UNITEDTable STATESof Contents

~~SECURITIES~~UNITED ~~AND~~STATES ~~EXCHANGE COMMISSION~~

~~Washington,~~SECURITIES ~~D.C.~~AND ~~20549~~EXCHANGE COMMISSION

~~Form~~Washington, ~~10-Q~~D.C. 20549

þForm ~~QUARTERLY~~10-Q ~~REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.~~

~~For~~x ~~the~~QUARTERLY ~~quarterly~~REPORT ~~period~~PURSUANT ~~ended~~TO ~~September 30,~~SECTION ~~2007~~13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

¨For ~~TRANSITION~~the ~~REPORT~~quarterly ~~PURSUANT~~period TOended ~~SECTION~~June 30, 132008 ~~OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.~~

~~For~~¨ ~~the~~TRANSITION ~~transition~~REPORT ~~period~~PURSUANT ~~from to .~~TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

~~Commission~~For ~~File Number~~the ~~333-80337~~transition period from to .

~~Team~~Commission ~~Finance~~File ~~LLC~~Numbers 333-132495 333-132495-53

~~(Exact~~Team ~~name~~Finance ~~of registrant as specified in its charter)~~ LLC

Delaware		8099		20-3818106
(State or other jurisdiction of incorporation or organization)		(Primary Standard Industrial Classification Code Number)		(I.R.S. Employer Identification No.)

(Exact name of registrant as specified in its charter)

Health Finance Corporation


Delaware		20-3818106
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

~~(Exact~~Health ~~name~~Finance ofCorporation ~~registrant as specified in its charter)~~

Delaware		8099		20-3818041
(State or other jurisdiction of incorporation or organization)		(Primary Standard Industrial Classification Code Number)		(I.R.S. Employer Identification No.)

(Exact name of registrant as specified in its charter)

1900 Winston Road


Delaware		20-3818041
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

~~Suite~~1900 ~~300~~Winston Road

~~Knoxville,~~Suite ~~Tennessee~~300 ~~37919~~

~~(865)~~Knoxville, ~~693-1000~~Tennessee 37919

(~~Address, zip code, and telephone number, including area code, of registrant’s principal executive office.~~865) 693-1000

~~Indicate by check mark whether the registrant~~ (~~1) has~~Address, ~~filed~~zip ~~all reports required to be filed by Section 13~~ code, and ~~15(d)~~telephone ofnumber, ~~the~~including ~~Securities~~area ~~Exchange~~code, ~~Act~~ of ~~1934 during the preceding 12 months (or for such shorter periods that the~~ registrant’s ~~was~~principal ~~required~~executive ~~to file such reports~~office.)~~, and~~ ~~(2) has been subject to such filing requirements for the past 90 days.~~

~~Yes þ No ¨~~Indicate by check mark whether the registrants (1) have filed all reports required to be filed by Section 13 and 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter periods that the registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days.

~~Indicate~~Yes x No ¨ by check mark whether the registrants are large accelerated filers, accelerated filers, or non-accelerated filers. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

~~Large~~Indicate ~~accelerated~~by check mark whether the ~~filer ¨ Accelerated~~registrants ~~filer ¨ Non~~are large accelerated filers, accelerated filers, non-accelerated filers or smaller reporting companies. See the definitions of “large accelerated filer þ”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

~~Indicate~~Large byaccelerated ~~check~~filer ~~mark~~¨ ~~whether~~Accelerated ~~the~~filer ~~registrant~~¨ isNon-accelerated afiler ~~shell~~x ~~company~~ (asDo ~~defined~~not incheck ~~Rule~~if ~~12b-2~~a ofsmaller ~~the~~reporting ~~Exchange Act~~company) Smaller reporting company ¨

~~Yes ¨ No þ~~Indicate by check mark whether the registrants are a shell company (as defined in Rule 12b-2 of the Exchange Act)

~~As of November 7, 2007, there were outstanding~~Yes ¨ No x ~~1,000 Class A Units of Team Finance LLC and 100 shares of Common Stock, with a par value of $.01 of Health Finance Corporation.~~

~~FORWARD~~As ~~LOOKING~~of ~~STATEMENTS~~August 11, 2008, there were outstanding 1,000 Class A Units of Team Finance LLC and 100 shares of Common Stock, with a par value of $.01 of Health Finance Corporation.

StatementsTable made in this Form 10-Q that are not historical facts and that reflect the current view of Team Finance LLC and Team Health, Inc. (collectively, the “Company”) about future events and financial performance are hereby identified as “forward looking statements.” Some of these statements can be identified by terms and phrases such as “anticipate,” “believe,” “intend,” “estimate,” “expect,” “continue,” “could,” “should”, “may,” “plan,” “project,” “predict” and similar expressions and include references to assumptions that we believe are reasonable and relate to our future prospects, developments and business strategies. The Company cautions readers of this Form 10-Q that such “forward looking statements”, including without limitation, those relating to the Company’s future business prospects, revenue, working capital, professional liability expense, liquidity, capital needs, interest costs and income, wherever they occur in this Form 10-Q or in other statements attributable to the Company, are necessarily estimates reflecting the judgment of the Company’s senior management and involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by the “forward looking statements”. Factors that could cause our actual results to differ materially from those expressed or implied in such forward-looking statements, include, but are not limited to: Contents

•FORWARD ~~the~~LOOKING ~~effect~~STATEMENTS ~~and interpretation of current or future government regulation of the healthcare industry, and our ability to comply with these regulations;~~

•Statements made in this Form 10-Q that are not historical facts and that reflect the current view of Team Finance LLC and Team Health, Inc. (collectively, the “Company”) about future events and financial performance are hereby identified as “forward looking statements.” Some of these statements can be identified by terms and phrases such as “anticipate,” “believe,” “intend,” “estimate,” “expect,” “continue,” “could,” “should”, “may,” “plan,” “project,” “predict” and similar expressions and include references to assumptions that we believe are reasonable and relate to our ~~exposure~~future prospects, developments and business strategies. The Company cautions readers of this Form 10-Q that such “forward looking statements”, including without limitation, those relating to the Company’s future business prospects, revenue, working capital, professional liability ~~lawsuits~~expense, liquidity, capital needs, interest costs and ~~governmental~~income, ~~agency~~wherever ~~investigations;~~they occur in this Form 10-Q or in other statements attributable to the Company, are necessarily estimates reflecting the judgment of the Company’s senior management and involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by the “forward looking statements”. Factors that could cause our actual results to differ materially from those expressed or implied in such forward-looking statements, include, but are not limited to:

• the ~~adequacy~~effect and interpretation of ~~our~~current ~~insurance~~or ~~coverage~~future government regulation of the healthcare industry, and ~~insurance~~our ~~reserves~~ability to comply with these regulations;

• our ~~reliance~~exposure onto ~~third-party~~professional ~~payers~~liability lawsuits and governmental agency investigations;

• the ~~general~~adequacy ~~level~~ of ~~emergency~~our ~~department~~insurance ~~patient~~coverage ~~volumes~~and atinsurance ~~our clients’ facilities~~reserves;

• our ~~ability~~reliance ~~to enter into and retain contracts with hospitals, military treatment facilities and other healthcare facilities~~ on ~~attractive~~third-party ~~terms~~payers;

• ~~changes~~the ingeneral ~~rates~~level orof ~~methods~~emergency ofdepartment ~~government~~patient ~~payments~~volumes ~~for~~at our ~~services~~clients’ facilities;

• our ability to ~~successfully~~enter ~~integrate~~into ~~strategic~~and ~~acquisitions~~retain contracts with hospitals, military treatment facilities and other healthcare facilities on attractive terms;

• ~~the~~changes ~~control~~in ofrates ~~our~~or ~~company~~methods byof ~~our~~government ~~sponsor~~payments ~~may~~for ~~be in conflict with~~ our ~~interests~~services;

• our ~~future capital needs and~~ ability to ~~obtain~~successfully ~~future~~integrate ~~financing~~strategic acquisitions;

• ~~our~~the ~~ability~~control toof ~~carry~~our ~~out~~company by our ~~business~~sponsor ~~strategy~~may be in conflict with our interests;

• our ~~ability~~future tocapital ~~continue~~needs ~~to recruit~~ and ~~retain qualified healthcare professionals and our~~ ability to ~~attract~~obtain ~~and~~future ~~retain operational personnel~~financing;

• ~~competition~~our inability to carry out our ~~market~~business strategy;

• our ability to ~~maintain~~continue orto ~~implement~~recruit ~~complex~~and ~~information~~retain ~~systems~~qualified healthcare professionals and our ability to attract and retain operational personnel;

• ~~our~~competition ~~substantial~~in ~~indebtedness~~our market;

• our ability to ~~generate~~maintain ~~cash~~or ~~flow~~implement tocomplex ~~service~~information ~~our debt obligations~~systems;

• ~~certain covenants in~~ our ~~debt~~substantial ~~documents~~indebtedness;

• ~~general~~our ~~economic~~ability ~~conditions;~~to ~~and~~generate cash flow to service our debt obligations;

• ~~other~~certain ~~factors~~covenants ~~detailed from time to time~~ in ~~the~~our ~~Company’s~~debt ~~filings with the Securities and Exchange Commission, including filings on Forms 10-Q and 10-K.~~documents;

~~The~~• ~~Company~~general ~~disclaims~~economic ~~any~~conditions; intent or obligation to update “forward looking statements” made in this Form 10-Q to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time. and

2• other factors detailed from time to time in the Company’s filings with the Securities and Exchange Commission, including filings on Forms 10-Q and 10-K.

~~TEAM~~The ~~FINANCE~~Company ~~LLC~~disclaims any intent or obligation to update “forward looking statements” made in this Form 10-Q to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time.

~~QUARTERLY~~2 ~~REPORT FOR THE THREE MONTHS~~

ENDEDTable SEPTEMBERof 30, 2007 Contents

		Page
Part 1. Financial Information
Item 1.	Financial Statements (Unaudited)
	Consolidated Balance Sheets—September 30, 2007 and December 31, 2006	4
	Consolidated Statements of Operations—Three months ended September 30, 2007 and 2006	5
	Consolidated Statements of Operations—Nine months ended September 30, 2007 and 2006	6
	Consolidated Statements of Cash Flows—Nine months ended September 30, 2007 and 2006	7
	Notes to Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	35
Item 4.	Controls and Procedures	36
Part 2. Other Information
Item 1.	Legal Proceedings	36
Item 1A.	Risk Factors	36
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	36
Item 3.	Defaults Upon Senior Securities	36
Item 4.	Submission of Matters to a Vote of Security Holders	36
Item 5.	Other Information	36
Item 6.	Exhibits	37
Signatures		38

TEAM FINANCE LLC

3QUARTERLY REPORT FOR THE THREE MONTHS

~~PART~~ENDED 1.JUNE ~~FINANCIAL~~30, ~~INFORMATION~~2008

Item 1. Financial Statements


		Page
Part 1. Financial Information
Item 1.	Financial Statements (Unaudited)
	Consolidated Balance Sheets—June 30, 2008 and December 31, 2007	4
	Consolidated Statements of Operations—Three months ended June 30, 2008 and 2007	5
	Consolidated Statements of Operations—Six months ended June 30, 2008 and 2007	6
	Consolidated Statements of Cash Flows—Six months ended June 30, 2008 and 2007	7
	Notes to Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	35
Item 4T.	Controls and Procedures	36

Part 2. Other Information
Item 1.	Legal Proceedings	37
Item 1A.	Risk Factors	37
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	37
Item 3.	Defaults Upon Senior Securities	37
Item 4.	Submission of Matters to a Vote of Security Holders	37
Item 5.	Other Information	37
Item 6.	Exhibits	38
Signatures		39

~~TEAM~~3 ~~FINANCE LLC~~

CONSOLIDATEDTable BALANCEof SHEETS Contents

	September 30, 2007			December 31, 2006
	(Unaudited)
	(In thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	19,807		$	3,999
Accounts receivable, less allowance for uncollectibles of $166,482 and $168,416 in 2007 and 2006, respectively		227,815			207,031
Prepaid expenses and other current assets		17,527			11,463
Receivables under insurance programs		24,644			36,287
Income tax receivable		—			1,403
Total current assets		289,793			260,183
Investments of insurance subsidiary		69,264			59,809
Property and equipment, net		25,821			21,847
Other intangibles, net		28,796			29,051
Goodwill		148,361			150,459
Deferred income taxes		74,702			86,726
Receivables under insurance programs		30,361			23,213
Other		29,433			23,272
	$	696,531		$	654,560
LIABILITIES AND MEMBERS’ EQUITY (DEFICIT)
Current liabilities:
Accounts payable	$	11,185		$	13,618
Accrued compensation and physician payable		97,919			86,410
Other accrued liabilities		78,975			76,855
Income tax payable		3,439			—
Current maturities of long-term debt		4,250			11,050
Deferred income taxes		28,153			22,673
Total current liabilities		223,921			210,606
Long-term debt, less current maturities		628,312			631,500
Other non-current liabilities		170,553			179,144
Accumulated other comprehensive gain (loss)		255			(276	)
Members’ deficit		(326,510	)		(366,414	)
	$	696,531		$	654,560

PART 1. FINANCIAL INFORMATION

~~See~~Item ~~accompanying notes to financial statements~~1. Financial Statements

4 TEAM FINANCE LLC

~~TEAM~~CONSOLIDATED ~~FINANCE~~BALANCE ~~LLC~~SHEETS

CONSOLIDATED STATEMENTS OF OPERATIONS


	June 30, 2008			December 31, 2007
	(Unaudited)
	(In thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	37,069		$	30,290
Accounts receivable, less allowance for uncollectibles of $161,111 and $165,226 in 2008 and 2007, respectively		224,901			222,603
Prepaid expenses and other current assets		20,115			13,242
Receivables under insured programs		25,637			34,118

Total current assets		307,722			300,253
Investments of insurance subsidiary		85,975			76,057
Property and equipment, net		24,903			25,276
Other intangibles, net		36,587			27,247
Goodwill		158,898			158,898
Deferred income taxes		50,709			60,104
Receivables under insured programs		26,652			23,896
Other		36,876			27,442

	$	728,322		$	699,173

LIABILITIES AND MEMBERS’ EQUITY (DEFICIT)
Current liabilities:
Accounts payable	$	11,394		$	12,177
Accrued compensation and physician payable		100,003			101,421
Other accrued liabilities		73,191			83,854
Income tax payable		6,748			985
Current maturities of long-term debt		4,250			4,250
Deferred income taxes		26,155			27,635

Total current liabilities		221,741			230,322
Long-term debt, less current maturities		625,125			627,250
Other non-current liabilities		176,981			166,136
Accumulated other comprehensive earnings		3,352			434
Members’ deficit		(298,877	)		(324,969	)

	$	728,322		$	699,173

	Three Months Ended September 30,
	2007			2006
	(Unaudited)
	(In thousands)
Net revenue	$	550,949		$	481,033
Provision for uncollectibles		236,345			197,749
Net revenue less provision for uncollectibles		314,604			283,284
Cost of services rendered
Professional service expense		241,400			215,493
Professional liability cost		1,052			12,825
Gross profit		72,152			54,966
General and administrative expenses		28,496			26,143
Management fee and other expenses		1,217			877
Depreciation and amortization		3,868			6,109
Interest expense, net		13,639			15,205
Earnings from continuing operations before income taxes		24,932			6,632
Provision for income taxes		9,352			2,235
Earnings from continuing operations		15,580			4,397
Earnings (loss) from discontinued operations less applicable (benefit from) provision for income taxes of ($95) and $66, respectively		(152	)		105
Net earnings	$	15,428		$	4,502

See accompanying notes to financial statements.

~~See~~4 ~~accompanying notes to financial statements.~~

5Table of Contents

TEAM FINANCE LLC

CONSOLIDATED STATEMENTS OF OPERATIONS

	Nine Months Ended September 30,
	Three Months EndedJune 30,
	2007				2006
	2008			2007
	(Unaudited)
	(In thousands)
Net revenue	$	1579,~~555,082~~005		$	$518,180	~~1,346,624~~
Provision for uncollectibles		~~636~~243,~~570~~519			215,373	~~537,980~~
Net revenue less provision for uncollectibles		~~918~~335,~~512~~486			302,807	~~808,644~~
Cost of services rendered
Professional service expense		703,412				613,337
Professional service expenses		258,555			233,687
Professional liability cost		7,266				24,496
Professional liability costs		12,496			11,889
Gross profit		~~207~~64,~~834~~435			57,231	~~170,811~~
General and administrative expenses		8330,~~310~~831			26,997	~~74,986~~
Management fee and other expenses		~~3,035~~899			885	~~2,690~~
Depreciation and amortization		10,956				19,879
Transaction costs		1,785			—
Interest expense, net		41,430				43,117
Depreciation and amortization		4,125			3,597
Earnings from continuing operations before income taxes		69,103				30,139
Interest expense, net		10,953			13,322
Provision for income taxes		26,552				11,600
Earnings from continuing operations before income taxes		15,842			12,430
Earnings from continuing operations		42,551				18,539
Provision for income taxes		6,198			4,727
Loss from discontinued operations less applicable benefit from income taxes of $312 and $2,386, respectively		(499	)			(6,904	)
Earnings from continuing operations		9,644			7,703
Net earnings	$	42,052			$	11,635
Loss from discontinued operations less applicable benefit from income taxes of $67		—			(110	)
Net earnings	$	9,644		$	7,593

See accompanying notes to financial statements.

TEAMTable FINANCEof LLC Contents

~~CONSOLIDATED~~TEAM ~~STATEMENTS~~FINANCE OFLLC ~~CASH FLOWS~~

	Nine Months Ended September 30,
	2007			2006
	(Unaudited)
	(In thousands)
Operating Activities
Net earnings	$	42,052		$	11,635
Adjustments to reconcile net earnings:
Depreciation and amortization		10,994			20,462
Amortization of deferred financing costs		1,615			1,821
Employee equity based compensation expense		419			477
Provision for uncollectibles		636,570			537,980
Impairment of intangibles		—			9,523
Deferred income taxes		19,441			(2,561	)
Loss on sale of equipment		407			23
Equity in joint venture income		(1,360	)		(1,502	)
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable		(657,354	)		(552,012	)
Prepaids and other assets		(12,101	)		(13,108	)
Income tax accounts		4,207			17,526
Accounts payable		(2,433	)		(9,095	)
Accrued compensation and physician payable		12,979			987
Other accrued liabilities		5,717			4,900
Professional liability reserves		(10,693	)		4,449
Net cash provided by operating activities		50,460			31,505
Investing Activities
Purchases of property and equipment		(10,865	)		(7,173	)
Cash paid for acquisitions, net		(3,545	)		(20,785	)
Net purchases of investments by insurance subsidiary		(8,925	)		(12,640	)
Other investing activities		125			209
Net cash used in investing activities		(23,210	)		(40,389	)
Financing Activities
Payments on notes payable		(3,188	)		(3,187	)
Proceeds from revolving credit facility		83,000			184,300
Payments on revolving credit facility		(89,800	)		(176,700	)
Payments of deferred financing costs		(500	)		(752	)
Purchase of treasury stock		—			(2,570	)
Proceeds from sales of common units		50			115
Redemption of common units		(1,004	)		—
Transaction payments in connection with recapitalization		—			(56	)
Net cash (used in) provided by financing activities		(11,442	)		1,150
Net increase (decrease) in cash		15,808			(7,734	)
Cash and cash equivalents, beginning of period		3,999			10,644
Cash and cash equivalents, end of period	$	19,807		$	2,910
Interest paid	$	37,306		$	37,303
Taxes paid	$	2,089		$	4,494

CONSOLIDATED STATEMENTS OF OPERATIONS

See accompanying notes to financial statements.


	Six Months Ended June 30,
	2008		2007
	(Unaudited)
	(In thousands)
Net revenue	$	1,138,026	$	1,004,132
Provision for uncollectibles		472,521		400,224

Net revenue less provision for uncollectibles		665,505		603,908
Cost of services rendered
Professional service expenses		513,792		462,011
Professional liability costs		12,550		6,214

Gross profit		139,163		135,683
General and administrative expenses		58,959		54,816
Management fee and other expenses		1,786		1,818
Transaction costs		1,785		—
Depreciation and amortization		8,006		7,087
Interest expense, net		23,595		27,792

Earnings from continuing operations before income taxes		45,032		44,170
Provision for income taxes		17,900		17,200

Earnings from continuing operations		27,132		26,970
Loss from discontinued operations less applicable benefit from income taxes of $217		—		(346	)

Net earnings	$	27,132	$	26,624

7See accompanying notes to financial statements.

~~TEAM~~6 ~~FINANCE LLC~~

NOTESTable TOof CONSOLIDATED FINANCIAL STATEMENTS Contents

~~(Unaudited)~~TEAM FINANCE LLC

~~Note~~CONSOLIDATED 1.STATEMENTS ~~Organization~~OF ~~and~~CASH ~~Basis~~FLOWS ~~of Presentation~~

On November 23, 2005, affiliates of The Blackstone Group (“Blackstone”), a private equity firm, by way of merger with Team Health Holdings LLC (“Holdings”), acquired a 91.1% interest in Holdings (the “Recapitalization Merger”). Holdings became the parent corporation of Team Finance LLC (“Team Finance”). Also pursuant to the Merger Agreement dated October 11, 2005, Team MergerSub Inc., a Tennessee Corporation and wholly-owned subsidiary of Team Finance merged with and into Team Health, Inc. (“Team Health”) (the “Reorganization Merger”). References and information noted as being those of the “Company”, “we” or “our” relate to both Team Health and Team Finance. The remaining ownership in Holdings is held by members of management of the Company.


	Six Months Ended June 30,
	2008			2007
	(Unaudited)
	(In thousands)
Operating Activities
Net earnings	$	27,132		$	26,624
Adjustments to reconcile net earnings:
Depreciation and amortization		8,006			7,113
Amortization of deferred financing costs		1,041			1,091
Employee equity based compensation expense		276			280
Provision for uncollectibles		472,521			400,224
Deferred income taxes		6,044			11,428
Loss on disposal of equipment		36			67
Equity in joint venture income		(580	)		(835	)
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable		(474,819	)		(402,795	)
Prepaids and other assets		(11,966	)		(13,460	)
Income tax accounts		5,635			2,548
Accounts payable		(667	)		(4,392	)
Accrued compensation and physician payable		(1,405	)		5,095
Other accrued liabilities		(1,800	)		1,316
Professional liability reserves		2,777			(5,079	)

Net cash provided by operating activities		32,231			29,225
Investing Activities
Purchases of property and equipment		(4,512	)		(8,053	)
Cash paid for acquisitions, net		(7,513	)		(1,094	)
Net purchases of investments by insurance subsidiary		(9,986	)		(9,374	)
Other investing activities		—			125

Net cash used in investing activities		(22,011	)		(18,396	)
Financing Activities
Payments on notes payable		(2,125	)		(2,125	)
Proceeds from revolving credit facility		—			69,500
Payments on revolving credit facility		—			(76,300	)
Payments of deferred financing costs		—			(500	)
Redemption of common units		(1,316	)		(797	)
Proceeds from sales of common units		—			50

Net cash used in financing activities		(3,441	)		(10,172	)

Net increase in cash		6,779			657
Cash and cash equivalents, beginning of period		30,290			3,999

Cash and cash equivalents, end of period	$	37,069		$	4,656

Interest paid	$	25,914		$	29,176

Taxes paid	$	6,320		$	1,280

~~The~~See ~~Recapitalization~~accompanying ~~Merger~~notes was accounted for as a recapitalization. The Reorganization Merger was accounted for as an acquisition of minority interest, whereby the common stock of Team Health that was not owned by Holdings prior to November 23, 2005, was recorded at fair value resulting in an adjustment to the carrying value of the pro rata portion of assets and liabilities deemed to have been acquired or assumed in the Reorganization Merger. Pursuant to the Reorganization Merger, all the existing outstanding minority equity interests in Team Health was acquired by Holdings, resulting in Holdings owning 100% of the outstanding equity interests in Team Health. In 1999, our former controlling stockholders acquired their controlling interest in Team Health in a transaction that was also accounted for as a recapitalization (the “1999 Recapitalization”). The Reorganization Merger also required the “push down” of the accounting basis established in the 1999 Recapitalization. Accordingly, the historical information for Team Health was restated for the effect of the Reorganization Merger for the purpose of presenting these consolidated financial statements ~~of Team Finance~~.

~~The~~7 accompanying unaudited consolidated financial statements include the accounts of Team Health and its wholly owned subsidiaries and have been prepared in accordance with accounting principles generally accepted in the United States for interim financial reporting and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by accounting principles generally accepted in the United States for complete financial statements. Certain prior year amounts have been reclassified to conform to the current year presentation.

InTable the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments (consisting of normal recurring items) necessary for a fair presentation of results for the interim periods presented. The results of operations for any interim period are not necessarily indicative of results for the full year. The consolidated balance sheet of the Company at December 31, 2006 has been derived from the audited financial statements at that date, but does not include all of the information and disclosures required by accounting principles generally accepted in the United States for complete financial statements. These financial statements and footnote disclosures should be read in conjunction with the December 31, 2006 audited consolidated financial statements and the notes thereto included in the Company’s Form 10-K filed with the Securities and Exchange Commission on March 13, 2007. Contents

~~The~~TEAM ~~preparation~~FINANCE ofLLC the financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the accompanying consolidated financial statements and notes. Actual results could differ from those estimates.

~~Note~~NOTES 2.TO ~~New~~CONSOLIDATED ~~Accounting~~FINANCIAL ~~Standards~~STATEMENTS

~~In September 2006, the Financial Accounting Standards Board~~ (~~“FASB”~~Unaudited) ~~issued Statement of Financial Accounting Standards (“SFAS”) No. 157, “Fair Value Measurements,” which provides enhanced guidance for~~

8Note 1. Organization and Basis of Presentation

On ~~using~~November 23, ~~fair~~2005, ~~value~~affiliates toof ~~measure~~The ~~assets~~Blackstone ~~and~~Group ~~liabilities.~~(“Blackstone”), ~~SFAS~~a ~~No. 157~~private ~~establishes~~equity afirm, ~~common~~by ~~definition~~way of ~~fair~~merger ~~value~~with Team Health Holdings LLC (“Holdings”), ~~provides~~acquired a ~~framework~~91.1% ~~for~~interest ~~measuring~~in ~~fair value~~Holdings ~~under~~(the U“Recapitalization Merger”).S. ~~GAAP~~Holdings ~~and~~became ~~expands~~the ~~disclosure~~parent ~~requirements~~corporation ~~about~~of ~~fair~~Team ~~value~~Finance ~~measurements.~~LLC ~~SFAS~~(“Team NoFinance”). ~~157~~ isAlso ~~effective~~pursuant ~~for~~to ~~financial~~the ~~statements~~Merger ~~issued~~Agreement indated ~~fiscal~~October 11, ~~years~~2005, ~~beginning~~Team ~~after~~MergerSub ~~November 15~~Inc., ~~2007,~~a ~~and~~Tennessee ~~interim~~Corporation ~~periods~~and ~~within~~wholly-owned ~~those~~subsidiary ~~fiscal~~of Team ~~years.~~Finance ~~The~~merged ~~Company~~with isand ~~currently~~into ~~evaluating~~Team ~~the impact~~Health, ifInc. ~~any,~~(“Team Health”) (the ~~adoption~~“Reorganization ofMerger”). ~~SFAS~~References ~~No. 157~~and ~~will~~information ~~have~~noted onas being those of the “Company’s”, ~~financial~~“we” ~~reporting~~or “our” relate to both Team Health and ~~disclosures~~Team Finance. The remaining ownership in Holdings is held by members of management of the Company.

InThe ~~February 2007,~~accompanying ~~the~~unaudited consolidated ~~FASB~~financial ~~issued~~statements ~~SFAS~~include ~~No. 159,~~the ~~The~~accounts ~~Fair~~of ~~Value~~Team ~~Option~~Health ~~for Financial Assets~~ and ~~Financial~~its ~~Liabilities—Including~~wholly anowned ~~amendment~~subsidiaries ofand ~~FASB~~have ~~Statement~~been ~~No. 115~~prepared ~~(“SFAS~~in ~~159”). SFAS~~accordance ~~159~~with ~~permits~~accounting ~~entities~~principles togenerally ~~measure~~accepted ~~eligible~~in ~~assets~~the ~~and~~United ~~liabilities~~States atfor ~~fair~~interim ~~value.~~financial ~~Unrealized~~reporting ~~gains~~ and ~~losses on items for which~~ with the ~~fair~~instructions ~~value~~to ~~option~~Form 10-Q ~~has~~and ~~been~~Article 10 ~~elected~~of ~~are~~Regulation ~~reported in earnings~~S-X. ~~SFAS~~Accordingly, ~~159~~they isdo ~~effective~~not ~~for~~include ~~fiscal~~all ~~years beginning after November 15, 2007. The provisions~~ of ~~SFAS~~the ~~159~~information ~~will~~and ~~become~~notes ~~effective~~required onby ~~January 1,~~accounting ~~2008,~~principles ~~and~~generally ~~the~~accepted ~~Company~~in ~~has not yet determined~~ the ~~impact,~~United ifStates ~~any,~~for oncomplete ~~its consolidated~~ financial statements.

~~Note~~In 3the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments (consisting of normal recurring items) necessary for a fair presentation of results for the interim periods presented. ~~Discontinued~~The ~~Operations~~results of operations for any interim period are not necessarily indicative of results for the full year. The consolidated balance sheet of the Company at December 31, 2007 has been derived from the audited financial statements at that date, but does not include all of the information and disclosures required by accounting principles generally accepted in the United States for complete financial statements. These financial statements and footnote disclosures should be read in conjunction with the December 31, 2007 audited consolidated financial statements and the notes thereto included in the Company’s Form 10-K filed with the Securities and Exchange Commission on March 11, 2008.

InThe ~~January~~preparation ~~2007,~~of the ~~Company~~ ~~completed~~financial astatements ~~strategic~~in ~~review~~conformity ofwith accounting ~~Team~~principles ~~Health~~generally ~~Anesthesiology~~accepted ~~Management~~in ~~Services (“THAMS”), and based upon~~ the ~~review,~~United ~~concluded~~States ~~that~~requires ~~the existing business model of providing~~ management ~~services~~ to ~~independent~~make ~~physician~~estimates ~~groups was not a viable long term strategy~~ and ~~could~~assumptions ~~not~~that ~~consistently~~affect ~~meet internal growth targets. As a result of this review,~~ the ~~Company~~amounts ~~elected~~reported toin ~~exit this non-core business line. The final phase of this business line disposal was substantially completed during~~ the ~~third~~accompanying ~~quarter~~consolidated offinancial ~~2007,~~statements ~~therefore~~and ~~in accordance with the provisions of SFAS No~~notes. ~~144,~~ ~~Accounting~~Actual ~~for the Impairment or Disposal of Long-Lived Assets the operating~~ results ofcould ~~THAMS~~differ ~~are presented in the accompanying consolidated~~from ~~statements~~those ~~of operations as a discontinued operation for all periods presented~~estimates.

~~The~~Note ~~financial~~2. ~~results~~New ofAccounting ~~THAMS~~Standards ~~included in discontinued operations, are as follows (in thousands):~~

	Three Months EndedSeptember 30,					Nine Months EndedSeptember 30,
	2007			2006		2007			2006
Net revenue	$	49		$	2,800	$	2,368		$	9,124
Total cost of services		(11	)		560		398			2,060
Gross Profit		60			2,240		1,970			7,064
Earnings (loss) before income taxes		(247	)		171		(811	)		(9,290	)
Provision for (benefit from) income taxes		(95	)		66		(312	)		(2,386	)
Earnings (loss) from discontinued operations	$	(152	)	$	105	$	(499	)	$	(6,904	)

In March 2008, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 161, “Disclosures about Derivative Instruments and Hedging Activities—An Amendment of SFAS No. 133” (“SFAS 161”). SFAS 161 seeks to improve financial reporting for derivative instruments and hedging activities by requiring enhanced disclosures regarding the impact on financial position, financial performance, and cash flows. To achieve this increased transparency, SFAS 161 requires (1) the disclosure of the fair value of derivative instruments and gains and losses in a tabular format; (2) the disclosure of derivative features that are credit risk-related; and (3) cross-referencing within the footnotes. SFAS 161 is effective for the Company on January 1, 2009. The Company is in the process of evaluating the new disclosure requirements under SFAS 161.

~~The~~In ~~loss~~December ~~from~~2007, ~~discontinued~~the ~~operations~~FASB inissued SFAS No. 141 (Revised 2007), “Business Combinations” (“SFAS 141R”). SFAS 141R continues to require the ~~three~~purchase ~~and~~method ~~nine~~of ~~months~~accounting ~~ended~~to ~~September 30~~be applied to all business combinations, ~~2007 include~~but ~~approximately~~it ~~$0.1~~significantly ~~million~~changes ~~and~~the $1accounting for certain aspects of business combinations.0 ~~million,~~Under ~~respectively~~SFAS 141R, ofan acquiring ~~severance~~entity will be required to recognize all the assets acquired and ~~other~~liabilities ~~exit~~assumed ~~costs~~in ~~related~~a totransaction at the ~~disposal~~acquisition-date offair ~~this~~value ~~business~~with ~~unit~~limited exceptions. SFAS 141R will change the accounting

~~The~~8 loss from discontinued operations in the nine months ended September 30, 2006 consists of an impairment loss of $9.5 million ($7.0 million net of $2.5 million tax benefit). In April 2006, THAMS received notification from its largest anesthesia practice client of its intent to terminate its contract in accordance with the terms of the agreement. Management concluded that THAMS’ existing revenues and operating income would be materially adversely affected as a result of this contract termination. The above noted facts and circumstances were concluded by management to require a test for recoverability of the existing contract intangibles under the provisions of SFAS No. 144 “Accounting for the Impairment or Disposal of Long-Lived Assets” and a “triggering event” under the provisions of SFAS No. 142 “Goodwill and Other Intangible Assets.” Consequently the Company recorded a charge of $2.0 million in the results of operations in the first quarter of 2006. The charge reduced the book value of the contract intangibles within the management services reporting segment to its fair value estimated to be $0.7 million as of March 31, 2006, as determined by using a discounted cash flow model.

9Table of Contents

~~Additionally,~~ treatment ~~the~~for ~~Company~~certain ~~recorded~~specific aacquisition ~~goodwill~~related ~~impairment~~items ~~loss~~including: of(1) expensing ~~$7.5~~acquisition ~~million~~related incosts ~~the~~as ~~first~~incurred; ~~quarter~~(2) valuing ofnoncontrolling ~~2006.~~interests ~~The~~at ~~estimated~~fair ~~impairment~~value ~~was~~at ~~determined following~~ the ~~provisions~~acquisition ofdate; ~~SFAS~~and ~~No.~~(3) ~~142.~~recognizing ~~Accordingly,~~contingent ~~the~~consideration ~~Company~~arrangements ~~initially~~on ~~estimated~~ the ~~fair~~acquisition ~~value~~date ofat ~~THAMS. The~~ fair value. ofSFAS ~~the~~141R ~~business~~also ~~was~~includes ~~determined using~~ a ~~multiple~~substantial ofnumber ~~projected cash flows on remaining contracts. The carrying value~~ of ~~the~~new ~~business~~disclosure ~~exceeded its fair market value~~requirements. ~~The~~SFAS ~~estimated~~141R ~~fair~~is ~~value~~to ~~was~~be applied ~~allocated~~prospectively to ~~the~~business ~~underlying~~combinations ~~net~~for ~~assets~~which of the ~~business~~acquisition ~~following~~date ~~generally~~is ~~accepted~~on ~~accounting~~or ~~principles~~after ~~for~~January 1, ~~allocating purchase prices~~2009. ~~This~~The ~~included~~Company anexpects ~~allocation~~SFAS of141R ~~value~~will tohave ~~the~~an ~~components~~impact ~~of working capital, contract intangibles (based~~ on ~~discounting~~its ofaccounting for future ~~cash~~business ~~flows~~combinations ~~estimated~~once toadopted bebut ~~derived from such contracts) with~~ the ~~remainder~~effect ~~of such fair value assigned to~~is ~~goodwill.~~dependent ~~The~~upon ~~estimate of~~ the ~~implied~~acquisitions ~~goodwill~~that ~~resulting~~are ~~from~~made ~~the aforementioned application of the principles outlined~~ in ~~SFAS~~such Noperiods. ~~142~~ ~~was less than the recorded goodwill related to THAMS.~~

~~For~~In December 2007, the ~~nine~~FASB ~~months~~released ~~ended~~SFAS ~~September~~No. 30160, “Noncontrolling ~~2007~~Interests ~~and~~in ~~2006~~Consolidated ~~THAMS~~Financial ~~had~~ Statements—an ~~operating~~amendment ~~use~~ of ~~cash~~ARB ofNo. 51” $1(“SFAS 160”).3 ~~million~~SFAS 160 is effective for fiscal years, and $0interim periods within those fiscal years, beginning on or after December 15, 2008, which for the Company is the year ending December 31, 2009 and the interim periods within that fiscal year.9 ~~million~~The objective of SFAS 160 is to improve the relevance, ~~respectively~~comparability, and transparency of the financial information that a reporting entity provides in its consolidated financial statements. SFAS 160 currently does not impact the Company as it has full controlling interest of all of its subsidiaries.

~~Note~~In 4February 2007, the FASB issued SFAS No. 159, ~~Acquisitions~~“The Fair Value Option for Financial Assets and Financial Liabilities” (“SFAS 159”). SFAS 159 allows entities to voluntarily choose to measure certain financial assets and liabilities at fair value (“fair value option”). The fair value option may be elected on an instrument-by-instrument basis and is irrevocable, unless a new election date occurs. If the fair value option is elected for an instrument, SFAS 159 specifies that unrealized gains and losses for that instrument be reported in earnings at each subsequent reporting date. SFAS 159 was effective for the Company on January 1, 2008. The implementation of SFAS 159 did not have an impact on the Company’s results of operations, financial position or cash flows as the Company did not elect to measure any eligible items at fair value other than instruments such as investments or interest rate swaps that are currently required to be measured at fair value.

~~Effective~~Note August 24, 2007, the Company completed the acquisition of certain assets and related business operations of an emergency medicine staffing business located in Florida. The purchase price for the acquired business was $2.4 million which was paid in cash on the date of the closing. In addition, the Company may have to pay up to $2.2 million in future contingent payments. In connection with the transaction the Company has recorded a $4.3 ~~million contract intangible, which is the estimated fair value of the assets acquired at the date of the acquisition~~. ~~The excess of fair value of the assets acquired compared to the amount paid as of the acquisition date has been reflected as “estimated amount due seller” in accordance with SFAS~~Discontinued ~~No. 141,~~Operations ~~Business Combinations. Any contingent consideration payable in the future will be first applied to reduce the amount recorded as “estimated amount due seller,” and thereafter to goodwill.~~

~~Effective~~In ~~May 1,~~January ~~2006~~2007, the Company ~~acquired~~completed ~~the~~a ~~operations~~strategic review of ~~two~~Team ~~businesses.~~Health ~~The~~Anesthesiology ~~acquired~~Management ~~companies~~Services (“THAMS”), ~~provide~~and ~~hospital~~based ~~emergency~~upon ~~department~~the ~~and hospital~~review, ~~physician~~concluded ~~staffing~~that the existing business model of providing management services ~~under~~to ~~eleven~~independent ~~contracts~~physician ~~for~~groups ~~locations~~was innot ~~Ohio~~a viable long term strategy and could not consistently meet internal growth targets. As ~~The~~a ~~purchase~~result ~~price~~of ~~for~~this review, the ~~acquired~~Company ~~companies~~elected ~~was~~to $4exit this non-core business line.0 ~~million~~The final phase of ~~which~~this ~~$3.0~~business ~~million~~line disposal was ~~paid~~completed in ~~cash~~2007 atwith ~~May 1,~~no ~~2006~~continuing ~~and~~operations ~~$1.0 million~~in 2008, therefore, in ~~assumed~~accordance with the provisions of SFAS ~~liabilities~~No. 144, ~~The~~“Accounting ~~purchase~~for ~~price~~the ~~was~~Impairment ~~allocated~~or toDisposal ~~contract~~of ~~intangibles~~Long-Lived ~~based~~Assets”, onthe operating results of THAMS are presented in the ~~estimated~~accompanying ~~fair~~consolidated ~~value~~statements of ~~the~~operations ~~contracts~~as ~~obtained~~a ondiscontinued ~~the~~operation ~~acquisition~~for ~~date~~all applicable periods presented.

~~Effective~~The ~~July 1,~~financial ~~2006,~~results ~~the Company completed the acquisition~~ of ~~certain~~THAMS ~~assets~~included ~~and related business operations of a hospital medicine and inpatient services business located~~ in ~~Florida.~~discontinued ~~The purchase price for the acquired business was $17.9 million which was paid in cash on the date of the closing. In addition~~operations, ~~the~~are ~~Company~~as ~~may~~follows ~~have to pay up to $9.6 million~~ (in ~~future~~thousands): contingent payments. Of the total purchase price, $6.6 million was allocated to contract intangibles based on the estimated fair value of the contracts obtained on the acquisition date. The remaining $11.3 million was recorded as goodwill.

Note 5. Net Revenue


	Three Months Ended June 30,					Six Months Ended June 30,
	2008		2007			2008		2007
Net revenue	$	—	$	765		$	—	$	2,319
Total cost of services		—		69			—		409

Gross profit		—		696			—		1,910
Loss before income taxes		—		(177	)		—		(563	)
Benefit from income taxes		—		67			—		217

Loss from discontinued operations	$	—	$	(110	)	$	—	$	(346	)

~~Net~~The ~~revenue~~loss ~~for~~from discontinued operations in the three and ~~nine~~six months ended ~~September~~June 30, 2007 include approximately $0.2 million and ~~2006~~$0.9 million, respectively, ~~consisted~~ of severance and other exit costs related to the ~~following~~disposal ~~(in~~of ~~thousands):~~this business unit.

	Three Months EndedSeptember 30,				Nine Months EndedSeptember 30,
	2007		2006		2007		2006
Fee for service revenue	$	443,981	$	373,821	$	1,233,514	$	1,049,071
Contract revenue		100,972		99,275		303,031		279,442
Other revenue		5,996		7,937		18,537		18,111
	$	550,949	$	481,033	$	1,555,082	$	1,346,624

10Table of Contents

~~Note~~For 6the three and six months ended June 30, 2008, THAMS had no operating use of cash and for the three and six months ended June 30, 2007 had a use of cash of $0.8 ~~Other~~million ~~Intangible~~and ~~Assets~~$0.9 million, respectively.

~~The~~Note ~~following~~4. isAcquisition ~~a summary of intangible assets~~ and ~~related~~Transaction Costs ~~amortization as of September 30, 2007 and December 31, 2006 (in thousands):~~

	Gross Carrying Amount		Accumulated Amortization
As of September 30, 2007:
Contracts	$	40,020	$	11,327
Other		448		345
Total	$	40,468	$	11,672
As of December 31, 2006:
Contracts	$	37,323	$	8,409
Other		448		311
Total	$	37,771	$	8,720
Aggregate amortization expense:
For the nine months ended September 30, 2007	$	4,512
Estimated amortization expense:
For the remainder of the year ended December 31, 2007	$	1,485
For the year ended December 31, 2008		5,756
For the year ended December 31, 2009		5,673
For the year ended December 31, 2010		5,416
For the year ended December 31, 2011		5,416

Effective June 1, 2008, the Company completed the acquisition of certain assets and related business operations of an emergency medicine staffing business located in New Jersey. An officer of an affiliated corporation of the Company held an ownership interest in the selling party. The purchase price for the acquired business was $7.5 million which was paid in cash on the date of the closing. In addition, the Company may have to pay up to $6.7 million in deferred payments if future financial targets are achieved and certain contract terms are modified. In connection with the transaction the Company has recorded a $12.6 million contract intangible, which is the estimated fair value of the assets acquired at the date of the acquisition. The excess of fair value of the assets acquired compared to the amount paid as of the acquisition date has been reflected as “estimated amount due seller” in accordance with SFAS No. 141, “Business Combinations”. Any contingent consideration payable in the future will be first applied to reduce the amount recorded as “estimated amount due seller”, and thereafter recorded to goodwill.

~~Note~~In 7accordance with the provisions of SFAS 141, “Business Combinations”, the Company recognized $1.8 ~~Income~~million ~~Taxes~~of expenses, in June 2008, related to advisory, legal, accounting, and other fees incurred in connection with a terminated transaction effort.

InNote ~~June 2006, FASB issued Interpretation No~~5. ~~48,~~ ~~“Accounting~~Fair ~~for~~Value ~~Uncertainty~~Measurements in Income Taxes”, an interpretation of FAS 109, “Accounting for Income Taxes” (FIN 48), to create a single model to address accounting for uncertainty in tax positions. FIN 48 clarifies the accounting for income taxes, by prescribing a minimum recognition threshold a tax position is required to meet before being recognized in the financial statements. FIN 48 also provides guidance on derecognition, measurement, classification, interest and penalties, accounting in interim periods, disclosure and transition. FIN 48 became effective for fiscal years beginning after December 15, 2006.

~~The~~In ~~Company adopted~~ the ~~provisions~~first quarter of ~~FIN 48 on January 1~~2008, ~~2007. As a result of~~ the ~~implementation of FIN 48, the~~ Company ~~recognized~~ ~~approximately~~adopted aSFAS $1No.6 157, ~~million~~“Fair ~~charge~~Value ~~to members’ equity~~Measurements,” a(“SFAS 157”) ~~reduction~~for infinancial ~~the deferred tax~~ assets ofand ~~approximately $1~~liabilities.0 ~~million~~This ~~and~~standard andefines ~~increase~~fair invalue, ~~the~~provides ~~liability~~guidance for ~~unrecognized~~measuring ~~tax~~fair ~~benefits~~value ofand ~~approximately~~requires certain $0disclosures.4 ~~million.~~This ~~The~~standard ~~Company recognizes~~does ~~interest~~not ~~accrued~~require ~~related~~any tonew ~~the~~fair ~~unrecognized~~value ~~tax~~measurements, ~~benefits~~but inrather ~~interest~~applies ~~expense~~to ~~and~~all ~~penalties~~other inaccounting ~~operating~~pronouncements ~~expenses.~~that ~~Included~~require inor ~~the~~permit ~~above~~fair ~~estimates~~value ~~is approximately $0~~measurements.~~2 million~~ ~~of interest expense.~~

~~During~~SFAS ~~the three months ended September~~No. ~~30,~~157 ~~2007,~~prioritizes the ~~Company~~inputs ~~recognized~~used anin ~~additional~~measuring ~~reduction~~fair ofvalue ~~its~~into ~~deferred tax asset of approximately $0.1 million and an increase in~~ the ~~liability~~following ~~for~~hierarchy: ~~unrecognized tax benefits of approximately $0.4 million, $0.2 million related to a position taken in a prior period.~~

The amount of unrecognized tax benefits that, if recognized, would affect the effective rate are approximately $2.2 million.


Level 1		Quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2		Inputs other than quoted prices included within Level 1 that are either directly or indirectly observable;
Level 3		Unobservable inputs in which little or no market activity exists, therefore requiring an entity to develop its own assumptions about the assumptions that market participants would use in pricing.

The ~~Company~~following ~~and~~table ~~its~~provides ~~subsidiaries~~information ~~file~~on ~~income~~those ~~tax~~assets ~~returns in the U. S. federal jurisdiction~~ and ~~various~~liabilities ~~state jurisdictions. With few exceptions,~~ the Company ismeasures ~~no longer subject to U. S. federal, state or local~~at ~~examination~~fair byvalue ~~tax~~on ~~authorities~~a ~~for~~recurring ~~years~~basis ~~before~~(in ~~2003.~~thousands):


	Carrying Amount In Consolidated Balance Sheet June 30, 2008		Fair Value June 30, 2008		Fair Value Level 1		Fair Value Level 2		Fair Value Level 3
Investments of insurance subsidiary	$	85,975	$	85,975	$	85,975	$	—	$	—
Interest rate swap asset		4,858		4,858		—		4,858		—

The ~~effective~~fair value of the Company’s investments of insurance subsidiary are based on quoted prices. The fair value of the Company’s interest rate ~~for~~swaps ~~continuing~~were ~~operations~~determined ~~for~~by the ~~nine~~Company’s ~~months~~counterparty ~~ended~~using ~~September 30,~~inputs ~~2007~~that ~~was~~are ~~38.4%~~available in the public swap markets for similarly termed instruments and then making adjustments for terms ~~compared~~specific to 38the Company’s instruments.5% See Note 8 for ~~the~~more ~~same~~information ~~period~~regarding inour ~~2006~~interest rate swap agreements.

~~Note~~10 ~~8. Long-Term Debt~~

Long-termTable debt as of September 30, 2007 consisted of the following (in thousands): Contents

Term Loan Facilities	$	417,562
11.25% Senior Subordinated Notes		215,000
Revolving line of credit		—
		632,562
Less current portion		(4,250	)
	$	628,312

Note 6. Net Revenue

~~The~~Net ~~interest~~revenue ~~rate~~ for ~~any revolving credit facility borrowings is based on a grid which is based on~~ the ~~consolidated~~three ~~ratio of total funded debt to earnings before interest, taxes, depreciation~~ and ~~amortization,~~six ~~all~~months asended ~~set forth in the credit agreement. As of September~~June 30, 2008 and 2007, ~~the interest rate for borrowings under the revolving credit facility was equal to the euro dollar rate plus 2.25% or the agent bank’s base rate plus 1.25%. In addition~~respectively, ~~the~~consisted ~~Company pays a commitment fee for the revolving credit facility which is equal to 0.5%~~ of the ~~commitment~~following at(in ~~September 30, 2007.~~thousands):

The interest rate at September 30, 2007 was 7.4% for amounts outstanding under the term loan facility. Effective April 5, 2007, the Company amended its senior credit agreement. The amendment reduced the interest rate on any term loans outstanding equal to the euro dollar rate plus 2.0% or the agent bank’s base rate plus 1.0%. Previously, the interest rate on term loan borrowings was equal to the euro dollar rate plus 2.50% or the agent bank’s base rate plus 1.50%. The Company is subject to an increase in the term loan interest rate in the amount of 0.25% in the event of a downgrade in the corporate family rating of the Company by either Moody’s or Standard and Poor’s rating agencies. In addition, prior to April 5, 2008, in the event of a prepayment of the outstanding term loans associated with a refinancing whose primary purpose is a reduction in the term loan interest rate, the Company will pay a fee equal to 1.0% of the prepayment amount. Other significant terms and conditions of the credit agreement, including the maturity date of November 23, 2012, did not change under the amendment.


	Three Months Ended June 30,				Six Months Ended June 30,
	2008		2007		2008		2007
Fee for service revenue	$	462,391	$	410,321	$	907,994	$	789,532
Contract revenue		110,983		101,266		218,699		202,058
Other revenue		5,631		6,593		11,333		12,542

	$	579,005	$	518,180	$	1,138,026	$	1,004,132

NoNote ~~borrowings under the $125.0 million revolving credit facility were outstanding as of September 30, 2007, and the Company had $~~7.1 ~~million~~Other ofIntangible ~~standby~~Assets ~~letters of credit outstanding against the revolving credit facility commitment.~~

The ~~Company~~following ~~issued on~~is ~~November 23,~~a ~~2005,~~summary ~~11.25% Senior Subordinated Notes (the “Notes”) in the amount~~ of ~~$215.0~~intangible ~~million~~assets ~~due December 1, 2013. The Notes are subordinated in right of payment to all senior debt of the Company~~ and ~~are~~related ~~senior~~amortization inas ~~right~~ of ~~payment to all existing and future subordinated indebtedness of the Company. Interest on the Notes accrues at the rate of 11.25%~~June ~~per annum~~30, ~~payable~~2008 ~~semi-annually in arrears on June 1~~ and December ~~1 of each year. Beginning on December 1~~31, ~~2009,~~2007 ~~the~~(in ~~Company~~thousands): ~~may redeem some or all of the Notes at any time at various redemption prices.~~

The Notes are guaranteed jointly and severally on a full and unconditional basis by all of the Company’s domestic wholly-owned operating subsidiaries (the “Subsidiary Guarantors”) as required by the Indenture Agreement.


	Gross Carrying Amount		Accumulated Amortization
As of June 30, 2008:
Contracts	$	52,633	$	16,114
Other		448		380

Total	$	53,081	$	16,494

As of December 31, 2007:
Contracts	$	40,020	$	12,864
Other		448		357

Total	$	40,468	$	13,221

Aggregate amortization expense:
For the six months ended June 30, 2008	$	3,273

Estimated amortization expense:
For the remainder of the year ended December 31, 2008	$	4,149
For the year ended December 31, 2009		8,105
For the year ended December 31, 2010		7,674
For the year ended December 31, 2011		5,955
For the year ended December 31, 2012		5,523

~~Both~~Note ~~the 11~~8.~~25%~~ ~~Notes~~Long-Term ~~and~~Debt the current term loan facility contain both affirmative and negative covenants, including limitations on the Company’s ability to incur additional indebtedness, sell material assets, retire, redeem or otherwise reacquire its capital stock, acquire the capital stock or assets of another business, pay dividends, and require the Company to comply with certain coverage and leverage ratios.

12Long-term debt as of June 30, 2008 consisted of the following (in thousands):

Aggregate annual maturities of long-term debt as of September 30, 2007 are as follows (in thousands):


Term Loan Facilities	$	414,375
11.25% Senior Subordinated Notes		215,000
Revolving line of credit		—

		629,375
Less current portion		(4,250	)

	$	625,125

2007	$	4,250
2008		4,250
2009		4,250
2010		4,250
2011		4,250
Thereafter		611,312

NoteTable 9.of Professional Liability Insurance Contents

The ~~Company~~interest rate for any revolving credit facility borrowings is based on a grid which is based on the consolidated ratio of total funded debt to earnings before interest, taxes, depreciation and amortization, all as set forth in the credit agreement. As of June 30, 2008, the interest rate for borrowings under the revolving credit facility was equal to the euro dollar rate plus 2.25% or the agent bank’s ~~professional~~base ~~liability~~rate ~~loss~~plus ~~reserves~~1.25%. ~~consist~~In addition, the Company pays a commitment fee for the revolving credit facility which is equal to 0.5% of the ~~following~~commitment ~~(in~~at ~~thousands):~~June 30, 2008.

	September 30, 2007			December 31, 2006
Estimated losses under self-insured programs	$	159,819		$	170,512
Estimated losses under commercial insurance programs		55,004			59,500
		214,823			230,012
Less estimated payable within one year		(56,876	)		(59,486	)
	$	157,947		$	170,526

The interest rate at June 30, 2008 was 4.70% for amounts outstanding under the term loan facility. Effective April 5, 2007, the Company amended its senior credit agreement. The amendment reduced the interest rate on any term loans outstanding equal to the euro dollar rate plus 2.0% or the agent bank’s base rate plus 1.0%. Previously, the interest rate on term loan borrowings was equal to the euro dollar rate plus 2.50% or the agent bank’s base rate plus 1.50%. The Company is subject to an increase in the term loan interest rate in the amount of 0.25% in the event of a downgrade in the corporate family rating of the Company by either Moody’s or Standard and Poor’s rating agencies. Other significant terms and conditions of the credit agreement, including the maturity date of November 23, 2012, did not change under the amendment.

~~The Company provides for its estimated professional liability losses through a combination of self-insurance and commercial insurance programs.~~ During the ~~period~~six ~~March 12,~~months ~~1999~~ended ~~through March~~June 1130, ~~2003~~2008, the ~~primary source of the~~ Company’s ~~coverage~~entered ~~for~~into ~~such~~three ~~risks~~separate ~~was~~forward ainterest ~~professional~~rate ~~liability~~swap ~~insurance~~agreements. ~~policy~~The ~~provided~~objective ~~through~~of ~~one~~the ~~insurance~~agreements ~~carrier.~~is ~~The~~to ~~commercial~~eliminate ~~insurance~~the ~~carrier~~variability ~~policy~~of ~~initially~~the ~~included~~cash anflows ~~insured~~in ~~loss~~interest ~~limit~~payments offor $~~130~~200.0 million. Inof ~~April~~the ~~2006,~~variable-rate ~~the~~term ~~Company~~loan ~~amended~~for ~~the~~a ~~policy~~three-year ~~with~~period. ~~its~~The ~~commercial~~agreements ~~insurance~~are ~~carrier~~contracts to ~~provide~~exchange, ~~for~~on ana ~~increase~~quarterly inbasis, ~~the aggregate~~floating ~~limit~~interest ofrate payments ~~coverage~~ based ~~upon~~on ~~certain~~the ~~premium~~Eurocurrency ~~funding~~rate, ~~levels.~~for Asfixed ofinterest ~~September 30,~~payments ~~2007,~~over the ~~insured~~life ~~loss~~of ~~limit under~~ the ~~policy was $146~~agreements.0 ~~million.~~The ~~Losses~~Company inhas ~~excess~~determined of the ~~limit~~interest ofrate ~~coverage~~swaps ~~remain~~are ashighly aeffective ~~self-insured~~and ~~obligation~~qualify offor ~~the Company.~~hedge ~~Beginning~~accounting, ~~March~~therefore at June 1230, ~~2003~~2008, ~~professional~~the Company ~~liability~~has ~~loss~~recorded ~~risks~~the ~~are~~increase ~~principally~~in ~~being~~fair ~~provided~~value ~~for~~of ~~through~~the ~~self-insurance~~interest ~~with~~rate aswaps, ~~portion~~net of ~~such~~tax, ~~risks~~of ~~(“claims-made”~~approximately ~~basis)~~$3.0 ~~transferred~~million toas ~~and funded into~~ a ~~captive~~component ~~insurance company. The accounts~~ of ~~the captive insurance company are fully consolidated with those of the~~ other ~~operations~~comprehensive ~~of the Company in the accompanying consolidated financial statements~~earnings.

~~The~~These ~~self-insurance~~agreements ~~components~~expose ofthe ~~our risk management program include reserves for future claims incurred but not reported. The~~ Company’s ~~provisions for~~to credit losses ~~under~~in ~~its self-insurance components are estimated using~~ the ~~results~~event of ~~periodic~~non-performance ~~actuarial studies performed~~ by anthe ~~independent~~counterparty ~~actuarial firm. Such actuarial studies include numerous underlying estimates and assumptions, including assumptions as~~ to ~~future claim losses,~~ the ~~severity~~financial ~~and~~instruments. ~~frequency~~The ofcounterparty ~~such~~is ~~projected~~a ~~losses,~~creditworthy ~~loss~~financial ~~development~~institution ~~factors~~ and ~~others.~~the ~~The~~ Company’s ~~provisions~~believes the ~~for~~counterparty ~~losses~~will ~~under~~be ~~its~~able ~~self-insured components are subject~~ to ~~subsequent~~fully ~~adjustment~~satisfy ~~should future~~its ~~actuarial~~obligations ~~projected~~under ~~results~~the ~~for such periods indicate projected losses greater or less than previously projected~~contracts.

~~The Company’s~~No ~~most~~borrowings ~~recent~~under ~~actuarial valuation was completed in October 2007. As a result of such actuarial valuation,~~ the ~~Company realized a reduction in its provision for professional liability losses of~~ $12125.50 million inrevolving credit ~~the~~facility ~~three~~were ~~months~~outstanding ~~ended September~~as of June 30, ~~2007~~2008, ~~related~~and ~~to its reserves for losses in prior years. Additionally,~~ the Company had ~~realized a~~ $197.62 million ~~reduction in its professional liability losses in the first quarter~~ of ~~2007,~~standby ~~resulting~~letters ~~from an actuarial study completed in April 2007. In total, for the nine months ended September 30, 2007, the Company has realized a reduction in its provision for professional liability losses~~ of ~~$32.1~~credit ~~million~~outstanding ~~related~~against ~~to reserves for loss estimates in prior years associated with favorable trends in actuarial loss estimates. Also in~~ the ~~nine~~revolving ~~months~~credit ~~ended~~facility ~~September 30, 2006, the Company realized a $12~~commitment.1 ~~million reduction in its professional liability losses resulting from an actuarial study completed in April 2006.~~

13The Company issued on November 23, 2005, 11.25% Senior Subordinated Notes (the “Notes”) in the amount of $215.0 million due December 1, 2013. The Notes are subordinated in right of payment to all senior debt of the Company and are senior in right of payment to all existing and future subordinated indebtedness of the Company. Interest on the Notes accrues at the rate of 11.25% per annum, payable semi-annually in arrears on June 1 and December 1 of each year. Beginning on December 1, 2009, the Company may redeem some or all of the Notes at any time at various redemption prices.

~~Note~~The ~~10.~~Notes ~~Share~~are guaranteed jointly and severally on a full and unconditional basis by all of the Company’s domestic wholly-~~based~~owned ~~Compensation~~operating subsidiaries (the “Subsidiary Guarantors”) as required by the Indenture Agreement.

OnBoth ~~January 1,~~the ~~2006~~11.25% Notes and the current term loan facility contain both affirmative and negative covenants, including limitations on the Company’s ~~adopted~~ability ~~SFAS No. 123(R)~~to incur additional indebtedness, ~~Share-Based~~sell ~~Payment—Revised~~material ~~2000~~assets, ~~(SFAS No~~retire, redeem or otherwise reacquire its capital stock, acquire the capital stock or assets of another business, pay dividends, and require the Company to comply with certain coverage and leverage ratios. ~~123(R)).~~

In12 November 2005, the Company adopted the 2005 Unit Plan. A total of 400,000 Class B Common Units and 600,000 Class C Common Units are authorized for issuance to executives and other key employees under the 2005 Unit Plan. As of September 30, 2007, there were 307,833 restricted Class B Common Units and 430,967 Class C Common Units outstanding. The outstanding units vest ratably over five years and the Company is recognizing the related compensation expense over the five year period. Compensation expense for the employee equity based awards granted is based on the grant date fair value in accordance with the provisions of SFAS No. 123(R). For the nine months ended September 30, 2007 and 2006, the Company recognized $0.5 million, of employee equity based compensation expense. As of September 30, 2007, there was $1.8 million of unrecognized compensation expense related to nonvested restricted unit awards, which will be recognized over the remaining requisite service period. Forfeitures of employee equity based awards have been historically immaterial to the Company.

Also,Table in connection with the issuance of the restricted units, the Company recognized a tax benefit of approximately $1.0 million in 2006. Contents

~~Note~~Aggregate ~~11.~~annual ~~Contingencies~~maturities of long-term debt as of June 30, 2008 are as follows (in thousands):

Litigation


2008	$	4,250
2009		4,250
2010		4,250
2011		4,250
2012		397,375
Thereafter		215,000

WeNote ~~are currently a party to various legal proceedings~~9. ~~While~~Professional weLiability ~~currently~~Insurance believe that the ultimate outcome of such proceedings, individually and in the aggregate, will not have a material adverse effect on our financial position or overall trends in results of operations, litigation is subject to inherent uncertainties. If an unfavorable ruling were to occur, there exists the possibility of a material adverse impact on our net earnings in the period in which a ruling occurs. The estimate of the potential impact from such legal proceedings on our financial position or overall results of operations could change in the future.

~~Healthcare~~The ~~Regulatory~~Company’s ~~Matters~~professional liability loss reserves consist of the following (in thousands):

Laws and regulations governing the Medicare and Medicaid programs are complex and subject to interpretation. Compliance with such laws and regulations can be subject to future governmental review and interpretation as well as significant regulatory action. From time to time, governmental regulatory agencies will conduct inquiries and audits of the Company’s practices. It is the Company’s current practice and future intent to cooperate fully with such inquiries.


	June 30, 2008		December 31, 2007
Estimated losses under self-insured programs	$	165,681	$	162,904
Estimated losses under commercial insurance programs		52,289		58,014

		217,970		220,918
Less estimated payable within one year		57,793		67,666

	$	160,177	$	153,252

InThe ~~addition~~Company toprovides ~~laws~~for ~~and~~its ~~regulations~~estimated ~~governing~~professional ~~the~~liability ~~Medicare~~losses through a combination of self-insurance and ~~Medicaid~~commercial insurance programs. During the period March 12, ~~there~~1999 ~~are~~through aMarch 11, ~~number~~2003, the primary source of ~~federal~~the ~~and~~Company’s ~~state~~coverage ~~laws~~for ~~and~~such ~~regulations~~risks ~~governing~~was a professional liability insurance policy provided through one ~~such~~insurance ~~matters~~carrier. asThe ~~the~~commercial ~~corporate~~insurance ~~practice~~carrier ofpolicy ~~medicine~~initially ~~and~~included ~~fee~~an ~~splitting~~insured ~~arrangements,~~loss ~~anti-kickback~~limit ~~statutes,~~of ~~physician~~$130.0 million. ~~self-referral~~In ~~laws~~April 2006, ~~false~~the orCompany ~~fraudulent~~amended ~~claims~~the ~~filing~~policy ~~and~~with ~~patient~~its ~~privacy~~commercial ~~requirements.~~insurance ~~The~~carrier ~~failure~~ to ~~comply~~provide ~~with~~for ~~any~~an ofincrease ~~such~~in ~~laws~~the oraggregate ~~regulations~~limit ~~could~~of ~~have~~coverage anbased ~~adverse~~upon ~~impact~~certain onpremium ~~our~~funding ~~operations~~levels. ~~and~~As ~~financial~~of ~~results~~June 30, 2008, the insured loss limit under the policy was $150.8 Itmillion. isLosses ~~management’s~~in ~~belief~~excess ~~that~~of the limit of coverage remain as a self-insured obligation of the Company. isBeginning inMarch 12, ~~substantial~~2003, ~~compliance~~professional inliability ~~all~~loss ~~material~~risks ~~respects~~are principally being provided for through self-insurance with a portion of such ~~laws~~risks (“claims-made” basis) transferred to and ~~regulations~~funded into a captive insurance company. The accounts of the captive insurance company are fully consolidated with those of the other operations of the Company in the accompanying consolidated financial statements.

~~Acquisition~~The ~~Payments~~self-insurance components of our risk management program include reserves for future claims incurred but not reported. The Company’s provisions for losses under its self-insurance components are estimated using the results of periodic actuarial studies performed by an independent actuarial firm. Such actuarial studies include numerous underlying estimates and assumptions, including assumptions as to future claim losses, the severity and frequency of such projected losses, loss development factors and others. The Company’s provisions for losses under its self-insured components are subject to subsequent adjustment should future actuarial projected results for such periods indicate projected losses greater or less than previously projected. The Company’s estimated loss reserves under such programs are discounted at 3.6%.

AsThe ofCompany’s ~~September 30,~~most ~~2007, the~~recent ~~Company~~actuarial ~~may~~valuation ~~have~~was tocompleted ~~pay~~in upApril ~~to $11~~2008.8 ~~million~~As ina ~~future~~result ~~contingent~~of ~~payments~~such asactuarial ~~additional~~valuation, ~~consideration~~the ~~for~~Company ~~acquisitions~~realized ~~made~~a ~~prior~~reduction in toits ~~September 30,~~provision ~~2007~~for professional liability losses of $13.8 ~~These~~million ~~payments~~in ~~will~~the besix ~~made~~months ~~and~~ended ~~recorded~~June 30, as2008, ~~additional~~related ~~purchase~~to ~~price~~its orreserves ~~will~~for ~~reduce existing~~losses ~~liabilities~~in ~~should~~prior ~~the~~years. ~~acquired~~The ~~operations~~Company ~~achieve~~had ~~the~~previously ~~financial~~realized ~~targets~~a ~~agreed~~$19.6 tomillion reduction in ~~the~~its ~~respective~~professional liability ~~acquisition~~loss ~~agreements.~~liability ~~During~~in the ~~nine~~six months ended ~~September~~June 30, 2007, ~~the~~resulting ~~Company~~from ~~made~~an ~~$1.1~~actuarial ~~million~~study completed in ~~cash~~April ~~payments related to previous acquisitions~~2007.

1413

NoteTable 12.of Comprehensive Earnings Contents

~~The~~Note ~~components~~10. ofShare-based ~~comprehensive~~Compensation ~~earnings, net of related taxes, are as follows (in thousands):~~

	Three Months EndedSeptember 30,				Nine Months EndedSeptember 30,
	2007		2006		2007		2006
Net earnings	$	15,428	$	4,502	$	42,052	$	11,635
Net change in fair market value of investments		660		355		531		11
Comprehensive earnings	$	16,088	$	4,857	$	42,583	$	11,646

In November 2005, the Company adopted the 2005 Unit Plan. A total of 400,000 Class B Common Units and 600,000 Class C Common Units are authorized for issuance to executives and other key employees under the 2005 Unit Plan. As of June 30, 2008, there were 320,451 restricted Class B Common Units and 448,631 Class C Common Units outstanding. The outstanding units vest ratably over five years and the Company is recognizing the related compensation expense over the five year period. Compensation expense for the employee equity based awards granted is based on the grant date fair value in accordance with the provisions of SFAS No. 123(R). For the six months ended June 30, 2008 and 2007, the Company recognized $0.3 million of employee equity based compensation expense. As of June 30, 2008, there was approximately $2.0 million of unrecognized compensation expense related to nonvested restricted unit awards, which will be recognized over the remaining requisite service period. Forfeitures of employee equity based awards have been historically immaterial to the Company.

Note 1311. ~~Segment~~Contingencies ~~Reporting~~

~~After~~Litigation consideration of the discontinued operations of its anesthesia management services business (Note 3), the Company provides services through four operating segments which are aggregated into two reportable segments, Healthcare Services and Billing Services. The Healthcare Services segment, which is an aggregation of healthcare staffing, clinics and occupational health, provides comprehensive healthcare service programs to users and providers of healthcare services on a fee-for-service as well as a cost plus basis. The Billing Services segment provides a range of external billing, collection and consulting services on a fee basis to outside third-party customers.

~~Segment~~We ~~amounts~~are ~~disclosed~~currently ~~are~~a ~~prior~~party to ~~any~~various ~~elimination~~legal ~~entries~~proceedings. ~~made~~While inwe ~~consolidation,~~currently ~~except~~believe inthat the ~~case~~ultimate outcome of ~~net~~such ~~revenue~~proceedings, ~~where~~individually ~~intercompany~~and ~~charges~~in the aggregate, will not have a material adverse effect on our ~~been~~financial ~~eliminated.~~position ~~Certain~~or ~~expenses~~overall ~~are~~trends ~~not~~in ~~allocated~~results of operations, litigation is subject to ~~the~~inherent ~~segments~~uncertainties. ~~These~~If ~~unallocated~~an ~~expenses~~unfavorable ~~are~~ruling ~~corporate~~were ~~expenses~~to occur, ~~net~~there ~~interest~~exists ~~expense,~~the ~~depreciation~~possibility ~~and~~of ~~amortization,~~a ~~refinancing~~material ~~costs~~adverse ~~and~~impact ~~income~~on ~~taxes~~our net earnings in the period in which a ruling occurs. The ~~Company~~estimate ~~evaluates~~of ~~segment performance~~the ~~based~~potential impact from such legal proceedings on ~~profit~~our ~~and~~financial ~~loss~~position ~~before~~or ~~the~~overall ~~aforementioned~~results ~~expenses~~of operations could change in the future.

~~The~~Healthcare ~~following~~Regulatory ~~table~~Matters presents financial information for each reportable segment. Depreciation, amortization, management fee and other expenses separately identified in the consolidated statements of operations are included as a reduction to the operating earnings of each segment in each period below (in thousands):

	Three Months EndedSeptember 30,						Nine Months EndedSeptember 30,
	2007			2006			2007			2006
Net Revenue less provision for uncollectibles:
Healthcare Services	$	311,696		$	280,259		$	909,464		$	800,131
Billing Services		2,908			3,025			9,048			8,513
	$	314,604		$	283,284		$	918,512		$	808,644
Operating earnings:
Healthcare Services	$	50,065		$	31,926		$	144,261		$	102,921
Billing Services		461			791			1,499			2,178
General Corporate		(11,955	)		(10,880	)		(35,227	)		(31,843	)
	$	38,571		$	21,837		$	110,533		$	73,256

~~Note~~In ~~14.~~addition ~~Financial~~to ~~Information~~laws ~~for~~and ~~Subsidiary~~regulations ~~Guarantors~~governing the Medicare and ~~Non~~Medicaid programs, there are a number of federal and state laws and regulations governing such matters as the corporate practice of medicine and fee splitting arrangements, anti-~~Guarantor~~kickback ~~Subsidiary~~statutes, physician self-referral laws, false or fraudulent claims filing and patient privacy requirements. The failure to comply with any of such laws or regulations could have an adverse impact on our operations and financial results. It is management’s belief that the Company is in substantial compliance in all material respects with such laws and regulations.

~~The~~Acquisition ~~Company~~Payments conducts substantially all of its business through its subsidiaries. The parent company is a holding company that conducts no operations and whose financial position, excluding its investments in its subsidiaries, is comprised of deferred financing costs and the Company’s debt. The Company’s domestic, wholly-owned subsidiaries jointly and severally guarantee the 11.25% Notes on an unsecured senior

15As of June 30, 2008, the Company may have to pay up to $18.5 million in future contingent payments as additional consideration for acquisitions made prior to June 30, 2008. These payments will be made and recorded as additional purchase price or will reduce existing liabilities should the acquired operations achieve the financial targets or certain contract terms are modified as agreed to in the respective acquisition agreements. During the six months ended June 30, 2008, the Company made no payments related to previous acquisitions and made $1.1 million in the same period of 2007.

~~subordinated~~14 basis. The condensed consolidating financial information for the parent company, the issuers of the 11.25% Notes, and the subsidiary guarantors, the non-guarantor subsidiary, certain reclassifications and eliminations and the consolidated Company as of September 30, 2007 and December 31, 2006 and for the three and nine months ended September 30, 2007 and 2006, are as follows:

ConsolidatedTable Balanceof Sheet Contents

	As of September 30, 2007
	Parent andGuarantorSubsidiaries			Non- GuarantorSubsidiary		Reclassificationsand Eliminations			TotalConsolidated
	(in thousands)
Assets
Current assets:
Cash and cash equivalents	$	19,807		$	—	$	—		$	19,807
Accounts receivable, net		227,815			—		—			227,815
Prepaid expenses and other current assets		16,421			31,018		(29,912	)		17,527
Receivables under insurance programs		24,644			—		—			24,644
Total current assets		288,687			31,018		(29,912	)		289,793
Investments of insurance subsidiary		—			69,264		—			69,264
Property and equipment, net		25,821			—		—			25,821
Other intangibles, net		28,796			—		—			28,796
Goodwill		148,361			—		—			148,361
Deferred income taxes		70,810			—		3,892			74,702
Receivables under insurance programs		30,361			—		—			30,361
Investments in subsidiaries		12,986			—		(12,986	)		—
Other		29,204			229		—			29,433
	$	635,026		$	100,511	$	(39,006	)	$	696,531
Liabilities and members’ equity (deficit)
Current liabilities:
Accounts payable	$	10,247		$	938	$	—		$	11,185
Accrued compensation and physician payable		97,919			—		—			97,919
Other accrued liabilities		46,717			58,278		(26,020	)		78,975
Income taxes payable		2,335			1,104		—			3,439
Current maturities of long-term debt		4,250			—		—			4,250
Deferred income taxes		28,117			36		—			28,153
Total current liabilities		189,585			60,356		(26,020	)		223,921
Long-term debt, less current maturities		628,312			—		—			628,312
Other non-current liabilities		143,384			27,169		—			170,553
Common stock		—			120		(120	)		—
Additional paid in capital		—			4,610		(4,610	)		—
Retained earnings		—			8,001		(8,001	)		—
Accumulated other comprehensive gain		—			255		—			255
Members’ deficit		(326,255	)		—		(255	)		(326,510	)
	$	635,026		$	100,511	$	(39,006	)	$	696,531

Note 12. Comprehensive Earnings

16The components of comprehensive earnings, net of related taxes, are as follows (in thousands):

Consolidated Balance Sheet


	Three Months Ended June 30,						Six Months Ended June 30,
	2008			2007			2008			2007
Net earnings	$	9,644		$	7,593		$	27,132		$	26,624
Net change in fair market value of investments		(358	)		(268	)		(45	)		(129	)
Net change in fair market value of interest rate swap		3,313			—			2,963			—

Comprehensive earnings	$	12,599		$	7,325		$	30,050		$	26,495

	As of December 31, 2006
	Parent andGuarantorSubsidiaries			Non-GuarantorSubsidiary			Reclassificationsand Eliminations			TotalConsolidated
	(in thousands)
Assets
Current assets:
Cash and cash equivalents	$	3,999		$	—		$	—		$	3,999
Accounts receivable, net		207,031			—			—			207,031
Prepaid expenses and other current assets		10,690			22,776			(22,003	)		11,463
Receivables under insured programs		36,287			—			—			36,287
Income tax receivable		1,452			—			(49	)		1,403
Total current assets		259,459			22,776			(22,052	)		260,183
Investments of insurance subsidiary		—			59,809			—			59,809
Property and equipment, net		21,847			—			—			21,847
Other intangibles, net		29,051			—			—			29,051
Goodwill		150,459			—			—			150,459
Deferred income taxes		81,335			180			5,211			86,726
Receivables under insured programs		23,213			—			—			23,213
Investment in subsidiary		12,771			—			(12,771	)		—
Other		23,071			201			—			23,272
	$	601,206		$	82,966		$	(29,612	)	$	654,560
Liabilities and members’ equity (deficit)
Current liabilities:
Accounts payable	$	13,584		$	34		$	—		$	13,618
Accrued compensation and physician payable		86,410			—			—			86,410
Other accrued liabilities		53,658			39,989			(16,792	)		76,855
Income taxes payable		—			49			(49	)		—
Current maturities of long-term debt		11,050			—			—			11,050
Deferred income taxes		22,673			—			—			22,673
Total current liabilities		187,375			40,072			(16,841	)		210,606
Long-term debt, less current maturities		631,500			—			—			631,500
Other non-current liabilities		149,021			30,123			—			179,144
Common shares		—			120			(120	)		—
Additional paid in capital		—			4,610			(4,610	)		—
Retained earnings		—			8,313			(8,313	)		—
Accumulated other comprehensive loss		(4	)		(272	)		—			(276	)
Members’ deficit		(366,686	)		—			272			(366,414	)
	$	601,206		$	82,966		$	(29,612	)	$	654,560

Note 13. Segment Reporting

17After consideration of the discontinued operations of its anesthesia management services business (Note 3), the Company provides services through four operating segments which are aggregated into two reportable segments, Healthcare Services and Billing Services. The Healthcare Services segment, which is an aggregation of healthcare staffing, clinics and occupational health, provides comprehensive healthcare service programs to users and providers of healthcare services on a fee-for-service as well as a cost plus basis. The Billing Services segment provides a range of external billing, collection and consulting services on a fee basis to outside third-party customers.

~~Consolidated~~Segment ~~Statement~~amounts disclosed are prior to any elimination entries made in consolidation, except in the case of ~~Operations~~net revenue, where intercompany charges have been eliminated. Certain expenses are not allocated to the segments. These unallocated expenses are corporate expenses, net interest expense, depreciation and amortization, transaction costs and income taxes. The Company evaluates segment performance based on profit and loss before the aforementioned expenses.

	Three Months Ended September 30, 2007
	Parent andGuarantorSubsidiaries			Non-GuarantorSubsidiary			Reclassificationsand Eliminations			TotalConsolidated
	(in thousands)
Net revenue	$	550,949		$	9,757		$	(9,757	)	$	550,949
Provision for uncollectibles		236,345			—			—			236,345
Net revenues less provision for uncollectibles		314,604			9,757			(9,757	)		314,604
Cost of services rendered
Professional expenses		246,274			5,935			(9,757	)		242,452
Gross profit		68,330			3,822			—			72,152
General and administrative expenses		28,429			67			—			28,496
Management fee and other expenses		1,217			—			—			1,217
Depreciation and amortization		3,868			—			—			3,868
Interest expense (income), net		14,483			(844	)		—			13,639
Earnings from continuing operations before income taxes		20,333			4,599			—			24,932
Provision for income taxes		7,742			1,610			—			9,352
Earnings from continuing operations		12,591			2,989			—			15,580
Loss from discontinued operations net of taxes		(152	)		—			—			(152	)
Net earnings	$	12,439		$	2,989		$	—		$	15,428

The following table presents financial information for each reportable segment. Depreciation, amortization, management fee and other expenses separately identified in the consolidated statements of operations are included as a reduction to the operating earnings of each segment in each period below (in thousands):

Consolidated Statement of Operations


	Three Months Ended June 30,						Six Months Ended June 30,
	2008			2007			2008			2007
Net Revenue less provision for uncollectibles:
Healthcare Services	$	332,446		$	299,767		$	659,473		$	597,768
Billing Services		3,040			3,040			6,032			6,140

	$	335,486		$	302,807		$	665,505		$	603,908

Operating earnings:
Healthcare Services	$	40,232		$	36,802		$	93,571		$	94,076
Billing Services		593			448			1,145			1,159
General Corporate		(12,245	)		(11,498	)		(24,304	)		(23,273	)

	$	28,580		$	25,752		$	70,412		$	71,962

	Three Months Ended September 30, 2006
	Parent andGuarantorSubsidiaries		Non-GuarantorSubsidiary			Reclassificationsand Eliminations			TotalConsolidated
	(in thousands)
Net revenue	$	481,033	$	10,075		$	(10,075	)	$	481,033
Provision for uncollectibles		197,749		—			—			197,749
Net revenue less provision for uncollectibles		283,284		10,075			(10,075	)		283,284
Cost of services rendered
Professional expenses		232,266		6,127			(10,075	)		228,318
Gross profit		51,018		3,948			—			54,966
General and administrative expenses		26,093		50			—			26,143
Management fee and other expenses		877		—			—			877
Depreciation and amortization		6,109		—			—			6,109
Interest (income) expense, net		15,724		(519	)		—			15,205
Earnings from continuing operations before income taxes		2,215		4,417			—			6,632
Provision for income taxes		1,859		376			—			2,235
Earnings from continuing operations		356		4,041			—			4,397
Earnings from discontinued operations		105		—			—			105
Net earnings	$	461	$	4,041		$	—		$	4,502

18Table of Contents

~~Consolidated~~Note ~~Statement~~14. ofFinancial ~~Operations~~Information for Subsidiary Guarantors and Non-Guarantor Subsidiary

	Nine Months Ended September 30, 2007
	Parent andGuarantorSubsidiaries			Non-GuarantorSubsidiary			Reclassificationsand Eliminations			TotalConsolidated
	(in thousands)
Net revenue	$	1,555,082		$	29,802		$	(29,802	)	$	1,555,082
Provision for uncollectibles		636,570			—			—			636,570
Net revenues less provision for uncollectibles		918,512			29,802			(29,802	)		918,512
Cost of services rendered
Professional expenses		731,432			9,048			(29,802	)		710,678
Gross profit		187,080			20,754			—			207,834
General and administrative expenses		83,103			207			—			83,310
Management fee and other expenses		3,035			—			—			3,035
Depreciation and amortization		10,956			—			—			10,956
Interest expense (income), net		43,760			(2,330	)		—			41,430
Earnings from continuing operations before income taxes		46,226			22,877			—			69,103
Provision for income taxes		18,545			8,007			—			26,552
Earnings from continuing operations		27,681			14,870			—			42,551
Loss from discontinued operations net of taxes		(499	)		—			—			(499	)
Net earnings	$	27,182		$	14,870		$	—		$	42,052

The Company conducts substantially all of its business through its subsidiaries. The parent company is a holding company that conducts no operations and whose financial position, excluding its investments in its subsidiaries, is comprised of deferred financing costs and the Company’s debt. The Company’s domestic, wholly-owned subsidiaries jointly and severally guarantee the 11.25% Notes on an unsecured senior subordinated basis. The condensed consolidating financial information for the parent company, the issuers of the 11.25% Notes, and the subsidiary guarantors, the non-guarantor subsidiary, certain reclassifications and eliminations and the consolidated Company as of June 30, 2008 and December 31, 2007 and for the three and six months ended June 30, 2008 and 2007, are as follows:

Consolidated ~~Statement~~Balance ofSheet ~~Operations~~

	Nine months ended September 30, 2006
	As of June 30, 2008
	Parent andGuarantorSubsidiaries			Non-GuarantorSubsidiary			Reclassificationsand Eliminations	~~Reclassificationsand Eliminations~~			TotalConsolidated	~~TotalConsolidated~~
	(in thousands)
Net revenue	$	1,346,624		$	27,275			$	(27,275	)		$	1,346,624
Assets
Provision for uncollectibles		537,980			—				—				537,980
Current assets:
Net revenue less provision for uncollectibles		808,644			27,275				(27,275	)			808,644
Cash and cash equivalents	$	37,069		$	—		$	—			$	37,069
Cost of services rendered
Accounts receivable, net		224,901			—			—				224,901
Professional expenses		661,068			4,040				(27,275	)			637,833
Prepaid expenses and other current assets		18,765			35,384			(34,034	)			20,115
Gross profit		147,576			23,235				—				170,811
Income tax receivables		—			681			(681	)			—
General and administrative expenses		74,851			135				—				74,986
Receivables under insurance programs		25,637			—			—				25,637
Management fee and other expenses		2,690			—				—				2,690
Total current assets		306,372			36,065			(34,715	)			307,722
Depreciation and amortization		19,879			—				—				19,879
Investments of insurance subsidiary		—			85,975			—				85,975
Interest (income) expense, net		44,569			(1,452	)			—				43,117
Property and equipment, net		24,903			—			—				24,903
Earnings from continuing operations before income taxes		5,587			24,552				—				30,139
Other intangibles, net		36,587			—			—				36,587
Provision for income taxes		4,375			7,225				—				11,600
Goodwill		158,898			—			—				158,898
Earnings from continuing operations		1,212			17,327				—				18,539
Deferred income taxes		46,299			—			4,410				50,709
Loss from discontinued operations		(6,904	)		—				—				(6,904	)
Receivables under insured programs		26,652			—			—				26,652
Net earnings (loss)	$	(5,692	)	$	17,327			$	—			$	11,635
Investments in subsidiary		9,845			—			(9,845	)			—
Other		36,521			355			—				36,876
	$	646,077		$	122,395		$	(40,150	)		$	728,322
Liabilities and members’ equity (deficit)
Current liabilities:
Accounts payable	$	2,359		$	9,035		$	—			$	11,394
Accrued compensation and physician payable		100,003			—			—				100,003
Other accrued liabilities		40,968			61,847			(29,624	)			73,191
Income tax payable		7,429			—			(681	)			6,748
Current maturities of long-term debt		4,250			—			—				4,250
Deferred income taxes		26,155			—			—				26,155
Total current liabilities		181,164			70,882			(30,305	)			221,741
Long-term debt, less current maturities		625,125			—			—				625,125
Other non-current liabilities		135,313			41,668			—				176,981
Common stock		—			120			(120	)			—
Additional paid in capital		—			4,610			(4,610	)			—
Retained earnings		—			4,726			(4,726	)			—
Accumulated other comprehensive earnings		2,963			389			—				3,352
Members’ deficit		(298,488	)		—			(389	)			(298,877	)
	$	646,077		$	122,395		$	(40,150	)		$	728,322

1916

ConsolidatedTable Statement of Cash Flows Contents

	Nine Months Ended September 30, 2007
	Parent andGuarantorSubsidiaries			Non-GuarantorSubsidiary			Reclassificationsand Eliminations		TotalConsolidated
	(in thousands)
Operating activities
Net earnings	$	27,182		$	14,870		$	—	$	42,052
Adjustments to reconcile net earnings:
Depreciation and amortization		10,994			—			—		10,994
Amortization of deferred financing costs		1,615			—			—		1,615
Employee based compensation expense		419			—			—		419
Provision for uncollectibles		636,570			—			—		636,570
Deferred income taxes		18,092			1,349			—		19,441
Loss on sale of equipment		407			—			—		407
Equity in joint venture income		(1,360	)		—			—		(1,360	)
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable		(657,354	)		—			—		(657,354	)
Prepaids and other assets		(2,513	)		(9,588	)		—		(12,101	)
Income tax accounts		3,153			1,054			—		4,207
Accounts payable		(1,347	)		(1,086	)		—		(2,433	)
Accrued compensation and physician payable		12,979			—			—		12,979
Other accrued liabilities		(3,540	)		9,257			—		5,717
Professional liability reserves		(16,772	)		6,079			—		(10,693	)
Net cash provided by operating activities		28,525			21,935			—		50,460
Investing activities
Purchases of property and equipment		(10,865	)		—			—		(10,865	)
Cash paid for acquisitions, net		(3,545	)		—			—		(3,545	)
Net purchases of investments by insurance subsidiary		—			(8,925	)		—		(8,925	)
Other investing activities		125			—			—		125
Net cash used in investing activities		(14,285	)		(8,925	)		—		(23,210	)
Financing activities
Payments on notes payable		(3,188	)		—			—		(3,188	)
Proceeds from revolving credit facility		83,000			—			—		83,000
Payments on revolving credit facility		(89,800	)		—			—		(89,800	)
Payments of deferred financing costs		(500	)		—			—		(500	)
Redemption of common units		(1,004	)		—			—		(1,004	)
Proceeds from sales of common units		50			—			—		50
Net transfers from parent and parent’s subsidiaries		13,010			(13,010	)		—		—
Net cash provided by (used in) financing activities		1,568			(13,010	)		—		(11,442	)
Net increase in cash and cash equivalents		15,808			—			—		15,808
Cash and cash equivalents, beginning of period		3,999			—			—		3,999
Cash and cash equivalents, end of period	$	19,807		$	—		$	—	$	19,807

Consolidated Balance Sheet


	As of December 31, 2007
	Parent and Guarantor Subsidiaries			Non-Guarantor Subsidiary		Reclassifications and Eliminations			Total Consolidated
	(in thousands)
Assets
Current assets:
Cash and cash equivalents	$	30,290		$	—	$	—		$	30,290
Accounts receivable, net		222,603			—		—			222,603
Prepaid expenses and other current assets		12,248			21,148		(20,154	)		13,242
Receivables under insured programs		34,118			—		—			34,118

Total current assets		299,259			21,148		(20,154	)		300,253
Investments of insurance subsidiary		—			76,057		—			76,057
Property and equipment, net		25,276			—		—			25,276
Other intangibles, net		27,247			—		—			27,247
Goodwill		158,898			—		—			158,898
Deferred income taxes		56,212			—		3,892			60,104
Receivables under insured programs		23,896			—		—			23,896
Investment in subsidiary		13,952			—		(13,952	)		—
Other		27,316			126		—			27,442

	$	632,056		$	97,331	$	(30,214	)	$	699,173

Liabilities and members’ equity (deficit)
Current liabilities:
Accounts payable	$	12,103		$	74	$	—		$	12,177
Accrued compensation and physician payable		101,421			—		—			101,421
Other accrued liabilities		50,272			49,844		(16,262	)		83,854
Income tax payable		661			324		—			985
Current maturities of long-term debt		4,250			—		—			4,250
Deferred income taxes		27,402			233		—			27,635

Total current liabilities		196,109			50,475		(16,262	)		230,322
Long-term debt, less current maturities		627,250			—		—			627,250
Other non-current liabilities		133,232			32,904		—			166,136
Common stock		—			120		(120	)		—
Additional paid in capital		—			4,610		(4,610	)		—
Retained earnings		—			8,788		(8,788	)		—
Accumulated other comprehensive earnings		—			434		—			434
Members’ deficit		(324,535	)		—		(434	)		(324,969	)

	$	632,056		$	97,331	$	(30,214	)	$	699,173

~~Consolidated~~17 ~~Statement of Cash Flows~~

	Nine months ended September 30, 2006
	Parent andGuarantorSubsidiaries			Non-GuarantorSubsidiary			Reclassificationsand Eliminations		TotalConsolidated
	(in thousands)
Operating activities
Net earnings (loss)	$	(5,692	)	$	17,327		$	—	$	11,635
Adjustments to reconcile net earnings (loss):
Depreciation and amortization		20,462			—			—		20,462
Amortization of deferred financing costs		1,821			—			—		1,821
Employee equity based compensation expense		477			—			—		477
Provision for uncollectibles		537,980			—			—		537,980
Impairment of intangibles		9,523			—			—		9,523
Deferred income taxes		(1,447	)		(1,114	)		—		(2,561	)
Loss on sale of equipment		23			—			—		23
Equity in joint venture income		(1,502	)		—			—		(1,502	)
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable		(552,012	)		—			—		(552,012	)
Prepaids and other assets		(2,293	)		(10,815	)		—		(13,108	)
Income tax accounts		15,871			1,655			—		17,526
Accounts payable		(9,083	)		(12	)		—		(9,095	)
Accrued compensation and physician payable		987			—			—		987
Other accrued liabilities		(8,143	)		13,043			—		4,900
Professional liability reserves		1,893			2,556			—		4,449
Net cash provided by operating activities		8,865			22,640			—		31,505
Investing activities
Purchases of property and equipment		(7,173	)		—			—		(7,173	)
Cash paid for acquisitions, net		(20,785	)		—			—		(20,785	)
Net purchases of investments by insurance subsidiary		—			(12,640	)		—		(12,640	)
Other investing activities		209			—			—		209
Net cash used in investing activities		(27,749	)		(12,640	)		—		(40,389	)
Financing activities
Payments on notes payable		(3,187	)		—			—		(3,187	)
Proceeds from revolving credit facility		184,300			—			—		184,300
Payment on revolving credit facility		(176,700	)		—			—		(176,700	)
Payment of deferred financing costs		(752	)		—			—		(752	)
Purchase of treasury stock		(2,570	)		—			—		(2,570	)
Transaction payments in connection with recapitalization		(56	)		—			—		(56	)
Proceeds from sale of common units		115			—			—		115
Net transfers from parent and parent’s subsidiaries		10,000			(10,000	)		—		—
Net cash provided by (used in) financing activities		11,150			(10,000	)		—		1,150
Decrease in cash and cash equivalents		(7,734	)		—			—		(7,734	)
Cash and cash equivalents, beginning of period		10,644			—			—		10,644
Cash and cash equivalents, end of period	$	2,910		$	—		$	—	$	2,910

21Consolidated Statement of Operations

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations


	Three Months Ended June 30, 2008
	Parent and Guarantor Subsidiaries		Non-Guarantor Subsidiary			Reclassifications and Eliminations			Total Consolidated
	(in thousands)
Net revenue	$	579,005	$	9,198		$	(9,198	)	$	579,005
Provision for uncollectibles		243,519		—			—			243,519

Net revenue less provision for uncollectibles		335,486		9,198			(9,198	)		335,486
Cost of services rendered
Professional expenses		271,867		8,382			(9,198	)		271,051

Gross profit		63,619		816			—			64,435
General and administrative expenses		30,783		48			—			30,831
Management fee and other expenses		899		—			—			899
Transaction costs		1,785		—			—			1,785
Depreciation and amortization		4,125		—			—			4,125
Interest expense (income), net		11,745		(792	)		—			10,953

Earnings before income taxes		14,282		1,560			—			15,842
Provision for income taxes		5,652		546			—			6,198

Net earnings	$	8,630	$	1,014		$	—		$	9,644

~~Introduction~~Consolidated Statement of Operations

We believe we are the largest national provider of outsourced physician staffing and administrative services to hospitals and other healthcare providers in the United States based on revenues and patient visits. Our regional operating models also include comprehensive programs for inpatient care, radiology, pediatrics and other healthcare services, principally within hospital departments and other healthcare treatment facilities. We have, however, focused primarily on providing outsourced services to hospital emergency departments, which accounts for the majority of our revenue.


	Three Months Ended June 30, 2007
	Parent and Guarantor Subsidiaries			Non-Guarantor Subsidiary			Reclassifications and Eliminations			Total Consolidated
	(in thousands)
Net revenue	$	518,180		$	9,969		$	(9,969	)	$	518,180
Provision for uncollectibles		215,373			—			—			215,373

Net revenue less provision for uncollectibles		302,807			9,969			(9,969	)		302,807
Cost of services rendered
Professional expenses		247,391			8,154			(9,969	)		245,576

Gross profit		55,416			1,815			—			57,231
General and administrative expenses		26,962			35			—			26,997
Management fee and other expenses		885			—			—			885
Depreciation and amortization		3,597			—			—			3,597
Interest expense (income), net		14,168			(846	)		—			13,322

Earnings from continuing operations before income taxes		9,804			2,626			—			12,430
Provision for income taxes		3,808			919			—			4,727

Earnings from continuing operations		5,996			1,707			—			7,703
Loss from discontinued operations net of taxes		(110	)		—			—			(110	)

Net earnings	$	5,886		$	1,707		$	—		$	7,593

~~The~~18 following discussion provides an assessment of our results of operations, liquidity and capital resources and should be read in conjunction with our consolidated financial statements and notes thereto included elsewhere in this document.

CriticalTable Accountingof Policies and Estimates Contents

~~The~~Consolidated ~~consolidated~~Statement ~~financial statements~~ of ~~the~~Operations Company are prepared in accordance with accounting principles generally accepted in the United States, which requires us to make estimates and assumptions. Management believes the following critical accounting policies, among others, affect its more significant judgments and estimates used in the preparation of its consolidated financial statements.

There have been no changes to these critical accounting policies or their application during the nine months ended September 30, 2007.


	Six Months Ended June 30, 2008
	Parent and Guarantor Subsidiaries		Non-Guarantor Subsidiary			Reclassifications and Eliminations			Total Consolidated
	(in thousands)
Net revenue	$	1,138,026	$	18,956		$	(18,956	)	$	1,138,026
Provision for uncollectibles		472,521		—			—			472,521

Net revenue less provision for uncollectibles		665,505		18,956			(18,956	)		665,505
Cost of services rendered
Professional expenses		533,697		11,601			(18,956	)		526,342

Gross profit		131,808		7,355			—			139,163
General and administrative expenses		58,872		87			—			58,959
Management fee and other expenses		1,786		—			—			1,786
Transaction costs		1,785		—			—			1,785
Depreciation and amortization		8,006		—			—			8,006
Interest expense (income), net		25,461		(1,866	)		—			23,595

Earnings before income taxes		35,898		9,134			—			45,032
Provision for income taxes		14,703		3,197			—			17,900

Net earnings	$	21,195	$	5,937		$	—		$	27,132

~~Revenue~~Consolidated ~~Recognition~~Statement of Operations

Net Revenue. Net revenues consist of fee-for-service revenue, contract revenue and other revenue. Net revenues are recorded in the period services are rendered. Our net revenues are principally derived from the provision of healthcare staffing services to patients within healthcare facilities. The form of billing and related risk of collection for such services may vary by customer. The following is a summary of the principal forms of our billing arrangements and how net revenue is recognized for each.


	Six Months Ended June 30, 2007
	Parent and Guarantor Subsidiaries			Non-Guarantor Subsidiary			Reclassifications and Eliminations			Total Consolidated
	(in thousands)
Net revenue	$	1,004,132		$	20,044		$	(20,044	)	$	1,004,132
Provision for uncollectibles		400,224			—			—			400,224

Net revenue less provision for uncollectibles		603,908			20,044			(20,044	)		603,908
Cost of services rendered
Professional expenses		485,156			3,113			(20,044	)		468,225

Gross profit		118,752			16,931			—			135,683
General and administrative expenses		54,676			140			—			54,816
Management fee and other expenses		1,818			—			—			1,818
Depreciation and amortization		7,087			—			—			7,087
Interest expense (income), net		29,278			(1,486	)		—			27,792

Earnings from continuing operations before income taxes		25,893			18,277			—			44,170
Provision for income taxes		10,803			6,397			—			17,200

Earnings from continuing operations		15,090			11,880			—			26,970
Loss from discontinued operations net of taxes		(346	)		—			—			(346	)

Net earnings	$	14,744		$	11,880		$	—		$	26,624

A19 significant portion (79% and 78% of our net revenue in the nine months ended September 30, 2007 and the year ended December 31, 2006, respectively) resulted from fee-for-service patient visits. Fee-for-service revenue represents revenue earned under contracts in which we bill and collect the professional component of charges for medical services rendered by our contracted and employed physicians. Under the fee-for-service arrangements, we bill patients for services provided and receive payment from patients or their third-party payers. Fee-for-service revenue is reported net of contractual allowances and policy discounts. All services provided are expected to result in cash flows and are therefore reflected as net revenues in the financial statements. Fee-for-service revenue is recognized in the period that the services are rendered to specific patients and reduced immediately for the estimated impact of contractual allowances in the case of those patients having third-party payer coverage. The recognition of net revenue (gross charges less contractual allowances) from such visits is dependent on such factors as proper completion of medical charts following a patient visit, the forwarding of such charts to one of our billing centers for medical coding and entering into our billing systems and the verification of each patient’s submission or representation at the time services are rendered as to the payer(s) responsible for payment of such services. Net revenues are recorded based on the information known at the time of entering of such information into our billing systems as well as an estimate of the net revenues associated with medical charts for a given service period that have not been processed yet into our billing systems. The above factors and estimates are subject to change. For example, patient payer information may change following an initial attempt to bill for services due to a change in payer status. Such changes in payer status have an impact on recorded net revenue due to differing payers being subject to different contractual allowance amounts. Such changes in net revenue are recognized in the period that such changes in payer become

22Table of Contents

~~known.~~Consolidated ~~Similarly,~~Statement ~~the actual volume~~ of ~~medical~~Cash ~~charts~~Flows ~~not processed into our billing systems may be different from the amounts estimated. Such differences in net revenue are adjusted in the following month based on actual chart volumes processed.~~

Contract revenue represents revenue generated under contracts in which we provide physician and other healthcare staffing and administrative services in return for a contractually negotiated fee. Contract revenue consists primarily of billings based on hours of healthcare staffing provided at agreed to hourly rates. Revenue in such cases is recognized as the hours are worked by our staff and contractors. Additionally, contract revenue also includes supplemental revenue from hospitals where we may have a fee-for-service contract arrangement. Contract revenue for the supplemental billing in such cases is recognized based on the terms of each individual contract. Such contract terms generally either provide for a fixed monthly dollar amount or a variable amount based upon measurable monthly activity, such as hours staffed, patient visits or collections per visit compared to a minimum activity threshold. Such supplemental revenues based on variable arrangements are usually contractually fixed on a monthly, quarterly or annual calculation basis considering the variable factors negotiated in each such arrangement. Such supplemental revenues are recognized as revenue in the period when such amounts are determined to be fixed and therefore contractually obligated as payable by the customer under the terms of the respective agreement.


	Six Months Ended June 30, 2008
	Parent and Guarantor Subsidiaries			Non-Guarantor Subsidiary			Reclassifications and Eliminations		Total Consolidated
	(in thousands)
Operating activities
Net earnings	$	21,195		$	5,937		$	—	$	27,132
Adjustments to reconcile net earnings:
Depreciation and amortization		8,006			—			—		8,006
Amortization of deferred financing costs		1,041			—			—		1,041
Employee equity based compensation expense		276			—			—		276
Provision for uncollectibles		472,521			—			—		472,521
Deferred income taxes		6,771			(727	)		—		6,044
Loss on disposal of equipment		36			—			—		36
Equity in joint venture income		(580	)		—			—		(580	)
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable		(474,819	)		—			—		(474,819	)
Prepaids and other assets		1,981			(13,947	)		—		(11,966	)
Income tax accounts		6,639			(1,004	)		—		5,635
Accounts payable		(646	)		(21	)		—		(667	)
Accrued compensation and physician payable		(1,405	)		—			—		(1,405	)
Other accrued liabilities		(15,194	)		13,394			—		(1,800	)
Professional liability reserves		(4,595	)		7,372			—		2,777

Net cash provided by operating activities		21,227			11,004			—		32,231
Investing activities
Purchases of property and equipment		(4,512	)		—			—		(4,512	)
Cash paid for acquisitions, net		(7,513	)		—			—		(7,513	)
Net purchases of investments by insurance subsidiary		—			(9,986	)		—		(9,986	)

Net cash used in investing activities		(12,025	)		(9,986	)		—		(22,011	)
Financing activities
Payments on notes payable		(2,125	)		—			—		(2,125	)
Redemption of common units		(1,316	)		—			—		(1,316	)
Net transfer from parent and parent’s subsidiaries		1,018			(1,018	)		—		—

Net cash used in financing activities		(2,423	)		(1,018	)		—		(3,441	)

Net increase in cash		6,779			—			—		6,779
Cash and cash equivalents, beginning of period		30,290			—			—		30,290

Cash and cash equivalents, end of period	$	37,069		$	—		$	—	$	37,069

~~Other~~20 revenue consists primarily of revenue from management and billing services provided to outside parties. Revenue is recognized for such services pursuant to the terms of the contracts with customers. Generally, such contracts consist of fixed monthly amounts with revenue recognized in the month services are rendered or as hourly consulting fees recognized as revenue as hours are worked in accordance with such arrangements. Additionally, we derive a small percentage of our revenues from providing billing services that are contingent upon the collection of third-party physician billings by us on their behalf. Such revenues are not considered earned and therefore not recognized as revenue until actual cash collections are achieved in accordance with the contractual arrangements for such services.

NetTable Revenue Less Provision for Uncollectibles. Net revenue less provision for uncollectibles reflects management’s estimate of billed amounts to ultimately be collected. Management, in estimating the amounts to be collected resulting from its over six million annual fee-for-service patient visits and procedures, considers such factors as prior contract collection experience, current period changes in payer mix and patient acuity indicators, reimbursement rate trends in governmental and private sector insurance programs, resolution of credit balances, the estimated impact of billing system effectiveness improvement initiatives and trends in collections from self-pay patients. Such estimates are substantially formulaic in nature. The estimates are continuously updated and adjusted if subsequent actual collection experience indicates a change in estimate is necessary. Such provisions and any subsequent changes in estimates may result in adjustments to our operating results with a corresponding adjustment to our accounts receivable allowance for uncollectibles on our balance sheet. Contents

~~Accounts~~Consolidated ~~Receivable.~~Statement ~~As described above and below, we determine the estimated value~~ of ~~our~~Cash ~~accounts~~Flows receivable based on estimated cash collection run rates of estimated future collections by contract for patient visits under our fee-for-service contract revenue. Accordingly, we are unable to report the payer mix composition on a dollar basis of our outstanding net accounts receivable. Our days revenue outstanding at September 30, 2007 and at December 31, 2006, were 68.4 days and 67.6 days, respectively. The number of days outstanding will fluctuate over time due to a number of factors. The increase in average days revenue outstanding of approximately 0.8 days includes an increase of 8.0 days associated with an increased valuation of fee-for-service accounts receivable. This increase was partially offset by a decrease of 6.0 days resulting from an increase in average revenue per day between periods and a decrease of 1.2 days related to contract accounts receivable. The increase in average revenue per day is primarily attributable to an increase in gross charges, an increase in Medicare physician reimbursement, increased pricing with managed care plans, and an increase in the average patient acuity, while the increased valuation of fee-for-service accounts receivable is due primarily to new contract start-ups. The decrease of 1.2 days related to contract accounts receivable is due primarily to increased cash collections. Our allowance for doubtful accounts totaled $166.5 million as of September 30, 2007.


	Six Months Ended June 30, 2007
	Parent and Guarantor Subsidiaries			Non-Guarantor Subsidiary			Reclassifications and Eliminations		Total Consolidated
	(in thousands)
Operating activities
Net earnings	$	14,744		$	11,880		$	—	$	26,624
Adjustments to reconcile net earnings:
Depreciation and amortization		7,113			—			—		7,113
Amortization of deferred financing costs		1,091			—			—		1,091
Employee based compensation expense		280			—			—		280
Provision for uncollectibles		400,224			—			—		400,224
Deferred income taxes		10,585			843			—		11,428
Loss on sale of equipment		67			—			—		67
Equity in joint venture income		(835	)		—			—		(835	)
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable		(402,795	)		—			—		(402,795	)
Prepaids and other assets		5,737			(19,197	)		—		(13,460	)
Income tax accounts		2,598			(50	)		—		2,548
Accounts payable		(3,312	)		(1,080	)		—		(4,392	)
Accrued compensation and physician payable		5,095			—			—		5,095
Other accrued liabilities		(17,669	)		18,985			—		1,316
Professional liability reserves		(6,324	)		1,245			—		(5,079	)

Net cash provided by operating activities		16,599			12,626			—		29,225
Investing activities
Purchases of property and equipment		(8,053	)		—			—		(8,053	)
Cash paid for acquisitions, net		(1,094	)		—			—		(1,094	)
Net change in captive investments		—			(9,374	)		—		(9,374	)
Other investing activities		125			—			—		125

Net cash used in investing activities		(9,022	)		(9,374	)		—		(18,396	)
Financing activities
Payments on notes payable		(2,125	)		—			—		(2,125	)
Proceeds from revolving credit facility		69,500			—			—		69,500
Payments on revolving credit facility		(76,300	)		—			—		(76,300	)
Payments of deferred financing costs		(500	)		—			—		(500	)
Redemption of common units		(797	)		—			—		(797	)
Proceeds from sales of common units		50			—			—		50
Net transfers from parent and parent’s subsidiaries		3,252			(3,252	)		—		—

Net cash used in financing activities		(6,920	)		(3,252	)		—		(10,172	)

Net increase in cash		657			—			—		657
Cash and cash equivalents, beginning of period		3,999			—			—		3,999

Cash and cash equivalents, end of period	$	4,656		$	—		$	—	$	4,656

~~Approximately~~21 98% of our allowance for doubtful accounts is related to gross fees for fee-for-service patient visits. Our principal exposure for uncollectible fee-for-service visits is centered in self-pay patients and, to a lesser extent, for co-payments and deductibles from patients with insurance. While we do not specifically allocate the allowance for doubtful accounts to individual accounts or specific payer classifications, the portion of the allowance associated with fee-for-service charges as of September 30, 2007, was equal to approximately 90% of outstanding self-pay fee-for-service patient accounts.

TheTable majority of our fee-for-service patient visits are for the provision of emergency care in hospital settings. Due to federal government regulations governing the providing of such care, we are obligated to provide emergency care regardless of the patient’s ability to pay or whether or not the patient has insurance or other third-party coverage for the cost of the services rendered. While we attempt to obtain all relevant billing information at the time emergency care services are rendered, there are numerous patient encounters where such information is not available at time of discharge. In such cases where detailed billing information relative to insurance or other third-party coverage is not available at discharge, we attempt to obtain such information from the patient or client hospital billing record information subsequent to discharge to facilitate the collections process. Collections at the time of rendering such services (emergency room discharge) are not significant. Primary responsibility for collection of fee-for-service accounts receivable resides within our internal billing operations. Once a claim has been submitted to a payer or an individual patient, employees within our billing operations have responsibility for the follow up collection efforts. The protocol for follow up differs by payer classification. For self-pay patients, our billing system will automatically send a series of dunning letters on a prescribed time frame requesting payment or the provision of information reflecting that the balance due is covered by another payer, such as Medicare or a third-party insurance plan. Generally, the dunning cycle on a self pay account will run from 90 to 120 days. At the end of this period, if no collections or additional information is obtained from the patient, the account is no longer considered an active account and is transferred to a collection agency. Upon transfer to a collection agency, the patient account is written-off as a bad debt. Any subsequent cash receipts on accounts previously written off are recorded as a recovery. For non-self pay accounts, billing personnel will follow up and respond to any communication from payers such as requests for additional information or denials until collection of the account is obtained or other resolution has occurred. For contract accounts receivable, invoices for services are prepared in the various operating areas of the Company and mailed to our customers, generally on a monthly basis. Contract terms under such arrangements generally require payment within thirty days of receipt of the invoice. Outstanding invoices are periodically reviewed and operations personnel with responsibility for the customer relationship will contact the customer to follow up on any delinquent invoices. Contract accounts receivable will be considered as bad debt and written-off based upon the individual circumstances of the customer situation after all collection efforts have been exhausted, including legal action if warranted, and it is the judgment of management that the account is not expected to be collected. Contents

~~Methodology~~Item ~~for Computing Allowance for Doubtful Accounts~~2. WeManagement’s ~~employ~~Discussion several methodologies for determining our allowance for doubtful accounts depending on the nature of the net revenue recognized. We initially determine gross revenue for our fee-for-service patient visits based upon established fee schedule prices. Such gross revenue is reduced for estimated contractual allowances for those patient visits covered by contractual insurance arrangements to result in net revenue. Net revenue is then reduced for our estimate of uncollectible amounts. Fee-for-service net revenue less provision for uncollectibles represents our estimated cash to be collected from such patient visits and isAnalysis ~~net~~ of ~~our~~Financial ~~estimate~~Condition of account balances estimated to be uncollectible. The provision for uncollectible fee-for-service patient visits is based on historical experience resulting from the over six million annual patient visits. The significant volume of annual patient visits and ~~the~~Results ~~terms~~ of thousands of commercial and managed care contracts and the various reimbursement policies relating to governmental healthcare programs do not make it feasible to evaluate fee-for-service accounts receivable on a specific account basis. Fee-for-service accounts receivable collection estimates are reviewed on a quarterly basis for each of our fee-for-service contracts by period of accounts receivable origination. Such reviews include the use of historical cash collection percentages by contract adjusted for the lapse of time since the date of the patient visit. In addition, when actual collection percentages differ from expected results, on a contract by contract basis supplemental detailed reviews of the outstanding accounts receivable balances may be performed by our billing operations to determine whether there are facts and Operations

24Introduction

~~circumstances~~We ~~existing~~believe ~~that~~we ~~may~~are ~~cause a different conclusion as to~~ the ~~estimate~~largest ofnational provider ~~the collectibility~~ of ~~that~~outsourced ~~contract’s~~physician ~~accounts~~staffing ~~receivable~~and ~~from~~administrative ~~the estimate~~services ~~resulting~~to ~~from~~hospitals ~~using~~and ~~the~~other ~~historical~~healthcare ~~collection~~providers ~~experience.~~in ~~Contract-related~~the ~~net~~United ~~revenues~~States ~~are billed~~ based on ~~the~~revenues ~~terms~~and ofpatient ~~the contract at amounts expected to be collected~~visits. ~~Such~~Our ~~billings~~regional ~~are~~operating ~~typically~~models ~~submitted~~also oninclude acomprehensive ~~monthly~~programs ~~basis and aged~~for ~~trial~~inpatient ~~balances~~care, ~~prepared.~~radiology, ~~Allowances~~pediatrics ~~for~~and ~~estimated~~other ~~uncollectible~~healthcare ~~amounts~~services, ~~related~~principally towithin ~~such~~hospital ~~contract~~departments ~~billings are made based upon specific accounts~~ and ~~invoice~~other ~~periodic~~healthcare ~~reviews~~treatment ~~once~~facilities. itWe ishave, ~~concluded~~however, ~~that~~focused ~~such~~primarily ~~amounts~~on ~~are~~providing ~~not~~outsourced ~~likely~~services to behospital ~~collected. The~~emergency ~~methodologies~~departments, ~~employed~~which toaccounts ~~compute allowances~~ for ~~doubtful~~the ~~accounts~~majority ~~were~~of ~~unchanged~~our ~~between 2007 and 2006~~revenue.

~~Insurance Reserves.~~ The ~~nature~~ offollowing ~~our~~discussion ~~business~~provides isan ~~such~~assessment ~~that~~of itour isresults ~~subject to professional liability lawsuits. Historically, to mitigate a portion~~ of ~~this risk~~operations, ~~we have maintained insurance for individual professional liability claims with per incident and annual aggregate~~ ~~limits~~liquidity ~~per physician for all incidents. Prior to March 12, 2003, we obtained such insurance coverage from a commercial insurance provider. Professional liability claims~~ and ~~lawsuits~~capital ~~are~~resources ~~routinely reviewed by our insurance carrier~~ and ~~management for~~should ~~purposes~~be ofread ~~establishing ultimate loss estimates. Provisions for estimated losses~~ in ~~excess~~conjunction ofwith ~~insurance~~our ~~limits~~consolidated ~~have~~financial ~~been~~statements provided at the time such determinations are made. In addition, where as a condition of a professional liability insurance policy the policy includes a self-insured risk retention layer of coverage, we have recorded a provision for estimated losses likely to be incurred during such periods and ~~within~~notes ~~such~~thereto ~~limits~~included ~~based~~elsewhere onin ~~our~~this ~~past loss experience following consultation with our outside insurance experts and claims managers~~document.

~~Subsequent~~Critical toAccounting ~~March 11,~~Policies ~~2003, we have provided for a significant portion of our professional liability loss exposures through the use of a captive insurance company~~ and ~~through~~Estimates greater utilization of self-insurance reserves. Since March 12, 2003, our professional liability costs consist of annual projected costs resulting from periodic actuarial studies along with the cost of certain professional liability commercial insurance premiums and programs available to us. An independent actuary firm is responsible for preparation of the periodic actuarial studies. Management’s estimate of our professional liability costs resulting from such actuarial studies is significantly influenced by assumptions, which are limited by the uncertainty of predicting future events, and assessments regarding expectations of several factors. These factors include, but are not limited to: hours of exposure as measured by hours of physician and related professional staff services as well as actual loss development trends; the frequency and severity of claims, which can differ significantly by jurisdiction; coverage limits of third-party insurance; the effectiveness of our claims management process; and the outcome of litigation.

~~Our~~The ~~commercial~~consolidated ~~insurance~~financial ~~policy~~statements ~~for~~of ~~professional liability losses for~~ the ~~period~~Company ~~March 12,~~are ~~1999~~prepared ~~through March 11, 2003, included insured limits applicable to such coverage~~ in ~~the period. Effective April~~accordance ~~2006, we executed an agreement~~ with ~~the~~accounting ~~commercial~~principles ~~insurance~~generally ~~provider~~accepted ~~that~~in ~~issued~~ the ~~policy~~United ~~that~~States, ~~ended~~which ~~March 11,~~requires ~~2003~~us to ~~increase the existing $130.0 million aggregate limit of coverage. Under the terms of the agreement, we will~~ make ~~periodic premium~~estimates ~~payments to the commercial insurance company~~ and ~~the total aggregate limit of coverage under the policy will be increased by a portion of the premiums paid~~assumptions. WeManagement ~~have~~believes ~~committed to fund premiums such that~~ the ~~total~~following ~~aggregate~~critical ~~limit~~accounting ~~of coverage under the program remains greater than the paid losses at any point in time. During fiscal year 2006~~policies, weamong ~~funded a total of $11.0 million under this agreement. For the nine months ended September 30~~others, ~~2007~~affect weits ~~funded~~more asignificant ~~total~~judgments ~~of $6.0 million under~~and ~~this~~estimates ~~agreement~~used ~~and have agreed to fund an additional $3.6 million~~ in the ~~fourth~~preparation ~~quarter~~ of ~~2007.~~its Weconsolidated ~~have~~financial ~~the option to fund additional payments in subsequent fiscal years which will be based upon the level of incurred losses relative to the aggregate limit of coverage~~statements. As of September 30, 2007, the current aggregate limit of coverage under this policy is $146.0 million and the estimated loss reserve for claim losses and expenses in excess of the current aggregate limit recorded by the Company was $22.9 million.

~~Our~~There ~~provisions~~have ~~for~~been ~~losses~~no ~~under~~changes ~~the~~to ~~aggregate~~these ~~loss~~critical ~~limits of our policy in effect prior to March 12,~~accounting ~~2003,~~policies ~~and~~or ~~under~~their ~~our~~application ~~captive~~during ~~insurance~~the ~~and~~six ~~self-insurance~~months ~~programs~~ended ~~since March~~June 1230, ~~2003, are subject to periodic actuarial re-evaluation~~2008. The results of such periodic actuarial studies may result in either upward or downward adjustment to our previous loss estimates. The Company’s estimated loss reserves under such programs are discounted at 4.6%.

~~The~~Revenue ~~accounts~~Recognition ~~of the captive insurance company are fully consolidated with those of our other operations in the accompanying financial statements.~~

25Net Revenue. Net revenue consists of fee-for-service revenue, contract revenue and other revenue. Net revenue is recorded in the period services are rendered. Our net revenue is principally derived from the provision of healthcare staffing services to patients within healthcare facilities. The form of billing and related risk of collection for such services may vary by customer. The following is a summary of the principal forms of our billing arrangements and how net revenue is recognized for each.

~~Impairment~~A significant portion (80% of ~~Intangible~~our ~~Assets~~net revenue in the six months ended June 30, 2008 and the year ended December 31, 2007) resulted from fee-for-service patient visits. Fee-for-service revenue represents revenue earned under contracts in which we bill and collect the professional component of charges for medical services rendered by our contracted and employed physicians. Under the fee-for-service arrangements, we bill patients for services provided and receive payment from patients or their third-party payers. Fee-for-service revenue is reported net of contractual allowances and policy discounts. All services provided are expected to result in cash flows and are therefore reflected as net revenue in the financial statements. Fee-for-service revenue is recognized in the period that the services are rendered to specific patients and reduced immediately for the estimated impact of contractual allowances in the case of those patients having third-party payer coverage. The recognition of net revenue (gross charges less contractual allowances) from such visits is dependent on such factors as proper completion of medical charts following a patient visit, the forwarding of such charts to one of our billing centers for medical coding and entering into our billing systems and the verification of each patient’s submission or representation at the time services are rendered as to the payer(s) responsible for payment of such services. Net revenue is recorded based on the information known at the time of entering of such information into our billing systems as well as an estimate of the net revenue associated with medical charts for a given service period that have not been processed yet into our billing systems. The above factors and estimates are subject to change. For example, patient payer information may change following an initial attempt to bill for services due to a change in payer status. Such changes in payer status have an impact on recorded net revenue due to differing payers being subject to different contractual allowance amounts. Such changes in net revenue are recognized in the period that such changes in payer become known. Similarly, the actual volume of medical charts not processed into our

In22 assessing the recoverability of the Company’s intangibles, we must make assumptions regarding estimated future cash flows and other factors to determine the fair value of the respective assets. If these estimates or their related assumptions change in the future, we may be required to record impairment charges for these assets.

FactorsTable and Trends that Affect Our Results of Operations Contents

In billing ~~reading~~systems ~~our~~may ~~financial statements, you should~~ be ~~aware~~different offrom the ~~following~~amounts ~~factors~~estimated. ~~and~~Such ~~trends~~differences ~~that~~in wenet ~~believe~~revenue are ~~important~~adjusted in ~~understanding~~the ~~our~~following ~~financial~~month ~~performance~~based on actual chart volumes processed.

~~2008~~Contract ~~Proposed~~revenue ~~Medicare~~represents revenue generated under contracts in which we provide physician and other healthcare ~~Fee~~staffing ~~Schedule~~and ~~Change~~administrative services in return for a contractually negotiated fee. Contract revenue consists primarily of billings based on hours of healthcare staffing provided at agreed to hourly rates. Revenue in such cases is recognized as the hours are worked by our staff and contractors. Additionally, contract revenue also includes supplemental revenue from hospitals where we may have a fee-for-service contract arrangement. Contract revenue for the supplemental billing in such cases is recognized based on the terms of each individual contract. Such contract terms generally either provide for a fixed monthly dollar amount or a variable amount based upon measurable monthly activity, such as hours staffed, patient visits or collections per visit compared to a minimum activity threshold. Such supplemental revenues based on variable arrangements are usually contractually fixed on a monthly, quarterly or annual calculation basis considering the variable factors negotiated in each such arrangement. Such supplemental revenues are recognized as revenue in the period when such amounts are determined to be fixed and therefore contractually obligated as payable by the customer under the terms of the respective agreement.

OnOther ~~November 1,~~revenue ~~2007,~~consists ~~the~~primarily ~~Centers~~of ~~for~~revenue ~~Medicare &~~from ~~Medicaid~~management ~~Services~~and ~~(“CMS”)~~billing ~~announced~~services provided to outside parties. Revenue is recognized for ~~proposed~~such ~~changes~~services pursuant to the ~~Medicare~~terms ~~physician~~of ~~fee~~the ~~schedule~~contracts ~~methodology~~with customers. ~~The~~Generally, ~~proposed~~such ~~changes~~contracts ~~would~~consist ~~decrease~~of ~~emergency~~fixed ~~physician~~monthly ~~payments~~amounts bywith revenue recognized in the month services are rendered or as hourly consulting fees recognized as revenue as hours are worked in accordance with such arrangements. Additionally, we derive a ~~total~~portion of ~~12.1%~~our ~~starting~~revenues from providing billing services that are contingent upon the collection of third-party physician billings by us on ~~January 1,~~their ~~2008~~behalf. Such revenues are not considered earned and therefore not recognized as revenue until actual cash collections are achieved in accordance with the contractual arrangements for such services.

OfNet ~~the~~Revenue ~~12.1%~~Less ~~decrease~~Provision infor ~~reimbursement,~~Uncollectibles. aNet 2%revenue ~~decrease~~less ~~would~~provision ~~result~~for ~~from~~uncollectibles ~~proposed~~reflects ~~changes~~management’s inestimate ~~the~~of ~~Practice~~billed ~~Expense~~amounts ~~Relative~~to ~~Value~~ultimately ~~Units~~be ~~(“RVU”) for Evaluation and Management codes associated with emergency physicians~~collected. ~~Evaluation and~~ Management, ~~services are those which reflect time and effort that physicians spend with patients~~ in ~~assessing~~estimating ~~their condition and are~~ the ~~primary type of code~~ ~~billed~~amounts into ~~Emergency~~be ~~Medicine.~~collected ~~The~~resulting ~~proposed~~from ~~changes~~its ~~would~~over ~~apply~~seven tomillion ~~payments~~annual fee-for-service ~~services~~patient ~~furnished~~visits toand ~~Medicare~~procedures, ~~beneficiaries~~considers ~~beginning~~such infactors ~~2008.~~as ~~CMS~~prior iscontract ~~required~~collection toexperience, ~~impose~~current aperiod ~~budget neutrality adjustment if~~ changes in ~~RVUs~~payer ~~will~~mix ~~cause~~and anpatient ~~increase~~acuity orindicators, ~~decrease~~reimbursement inrate ~~overall~~trends ~~fee schedule outlays~~ in ~~excess~~governmental ofand ~~certain~~private ~~thresholds.~~sector Ininsurance ~~addition~~programs, toresolution ~~the~~of ~~proposed~~overprovision ~~changes~~account ~~in the RVU values~~balances, ~~CMS announced a proposed reduction in~~ the ~~Medicare~~estimated ~~Conversion~~impact ~~Factor~~of ~~(“Conversion~~billing ~~Factor”)~~system ~~applicable~~effectiveness toimprovement ~~all Medicare~~initiatives ~~physician~~and ~~fee~~trends ~~payments~~ in ~~the~~collections ~~amount~~from ofself-pay patients ~~10.1%~~and ~~for~~external ~~2008,~~collection ~~a reduction required by a statutory formula~~agencies. ~~There~~Such estimates are ~~several~~substantially ~~bills~~formulaic ~~currently proposed~~ in ~~the U~~nature.S. ~~Congress~~The toestimates ~~revise~~are ~~such~~continuously aupdated ~~result~~and toadjusted ~~eliminate~~if ~~the~~subsequent ~~proposed~~actual ~~12.1%~~collection ~~rate~~experience ~~decrease. However,~~indicates ~~management~~a ~~cannot~~change ~~predict the outcome of such bills~~ in ~~mitigating~~estimate ~~the~~is ~~current planned rate decrease~~necessary. ~~In the event that the total 12.1% rate reduction becomes effective in 2008, we estimate that it will negatively affect our revenues from~~Such ~~Medicare~~provisions and ~~other~~any ~~revenue~~subsequent ~~sources whose rates are linked to~~ changes in ~~the~~estimates ~~Medicare~~may ~~fee~~result ~~schedule rates by an estimated $23.9 million. Additional changes~~ in ~~managed~~adjustments ~~care~~to ~~revenues~~our ~~are~~operating ~~possible~~results ifwith ~~fee~~a ~~schedules~~corresponding ~~maintained~~adjustment byto ~~certain~~our ofaccounts ~~such organizations~~receivable ~~are~~allowance ~~revised~~for ~~based~~uncollectibles on ~~the~~our ~~Medicare~~balance ~~fee schedule changes~~sheet.

~~Partially~~Accounts ~~offsetting~~Receivable. ~~these~~As ~~emergency~~described ~~physician~~above ~~payment~~and ~~reductions~~below, is we determine the ~~available~~estimated ~~participation~~value inof aour ~~voluntary~~accounts ~~reporting~~receivable ~~program~~based on estimated cash collection run rates of estimated future collections by contract for ~~physicians~~patient ~~and~~visits ~~other~~under ~~healthcare~~our ~~practitioners~~fee-for-service contract revenue. Accordingly, ~~whereby~~we ~~eligible~~are ~~professionals~~unable ~~who~~to report ~~specific~~the ~~measures~~payer mix composition on ~~quality~~a dollar basis of ~~care~~our ~~furnished~~outstanding tonet ~~Medicare~~accounts ~~beneficiaries~~receivable. ~~may~~Our days ~~earn~~revenue ~~incentives~~outstanding ~~up to~~at 1June 30, 2008 and at December 31, 2007, were 63.5%0 days and 66.7 days, respectively. The number of ~~their~~days ~~total~~outstanding ~~allowed~~will ~~charges,~~fluctuate ~~subject~~over time due to a ~~cap~~number of factors. WeThe ~~estimate~~decrease ~~that~~in ~~participation~~average days outstanding of approximately 3.7 days includes a decrease of 4.4 days resulting from an increase in ~~this~~average ~~program~~revenue ~~will~~per day and a decrease of 0.7 days associated with the reduction of fee-for-service account receivables. These decreases were partially offset by an increase ~~our~~of ~~revenues~~1.4 days related to an increase in ~~2008~~the byvaluation of contract accounts receivable. The increase in average revenue per day is primarily attributable to an ~~estimated~~increase $2in gross charges and increased pricing with managed care plans. The decrease of 0.7 days associated with the reduction of fee-for-service accounts receivable and the increase of 1.4 days related to contract accounts receivable are due primarily to timing of cash collections. Our allowance for doubtful accounts totaled $161.1 million as of June 30, 2008.

~~2008~~23 ~~Allowable Billing Changes~~

InTable October 2007, the CPT Advisory Panel of the American Medical Association released a change in how certain emergency department physician services can be billed beginning January 1, 2008. The result of this change decreases the allowable amounts that can be billed for intravenous infusion of medications and rehydration treatment services rendered by the physician within a facility setting. We estimate that the impact from these changes will negatively affect our revenues by an estimated $4.7 million in fiscal year 2008. Contents

~~Military~~Approximately ~~Healthcare~~98% ~~Staffing~~of our allowance for doubtful accounts is related to gross fees for fee-for-service patient visits. Our principal exposure for uncollectible fee-for-service visits is centered in self-pay patients and, to a lesser extent, for co-payments and deductibles from patients with insurance. While we do not specifically allocate the allowance for doubtful accounts to individual accounts or specific payer classifications, the portion of the allowance associated with fee-for-service charges as of June 30, 2008, was equal to approximately 90% of outstanding self-pay fee-for-service patient accounts.

WeThe majority of our fee-for-service patient visits are afor ~~provider~~the provision of emergency care in hospital ~~healthcare~~settings. ~~professionals~~Due ~~that~~to ~~serve~~federal ~~military~~government ~~personnel~~regulations ~~and~~governing ~~their~~the ~~dependents~~providing inof ~~military~~such ~~treatment~~care, ~~facilities~~we ~~nationwide~~are ~~administered~~obligated byto provide emergency care regardless of the ~~Department~~patient’s ability to pay or whether or not the patient has insurance or other third-party coverage for the cost of ~~Defense~~the services rendered. ~~Our~~While ~~revenues~~we ~~derived~~attempt to obtain all relevant billing information at the time emergency care services are rendered, there are numerous patient encounters where such information is not available at time of discharge. In such cases where detailed billing information relative to insurance or other third-party coverage is not available at discharge, we attempt to obtain such information from ~~military~~the ~~healthcare~~patient ~~staffing~~or ~~totaled~~client ~~approximately~~hospital ~~$106~~billing record information subsequent to discharge to facilitate the collections process.0 Collections at the time of rendering such services (emergency room discharge) are not significant. Primary responsibility for collection of fee-for-service accounts receivable resides ~~million~~within inour internal billing operations. Once a claim has been submitted to a payer or an individual patient, employees within our billing operations have responsibility for the ~~first~~follow ~~nine~~up ~~months~~collection efforts. The protocol for follow up differs by payer classification. For self-pay patients, our billing system will automatically send a series of ~~2007~~dunning ~~compared~~letters on a prescribed time frame requesting payment or the provision of information reflecting that the balance due is covered by another payer, such as Medicare or a third-party insurance plan. Generally, the dunning cycle on a self pay account will run from 90 to ~~approximately~~120 ~~$121~~days.1 ~~million~~At the end of this period, if no collections or additional information is obtained from the patient, the account is no longer considered an active account and is transferred to a collection agency. Upon transfer to a collection agency, the patient account is written-off as a bad debt. Any subsequent cash receipts on accounts previously written off are recorded as a recovery. For non-self pay accounts, billing personnel will follow up and respond to any communication from payers such as requests for additional information or denials until collection of the account is obtained or other resolution has occurred. At the completion of our collection cycle, we factor on a non-recourse basis selected patient accounts to external collection agencies and consider the projected value of future factoring proceeds in the ~~same~~estimation ~~period~~of our overall accounts receivable valuation. For contract accounts receivable, invoices for services are prepared in ~~2006~~the various operating areas of the Company and mailed to our customers, generally on a monthly basis. Contract terms under such arrangements generally require payment within thirty days of receipt of the invoice. Outstanding invoices are periodically reviewed and operations personnel with responsibility for the customer relationship will contact the customer to follow up on any delinquent invoices. Contract accounts receivable will be considered as bad debt and written-off based upon the individual circumstances of the customer situation after all collection efforts have been exhausted, including legal action if warranted, and it is the judgment of management that the account is not expected to be collected.

26Methodology for Computing Allowance for Doubtful Accounts. We employ several methodologies for determining our allowance for doubtful accounts depending on the nature of the net revenue recognized. We initially determine gross revenue for our fee-for-service patient visits based upon established fee schedule prices. Such gross revenue is reduced for estimated contractual allowances for those patient visits covered by contractual insurance arrangements to result in net revenue. Net revenue is then reduced for our estimate of uncollectible amounts. Fee-for-service net revenue less provision for uncollectibles represents our estimated cash to be collected from such patient visits and is net of our estimate of account balances estimated to be uncollectible. The provision for uncollectible fee-for-service patient visits is based on historical experience resulting from over seven million annual patient visits. The significant volume of annual patient visits and the terms of thousands of commercial and managed care contracts and the various reimbursement policies relating to governmental healthcare programs do not make it feasible to evaluate fee-for-service accounts receivable on a specific account basis. Fee-for-service accounts receivable collection estimates are reviewed on a quarterly basis for each of our fee-for-service contracts by period of accounts receivable origination. Such reviews include the use of historical

~~Approximately~~24 $57.0 million of estimated annual revenue won by us as part of the military’s contract bidding process in 2006 was awarded to us on a one-year contract basis and was subject to re-bid and award on or about October 1, 2007. Approximately $98.1 million of estimated annual revenue won during the bidding process in 2006 was awarded to us on a two—five option year contract basis which gave the government the option to exercise available option years each October 1. The government reserves a portion of its contracts for award to small businesses. We participate in such small business awards to the extent we can serve as a sub-contractor to small businesses that win such bids. Approximately 25.6% of our military staffing revenue for the nine months ended September 30, 2007 is derived through a subcontracting agreement with a small business prime contractor compared to 27.9% for the same period in 2006.

TheTable Company was successful in retaining existing business or winning new bid awards following completion of the bidding process as of October 1, 2007, in the estimated annual amount of $164.6 million. Approximately $90.0 million of annual revenue derived from contracts presently held by other staffing providers or new government contract staffing opportunities were available for bid and awarded prior to October 1, 2007. The estimated amount recently awarded to us of $164.6 million included $43.1 million awarded under one-year contracts. Contents

~~Anesthesiology~~ cash collection percentages by contract adjusted for the lapse of time since the date of the patient visit. In addition, when actual collection percentages differ from expected results, on a contract by contract basis, supplemental detailed reviews of the outstanding accounts receivable balances may be performed by our billing operations to determine whether there are facts and circumstances existing that may cause a different conclusion as to the estimate of the collectibility of that contract’s accounts receivable from the estimate resulting from using the historical collection experience. Contract-related ~~services~~net revenue is billed based on the terms of the contract at amounts expected to be collected. Such billings are typically submitted on a monthly basis and aged trial balances prepared. Allowances for estimated uncollectible amounts related to such contract billings are made based upon specific accounts and invoice periodic reviews once it is concluded that such amounts are not likely to be collected. The methodologies employed to compute allowances for doubtful accounts were unchanged between 2008 and 2007.

InInsurance ~~January~~Reserves. ~~2007~~The nature of our business is such that it is subject to professional liability lawsuits. Historically, weto ~~completed~~mitigate a ~~strategic~~portion of ~~review~~this ofrisk, ~~our~~we ~~anesthesia~~have ~~management~~maintained ~~services~~insurance ~~business,~~for ~~and~~individual ~~based~~professional ~~upon~~liability ~~our~~claims ~~review~~with ~~concluded~~per ~~that~~incident ~~the~~and ~~existing~~annual ~~business~~aggregate ~~model~~limits ofper ~~providing~~physician ~~management~~for ~~services~~all incidents. Prior to ~~independent physician~~March 12, ~~groups~~2003, ~~was~~we ~~not~~obtained such insurance coverage from a commercial ~~viable~~insurance ~~long~~provider. ~~term~~Professional ~~strategy~~liability claims and ~~could~~lawsuits ~~not~~are ~~consistently~~routinely ~~meet~~reviewed by our ~~internal~~insurance ~~growth~~carrier ~~targets.~~and Asmanagement afor ~~result~~purposes of ~~this~~establishing ~~review,~~ultimate weloss ~~elected~~estimates. toProvisions ~~exit~~for ~~this~~estimated ~~non-core~~losses ~~business~~in ~~line.~~excess ~~The~~of ~~final~~insurance limits ~~phase~~have ofbeen ~~this~~provided ~~business~~at ~~line~~the ~~disposal~~time ~~was substantially~~such ~~completed~~determinations ~~during~~are ~~the~~made. ~~third~~In ~~quarter~~addition, where as a condition of ~~2007,~~a ~~therefore~~professional ~~under~~liability insurance policy the ~~provisions~~policy ofincludes ~~Statement~~a ofself-insured ~~Financial~~risk ~~Accounting~~retention ~~Standards~~layer ~~(SFAS)~~of ~~No. 144~~coverage, ~~“Accounting~~we have recorded a provision for estimated ~~the~~losses ~~Impairment~~likely ofto orbe ~~Disposal~~incurred ofduring ~~Long~~such ~~Lived~~periods ~~Assets”,~~and ~~we have~~within ~~reported~~such ~~the~~limits ~~results~~based ofon ~~the~~our ~~anesthesia~~past ~~operations~~loss asexperience ~~discontinued~~following ~~operations~~consultation ~~for~~with ~~all~~our ~~periods~~outside ~~presented~~insurance experts and claims managers.

~~Results~~Subsequent to March 11, 2003, we have provided for a significant portion of ~~Operations~~our professional liability loss exposures through the use of a captive insurance company and through greater utilization of self-insurance reserves. Since March 12, 2003, our professional liability costs consist of annual projected costs resulting from periodic actuarial studies along with the cost of certain professional liability commercial insurance premiums and programs available to us and costs incurred in the operation of the insurance program. An independent actuary firm is responsible for preparation of the periodic actuarial studies. Management’s estimate of our professional liability costs resulting from such actuarial studies is significantly influenced by assumptions, which are limited by the uncertainty of predicting future events, and assessments regarding expectations of several factors. These factors include, but are not limited to: hours of exposure as measured by hours of physician and related professional staff services as well as actual loss development trends; the frequency and severity of claims, which can differ significantly by jurisdiction; coverage limits of third-party insurance; the effectiveness of our claims management process; and the outcome of litigation.

~~The~~Our ~~following~~commercial ~~discussion~~insurance ~~provides~~policy anfor ~~analysis~~professional ofliability ~~our~~losses ~~results~~for ofthe ~~operations~~period ~~and~~March 12, ~~should~~1999 bethrough ~~read~~March 11, 2003, included insured limits applicable to such coverage in ~~conjunction~~the period. Effective April 2006, we executed an agreement with ~~our~~the ~~unaudited~~commercial ~~consolidated~~insurance ~~financial statements~~provider that issued the policy that ended March 11, 2003 to increase the existing $130.0 ~~The~~million ~~operating~~aggregate ~~results~~limit of coverage. Under the ~~periods~~terms ~~presented~~of ~~were~~the ~~not~~agreement, ~~significantly~~we ~~affected~~will bymake ~~general~~periodic premium ~~inflation~~payments into the ~~U.S.~~commercial ~~economy.~~insurance ~~Net~~company ~~revenue~~and ~~less~~the total aggregate limit of coverage under the ~~provision~~policy ~~for~~will ~~uncollectibles~~be isincreased anby ~~estimate~~a portion of ~~future~~the ~~cash~~premiums ~~collections~~paid. ~~and~~We ashave committed to fund premiums such itthat isthe atotal ~~key~~aggregate limit of coverage ~~measurement~~under bythe ~~which~~program ~~management~~remains ~~evaluates~~greater ~~performance~~than the paid losses at any point in time. During fiscal year 2007, we funded a total of ~~individual~~$9.6 ~~contracts~~million asunder ~~well~~this asagreement. For the ~~Company~~six asmonths ended June 30, 2008 we funded a ~~whole~~total of $1.5 ~~The~~million ~~following~~under ~~table~~this agreement. ~~sets~~We ~~forth~~have the ~~components~~option to fund additional payments which will be based upon the level of ~~net~~incurred ~~earnings~~losses asrelative ato ~~percentage~~the aggregate limit of ~~net~~coverage ~~revenue~~at ~~less~~that ~~provision~~time. ~~for~~As ~~uncollectibles~~of ~~for~~June 30, 2008, the current aggregate limit of coverage under this ~~periods~~policy ~~indicated:~~is $150.8 million and the estimated loss reserve for claim losses and expenses in excess of the current aggregate limit recorded by the Company was $15.3 million.

	Three Months EndedSeptember 30,				Nine Months EndedSeptember 30,
	2007		2006		2007		2006
Net revenue less provision for uncollectibles	100.0	%	100.0	%	100.0	%	100.0	%
Professional service expenses	76.7		76.1		76.6		75.8
Professional liability costs	0.3		4.5		0.8		3.0
Gross profit	22.9		19.4		22.6		21.1
General and administrative expenses	9.1		9.2		9.1		9.3
Management fee and other expenses	0.4		0.3		0.3		0.3
Depreciation and amortization	1.2		2.2		1.2		2.5
Interest expense, net	4.3		5.4		4.5		5.3
Earnings from continuing operations before income taxes	7.9		2.3		7.5		3.7
Provision for income taxes	3.0		0.8		2.9		1.4
Earnings from continuing	5.0		1.6		4.6		2.3
Earnings (loss) from discontinued operations, net of taxes	0.0		0.0		(0.1	)	(0.9	)
Net earnings	4.9		1.6		4.6		1.4

Our provisions for losses under the aggregate loss limits of our policy in effect prior to March 12, 2003, and under our captive insurance and self-insurance programs since March 12, 2003, are subject to periodic actuarial

2725

ThreeTable Monthsof Ended September 30, 2007 Compared to the Three Months Ended September 30, 2006 Contents

~~Net Revenue. Net revenue in the three months ended September 30, 2007 increased $69.9 million or 14.5%, to $550.9~~ ~~million from $481~~re-evaluation.0 ~~million in the three months ended September 30, 2006.~~ The ~~increase~~results ~~in net revenues~~ of ~~$69.9~~such ~~million~~periodic ~~resulted~~actuarial ~~primarily~~studies ~~from~~may ~~increases~~result in ~~fee-for-service~~either ~~revenue~~upward ofor ~~$70.2~~downward ~~million~~adjustment ~~and~~to ~~contract~~our ~~revenue~~previous ofloss $1estimates.7 ~~million. These~~The ~~increases~~Company’s ~~were~~estimated ~~slightly~~loss ~~offset~~reserves byunder asuch ~~$1.9~~programs ~~million~~are ~~decrease~~discounted inat ~~other revenue. In the three months ended September 30, 2007, fee-for-service revenue was 80.6% of net revenue compared to 77.7% in 2006, contract revenue was 18.~~3~~% of net revenue in 2007 compared to 20~~.6% ~~in 2006 and other revenue was 1~~.1% in 2007 compared to 1.6% in 2006. The decrease in other revenue is due to the $2.1 million favorable settlement of a lawsuit involving a terminated staffing contract arrangement in the three months ended September 30, 2006.

~~Provision for Uncollectibles.~~ The ~~provision~~accounts ~~for~~of ~~uncollectibles~~the ~~was~~captive ~~$236.3~~insurance ~~million~~company inare ~~the~~fully ~~three~~consolidated months ended September 30, 2007 compared to $197.7 million in the corresponding period in 2006, an increase of $38.6 million or 19.5%. The provision for uncollectibles as a percentage of net revenue was 42.9% in 2007 compared with ~~41.1% in~~those 2006. The provision for uncollectibles is primarily related to revenue generated under fee-for-service contracts that is not expected to be fully collected. The period over period increase in the provision is due to a combination of ~~increases~~our ~~in the total billed patient volume, annual increases in gross fee schedules and an increase in self pay gross accounts receivable relative to~~ other ~~payer~~operations ~~types. For the three months ended September 30, 2007 self pay fee-for-service patient visits were approximately 23.8% of total fee-for-service patient visits compared to approximately 22.5%~~ in the ~~same~~accompanying ~~period~~financial ~~of 2006~~statements.

~~Net Revenue~~Impairment Less Provision for Uncollectibles. Net revenue less provision for uncollectibles in the three months ended September 30, 2007 increased $31.3 million, or 11.1%, to $314.6 million from $283.3 million in the three months ended September 30, 2006. Same contract revenues, which consists of ~~contracts~~Intangible ~~under management in both periods, increased $16.6 million, or 6.8%, to $260.2 million in 2007 compared to $243.7 million in 2006. The increase in same contract revenue of~~Assets 6.8% consists primarily of increases in patient dollar volume between periods which contributed 1.9% of the growth, an increase in our estimated net revenue per billing unit of 3.5% and an increase of 0.4% associated with a change in prior year revenue estimates. The increase in estimated collections per billing unit is associated primarily with annual increases in gross charges, managed care and Medicare pricing improvements, increased patient acuity, and improvements in realized cash collections, offset by an unfavorable shift in payer mix reflecting an increase in the percentage of self pay volume between periods. Also contributing to the increase is a 0.4% increase associated with a net increase in settlements with managed care plans between periods. Contract and other revenue contributed approximately 0.6% of the increase. The remainder of the increase in revenue less provision for uncollectibles between periods is due to new contracts obtained through internal sales of $34.7 million partially offset by $21.1 million of revenue derived from contracts that terminated during the periods. Acquisitions contributed $1.2 million of growth between periods.

~~Professional~~In ~~Service~~assessing ~~Expenses.~~the ~~Professional~~recoverability ~~service~~of ~~expenses,~~the ~~which~~Company’s ~~include physician costs~~intangibles, ~~billing~~we ~~and~~must ~~collection~~make ~~expenses,~~assumptions ~~and~~regarding ~~other professional~~estimated ~~expenses,~~future ~~totaled~~cash ~~$241.4~~flows ~~million~~and other infactors ~~the three months ended September 30, 2007 compared~~ to ~~$215.5~~determine ~~million in~~ the ~~three~~fair ~~months~~value ~~ended September 30, 2006, an increase~~ of ~~$25.9~~the ~~million~~respective ~~or 12~~assets.~~0%.~~ ~~The~~If ~~increase~~these ofestimates ~~$25.9~~or ~~million included~~their anrelated ~~increase~~assumptions ofchange ~~approximately $11.2 million which resulted principally from increases~~ in the ~~number~~future, ofwe ~~provider~~may ~~hours~~be ~~staffed~~required ~~and the average rates paid per hour of provider service on a same contract basis. Also contributing~~ to ~~the~~record ~~increase in~~impairment ~~expense~~charges ~~was~~for ~~$1.0~~these ~~million related to our acquisitions and $13~~assets.6 ~~million related to new sales net of terminated contracts.~~

~~Professional~~Factors ~~Liability~~and ~~Costs.~~Trends ~~Professional~~that ~~liability~~Affect ~~costs~~Our ~~were~~Results ~~$1.1 million in the three months ended September 30, 2007 compared with $12.8 million in the three months ended September 30, 2006 for a decrease~~ of ~~$11.7 million.~~Operations Professional liability costs for the three months ended September 30, 2007 include reductions in professional liability reserves relating to prior years resulting from our recent actuarial study completed in October of 2007 of $12.5 million. Excluding the favorable actuarial adjustments, professional liability costs

28In reading our financial statements, you should be aware of the following factors and trends that we believe are important in understanding our financial performance.

~~increased~~2008 ~~$0.7 million between periods primarily due to an increase in provider hours in 2007. The increase in provider hours is predominantly a result of our net growth~~ and, to2009 aMedicare ~~lesser~~Fee ~~extent,~~Schedule ~~increased~~Changes provider hours staffed on a same contract basis. The reduction in prior professional liability reserves is due to favorable trends in loss estimates primarily associated with improvements in overall frequency of claims reported and favorable changes in loss development assumptions.

~~Gross~~During ~~Profit. Gross profit was $72.2 million in the three months ended September 30~~2007, ~~2007 compared to $55.0 million in~~ the ~~same~~Centers ~~period in 2006~~ for anMedicare & Medicaid ~~increase~~Services of(“CMS”) ~~$17.2~~initially ~~million~~announced ~~between~~a ~~periods.~~proposed ~~Included~~reduction in the ~~$17.2~~Medicare ~~million~~Conversion ~~increase~~Factor is(“Conversion aFactor”) ~~decrease~~applicable into ~~professional~~all ~~liability~~Medicare ~~costs~~physician ~~between periods~~fee ofpayments ~~$12.5 million resulting from our actuarial study completed~~ in ~~October 2007. Excluding~~ the ~~impact~~amount of ~~the decrease in professional liability costs profit increased $4~~10.71% ~~million.~~for ~~The increase in gross profit~~2008, ~~excluding~~a ~~the~~reduction ~~decrease~~required inby ~~professional liability costs, is primarily due to improvements on~~ a ~~same~~statutory ~~contract basis between periods~~formula.

~~Gross~~CMS ~~profit~~also asannounced that emergency physicians would see a ~~percentage~~further reduction of approximately 2.0% resulting from ~~revenue~~proposed ~~less~~changes ~~provision~~in the Practice Expense Relative Value Units (“RVU”) for ~~uncollectibles~~Evaluation ~~increased~~and toManagement 22codes associated with emergency physicians.9% inEvaluation ~~2007~~and ~~compared~~Management services are those which reflect time and effort that physicians spend with 19patients in assessing their condition and are the primary type of code billed in Emergency Medicine.4% The initial proposed reduction in ~~2006~~2008 Medicare payments was 12.1% for emergency physicians.

~~General~~In ~~and~~December ~~Administrative Expenses.~~2007, ~~General~~President Bush signed into law the Medicare, Medicaid and ~~administrative~~SCHIP ~~expenses~~Extension ~~increased~~Acts $2of 2007.4 ~~million~~The tolegislation ~~$28~~provided a 0.5% ~~million~~positive update for the ~~three~~2008 ~~months~~Medicare ~~ended~~Physician ~~September 30,~~Fee ~~2007~~Schedule ~~from~~for ~~$26.1~~the ~~million~~six inmonth ~~the~~period ~~three~~from ~~months~~January 1, ~~ended~~2008 ~~September~~to June 30, ~~2006~~2008. ~~General~~In July 2008, Congress passed the Medicare Improvement Act for Patients and ~~administrative~~Providers. ~~expenses~~The as legislation provides a 0.5% ~~percentage~~increase offor ~~net~~the ~~revenue~~2008 ~~less~~Medicare ~~provision~~Physician Fee Schedule for ~~uncollectibles~~the ~~were~~period 9from July 1, 2008 through December 31, 2008 (effectively taking the originally proposed 10.1% inreduction ~~2007~~to ~~and~~a 90.25% ~~in 2006~~increase). The new legislation also provides for a 1.1% increase in ~~general~~2009 over the 2008 rates and ~~administrative~~extends ~~expenses~~the ofPhysician ~~$2.4~~Quality ~~million~~Reporting ~~between~~Initiative ~~periods~~(PQRI) isthrough ~~primarily~~2010, ~~due~~increasing the reporting bonus from 1.5% in 2008 to ~~new~~2.0% ~~positions~~in 2009 and ~~inflationary~~2010. ~~growth~~The innew legislation did not affect the 2.0% decrease ~~salaries~~from ~~and~~the ~~increases~~changes in ~~incentive~~the ~~plan~~emergency ~~and~~medicine ~~commission~~RVU ~~costs~~factors.

~~Management~~The ~~Fee~~total ~~and~~estimated ~~Other~~reduction ~~Expenses.~~in ~~Management~~emergency ~~fee~~physician ~~and~~reimbursement ~~other~~rates ~~expenses~~through ~~were~~December 31, $2008 is 1.25%, ~~million~~which we estimate will negatively affect our revenues from Medicare and other revenue sources whose rates are linked to changes in the Medicare fee schedule by an estimated $01.90 million infor the ~~three~~six ~~months~~month ~~ended~~period ~~September~~from July 301, ~~2007~~2008 ~~and~~to ~~2006~~December 31, ~~respectively~~2008.

~~Depreciation~~2008 ~~and Amortization.~~Coding ~~Depreciation~~ and ~~amortization~~Billing ~~was~~Changes $3.9 million in the three months ended September 30, 2007 compared to $6.1 million for the three months ended September 30, 2006. Depreciation and amortization expense decreased $2.2 million between periods due to a decrease in amortization expense of $2.6 million. The decline in amortization expense was due primarily to contract intangibles being fully amortized during 2007 partially offset by an increase in contract intangibles related to acquisitions that occurred in 2007.

~~Net~~We ~~Interest~~are ~~Expense.~~subject ~~Net~~to ~~interest~~various ~~expense~~coding ~~decreased~~and ~~$1.6~~billing ~~million~~criteria related to ~~$13.6~~ ~~million~~how incertain ~~the~~emergency ~~three~~department ~~months~~physician ~~ended~~services ~~September 30,~~can ~~2007,~~be ~~compared to $15~~billed.2 ~~million~~The inway ~~the~~we ~~corresponding~~are ~~period~~able ~~in 2006 primarily due~~ to bill ~~the~~for ~~reduction~~these ofservices ~~our~~may ~~interest~~be ~~rate~~modified onor ~~the~~changed ~~term~~from ~~loan~~time asto atime ~~result~~eliminating ofor ~~the~~reducing ~~second quarter 2007 amendment to~~ our ~~senior~~reimbursement ~~credit~~for ~~agreement,~~these ~~lower~~services. ~~revolver~~The ~~borrowings~~annual ~~between~~negative ~~periods~~revenue ~~and~~impact ~~an increase in interest income from investments~~ of ~~our~~the ~~insurance subsidiary.~~

~~Earnings~~26 from Continuing Operations before Income Taxes. Earnings from continuing operations before income taxes in the three months ended September 30, 2007 were $24.9 million compared to $6.6 million in the corresponding period in 2006.

ProvisionTable forof Income Taxes. The provision for income taxes was $9.4 million in the three months ended September 30, 2007 compared to $2.2 million in the corresponding period in 2006. Contents

~~Earnings~~ changes ~~from~~currently ~~Continuing~~in ~~Operations.~~effect, including the elimination of our capability to bill for intravenous infusion of medications and rehydration treatment services ~~Earnings~~in ~~from~~hospital ~~continuing~~emergency ~~operations~~department ~~were~~settings, is estimated to be approximately $1510.60 million ~~compared~~during 2008. We are working to ~~$4.4~~counter ~~million~~the inadverse impact of the ~~corresponding~~reimbursement ~~period~~reductions currently in ~~2006~~effect as well as any future reimbursement reductions through a variety of initiatives, including improved provider productivity, increases in the efficiency and effectiveness of our revenue cycle process, and the reduction or deferral of certain operating costs.

~~Earnings (loss)~~Anesthesiology from Discontinued Operations, net of taxes. Earnings (loss) from discontinued operations, net of taxes was a loss of $0.2 million for the three months ended September 30, 2007 compared to earnings of $0.1 million in the corresponding period in 2006. Contributing to the loss in 2007 were $0.1 million of severance and other exit costs related toservices ~~the disposal of the anesthesia business unit.~~

~~Net~~In ~~Earnings.~~January ~~Net~~2007, ~~earnings~~we completed ~~were~~a ~~$15.4~~strategic ~~million~~review inof our anesthesia management services business, and based upon our review concluded that the ~~three~~existing ~~months~~business ~~ended~~model ~~September 30~~of providing management services to independent physician groups was not a viable long term strategy and could not consistently meet our internal growth targets. As a result of this review, ~~2007~~we ~~compared~~elected to $4exit this non-core business line.5 ~~million~~The final phase of this business line disposal was completed in 2007 with no continuing operations in 2008, therefore under the ~~three~~provisions ~~months~~of ~~ended~~Statement ~~September~~of Financial Accounting Standards (“SFAS”) No. 30144, ~~2006~~“Accounting for the Impairment of or Disposal of Long Lived Assets”, we have reported the results of the anesthesia operations as discontinued operations for all applicable periods presented.

29Results of Operations

~~Nine~~The ~~Months~~following ~~Ended~~discussion ~~September 30,~~provides ~~2007~~an ~~Compared~~analysis toof our results of operations and should be read in conjunction with our unaudited consolidated financial statements. The operating results of the ~~Nine~~periods ~~Months~~presented ~~Ended~~were ~~September 30,~~not ~~2006~~significantly affected by general inflation in the U.S. economy. Net revenue less the provision for uncollectibles is an estimate of future cash collections and as such it is a key measurement by which management evaluates performance of individual contracts as well as the Company as a whole. The following table sets forth the components of net earnings as a percentage of net revenue less provision for uncollectibles for the periods indicated:

Net Revenue. Net revenue in the nine months ended September 30, 2007 increased $208.5 million or 15.5%, to $1,555.1 million from $1,346.6 million in the nine months ended September 30, 2006. The increase in net revenues of $208.5 million resulted primarily from increases in fee-for-service revenue of $184.4 million, contract revenue of $23.6 million and other revenue of $0.4 million. In the nine months ended September 30, 2007, fee-for-service revenue was 79.3% of net revenue compared to 77.9% in 2006, contract revenue was 19.5% of net revenue in 2007 compared to 20.8% in 2006 and other revenue was 1.2% in 2007 compared to 1.3% in 2006.


	Three Months Ended June 30,				Six Months Ended June 30,
	2008		2007		2008		2007
Net revenue less provision for uncollectibles	100.0	%	100.0	%	100.0	%	100.0	%
Professional service expenses	77.1		77.2		77.2		76.5
Professional liability costs	3.7		3.9		1.9		1.0

Gross profit	19.2		18.9		20.9		22.5
General and administrative expenses	9.2		8.9		8.9		9.1
Management fee and other expenses	0.3		0.3		0.3		0.3
Transaction costs	0.5		—		0.3		—
Depreciation and amortization	1.2		1.2		1.2		1.2
Interest expense, net	3.3		4.4		3.5		4.6

Earnings from continuing operations before income taxes	4.7		4.1		6.8		7.3
Provision for income taxes	1.9		1.6		2.7		2.8

Earnings from continuing operations	2.9		2.5		4.1		4.5
Loss from discontinued operations, net of taxes	—		—		—		(0.1	)

Net earnings	2.9	%	2.5	%	4.1	%	4.4	%

~~Provision~~27 for Uncollectibles. The provision for uncollectibles was $636.6 million in the nine months ended September 30, 2007 compared to $538.0 million in the corresponding period in 2006, an increase of $98.6 million or 18.3%. The provision for uncollectibles as a percentage of net revenue was 40.9% in 2007 compared with 40.0% in 2006. The provision for uncollectibles is primarily related to revenue generated under fee-for-service contracts that is not expected to be fully collected. The period over period increase in the provision is due to a combination of increases in the total billed patient volume, annual increases in gross fee schedules and an increase in self pay gross accounts receivable relative to other payer types. For the nine months ended September 30, 2007 self pay fee-for-service patient visits were approximately 22.5% of total fee-for-service patient visits compared to approximately 21.4% in the same period of 2006.

NetTable Revenue Less Provision for Uncollectibles. Net revenue less provision for uncollectibles in the nine months ended September 30, 2007 increased $109.9 million, or 13.6%, to $918.5 million from $808.6 million in the nine months ended September 30, 2006. Same contract revenues, which consists of contracts under management in both periods, increased $45.7 million, or 6.7%, to $725.0 million in 2007 compared to $679.3 million in 2006. The increase in same contract revenue of 6.7% consists primarily of increases in patient dollar volume between periods which contributed 2.4% of the growth, an increase in our estimated net revenue per billing unit of 3.5% and an increase of 0.8% associated with a change in prior year revenue estimates. The increase in estimated collections per billing unit is associated primarily with annual increases in gross charges, managed care and Medicare pricing improvements, increased patient acuity, and improvements in realized cash collections, offset by an unfavorable shift in payer mix reflecting an increase in the percentage of self pay volume between periods. Contract and other revenue contributed approximately 0.8% of the increase. These increases were partially offset by a decline of approximately 0.8% associated with a net decline in settlements with managed care plans between periods. The remainder of the increase in revenue less provision for uncollectibles between periods is due to new contracts obtained through internal sales of $93.0 million partially offset by $57.2 million of revenue derived from contracts that terminated during the periods. Acquisitions contributed $28.4 million of growth between periods. Contents

~~Professional~~Three ~~Service~~Months ~~Expenses.~~Ended ~~Professional service expenses, which include physician costs, billing and collection expenses, and other professional expenses, totaled $703.4 million in the nine months ended September~~June 30, ~~2007~~2008 ~~compared~~Compared to ~~$613.3 million in~~ the ~~nine~~Three ~~months~~Months ~~ended~~Ended ~~September~~June 30, ~~2006, an increase of $90.1 million or 14.7%. The increase of~~2007 $90.1 million included an increase of approximately $34.4 million which resulted principally from increases in the number of provider hours staffed and the average rates paid per hour of provider service on a same contract basis. Also contributing to the increase in expense was $21.2 million related to our acquisitions and $34.5 million related to new sales net of terminated contracts.

~~Professional~~Net ~~Liability Costs~~Revenue. ~~Professional~~Net ~~liability~~revenue ~~costs were $7.3 million~~ in the ~~nine~~three months ended ~~September~~June 30, ~~2007~~2008 ~~compared~~increased ~~with~~$60.8 million or 11.7%, to $24579.50 million from $518.2 million in the ~~nine~~three months ended ~~September~~June 30, ~~2006~~2007. ~~for~~The aincrease ~~decrease~~in net revenue of $1760.2 8 million. ~~Professional~~resulted ~~liability~~primarily ~~costs~~from ~~include~~increases ~~reductions~~ in ~~professional~~fee-for-service ~~liability~~revenue ~~reserves~~of ~~relating~~$52.1 tomillion ~~prior~~and ~~years~~contract ~~resulting~~revenue ~~from~~of ~~actuarial~~$9.7 ~~studies~~million. ~~completed~~These inincreases ~~April~~were slightly ~~and~~offset ~~October~~by ofa ~~each year of~~ $~~32.~~1.0 million decrease in ~~2007~~other ~~and $12~~revenue.1 ~~million~~In inthe ~~2006. Excluding~~three ~~the~~months ~~favorable~~ended ~~actuarial~~June 30, ~~adjustments~~2008, ~~professional~~fee-for-service ~~liability~~revenue ~~costs~~was ~~increased $2~~79.89% ~~million~~of ~~between~~net ~~periods~~revenue ~~primarily~~compared ~~due~~ to an79.2% ~~increase~~ in ~~provider hours in~~ 2007., ~~The~~contract ~~increase~~revenue inwas ~~provider~~19.2% ~~hours~~of isnet ~~predominately~~revenue ain ~~result~~2008 ofcompared ~~our~~to 19.5% ~~net~~in ~~growth~~2007 and ~~acquisitions~~ ~~and~~other torevenue awas ~~lesser~~1.0% ~~extent~~in ~~increased~~2008 ~~provider~~compared ~~hours~~to ~~staffed~~1.3% in 2007.

Provision for Uncollectibles. The provision for uncollectibles was $243.5 million in the three months ended June 30, 2008 compared to $215.4 million in the corresponding period in 2007, an increase of $28.1 million or 13.1%. The provision for uncollectibles as a percentage of net revenue was 42.1% in 2008 compared with 41.6% in 2007. The provision for uncollectibles is primarily related to revenue generated under fee-for-service contracts that is not expected to be fully collected. The period over period increase in the provision is due to a combination of increases in the total billed patient volume and annual increases in gross fee schedules. For the three months ended June 30, 2008 self pay fee-for-service visits were approximately 22.1% of the total fee-for-service visits compared to approximately 22.2% in the same period of 2007.

Net Revenue Less Provision for Uncollectibles. Net revenue less onprovision afor ~~same~~uncollectibles ~~contract~~in ~~basis~~the three months ended June 30, 2008 increased $32.7 ~~The~~million, ~~reduction~~or 10.8%, to $335.5 million from $302.8 million in ~~prior~~the ~~year~~three ~~professional~~months ~~liability~~ended ~~reserves~~June 30, is2007. ~~due~~Same contract revenue, which consists of contracts under management in both periods, increased $17.5 million, or 6.3%, to ~~favorable~~$297.2 ~~trends~~million in ~~loss~~2008 ~~estimates~~compared ~~primarily~~to ~~associated~~$279.6 ~~with~~million in 2007. The increase in same contract revenue of 6.3% consists of increases in patient dollar volume between periods which ~~improvements~~contributed 1.4% of the growth and increases in contract and other revenue which contributed approximately 2.1% of the ~~overall~~growth ~~frequency~~between periods. Increases in estimated collections per billing unit contributed 1.9% of ~~claims~~the ~~reported~~growth in same contract revenue as annual increases in gross charges and ~~favorable~~managed care pricing improvements were offset by reductions in Medicare reimbursements and by reductions in patient acuity between periods primarily as a result of coding changes that became effective during 2008. Changes in ~~loss~~prior ~~development~~year ~~assumptions~~revenue estimates increased same contract revenue growth by 0.2% and settlements with managed care plans contributed 0.7% of same contract growth. The remainder of the increase in revenue less provision for uncollectibles between periods is due to new contracts obtained through internal sales of $34.7 million partially offset by $21.0 million of revenue derived from contracts that terminated during the periods. Acquisitions contributed $1.5 million of growth between periods.

~~Gross~~Professional ~~Profit~~Service Expenses. ~~Gross~~Professional service expenses, which include physician costs, billing and ~~profit~~collection ~~was~~expenses, and other professional expenses, totaled $~~207~~258.86 million in the ~~nine~~three months ended ~~September~~June 30, ~~2007~~2008 compared to $~~170~~233.87 million in the ~~same~~three ~~period~~months inended ~~2006~~June 30, ~~for~~2007, an increase of $3724.09 million ~~between~~or ~~periods~~10.6%. ~~Included~~The inincrease ~~the~~ of $3724.09 million ~~increase~~included isan aincrease ~~net decrease in professional liability costs between periods~~ of approximately $2012.07 million ~~resulting~~which ~~from~~resulted ~~the~~principally ~~actuarial~~from ~~studies~~increases ~~completed~~ in ~~April~~the ~~and~~number ~~October~~ of ~~each~~provider ~~year.~~hours ~~Excluding~~staffed and the ~~impact~~average ofrates ~~the~~paid ~~net~~per ~~decrease~~hour inof ~~professional~~provider ~~liability~~service ~~costs~~on ~~gross~~a ~~profit~~same ~~increased~~contract ~~$17~~basis.~~0 million.~~ ~~The~~Also ~~increase~~contributing to ~~in gross profit, excluding~~ the ~~decrease~~increase in ~~professional~~expense ~~liability~~was ~~costs,~~$11.1 ismillion ~~primarily~~related ~~due~~ to ~~the~~new ~~contribution~~sales ~~from~~net ~~our~~of ~~2007~~terminated ~~acquisitions~~contracts and ~~improvements~~$1.0 onmillion arelated ~~same~~to ~~contract~~our ~~basis between periods~~acquisitions.

~~Gross~~Professional ~~profit~~Liability asCosts. aProfessional ~~percentage~~liability ofcosts ~~revenue~~were ~~less~~$12.5 ~~provision~~million in the three months ended June 30, 2008 compared to $11.9 million in the three months ended June 30, 2007 for ~~uncollectibles~~an ~~was~~increase 22of $0.6% million. Costs associated with an increase in ~~2007~~provider ~~compared~~hours due to ~~21.1%~~net growth and increased provider hours staffed on a same contract basis have been partially offset by a decrease in ~~2006~~the actuarial estimate of current period losses under our self insurance program.

~~General~~Gross ~~and Administrative Expenses~~Profit. ~~General~~Gross ~~and~~profit ~~administrative~~was ~~expenses increased~~ $864.34 million toin ~~$83.3 million for~~ the ~~nine~~three months ended ~~September~~ June 30, ~~2007~~2008 ~~from~~compared to $7557.02 million in the same ~~nine~~period ~~months~~in ~~ended~~2007 ~~September 30,~~for ~~2006~~an increase of $7.2 ~~General~~million ~~and~~between ~~administrative~~periods. ~~expenses~~Gross profit as a percentage of net revenue less provision for uncollectibles ~~were~~increased 9to 19.12% in ~~2007~~2008 ~~and~~compared 9with 18.39% in ~~2006~~2007. ~~Acquisitions contributed $2.3 million of the increase in general and administrative expenses.~~ The ~~remaining $6.0 million~~ increase in ~~general~~gross ~~and~~profit ~~administrative~~is ~~expenses in 2007 are increases~~ primarily ~~related~~ due to ~~new~~the ~~positions~~contribution ~~and~~from ~~inflationary~~our ~~growth~~new incontracts ~~salaries~~ and ~~benefits~~improvements ~~and~~on ~~increases~~a insame ~~incentive~~contract ~~plan~~basis ~~and~~between ~~commission costs~~periods.

~~Management~~28 ~~Fee and Other Expenses. Management fee and other expenses were $3.0 million and $2.7 million in the nine months ended September 30, 2007 and 2006, respectively.~~

DepreciationTable and Amortization. Depreciation and amortization was $11.0 million in the nine months ended September 30, 2007 compared to $19.9 million for the nine months ended September 30, 2006. Depreciation and amortization expense decreased $8.9 million between periods due to a decrease in amortization expense of $10.0 million. The decline in amortization expense was due primarily to contract intangibles being fully amortized during 2007 partially offset by an increase in contract intangibles related to acquisitions that occurred in 2007 and 2006. Contents

~~Net~~General ~~Interest~~and ~~Expense~~Administrative Expenses. ~~Net~~General ~~interest~~and ~~expense~~administrative ~~decreased~~expenses increased $13.7 8 million to $4130.48 million infor the ~~nine~~three months ended ~~September~~June 30, ~~2007,~~2008 ~~compared~~from to $4327.10 million in the ~~corresponding~~three ~~period~~months ended June 30, 2007. General and administrative expenses as a percentage of net revenue less provision for uncollectibles increased to 9.2% in 2008 ~~2006~~from 8.9% in 2007. The ~~decrease~~increase in ~~net~~general ~~interest~~and ~~expense~~administrative expenses is primarily due to aninflationary ~~increase~~growth in ~~interest~~salaries ~~income~~and ~~from~~increased ~~investments~~incentive ofplan ~~our insurance~~and ~~subsidiary~~relocation costs, higher travel costs and aan ~~decrease~~increase in ~~revolver~~severance ~~borrowings~~costs between periods.

~~Earnings~~Management ~~From~~Fee ~~Continuing~~and ~~Operations~~Other ~~before Income Taxes~~Expenses. ~~Earnings~~Management ~~from~~fee ~~continuing~~and ~~operations~~other ~~before~~expenses ~~income~~were ~~taxes~~$0.9 million in the ~~nine~~three months ended ~~September~~ June 30, ~~2007~~2008 ~~were~~and ~~$69~~2007.1 ~~million compared to $30.1 million in the corresponding period in 2006.~~

~~Provision~~Depreciation ~~for~~and ~~Income Taxes~~Amortization. ~~The~~Depreciation ~~provision~~and ~~for~~amortization ~~income~~expense ~~taxes~~ was $264.61 million in the ~~nine~~ three months ended ~~September~~June 30, ~~2007~~2008 compared to $113.6 million infor the ~~corresponding~~three ~~period~~months ended June 30, 2007. The increase of $0.5 million between periods was primarily due to higher depreciation expense related to growth in ~~2006~~capital expenditures and increased amortization expense associated with acquisitions completed in 2007 and 2008.

~~Earnings~~Net ~~From~~Interest ~~Continuing Operations~~Expense. ~~Earnings~~Net ~~from~~interest ~~continuing~~expense decreased ~~operations~~$2.4 ~~were~~million to $4211.6 0 million in the ~~nine~~three months ended ~~September~~June 30, ~~2007~~2008, compared to $1813.53 million in the corresponding period in ~~2006~~2007 primarily due to a lower interest rate environment in 2008.

~~Loss~~Transaction ~~from Discontinued Operations, net of taxes~~Costs. ~~Loss~~Transaction ~~from~~costs ~~discontinued~~were ~~operations, net of taxes was~~ $01.58 million infor the ~~nine~~three months ended ~~September~~June 30, ~~2007 compared to a loss of $6~~2008.9 ~~million~~These incosts ~~the~~relate ~~corresponding period in 2006. Contributing~~ to ~~the~~advisory, legal, ~~loss~~accounting ~~in 2007 were $1.0 million of severance~~ and other ~~exit~~fees ~~costs~~incurred related to ~~the~~ongoing ~~disposal~~acquisition ofdiscussions ~~the~~that ~~anesthesia~~terminated ~~business unit. The loss~~ in ~~2006~~June ~~includes an impairment loss of $9~~2008.5 ~~million.~~

~~Net~~ Earnings. ~~Net~~from Continuing ~~earnings~~Operations ~~were~~before ~~$42~~Income Taxes.1 ~~million~~Earnings from continuing operations before income taxes in the ~~nine~~three months ended ~~September~~June 30, ~~2007~~2008 were $15.8 million compared to $1112.64 million in the ~~nine~~corresponding ~~months~~period ~~ended September 30,~~in ~~2006~~2007.

31Provision for Income Taxes. The provision for income taxes was $6.2 million in the three months ended June 30, 2008 compared to $4.7 million in the corresponding period in 2007.

~~Liquidity~~Earnings ~~and~~from ~~Capital~~Continuing ~~Resources~~Operations. Earnings from continuing operations were $9.6 million compared to $7.7 million in the corresponding period in 2007.

~~Our~~Loss ~~principal~~from ~~ongoing~~Discontinued ~~uses~~Operations, net of ~~cash~~taxes. ~~are~~Loss tofrom discontinued ~~meet working capital requirements~~operations, ~~fund~~net ~~debt~~of ~~obligations~~taxes ~~and~~was ~~to finance our capital expenditures and acquisitions~~$0.1 Wemillion ~~believe~~for ~~that~~the ~~our~~three ~~cash~~months ~~needs,~~ended ~~other than for significant acquisitions~~June 30, ~~will~~2007. ~~continue~~Contributing to ~~be met through~~ the ~~use~~loss ofin ~~existing~~2007 ~~available~~were ~~cash,~~$0.2 ~~cash~~million ~~flows~~of ~~derived~~severance ~~from future operating results~~ and ~~cash~~other ~~generated~~exit ~~from~~costs ~~borrowings~~related ~~under~~to ~~our~~the ~~senior~~disposal ~~secured~~of ~~revolving~~the ~~credit~~anesthesia ~~facility.~~business unit.

~~Cash~~Net ~~provided by operating activities in the nine months ended September 30, 2007 was $50~~Earnings.5 ~~million~~Net ~~compared to $31.5 million in the corresponding period in 2006. The $19.0 million increase in cash provided by operating activities was principally due to increased~~ earnings ~~and~~were a reduced level of cash funding of accounts payable and other working capital payables between periods offset by an increase in funding of accounts receivable. For the nine months ended September 30, 2007 and 2006 our anesthesia operations had a use of operating cash of $~~1.3 million and $0.~~9 ~~million, respectively~~.6 ~~Cash used in investing activities in the nine months ended September 30, 2007, was $23.2~~ million ~~compared to cash used~~ in investing activities of $40.4 million in 2006. The $17.2 million decrease in cash used in investing activities was principally due to a decrease in cash payments made related to acquisitions and a decrease in captive investment purchases between periods partially offset by an increase in capital expenditures. Cash used in financing activities in the ~~nine~~three months ended ~~September~~June 30, ~~2007~~2008 ~~was $11.4 million~~ compared to ~~cash provided by financing activities of~~ $17.26 million in the ~~nine~~ three months ended ~~September~~June 30, ~~2006~~2007. ~~The $12.6 million increase in cash used in financing activities was principally due to the net reduction in outstanding amounts under the revolving credit facility between periods.~~

WeSix ~~spent~~Months ~~$10.9~~Ended ~~million~~June 30, in2008 ~~the~~Compared ~~first~~to ~~nine months of 2007 and $7.2 million in~~ the ~~first~~Six ~~nine months~~Months ofEnded ~~2006~~June 30, ~~for~~2007 ~~capital expenditures. These expenditures were primarily for information technology investments and related development projects along with projects in support of operational initiatives.~~

WeNet ~~are~~Revenue. ~~highly~~Net ~~leveraged.~~revenue Asin ofthe ~~September~~six months ended June 30, ~~2007~~2008 increased $133.9 million or 13.3%, weto ~~had~~$1,138.0 million from $~~632~~1,004.61 million in ~~aggregate~~the ~~indebtedness~~six months ended June 30, ~~with~~2007. anThe ~~additional~~increase in net revenue of $~~125~~133.09 million ofresulted ~~borrowing capacity~~primarily ~~available~~from ~~under~~increases ~~our~~in ~~senior~~fee-for-service ~~secured~~revenue ~~revolving~~of ~~credit~~$118.5 ~~facility~~million ~~(without~~and ~~giving~~contract ~~effect~~revenue toof $716.6 million. These increases were slightly offset by a $1.2 million decrease in other revenue. In the six months ended June 30, 2008, fee-for-service revenue was 79.8% of ~~undrawn~~net ~~letters~~revenue compared to 78.6% in 2007, contract revenue was 19.2% of ~~credit)~~net revenue in 2008 compared to 20.1% in 2007 and other revenue was 1.0% in 2008 compared to 1.2% in 2007.

~~Borrowings~~Provision ~~outstanding~~for ~~under the senior credit facility mature in various years with a final maturity date of December 1, 2013~~Uncollectibles. The ~~senior~~provision ~~credit~~for ~~facility agreement contains both affirmative and negative covenants, including~~uncollectibles ~~limitations~~was on$472.5 ~~our~~million ~~ability~~in ~~to incur additional indebtedness, sell material assets, retire, redeem or otherwise reacquire our capital stock, acquire~~ the ~~capital~~six ~~stock~~months orended ~~assets of another business~~June 30, ~~pay~~2008 ~~dividends,~~compared ~~and require the Company~~ to ~~comply with certain coverage and leverage ratios~~$400.2 ~~The~~million ~~senior~~in ~~credit~~the ~~agreement~~corresponding ~~also~~period ~~includes~~in a2007, ~~provision~~an ~~for~~increase ~~the prepayment~~ of a$72.3 ~~portion~~million ofor ~~the outstanding term loan amounts at any year-end if we generate “excess cash flow”, as defined in the~~ ~~agreement.~~

~~Effective~~29 April 5, 2007, we amended our senior credit agreement. The amendment reduced the interest rate on any term loans outstanding equal to the euro dollar rate plus 2.00% or the agent bank’s base rate plus 1.00%. Previously, the interest rate on term loan borrowings was equal to the euro dollar rate plus 2.50% or the agent bank’s base rate plus 1.50%. We are subject to an increase in the term loan interest rate in the amount of 0.25% in the event of a downgrade in the corporate family rating of the Company by either Moody’s or Standard and Poor’s rating agencies. In addition, prior to April 5, 2008, in the event of a prepayment of the outstanding term loans associated with a refinancing whose primary purpose is a reduction in the term loan interest rate, we will pay a fee equal to 1.0% of the prepayment amount. Other significant terms and conditions of the credit agreement, including the maturity date of November 23, 2012, did not change under the amendment.

TheTable Company and its subsidiaries, affiliates or significant shareholders (including The Blackstone Group L.P. and its affiliates) may from time to time, in their sole discretion, purchase, repay, redeem or retire any of the Company’s outstanding debt or equity securities (including any publicly issued debt or equity securities), in privately negotiated or open market transactions, by tender offer or otherwise. Contents

32 18.1%. The provision for uncollectibles as a percentage of net revenue was 41.5% in 2008 compared with 39.9% in 2007. The provision for uncollectibles is primarily related to revenue generated under fee-for-service contracts that is not expected to be fully collected. The period over period increase in the provision is due to a combination of increases in the total billed patient volume, annual increases in gross fee schedules and an increase in self pay gross accounts receivable relative to other payer types. For the six months ended June 30, 2008 self pay fee-for-service patient visits were approximately 22.0% of total fee-for-service patient visits compared to approximately 21.8% in the same period of 2007.

AsNet ofRevenue ~~September 30,~~Less ~~2007,~~Provision wefor Uncollectibles. ~~had~~Net ~~total~~revenue ~~cash~~less ~~and~~provision ~~cash~~for ~~equivalents~~uncollectibles ofin ~~approximately~~the six months ended June 30, 2008 increased $1961.86 million, or 10.2%, ~~Our ongoing~~to ~~cash~~$665.5 ~~needs~~million ~~for~~from $603.9 million in the ~~nine~~six months ended ~~September~~June 30, 2007. ~~were~~Same ~~substantially~~contract ~~met~~revenue, which ~~from~~consists ~~internally~~of ~~generated~~contracts ~~operating~~under ~~sources~~management in both periods, increased $35.3 million, or 6.6%, to $572.7 million in 2008 compared to $537.3 million in 2007. The increase in same contract revenue of 6.6% consists primarily of increases in patient dollar volume between periods which contributed 2.4% of the growth and ~~periodic~~increases ~~borrowings~~in ~~under~~contract ~~our~~revenue ~~revolving~~which ~~credit~~contributed ~~facility~~approximately 2.7% ~~During~~of the ~~nine~~growth ~~months~~between ~~ended~~periods. ~~September 30,~~Increases in estimated collections per billing unit contributed 1.3% of the ~~2007,~~growth wein ~~borrowed~~same ~~$83~~contract revenue as annual increases in gross charges and managed care pricing improvements were offset by reductions in Medicare reimbursements and by reductions in patient acuity between periods primarily as a result of coding changes that became effective during 2008 along with an unfavorable shift in payer mix reflecting an increase in the percentage of self pay volume between periods. Also contributing to the increase is an approximately 0.3% ~~million~~increase related to the favorable resolution of a settlement with a managed care plan. Changes in prior year revenue estimates and ~~subsequently~~other ~~repaid~~accounts receivable valuation assumptions reduced same contract revenue growth by 0.1%. The remainder of the increase in revenue less provision for uncollectibles between periods is due to new contracts obtained through internal sales of $8968.85 million ~~under~~partially ~~our~~offset ~~revolving~~by ~~credit facility~~$44.9 Asmillion of ~~September 30,~~revenue ~~2007~~derived ~~there~~from ~~were~~contracts nothat ~~amounts~~terminated ~~outstanding~~during ~~under~~ the ~~revolving~~periods. ~~credit~~Acquisitions ~~facility~~contributed $2.6 million of growth between periods.

~~During~~Professional Service Expenses. Professional service expenses, which include physician costs, billing and collection expenses, and other professional expenses, totaled $513.8 million in the ~~nine~~six months ended ~~September~~June 30, 2008 compared to $462.0 million in the six months ended June 30, 2007, an increase of $351.58 million inor ~~cash~~11.2%. The ~~payments~~increase ~~were~~of ~~made~~$51.8 ~~related~~million toincluded ~~current~~an ~~year~~increase ~~acquisitions~~of approximately $27.9 million which resulted principally from increases in the number of provider hours staffed and ~~contingent consideration~~the increases in average rates paid per hour of provider service on a ~~prior~~same contract ~~year acquisition~~basis. ~~Future~~Also ~~contingent~~contributing ~~payment~~to ~~obligations~~the ~~are~~increase ~~approximately~~in expense was $1122.83 million asrelated to new sales net of ~~September 30,~~terminated ~~2007~~contracts and $1.7 million related to our acquisitions.

~~Effective~~Professional ~~March 12,~~Liability ~~2003,~~Costs. weProfessional ~~began providing for professional~~ liability ~~risks~~costs inwere ~~part through a captive insurance company~~$12.6 ~~Prior~~million ~~to such date we insured such risks principally through the commercial insurance market. The change~~ in the ~~professional~~six ~~liability~~months ~~insurance~~ended ~~program~~June 30, ~~initially~~2008 ~~resulted~~compared ~~in increased cash flow due~~ to ~~the~~$6.2 ~~retention of cash formerly paid out~~ million in the ~~form~~six ofmonths ~~insurance~~ended premiums to a commercial insurance company coupled with a long period (typically 2-4 years or longer on average) before cash payout of such losses occurs. A portion of such cash retained is retained within our captive insurance company and therefore not immediately available for general corporate purposes. As of SeptemberJune 30, 2007, ~~the~~for ~~current~~an ~~value~~increase of ~~cash or cash equivalents and related investments held within the captive insurance company totaled approximately~~ $696.3 million. ~~Effective~~Professional ~~June 1,~~liability ~~2007,~~costs wefor ~~renewed~~the ~~our~~six ~~fronting~~months ~~program~~ended ~~with a commercial insurance carrier through May~~June 3130, 2008. Asand ~~part~~2007 ofinclude ~~this~~reductions ~~renewal,~~in weprofessional ~~paid~~liability ~~cash~~reserves ~~premiums~~relating ~~associated~~to ~~with~~prior ~~the~~years ~~fronting arrangement~~ of ~~approximately~~ $13.3 8 million. ~~Based~~in ~~upon~~2008 ~~the results of our most recent actuarial report~~ and ~~insurance program renewal, we anticipate cash funding to the captive insurance subsidiary of approximately~~ $2519.16 million. Wein ~~anticipate~~2007 ~~such~~resulting ~~fundings~~from toour ~~the~~actuarial ~~captive~~studies ~~insurance~~completed ~~subsidiary~~in ~~will~~April ~~commence~~of ~~during~~each ~~October 2007 and will continue through May 2008~~year. ~~In addition,~~Excluding ~~for~~ the ~~nine~~favorable ~~months~~actuarial ~~ended September 30~~adjustments, ~~2007~~professional weliability ~~funded~~costs aincreased ~~total of~~ $6.0.6 million ~~and~~between ~~have~~periods. ~~agreed~~Costs toassociated ~~fund~~ with an ~~additional~~increase ~~$3.6~~in ~~million~~provider inhours ~~the~~due ~~fourth~~to ~~quarter~~net ofgrowth ~~2007~~and toincreased aprovider ~~commercial~~hours ~~insurance~~staffed ~~provider~~on ina ~~order~~same tocontract ~~meet~~basis ~~our~~have ~~obligation~~been ~~for incurred~~partially ~~costs~~offset inby ~~excess~~a ofdecrease in the ~~aggregate~~actuarial ~~limits~~estimate of ~~coverage~~current inperiod ~~place~~losses onunder ~~the~~our ~~commercial~~self insurance ~~policy~~program. ~~that~~The ~~ended~~reduction in ~~March 11,~~prior ~~2003.~~professional Weliability ~~have~~reserves ~~the~~is ~~option~~due to ~~fund~~favorable ~~additional~~trends ~~premium payments under this program~~ in ~~subsequent~~loss ~~fiscal~~estimates ~~years~~primarily ~~which~~associated ~~will be~~with ~~based~~improvements ~~upon~~in ~~the~~overall ~~level~~frequency of ~~incurred~~claims ~~losses~~reported ~~relative~~and tofavorable ~~the~~changes ~~aggregate~~in ~~limit~~loss ofdevelopment ~~coverage at that time~~assumptions.

33Gross Profit. Gross profit was $139.2 million in the six months ended June 30, 2008 compared to $135.7 million in the same period in 2007 for an increase of $3.5 million between periods. Excluding the impact of the prior year professional liability reserve adjustments in each period, gross profit increased $9.2 million. The increase in gross profit, excluding the actuarial adjustments, is primarily due to improvements on a same contract basis between periods and the contribution from our acquisitions.

~~Under~~30 the indenture governing the senior subordinated notes, our ability to engage in certain activities such as incurring certain additional indebtedness, making certain investments, and paying certain dividends is tied to ratios based on Adjusted EBITDA (which is defined as “EBITDA” in the indenture). Adjusted EBITDA under the indenture is defined as net earnings before interest expense, taxes, depreciation and amortization, as further adjusted to exclude unusual items, non-cash items and the other adjustments shown in the table below. We believe that the disclosure of the calculation of Adjusted EBITDA provides information that is useful to an investor’s understanding of our liquidity and financial flexibility. EBITDA is not a measurement of financial performance or liquidity under generally accepted accounting principles. It should not be considered in isolation or as a substitute for net income, operating income, cash flows from operating, investing or financing activities, or any other measure calculated in accordance with generally accepted accounting principles. Adjusted EBITDA as calculated under the indenture for the senior subordinated notes is as follows (in thousands):

	Three Months Ended September 30,					Nine Months Ended September 30,
	2007		2006			2007		2006
Net earnings	$	15,428	$	4,502		$	42,052	$	11,635
Loss (earnings) from discontinued operations, net of taxes		152		(105	)		499		6,904
Interest expense, net		13,639		15,205			41,430		43,117
Provision for income taxes		9,352		2,235			26,552		11,600
Depreciation and amortization		3,868		6,109			10,956		19,879
EBITDA		42,439		27,946			121,489		93,135
Management fee and other expenses (a)		1,217		877			3,035		2,690
Restricted unit expense (b)		140		140			417		475
Insurance subsidiary interest income		844		519			2,330		1,452
Severance and other charges		265		281			1,610		490
Adjusted EBITDA*	$	44,905	$	29,763		$	128,881	$	98,242

*Gross ~~Adjusted~~profit ~~EBITDA~~as ~~totals~~a ~~include~~percentage ~~the~~of ~~effects~~revenue ofless ~~professional~~provision ~~liability~~for ~~loss~~uncollectibles ~~reserve~~was ~~adjustments~~20.9% ofin ~~$32,089~~2008 ~~and~~compared ~~$12,068~~with 22.5% ~~for~~in 2007. Excluding the ~~nine~~impact ~~months~~of ~~ended~~the ~~September~~favorable ~~30,~~actuarial ~~2007~~adjustments ~~and~~in ~~2006~~both periods, ~~respectively.~~gross ~~See~~profit ~~“Management’s~~as ~~Discussion~~a ~~and~~percentage ~~Analysis~~ of ~~Financial~~revenue ~~Condition~~was ~~and~~18.8% ~~Results~~in of2008 ~~Operations”~~compared with 19.2% in 2007.

(General and Administrative Expenses. General and administrative expenses increased $4.1 million to $59.0 million for the six months ended June 30, 2008 from $54.8 million in the six months ended June 30, 2007. General and administrative expenses as a) ~~Reflects~~percentage ~~management~~of ~~sponsor~~net ~~fee~~revenue less provision for uncollectibles declined to 8.9% in 2008 from 9.1% in 2007. The increase in general and ~~loss~~administrative onexpenses ~~disposal~~is primarily due to inflationary growth in salaries and an increase in the number of ~~assets~~employees as well as increased incentive plan costs and higher travel costs.

~~(b)~~Management ~~Reflects~~Fee ~~costs~~and ~~related~~Other toExpenses. ~~the~~Management ~~recognition~~fee ofand ~~expense~~other inexpenses ~~connection~~were ~~with~~$1.8 ~~the~~million ~~issuance~~in ofthe ~~restricted~~six ~~units~~months ~~under~~ended ~~the~~June 30, ~~2005~~2008 ~~unit~~and ~~plan~~2007.

~~Inflation~~Depreciation and Amortization. Depreciation and amortization expense was $8.0 million in the six months ended June 30, 2008 compared to $7.1 million for the six months ended June 30, 2007. The increase of $0.9 million between periods was primarily due to higher depreciation expense related to growth in capital expenditures during 2007.

WeNet doInterest ~~not~~Expense. ~~believe~~Net ~~that~~interest ~~general~~expense ~~inflation~~ decreased $4.2 million to $23.6 million in the Usix months ended June 30, 2008, compared to $27.S.8 million ~~economy~~in ~~has~~the ~~had~~corresponding aperiod ~~material~~in ~~impact~~2007 onprimarily due to the reduction of our ~~financial~~interest ~~position~~rate oron ~~results~~the term loan as a result of ~~operations.~~the second quarter 2007 amendment to our senior credit agreement and a lower interest rate environment in 2008.

~~Seasonality~~Transaction Costs. Transaction costs were $1.8 million for the six months ended June 30, 2008. These costs relate to advisory, legal, accounting and other fees incurred related to ongoing acquisition discussions that terminated in June 2008.

~~Historically,~~Earnings ~~our~~from Continuing ~~revenues~~Operations ~~and~~before ~~operating~~Income ~~results~~Taxes. ~~have~~Earnings ~~reflected minimal seasonal variation due to the significance of revenues derived~~ from ~~patient~~continuing ~~visits to~~operations ~~emergency~~before ~~departments,~~income ~~which~~taxes ~~are~~in ~~generally~~the ~~open~~six onmonths aended ~~365 day basis~~June 30, ~~and~~2008 ~~also~~were ~~due to our geographic diversification~~$45.0 ~~Revenue~~million ~~from~~compared ~~our~~to ~~non-emergency department staffing lines is dependent on a healthcare facility being open during selected time periods~~$44.2 ~~Revenue~~million in ~~such instances will fluctuate depending upon such factors as~~ the ~~number~~corresponding ofperiod ~~holidays~~ in ~~the period~~2007.

~~Recently~~Provision ~~Issued~~for ~~Accounting~~Income Taxes. The provision for income taxes was $17.9 million in the six months ended June 30, 2008 compared to $17.2 million ~~Standards~~in the corresponding period in 2007.

InEarnings ~~June~~from ~~2006,~~Continuing ~~the~~Operations. ~~Financial~~Earnings ~~Accounting~~from ~~Standards~~continuing ~~Board~~operations ~~(“FASB”)~~were ~~issued Interpretation No~~$27. ~~48,~~1 million ~~“Accounting~~compared ~~for Uncertainty in Income Taxes”, an interpretation of FAS109, “Accounting for Income Taxes” (“FIN 48”),~~ to ~~create~~$27.0 amillion ~~single~~in ~~model~~the tocorresponding ~~address~~period ~~accounting for uncertainty~~ in ~~tax positions~~2007. ~~FIN 48 clarifies the~~

34Loss from Discontinued Operations, net of taxes. Loss from discontinued operations, net of taxes was $0.3 million for the six months ended June 30, 2007. Contributing to the loss in 2007 were $0.9 million of severance and other exit costs related to the disposal of the anesthesia business unit.

~~accounting~~Net ~~for~~Earnings. ~~income~~Net ~~taxes,~~earnings bywere ~~prescribing~~$27.1 amillion ~~minimum~~in ~~recognition~~the ~~threshold~~six amonths ~~tax~~ended ~~position~~June 30, is2008 ~~required~~compared to ~~meet~~$26.6 ~~before~~million ~~being recognized~~ in the ~~financial~~six ~~statements.~~months ~~FIN~~ended 48 also provides guidance on derecognition, measurement, classification, interest and penalties, accounting in interim periods, disclosure and transition. FIN 48 is effective for fiscal years beginning after DecemberJune 1530, ~~2006~~2007.

~~The~~Liquidity Company adopted the provisions of FIN 48 on January 1, 2007. As a result of the implementation of FIN 48, the Company recognized approximately a $1.6 million charge to members’ equity, a reduction in the deferred tax assets of approximately $0.4 million and anCapital ~~increase~~Resources in the liability for unrecognized tax benefits of approximately $1.3 million. The Company recognizes interest accrued related to the unrecognized tax benefits in interest expense and penalties in operating expenses. Included in the above estimates is approximately $0.2 million of interest expense.

~~The~~Our ~~amount~~principal ongoing uses of ~~unrecognized~~cash ~~tax~~are ~~benefits~~to meet working capital requirements, fund debt obligations and to finance our capital expenditures and acquisitions. We believe that our cash needs, ifother ~~recognized~~than for significant acquisitions, ~~would~~will ~~affect~~continue to be met through the ~~effective~~use ~~rate~~of ~~are~~existing ~~approximately~~available ~~$1.6~~cash, ~~million~~cash flows derived from future operating results and cash generated from borrowings under our senior secured revolving credit facility.

~~The~~31 Company and its subsidiaries file income tax returns in the U. S. federal jurisdiction and various state jurisdictions. With few exceptions, the Company is no longer subject to U. S. federal, state or local examination by tax authorities for years before 2003.

In September 2006,Table FASB issued Statement of Financial Accounting Standards SFAS No. 157, “Fair Value Measurements,” which provides enhanced guidance for using fair value to measure assets and liabilities. SFAS No. 157 establishes a common definition of fair value, provides a framework for measuring fair value under U.S. GAAP and expands disclosures requirements about fair value measurements. SFAS No. 157 is effective for financial statements issued in fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. The Company is currently evaluating the impact, if any, the adoption of SFAS No. 157 will have on the Company’s financial reporting and disclosures. Contents

InCash ~~February~~provided by operating activities in the six months ended June ~~2007~~30, 2008 was $32.2 million compared to $29.2 million in the ~~FASB~~corresponding ~~issued~~period ~~SFAS~~in No2007. ~~159,~~ The ~~Fair~~$3.0 ~~Value~~million ~~Option~~increase in cash provided by operating activities was principally due to reduced cash funding for ~~Financial~~professional ~~Assets~~liability ~~and~~program ~~Financial Liabilities—Including~~costs anpartially ~~amendment~~offset ofby ~~FASB~~increased claim ~~Statement~~payments Nobetween periods. ~~115~~ ~~(“SFAS~~Cash ~~159”).~~used ~~SFAS~~in ~~159~~investing ~~permits~~activities ~~entities~~in the six months ended June 30, 2008 was $22.0 million compared to ~~measure~~$18.4 ~~eligible~~million ~~assets~~in ~~and~~the ~~liabilities~~same atperiod ~~fair~~of ~~value~~2007. ~~Unrealized~~The ~~gains~~$3.6 ~~and~~million ~~losses~~increase onin ~~items~~cash ~~for~~used ~~which~~in ~~the~~investing ~~fair~~activities ~~value~~was ~~option~~principally ~~has~~due ~~been~~to ~~elected~~an ~~are~~increase ~~reported~~in cash payments made related to acquisitions offset by a decrease in ~~earnings~~capital expenditures. ~~SFAS~~Cash ~~159~~used isin ~~effective~~financing ~~for~~activities ~~fiscal~~in ~~years~~the ~~beginning~~six ~~after~~months ~~November~~ended June 1530, ~~2007~~2008 was $3.4 ~~The~~million ~~provisions~~compared ofto ~~SFAS~~$10.2 ~~159~~million ~~will~~in ~~become~~the six ~~effective~~months onended ~~January~~June 130, ~~2008,~~2007. ~~and~~The we$6.2 ~~have~~million ~~not~~decrease ~~yet~~in ~~determined~~cash used in financing activities was principally due to the ~~impact,~~net ~~if any,~~reduction onin ~~our~~outstanding ~~consolidated~~amounts ~~financial~~under ~~statements~~the revolving credit facility during 2007.

~~Item~~We 3spent $4.5 ~~Quantitative~~million in the first six months of 2008 and ~~Qualitative~~$8.1 ~~Disclosures~~million ~~About~~in ~~Market~~the ~~Risk~~first six months of 2007 for capital expenditures. These expenditures were primarily for information technology investments and related development projects along with projects in support of operational initiatives. The $3.6 million decrease between periods is mainly attributable to higher expenditures in the prior period related to certain capital projects completed during 2007.

~~The~~We ~~Company~~are ishighly ~~exposed~~leveraged. toAs ~~market~~of ~~risk~~June 30, ~~related~~2008, towe ~~changes~~had $629.4 million in aggregate ~~interest~~indebtedness, ~~rates~~with an additional $125.0 ~~The~~million ~~Company~~of ~~does~~borrowing ~~not~~capacity ~~use~~available ~~derivative~~under ~~financial~~our ~~instruments~~senior ~~for~~secured ~~speculative~~revolving orcredit ~~trading~~facility ~~purposes~~(without giving effect to $7.2 million of undrawn letters of credit).

~~The~~Borrowings ~~Company’s~~outstanding ~~earnings~~under ~~are~~the ~~affected~~senior bycredit ~~changes~~facility mature in ~~short-term~~various ~~interest~~years ~~rates~~with as a ~~result~~final ofmaturity ~~its~~date ~~borrowings~~of ~~under~~November 23, ~~its~~2012. The senior credit facility ~~facilities~~agreement contains both affirmative and negative covenants, including limitations on our ability to incur additional indebtedness, sell material assets, retire, redeem or otherwise reacquire our capital stock, acquire the capital stock or assets of another business, pay dividends, and require the Company to comply with certain coverage and leverage ratios. The senior credit agreement also includes a provision for the prepayment of a portion of the outstanding term loan amounts at any year-end if we generate “excess cash flow”, as defined in the agreement.

AtDuring ~~September 30, 2007,~~ the ~~fair~~six ~~value~~months ofended ~~the~~June 30, ~~Company’s total debt~~2008, ~~which~~we entered ~~has~~into athree ~~carrying~~separate ~~value~~forward ofinterest ~~$632.6~~rate ~~million,~~swap ~~was approximately $645~~agreements.5 ~~million.~~ The ~~Company~~objective ~~had~~of ~~$417.6~~the ~~million~~agreements ofis ~~variable~~to ~~debt~~eliminate ~~outstanding~~the atvariability ~~September 30,~~of ~~2007.~~the Ifcash ~~the~~flows ~~market~~in interest ~~rates~~payments for ~~the~~$200.0 ~~Company’s~~million ~~variable~~of the variable-rate ~~borrowings~~term ~~had~~loan ~~averaged~~for 1%a ~~more~~three ~~subsequent~~year toperiod. ~~December 31,~~The ~~2006,~~agreements ~~the~~are ~~Company’s~~contracts ~~interest~~to ~~expense would have increased~~exchange, ~~and~~on ~~earnings~~a ~~before~~quarterly ~~income taxes would have decreased~~basis, byfloating ~~approximately~~interest ~~$3.2~~rate ~~million~~payments ~~for~~based on the ~~nine~~Eurocurrency ~~months ended September 30~~rate, ~~2007.~~for ~~This~~fixed ~~analysis~~interest ~~does~~payments ~~not~~over ~~consider~~ the ~~effects~~life of the ~~reduced~~agreements. ~~level~~We ofhave ~~overall~~determined ~~economic activity~~ that ~~could~~the ~~exist~~interest inrate ~~such~~swaps anare ~~environment.~~highly effective ~~Further,~~and inqualify ~~the~~for ~~event~~hedge ofaccounting, atherefore ~~change~~at ofJune 30, ~~such magnitude~~2008, ~~management~~we ~~could~~have ~~take~~recorded ~~actions in an attempt to further mitigate its exposure to~~ the ~~change.~~increase ~~However,~~in ~~due~~fair ~~to the~~value ~~uncertainty~~ of the ~~specific~~interest ~~actions~~rate ~~that~~swaps, ~~would~~net beof ~~taken and their possible effects~~tax, ~~the~~of ~~sensitivity~~approximately ~~analysis~~$3.0 ~~assumes~~million noas ~~changes~~a incomponent ~~the Company’s financial structure. This level~~ of ~~interest~~other ~~rate~~comprehensive ~~exposure is consistent with the overall interest rate exposure at December 31, 2006~~earnings.

35These agreements expose us to credit losses in the event of non-performance by the counterparty to the financial instruments. The counterparty is a creditworthy financial institution and we believe the counterparty will be able to fully satisfy its obligations under the contracts.

~~Item~~Effective 4April 5, 2007, we amended our senior credit agreement. ~~Controls~~The amendment reduced the interest rate on any term loans outstanding equal to the euro dollar rate plus 2.00% or the agent bank’s base rate plus 1.00%. Previously, the interest rate on term loan borrowings was equal to the euro dollar rate plus 2.50% or the agent bank’s base rate plus 1.50%. We are subject to an increase in the term loan interest rate in the amount of 0.25% in the event of a downgrade in the corporate family rating of the Company by either Moody’s or Standard and ~~Procedures~~Poor’s rating agencies. Other significant terms and conditions of the credit agreement, including the maturity date of November 23, 2012, did not change under the amendment.

~~The Company~~Subject ~~carried~~to ~~out~~any ancontractual ~~evaluation~~restrictions, ~~under~~ the ~~supervision and with the participation of the~~ Company’s ~~management, including the Company’s Chairman~~ and ~~Chief~~its ~~Executive Officer~~subsidiaries, ~~and~~affiliates ~~Chief Financial Officer of the effectiveness of the design~~or ~~and~~significant ~~operation~~shareholders ~~of the Company’s disclosure controls and procedures as defined in Rule 13a-15~~(e)including ~~and~~The ~~15d-15(e)~~Blackstone ~~under~~Group ~~the Securities Exchange Act of 1934, as amended (the “Exchange Act”)~~L.P. ~~Based upon that evaluation the Company’s Chief Executive Officer~~ and Chief Financial Officer concluded that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures (1) were effective in timely alerting them to material information relating to the Company (including its ~~consolidated subsidiaries~~affiliates) ~~required~~may tofrom betime ~~included in the Company’s periodic SEC filings and (2) were adequate~~ to ~~ensure that information required to be disclosed by the Company in the reports filed or submitted by the Company under the Exchange Act is recorded~~time, ~~processed and summarized and reported within the time periods specified~~ in ~~the~~their ~~SEC’s~~sole ~~rules and forms.~~

~~There~~32 have been no changes in the Company’s internal control over financial reporting identified in connection with the evaluation described in paragraph (a) above that have materially affected or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PARTTable 2.of OTHER INFORMATION Contents

~~Item~~ discretion, 1.purchase, ~~Legal~~repay, ~~Proceedings~~redeem or retire any of the Company’s outstanding debt or equity securities (including any publicly issued debt or equity securities), in privately negotiated or open market transactions, by tender offer or otherwise.

WeAs ~~are currently a party to various legal proceedings. While we currently believe that the ultimate outcome~~ of ~~such proceedings~~June 30, ~~individually and in the aggregate~~2008, ~~will~~we ~~not~~had ~~have~~total cash aand ~~material~~cash ~~adverse~~equivalents ~~effect on our financial position or overall trends in results~~ of ~~operations,~~approximately ~~litigation~~$37.1 ~~is subject to inherent uncertainties~~million. IfOur anongoing ~~unfavorable~~cash ~~ruling~~needs ~~were~~for ~~to occur, there exists~~ the ~~possibility~~six ofmonths aended ~~material~~June 30, ~~adverse~~2008 ~~impact~~were onsubstantially ~~our~~met ~~net~~from ~~earnings~~internally ingenerated ~~the~~operating ~~period in which the ruling occurs~~sources. ~~The~~As ~~estimate~~ of ~~the~~ ~~potential~~June 30, ~~impact~~2008 ~~from~~there ~~such~~were ~~legal~~no ~~proceedings~~amounts outstanding onunder ~~our~~the ~~financial~~revolving ~~position~~credit ~~or overall results of operations could change in the future~~facility.

~~Item~~During 1Athe six months ended June 30, 2008, $7.5 ~~Risk~~million ~~Factors~~in payments were made related to current year acquisitions and no contingent consideration was paid on prior year acquisitions. For the same period in 2007, $1.1 million in cash payments were made related to contingent considerations paid on a prior year acquisition. Future contingent payment obligations are approximately $18.5 million as of June 30, 2008.

~~There~~Effective ~~are~~March 12, no2003, we began ~~material~~providing ~~changes~~for ~~from~~professional liability risks in part through a captive insurance company. Prior to such date we insured such risks principally through the ~~risk~~commercial ~~factors~~insurance asmarket. ~~previously~~The ~~disclosed~~change in ~~our~~the ~~Form~~professional 10liability insurance program initially resulted in increased cash flow due to the retention of cash formerly paid out in the form of insurance premiums to a commercial insurance company coupled with a long period (typically 2-K4 years or longer on average) before cash payout of such losses occurs. A portion of such cash retained is retained within our captive insurance company and therefore not immediately available for general corporate purposes. As of June 30, ~~filed~~2008, the current value of cash or cash equivalents and related investments held within the captive insurance company totaled approximately $86.0 million. Effective June 1, 2008, we have renewed our fronting carrier program with a commercial insurance carrier through May 31, 2009. In connection with this renewal, we paid cash premiums of approximately $10.8 million during the ~~Securities~~second quarter of 2008. Based upon the results of our most recent actuarial report and ~~Exchange~~insurance ~~Commission~~program renewal, we anticipate cash funding to the captive insurance subsidiary of approximately $22.3 million. We anticipate such fundings to the captive insurance subsidiary will commence during October 2008 and will continue through May 2009. We also, for the six months ended June 30, 2008, funded a total of $1.5 million to a commercial insurance provider in order to meet our obligation for incurred costs in excess of the aggregate limits of coverage in place on the commercial insurance policy that ended March 1311, ~~2007~~2003. We have the option to fund additional premium payments during 2008 and future periods which will be based upon the level of incurred losses relative to the aggregate limit of coverage at that time.

~~Item~~33 ~~2. Unregistered Sales of Equity Securities and Use of Proceeds~~

None.Table of Contents

~~Item~~Under 3the indenture governing the senior subordinated notes, our ability to engage in certain activities such as incurring certain additional indebtedness, making certain investments, and paying certain dividends is tied to ratios based on Adjusted EBITDA (which is defined as “EBITDA” in the indenture). ~~Defaults~~Adjusted ~~upon~~EBITDA ~~Senior~~under ~~Securities~~the indenture is defined as net earnings before interest expense, taxes, depreciation and amortization, as further adjusted to exclude unusual items, non-cash items and the other adjustments shown in the table below. We believe that the disclosure of the calculation of Adjusted EBITDA provides information that is useful to an investor’s understanding of our liquidity and financial flexibility. Adjusted EBITDA is not a measurement of financial performance or liquidity under generally accepted accounting principles. It should not be considered in isolation or as a substitute for net income, operating income, cash flows from operating, investing or financing activities, or any other measure calculated in accordance with generally accepted accounting principles. Adjusted EBITDA as calculated under the indenture for the senior subordinated notes is as follows (in thousands):

None.


	Three Months Ended June 30,				Six Months Ended June 30,
	2008		2007		2008		2007
Net earnings	$	9,644	$	7,593	$	27,132	$	26,624
Loss from discontinued operations, net of taxes		—		110		—		346
Interest expense, net		10,953		13,322		23,595		27,792
Provision for income taxes		6,198		4,727		17,900		17,200
Depreciation and amortization		4,125		3,597		8,006		7,087

EBITDA		30,920		29,349		76,633		79,049
Management fee and other expenses(a)		899		885		1,786		1,818
Transaction costs		1,785		—		1,785		—
Restricted unit expense(b)		136		140		276		280
Insurance subsidiary interest income		792		846		1,866		1,486
Severance and other charges		1,075		488		1,459		2,126

Adjusted EBITDA*	$	35,607	$	31,708	$	83,805	$	84,759

~~Item~~* 4.Adjusted ~~Submission~~EBITDA totals include the effects of ~~Matters~~professional toliability aloss ~~Vote~~reserve adjustments of ~~Security~~$13,835 ~~Holders~~and $19,599 for the six months ended June 30, 2008 and 2007, respectively. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations”.

~~None.~~(a) Reflects management sponsor fee and loss on disposal of assets.

~~Item~~(b) 5.Reflects ~~Other~~costs ~~Information~~related to the recognition of expense in connection with the issuance of restricted units under the 2005 unit plan.

~~None.~~ Inflation

36We do not believe that general inflation in the U.S. economy has had a material impact on our financial position or results of operations.

~~Item~~Seasonality ~~6. Exhibits~~

3.5		Article of Amendment to the Articles of Incorporation of Correctional Healthcare Advantage, Inc. dated May 11, 2007.
31.1		Certification by Lynn Massingale, M.D. for Team Finance LLC dated November 7, 2007 pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2		Certification by David P. Jones for Team Finance LLC dated November 7, 2007 pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.3		Certification by Lynn Massingale, M.D. for Health Finance Corporation dated November 7, 2007 pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.4		Certification by David P. Jones for Health Finance Corporation dated November 7, 2007 pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1		Certification by Lynn Massingale, M.D. for Team Finance LLC dated November 7, 2007 pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2		Certification by David P. Jones for Team Finance LLC dated November 7, 2007 pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.3		Certification by Lynn Massingale, M.D. for Health Finance Corporation dated November 7, 2007 pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.4		Certification by David P. Jones for Health Finance Corporation dated November 7, 2007 pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Historically, our revenues and operating results have reflected minimal seasonal variation due to the significance of revenues derived from patient visits to emergency departments, which are generally open on a 365/366 day basis, and also due to our geographic diversification. Revenue from our non-emergency department staffing lines is dependent on a healthcare facility being open during selected time periods. Revenue in such instances will fluctuate depending upon such factors as the number of holidays in the period.

3734

SIGNATURESTable of Contents

~~Pursuant~~Recently toIssued ~~the~~Accounting ~~requirements~~Standards ~~of the Securities Exchange Act of 1934, the registrant has duly caused this report on Form 10-Q to be signed on its behalf by the undersigned thereunto duly authorized.~~

~~TEAM~~In ~~FINANCE~~March ~~LLC~~2008, ~~HEALTH~~the ~~FINANCE~~Financial ~~CORPORATION~~Accounting ~~/s/~~Standards H.Board ~~LYNN~~(“FASB”) ~~MASSINGALE~~issued Statement of Financial Accounting Standards (“SFAS”) No. 161, M“Disclosures about Derivative Instruments and Hedging Activities—An Amendment of SFAS No.D 133” (“SFAS 161”). HSFAS 161 seeks to improve financial reporting for derivative instruments and hedging activities by requiring enhanced disclosures regarding the impact on financial position, financial performance, and cash flows. ~~Lynn~~To ~~Massingale~~achieve this increased transparency, MSFAS 161 requires (1) the disclosure of the fair value of derivative instruments and gains and losses in a tabular format; (2) the disclosure of derivative features that are credit risk-related; and (3) cross-referencing within the footnotes.D SFAS 161 is effective for us on January 1, 2009. ~~Chief~~We ~~Executive~~are ~~Officer~~in the process of evaluating the new disclosure requirements under SFAS 161.

~~November~~In 7December 2007, the FASB issued SFAS No. 141 (Revised 2007), “Business Combinations” (“SFAS 141R”). SFAS 141R continues to require the purchase method of accounting to be applied to all business combinations, but it significantly changes the accounting for certain aspects of business combinations. Under SFAS 141R, an acquiring entity will be required to recognize all the assets acquired and liabilities assumed in a transaction at the acquisition-date fair value with limited exceptions. SFAS 141R will change the accounting treatment for certain specific acquisition related items including: (1) expensing acquisition related costs as incurred; (2) valuing noncontrolling interests at fair value at the acquisition date; and (3) recognizing contingent consideration arrangements on the acquisition date at fair value. SFAS 141R also includes a substantial number of new disclosure requirements. SFAS 141R is to be applied prospectively to business combinations for which the acquisition date is on or after January 1, 2009. We expect SFAS 141R will have an impact on our accounting for future business combinations once adopted but the effect is dependent upon the acquisitions that are made in such periods.

~~/s/~~In ~~DAVID~~December P.2007, ~~JONES~~the ~~David~~FASB Preleased SFAS No. 160, ~~Jones~~“Noncontrolling ~~Chief~~Interests in Consolidated Financial ~~Officer~~Statements—an amendment of ARB No. 51”. SFAS 160 is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008, which for the Company is the year ending December 31, 2009 and the interim periods within that fiscal year. The objective of SFAS 160 is to improve the relevance, comparability, and transparency of the financial information that a reporting entity provides in its consolidated financial statements. SFAS 160 currently does not impact the Company as it has full controlling interest of all of its subsidiaries.

~~November~~In 7,February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities” (“SFAS 159”). SFAS 159 allows entities to voluntarily choose to measure certain financial assets and liabilities at fair value (“fair value option”). The fair value option may be elected on an instrument-by-instrument basis and is irrevocable, unless a new election date occurs. If the fair value option is elected for an instrument, SFAS 159 specifies that unrealized gains and losses for that instrument be reported in earnings at each subsequent reporting date. SFAS 159 was effective for us on January 1, 2008. The implementation of SFAS 159 did not have an impact on our results of operations, financial position or cash flows as we did not elect to measure any eligible items at fair value other than instruments such as investments or interest rate swaps that are currently required to be measured at fair value.

38Item 3. Quantitative and Qualitative Disclosures About Market Risk

The Company is exposed to market risk related to changes in interest rates. The Company does not use derivative financial instruments for speculative or trading purposes.

The Company’s earnings are affected by changes in short-term interest rates as a result of its borrowings under its senior credit facilities.

At June 30, 2008, the fair value of the Company’s total debt, which has a carrying value of $629.4 million, was approximately $611.6 million. The Company had $414.4 million of variable debt outstanding at June 30,

2008. If the market interest rates for the Company’s variable rate borrowings had averaged 1% more subsequent to December 31, 2007, the Company’s interest expense (excluding the impact of our interest rate swap agreements) would have increased, and earnings before income taxes would have decreased, by approximately $2.1 million for the six months ended June 30, 2008. This analysis does not consider the effects of the reduced level of overall economic activity that could exist in such an environment. Further, in the event of a change of such magnitude, management could take actions in an attempt to further mitigate its exposure to the change. However, due to the uncertainty of the specific actions that would be taken and their possible effects, the sensitivity analysis assumes no changes in the Company’s financial structure. This level of interest rate exposure is consistent with the overall interest rate exposure at December 31, 2007.

Item 4T.

Controls and Procedures

The Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer, and Chief Financial Officer of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) as of June 30, 2008. Based upon that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures (1) were effective in timely alerting them to material information relating to the Company (including its consolidated subsidiaries) required to be included in the Company’s periodic SEC filings and (2) were adequate to ensure that information required to be disclosed by the Company in the reports filed or submitted by the Company under the Exchange Act is recorded, processed and summarized and reported within the time periods specified in the SEC’s rules and forms.

During the quarter ended June 30, 2008 there have been no changes in the Company’s internal control over financial reporting identified in connection with the evaluation described above that have materially affected or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART 2. OTHER INFORMATION

Item 1.

Legal Proceedings

We are currently a party to various legal proceedings. While we currently believe that the ultimate outcome of such proceedings, individually and in the aggregate, will not have a material adverse effect on our financial position or overall trends in results of operations, litigation is subject to inherent uncertainties. If an unfavorable ruling were to occur, there exists the possibility of a material adverse impact on our net earnings in the period in which the ruling occurs. The estimate of the potential impact from such legal proceedings on our financial position or overall results of operations could change in the future.

Item 1A.

Risk Factors

There are no material changes from the risk factors as previously disclosed in our Form 10-K, filed with the Securities and Exchange Commission on March 11, 2008.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3.

Defaults upon Senior Securities

None.

Item 4.

Submission of Matters to a Vote of Security Holders

None.

Item 5.

Other Information

None.

Item 6.

Exhibits


3.1		Certificate of Formation of Team Health Holdings, LLC*

3.2		Amended and Restated Limited Liability Agreement of Team Health Holdings, LLC, dated November 22, 2005*

3.3		Certificate of the Merger of Team Health Holdings LLC and Ensemble Acquisition, LLC, dated November 17, 2005*

3.4		Certificate of Formation of Team Finance LLC*

3.5		Limited Liability Company Agreement of Team Finance LLC*

3.6		Certificate of Incorporation of Health Finance Corporation*

3.7		By-laws of Health Finance Corporation*

4.3		Supplemental indenture dated June 30, 2006.

4.4		Second supplemental indenture dated June 30, 2007.

4.5		Third supplemental indenture dated April 30, 2008.

31.1		Certification by Greg Roth for Team Finance LLC dated August 11, 2008 pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification by David P. Jones for Team Finance LLC dated August 11, 2008 pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.3		Certification by Greg Roth for Health Finance Corporation dated August 11, 2008 pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.4		Certification by David P. Jones for Health Finance Corporation dated August 11, 2008 pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certification by Greg Roth for Team Finance LLC dated August 11, 2008 pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2		Certification by David P. Jones for Team Finance LLC dated August 11, 2008 pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.3		Certification by Greg Roth for Health Finance Corporation dated August 11, 2008 pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.4		Certification by David P. Jones for Health Finance Corporation dated August 11, 2008 pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*	Incorporated by reference to the indicated exhibits in the Company’s Registration Statement on Form S-4 dated March 16, 2006.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrants have duly caused this report on Form 10-Q to be signed on their behalf by the undersigned thereunto duly authorized.

TEAM FINANCE LLC

HEALTH FINANCE CORPORATION

/s/ GREG ROTH

Greg Roth

Chief Executive Officer

August 11, 2008

/s/ DAVID P. JONES

David P. Jones

Chief Financial Officer

August 11, 2008

Filing Compare · Team Finance LLC