to what extent a court will enforce the contracted radiology practices’ covenants.

The inability of the contracted radiology practices or us to enforce a radiologist’s non-compete covenants could result in increased competition from individuals who are knowledgeable about our business strategies and operations.

Liability Insurance

Insurance and Liability Mitigation

We maintain insurance policies with coverage we believe is appropriate in light of the risks attendant to our business and consistent with industry practice.

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Additionally, we maintain workers’ compensation insurance on all of our employees.

Coverage is placed on a statutory basis and corresponds to individual state’s requirements.

In our agreements with physician groups, including the Group, we require the physician group maintain medical malpractice insurance for each physician in the group, with coverage limits of not less than $1.0 million per incident and $3.0 million in the aggregate per year.

Our insurance coverage is placed on a statutory basis and corresponds to individual state’s requirements.

However, adequate liability insurance may not be available to us in the future at acceptable costs or at all.

In addition, insurers from which we purchase such insurance may experience financial hardship which would impact their ability to pay covered policyholder claims.

Pursuant to our agreements with physician groups with whom we contract, including the Group, each must maintain medical malpractice insurance for each physician in the group, having coverage limits of not less than $1.0 million per incident and $3.0 million in the aggregate per year.

California’s medical malpractice cap further reduces our exposure.

In California our operations benefit from a statutory medical malpractice cap that reduces our liability exposure.

California places a $250,000 limit on non-economic damages for medical malpractice cases.

Non-economic damages are defined as compensation for pain, suffering, inconvenience, physical impairment, disfigurement and other non-pecuniary injury.

The cap applies whether the case is for injury or death, and it allows only one $250,000 recovery in a wrongful death case.

Non-economic damages are defined as compensation for pain, suffering, inconvenience, physical impairment, disfigurement and other non-pecuniary injury.

No cap applies to economic damages.

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In the states in which we operate, other than Florida and Arizona, a lay person or any entity other than a professional corporation or other similar professional organization is not allowed to practice medicine, including by employing professional persons or by having any ownership interest or profit participation in or control over any medical professional practice.

laws of such states also prohibit a lay person or a non-professional entity from exercising control over the medical judgments or decisions of physicians and from engaging in certain financial arrangements, such as splitting professional fees with physicians.

The laws of such states also prohibit a lay person or a non-professional entity from exercising control over the medical judgments or decisions of physicians and from engaging in certain financial arrangements, such as splitting professional fees with physicians.

We structure our relationships with the radiology practices, including the purchase of diagnostic imaging centers, in a manner that we believe keeps us from engaging in the practice of medicine, exercising control over the medical judgments or decisions of the radiology practices or their physicians, or violating the prohibitions against fee-splitting.

Medicare and Medicaid Fraud and Abuse – Federal Anti-kickback Statute

Government Healthcare Programs.

We derive a substantial portion of our revenue from direct billings to governmental healthcare programs, such as Medicare and Medicaid, and private health insurance companies and/or health plans, including but not limited to those participating in the Medicare Advantage program.

During the year ended December 31, 2023, approximately 23% of our net service revenue generated at our diagnostic imaging centers was derived from federal government sponsored healthcare programs (Medicare) and 3% from state sponsored programs (Medicaid).

As a result, any negative changes in governmental capitation or fee-for-service rates or methods of reimbursement for the services we provide could have a significant adverse impact on our revenue and financial results.

Because governmental healthcare programs generally reimburse on a fee schedule basis rather than on a charge-related basis, we generally cannot increase our revenues from these programs by increasing our fees for the specified services.

Moreover, if our costs increase, we may not be able to recover our increased costs from these programs.

Government payors have taken and may continue to take steps to control the cost, eligibility for, use, and delivery of healthcare services as a result of budgetary constraints, cost containment pressures and other reasons.

We believe that these trends in cost containment will continue.

These cost containment measures, and other market changes in non-governmental insurance plans have generally restricted our ability to recover, or shift to non-governmental payors, any increased costs that we experience.

Our integrated care business and financial operations may be materially affected by these developments.

Medicare and Medicaid Fraud and Abuse – Federal Anti-kickback Statute.

Federal law known as the Anti-kickback Statute prohibits the knowing and willful offer, payment, solicitation or receipt of any form of remuneration in return for, or to induce, (i) the referral of a person, (ii) the furnishing or arranging for the furnishing of items or services reimbursable under the Medicare, Medicaid or other governmental programs or (iii) the purchase, lease or order or arranging or recommending purchasing, leasing or ordering of any item or service reimbursable under the Medicare, Medicaid or other governmental programs.

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(i) X-ray, fluoroscopy or ultrasound procedures that require the insertion of a needle, catheter, tube or probe through the skin or into a body orifice;

(ii) radiology procedures that are integral to the performance of, and performed

during, non-radiological medical procedures;

(ii) radiology procedures that are integral to the performance of, and performed during, non-radiological medical procedures;

and (iii) invasive or interventional radiology, because the radiology services in these procedures are merely incidental or secondary to another procedure that the physician has ordered.

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significant repayment obligations, exclusion from Medicare, Medicaid or other governmental programs, and civil and criminal penalties.

Federal regulatory and law enforcement authorities have increased enforcement activities with respect to Medicare and Medicaid fraud and abuse regulations and other reimbursement laws and rules, including laws and regulations that govern our activities and the activities of the radiology practices.

activities and the activities of the radiology practices.

The federal government also has increased funding to fight healthcare fraud and is coordinating its enforcement efforts among various agencies, such as the U.S.

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We believe that we are in compliance with the rules and regulations that apply to the federal False Claims Act as well as its state counterparts.

Healthcare Reform Legislation

Patient Protection and Affordable Care Act.

Healthcare reform legislation enacted in the first quarter of 2010 by the Patient Protection and Affordable Care Act or PPACA, specifically requires the U.S.

Department of Health and Human Services, in computing physician practice expense relative value units, to increase the equipment utilization factor for advanced diagnostic imaging services (such as MRI, CT and PET) from a presumed utilization rate of 50% to 65% for 2010 through 2012, 70% in 2013, and 75% thereafter.

Excluded from the adjustment is low-technology imaging modalities such as ultrasound, X-ray and fluoroscopy.

The Health Care and Education Reconciliation Act of 2010 (H.R.

4872), or Reconciliation Act, which was passed by the Senate and approved by the President on March 30, 2010, amends the provision for higher presumed utilization of advanced diagnostic imaging services to a presumed rate of 75%.

The higher utilization rate was fully implemented in the beginning of 2011 and replaced the phase-in approach provided in the PPACA.

4872), or Reconciliation Act, fully implemented the higher utilization rate in the beginning of 2011, eliminating the phase-in approach provided in the PPACA.

This utilization rate was further increased to 90% by the American Taxpayer Relief Act of 2012, effective as of January 1, 2014.

The aim of increased utilization of diagnostic imaging services is to spread the cost of the equipment and services over a greater number of scans, resulting in a lower cost per scan.

These changes have precipitated reductions in federal reimbursement for medical imaging and have resulted in decreased revenue for the scans we perform for Medicare beneficiaries.

These changes precipitated reductions in federal reimbursement for medical imaging, resulting in decreased revenues per scan for the scans we perform for Medicare beneficiaries.

Other changes in reimbursement for services rendered by Medicare Advantage plans may also reduce the revenues we receive for services rendered to Medicare Advantage enrollees.

On December 22, 2017, President Trump signed into law the Tax Cuts and Jobs Act (the “Tax Act”).

Among numerous changes to the tax code, the Tax Act repealed the individual mandate tax penalty (the “Individual Mandate”), a PPACA provision that required individuals to pay additional taxes if he or she was uninsured during the year.

The PPACA also required individuals to pay additional taxes if he or she was uninsured during the year (the "Individual Mandate").

On December 22, 2017, the Tax Cuts and Jobs Act was enacted which, among numerous changes to the tax code, repealed the Individual Mandate tax penalty.

Repeal of the Individual Mandate may lead to more people being uninsured, and could raise premium rates for insured persons.

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HIPAA, among other things, amends existing crimes and criminal penalties for Medicare fraud and enacts new federal healthcare fraud crimes, including actions affecting non-government healthcare benefit programs.

Under HIPAA, a healthcare benefit program includes any private plan or contract affecting interstate commerce under which any medical benefit, item or service is provided.

Under HIPAA, a healthcare benefit program includes any private plan or contract affecting interstate

commerce under which any medical benefit, item or service is provided.

A person or entity that knowingly and willfully obtains the money or property of any healthcare benefit program by means of false or fraudulent representations in connection with the delivery of healthcare services is subject to a fine or imprisonment, or potentially both.

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HIPAA imposes federal standards for electronic transactions, for the security of electronic health information and for protecting the privacy of PHI.

including new federal security breach notification requirements to affected individuals, DHHS and prominent media outlets, of certain breaches of unsecured PHI, (3) restrictions on marketing communications and a prohibition on covered entities or business associates from receiving remuneration in exchange for PHI, and (4) the civil and criminal penalties that may be imposed for HIPAA violations, increasing the annual cap in penalties from $25,000 to $1.5 million per year.

The Health Information Technology for Economic and Clinical Health Act of 2009 (“HITECH”), signed into law on February 17, 2009, dramatically expanded, among other things, (1) the scope of HIPAA to now apply directly to “business associates,” or independent contractors who receive or obtain PHI in connection with providing a service to a covered entity, (2) substantive security and privacy obligations, including new federal security breach notification requirements to affected individuals, DHHS and prominent media outlets, of certain breaches of unsecured PHI, (3) restrictions on marketing communications and a prohibition on covered entities or business associates from receiving remuneration in exchange for PHI, and (4) the civil and criminal penalties that may be imposed for HIPAA violations, increasing the annual cap in penalties from $25,000 to $1.5 million per year.

In addition, many states have enacted comparable privacy and security statutes or regulations that, in some cases, are more stringent than HIPAA requirements.

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Implementing additional regulations or compliance requirements could result in substantial costs to the contracted radiology practices, limiting their ability to enter into capitated or other risk-sharing managed care arrangements and indirectly affecting our revenue from the contracted practices.

Federal Budget

Moreover, if our costs increase, we may not be able to recover our increased costs from these programs.

Government and private payors have taken and may continue to take steps to control the cost, eligibility for, use, and delivery of healthcare services as a result of budgetary constraints, cost containment pressures and other reasons.

We believe that these trends in cost containment will continue.

Our integrated care business and financial operations may be materially affected by these developments.

Environmental Matters.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business