Common use of Impact of Insurance Reimbursement Clause in Contracts

Impact of Insurance Reimbursement. The prices the Partnership will be able to charge its patients for the lithotripsy of kidney stones is significantly dependent upon the amount of reimbursement private health care insurers will allow for this procedure. Most of the Partnership's patients would pay for services directly from private payment sources, primarily from third-party insurers such as Blue Cross/Blue Shield and other commercial insurers. Coverage and payment levels for these private payment sources vary depending upon the patient's individual insurance policy. The increasing influence of health maintenance organizations and other managed care companies has resulted in pressure to reduce the reimbursement available for lithotripsy procedures. The General Partner and some of its Affiliates have recently been informed by several hospitals and commercial insurers that reimbursement rates must be reduced, or the hospitals and commercial insurers would negotiate with competing lithotripsy services. Additionally, the Health Care Financing Administration ("HCFA"), which administers the Medicare program, has proposed rules which would reduce the reimbursement available for lithotripsy procedures provided at hospitals to $2,612. This rate is lower than the typical charge for lithotripsy services historically charged by the Partnership. However, in some cases, reimbursement rates payable to Affiliates of the General Partner are less than the proposed HCFA rate. Because of the competitive pressures from managed care companies as well as threatened reductions in Medicare reimbursement, the General Partner anticipates reimbursement available for the lithotripsy procedure may continue to decrease. Such decreases would have a material adverse effect on Partnership revenues. Regarding the professional fees paid to physicians who treat patients on the Mobile Lithotripsy System, the General Partner anticipates that similar competitive pressures may result in lower reimbursement paid to physicians, both by private insurers and by government programs such as Medicare. See "Regulation." Reliability and Efficacy of the Lithotripters. The Lithostar(TM) has an eleven year United States operating history, having received premarket approval from the FDA for renal lithotripsy on September 30, 1988. This approval followed a period of clinical testing beginning in February 1987 at four test sites in the United States, which was preceded by substantial clinical testing of the Lithostar(TM) at the Urological Clinic of the Xxxxxxxx Xxxxxxxxx University of Mainz, West Germany. The General Partner estimates that more than 400 Lithostar(TM) systems are currently operating in over twenty countries, and the General Partner and its Affiliates operate over 30 Lithostars(TM) in other ventures. In the General Partner's opinion, the Lithostar(TM) has proven to be reliable and dependable medical equipment; however, downtime periods necessitated for maintenance or repairs of the Partnership's Mobile Lithotripsy System will adversely affect Partnership revenues. In 1996, the FDA approved a new higher intensity shock-head system for the Lithostar(TM), which the General Partner believes has shortened procedure times. The Partnership's Lithostar(TM) has been upfitted with the new tube system. Based upon a detailed follow-up study of 86,000 renal and 51,000 ureteral stones treated on the Lithostar(TM) in all of the General Partner's affiliated partnerships using both the original and newer shock-head systems, the General Partner notes an 86% total success rate with an overall retreatment rate of only 15%. This retreatment rate included stones of all sizes and locations, including staghorn calculi which at times required multiple treatments. Based upon this study and the General Partner's experience in doing well in excess of 128,000 cases over the past ten and one-half years in its affiliated limited partnerships, the General Partner is of the opinion that the Lithostar(TM) is presently a very effective and sound alternative for the treatment of renal stones. Investors should note that some studies indicate that lithotripsy may cause high blood pressure and tissue damage. The General Partner questions the reliability of these studies and believes lithotripsy has become a widely accepted method for the treatment of renal stones.

Impact of Insurance Reimbursement. The prices Partnership's revenues are expected to be derived from the Partnership will be able to charge its patients for the lithotripsy of kidney stones is significantly dependent upon the amount of reimbursement private fees paid by Contract Hospitals and other health care insurers will allow for this procedure. Most of facilities under lithotripsy service contracts with the Partnership's patients would pay . The Partnership does not currently directly bill or collect for services directly from private payment sources, primarily from patients or their third-party insurers such as Blue Cross/Blue Shield payors. Payments received from Contract Hospitals and other commercial insurers. Coverage and payment levels for these private payment sources vary health care facilities may be subject to renegotiation depending upon on the patient's individual insurance policyreimbursement such parties receive. The increasing influence of health maintenance organizations and other managed care companies has resulted in pressure to reduce the reimbursement available for lithotripsy procedures. The Some of the General Partner and some of its Partner's Affiliates have recently been informed by several hospitals and commercial insurers that reimbursement rates must be reduced, or the hospitals and commercial insurers would negotiate with competing lithotripsy servicesexperienced declining revenues based on these managed care pressures in other health care markets. Additionally, the Health Care Financing Administration ("HCFA"), the federal agency which administers the Medicare program, has proposed rules which would reduce the reimbursement available for lithotripsy procedures provided at hospitals to $2,6122,235. This rate is lower than the typical charge for lithotripsy services historically charged by the Partnership. However, in See "Regulation - Federal Regulation." In some cases, cases reimbursement rates payable to Affiliates of the General Partner and other Affiliates are less than the proposed HCFA rate. Because of the competitive pressures from managed care companies as well as threatened reductions in Medicare reimbursement, the General Partner anticipates that reimbursement available for the lithotripsy procedure procedures may continue to decrease. Such decreases would have a material adverse effect on Partnership revenues. Regarding the professional fees paid to physicians who treat patients on the Mobile Lithotripsy System, the General Partner anticipates that similar competitive pressures may result in lower reimbursement paid to physicians, both by private insurers and by government programs such as Medicare. See "Regulation." Reliability and Efficacy of the Lithotripters. Storz Modulith(R) SLX-T. The Lithostar(TMModulith(R) has an eleven year United States operating history, having SLX-T received FDA premarket approval from the FDA for renal lithotripsy on September 30March 27, 19881997. This approval followed a period of clinical testing beginning in February 1987 at four test sites in the United States, which was preceded by substantial clinical testing of the Lithostar(TM) at the Urological Clinic of the Xxxxxxxx Xxxxxxxxx University of Mainz, West Germany. The General Partner estimates that more than 400 Lithostar(TM) systems are currently operating in over twenty countries, and Although the General Partner and its Affiliates operate over 30 Lithostars(TMhave positive direct experience with the use of the Modulith(R) SLX-T, "downtime" periods necessitated by maintenance and repairs of the Lithotripsy System will adversely effect Partnership revenues. Preliminary reports from abroad and "word of mouth" anecdotal evidence indicate that the Modulith(R) SLX-T is as effective as most of the "portable" lithotripters in other venturesthe market. In The General Partner is aware that early data from abroad concerning one precursor to the Modulith(R) SLX-T reflected a high retreatment rate, and that an Affiliate of the General Partner experienced electrical and mechanical problems using another precursor, the Modulith(R) SLX. However, the General Partner's opinion, and its Affiliates' limited experience with the Lithostar(TMtransportable Modulith(R) SLX-T has proven to be reliable and dependable medical equipment; however, downtime periods necessitated for maintenance or repairs of shown acceptable retreatment rates. A high retreatment rate may adversely affect the Partnership's Mobile Lithotripsy System will adversely affect Partnership revenues. In 1996, the FDA approved a new higher intensity shock-head system for the Lithostar(TM), which the General Partner believes has shortened procedure times. The Partnership's Lithostar(TM) has been upfitted with the new tube system. Based upon a detailed follow-up study of 86,000 renal and 51,000 ureteral stones treated on the Lithostar(TM) in all of the General Partner's affiliated partnerships using both the original and newer shock-head systems, the General Partner notes an 86% total success rate with an overall retreatment rate of only 15%. This retreatment rate included stones of all sizes and locations, including staghorn calculi which at times required multiple treatments. Based upon this study and the General Partner's experience in doing well in excess of 128,000 cases over the past ten and one-half years in its affiliated limited partnerships, the General Partner is of the opinion that the Lithostar(TM) is presently a very effective and sound alternative for the treatment of renal stones. Investors should note that some studies indicate that lithotripsy may cause high blood pressure and tissue damage. The General Partner questions the reliability of these studies and believes lithotripsy has become a widely accepted method for the treatment of renal stones.

Impact of Insurance Reimbursement. The prices price the Partnership will be is able to charge its patients for the lithotripsy of kidney stones is significantly dependent upon the amount of reimbursement private health care insurers will would allow for this procedure. Most of the Partnership's patients would pay for services directly from private payment sources, primarily from third-party insurers such as Blue Cross/Blue Shield and other commercial insurers. Coverage and payment levels for these private payment sources vary depending upon the patient's individual insurance policy. The increasing influence of health maintenance organizations and other managed care companies has resulted in pressure to reduce the reimbursement available for lithotripsy procedures. The General Partner Litho and some of its Affiliates have recently been informed by several hospitals and commercial insurers that reimbursement rates must be reduced, or the hospitals and commercial insurers would negotiate with competing lithotripsy services. Additionally, the Health Care Financing Administration ("HCFA"), which administers the Medicare program, has proposed rules which would reduce the reimbursement available for lithotripsy procedures provided at hospitals to $2,6122,235. This rate is lower than the typical charge for lithotripsy services historically charged by the Partnership. However, in See "Regulation - Federal Regulation." In some cases, cases reimbursement rates payable to Affiliates of the General Partner Litho by commercial insurers are less than the proposed HCFA rate. Because of the competitive pressures from managed care companies as well as threatened reductions in Medicare reimbursement, the General Partner Litho anticipates that reimbursement available for the lithotripsy procedure may continue to decrease. Such decreases would could have a material adverse effect on Partnership revenues. Regarding the professional fees paid to physicians who treat patients on the Mobile Lithotripsy System, the General Partner Litho anticipates that similar competitive pressures may result in lower reimbursement paid to physicians, both by private insurers and by government programs such as Medicare. See "Regulation." Reliability and Efficacy of the LithotriptersLithotripter. The Lithostar(TM) has an eleven year United States operating history, having received premarket approval from the FDA for renal lithotripsy on September 30, 1988. This approval followed a period of clinical testing beginning in February 1987 at four test sites in the United States, which was preceded by substantial clinical testing of the Lithostar(TM) at the Urological Clinic of the Xxxxxxxx Jxxxxxxx Xxxxxxxxx University of Mainz, West Germany. The General Partner Litho estimates that more than 400 Lithostar(TM) systems are currently operating in over twenty countries, and the General Partner Litho and its Affiliates operate over 30 Lithostars(TM) in other ventures. In the General PartnerLxxxx's opinion, the Lithostar(TM) has proven to be reliable and dependable medical equipment; however, downtime periods necessitated for maintenance or repairs of the Partnership's Mobile Lithotripsy System will adversely affect Partnership revenues. The Lithostar(TM) operated by the Partnership has been in operation since 1990 and has not required service other than routine maintenance and upgrades. In 1996, the FDA approved a new higher intensity shock---head system for the Lithostar(TM), which the General Partner Lxxxx believes has shortened procedure times. The Partnership's Lithostar(TM) has been upfitted with the new tube system. Based upon a detailed follow-up study of 86,000 renal and 51,000 ureteral stones treated on the Lithostar(TM) in all of the General PartnerLitho's affiliated partnerships using both the original and newer shock-head systems, the General Partner Litho notes an 86% total success rate with an overall retreatment rate of only 15%. This retreatment rate included stones of all sizes and locations, including staghorn calculi which at times required multiple treatments. Based upon this study and the General PartnerLxxxx's experience in doing well in excess of 128,000 150,000 cases over the past ten and one-half years in its affiliated limited partnerships, the General Partner Litho is of the opinion that the Lithostar(TM) is presently a very effective and sound alternative for the treatment of renal stones. Investors should note that some studies indicate that lithotripsy may cause high blood pressure and tissue damage. The General Partner Litho questions the reliability of these studies and believes lithotripsy has become a widely accepted method for the treatment of renal stones.

Impact of Insurance Reimbursement. The prices Partnership's revenues are expected to continue to be derived from the Partnership will be able to charge its patients for the lithotripsy of kidney stones is significantly dependent upon the amount of reimbursement private fees paid by Contract Hospitals and other health care insurers will allow for this procedure. Most of facilities under contracts with the Partnership's patients would pay , as well as fees directly billed or collected for services directly from private payment sources, primarily from patients or their third-party insurers such as Blue Cross/Blue Shield payors. Payments received from Contract Hospitals and other commercial health care facilities may be subject to renegotiation depending on the reimbursement such parties receive. Such reimbursement may be reduced for several reasons, including the introduction of an outpatient prospective payment system regarding Medicare patients, which in turn could lower reimbursement available from private health insurers. Coverage and payment levels for these private payment sources vary depending upon the patient's individual insurance policy. The increasing influence of health maintenance organizations and other managed care companies has resulted in pressure to reduce the reimbursement available for lithotripsy procedures. The General Partner and some of its Affiliates have recently been informed by several hospitals and commercial insurers that reimbursement rates must be reduced, or the hospitals and commercial insurers would negotiate with competing lithotripsy services. Additionally, the Health Care Financing Administration ("HCFA"), the federal agency which administers the Medicare program, has proposed issued rules which would reduce the reimbursement available for lithotripsy procedures provided at hospitals to $2,6122,265. This rate is lower than the typical charge for lithotripsy services historically charged by the Partnership. However, in See "Regulation - Federal Regulation." In some cases, cases reimbursement rates payable to Affiliates of the Partnership and the General Partner Partner's Affiliates from commercial third-party payors are already less than the proposed HCFA rate. Because of the competitive pressures from managed care companies as well as threatened reductions in Medicare reimbursement, the General Partner anticipates that reimbursement available for the lithotripsy procedure procedures may continue to decrease. Such decreases would have a material adverse effect on Partnership revenues. Regarding the professional fees paid to physicians who treat patients on the Mobile Lithotripsy SystemSystems, the General Partner anticipates that similar competitive pressures may result in lower reimbursement paid to physicians, both by private insurers and by government programs such as Medicare. See "Regulation." Reliability and Efficacy of the Partnership's Lithotripters. The Partnership currently operates a Lithostar(TM) extracorporeal shock wave lithotripter. The Lithostar(TM) has approximately an eleven eleven-year United States operating history, having received premarket approval from the FDA for renal lithotripsy on September 30, 1988. This approval followed a period of clinical testing beginning in February 1987 at four test sites in the United States, which was preceded by substantial clinical testing of the Lithostar(TM) at the Urological Clinic of the Xxxxxxxx Xxxxxxxxx University of Mainz, West Germany. The General Partner estimates that more than 400 Lithostar(TM) systems are currently operating in over twenty countries, and the General Partner and its Affiliates operate over 30 Lithostars(TM) in this and other ventures. In the General Partner's opinion, the Lithostar(TM) has proven to be reliable and dependable medical equipment; however, any downtime periods necessitated for maintenance or repairs of the Partnership's Mobile Existing Lithotripsy System will adversely affect Partnership revenues. In 1996, the FDA approved a new higher intensity shock-head system for the Lithostar(TM), which the General Partner believes has shortened procedure times. The Partnership's Lithostar(TM) has been operated by the Partnership was upfitted with the new tube systemshock-head system in 1996. Based upon a detailed follow-up study of 86,000 renal and 51,000 ureteral stones treated on the Lithostar(TM) in all of the General Partner's affiliated partnerships using both the original and newer shock-head systems, the General Partner notes an 86% total success rate with an overall retreatment rate of only 15%. This retreatment rate included stones of all sizes and locations, including staghorn calculi which at times required multiple treatments. Based upon this study and the General Partner's experience in doing well in excess of 128,000 cases over the past ten and one-half years in its affiliated limited partnerships, the General Partner is of the opinion that the Lithostar(TM) is presently a very generally an effective and sound alternative for the treatment of renal stones. The Lithostar(TM) used by the Partnership is an older model, and the General Partner believes that the Partnership must acquire a new transportable lithotripter in order to maintain the Partnership's current level of efficiency and respond to competitive pressures. The Partnership anticipates purchasing one new transportable extracorporeal shock wave lithotripter with the proceeds of this Offering and Partnership debt financing. See "Business Activities - Acquisition of New Lithotripsy System." The General Partner believes a new transportable lithotripter offers an advantage over the Partnership's Existing Lithotripsy System because it can be moved from site to site more quickly, and can be used in hospital procedure rooms at treatment facilities with limited pad space. Pursuant to the terms of the Partnership Agreement, the Partnership's acquisition of a New Lithotripsy System is subject to the prior approval of a Majority in Interest of the Limited Partners. In the event the requisite consent of the Limited Partners is received, the General Partner will select from three available models the unit which offers the best combination of value and efficacy for the Partnership. The General Partner will consult with the Partnership's Physician Advisory Board prior to selecting the model of lithotripter to be acquired. The models currently under consideration as of the date of this Memorandum are (i) the Storz Modulith(R) SLX-T ("Modulith(R) SLX-T"), (ii) the Medirex Tripter X-1 Compact ("Compact"), and (iii) the Siemens Modularis(TM) Uro Plus ("Modularis(TM)"). The Modulith(R) SLX-T received FDA premarket approval on March 27, 1997. Preliminary reports from abroad and "word of mouth" anecdotal evidence indicate that the Modulith(R) SLX-T is as effective as most of the "portable" lithotripters in the market. The General Partner is aware that early data from abroad concerning one precursor to the Modulith(R) SLX-T reflected a high retreatment rate, and that an Affiliate of the General Partner experienced electrical and mechanical problems using another precursor, the Modulith(R) SLX. However, the General Partner and its Affiliates' experience with the transportable Modulith(R) SLX-T has shown acceptable retreatment rates. A high retreatment rate may adversely affect the Partnership. The General Partner and its Affiliates currently operate 11 Modulith(R) SLX-T lithotripters throughout the United States. The Compact and the Modularis(TM) received FDA premarket approval in 1996 and 1998, respectively. The General Partner and its Affiliates have limited direct experience with the use of the Compact and no direct experience with the Modularis(TM). Downtime periods necessitated by maintenance and repairs of any unit selected from the three models of lithotripters under consideration will adversely affect Partnership revenues. Investors should note that some studies indicate that lithotripsy may cause high blood pressure and tissue damage. The General Partner Partnership questions the reliability of these studies and believes lithotripsy has become a widely accepted method for the treatment of renal stones.

Impact of Insurance Reimbursement. The prices Partnership's revenues are expected to continue to be derived from the Partnership will be able to charge its patients for the lithotripsy of kidney stones is significantly dependent upon the amount of reimbursement private fees paid by Contract Hospitals and other health care insurers will allow for this procedure. Most of facilities under contracts with the Partnership's patients would pay , as well as fees directly billed or collected for services directly from private payment sources, primarily from patients or their third-party insurers such as Blue Cross/Blue Shield payors. Payments received from Contract Hospitals and other commercial health care facilities may be subject to renegotiation depending on the reimbursement such parties receive. Such reimbursement may be reduced for several reasons, including the introduction of an outpatient prospective payment system regarding Medicare patients, which in turn could lower reimbursement available from private health insurers. Coverage and payment levels for these private payment sources vary depending upon the patient's individual insurance policy. The increasing influence of health maintenance organizations and other managed care companies has resulted in pressure to reduce the reimbursement available for lithotripsy procedures. The General Partner and some of its Affiliates have recently been informed by several hospitals and commercial insurers that reimbursement rates must be reduced, or the hospitals and commercial insurers would negotiate with competing lithotripsy services. Additionally, the Health Care Financing Administration ("HCFA"), the federal agency which administers the Medicare program, has proposed issued rules which would reduce the reimbursement available for lithotripsy procedures provided at hospitals to $2,6122,265. This rate is lower than the typical charge for lithotripsy services historically charged by the Partnership. However, in See "Regulation - Federal Regulation." In some cases, cases reimbursement rates payable to Affiliates of the General Partner Partner's Affiliates from commercial third-party payors are already less than the proposed HCFA rate. Because of the competitive pressures from managed care companies as well as threatened reductions in Medicare reimbursement, the General Partner anticipates that reimbursement available for the lithotripsy procedure procedures may continue to decrease. Such decreases would have a material adverse effect on Partnership revenues. Regarding the professional fees paid to physicians who treat patients on the Mobile Lithotripsy System, the General Partner anticipates that similar competitive pressures may result in lower reimbursement paid to physicians, both by private insurers and by government programs such as Medicare. See "Regulation." Reliability and Efficacy of the LithotriptersPartnership's Lithostar(TM). The Partnership currently operates a Lithostar(TM) model lithotripter. The Lithostar(TM) has more than an eleven eleven-year United States operating history, having received premarket approval from the FDA for renal lithotripsy on September 30, 1988. This approval followed a period of clinical testing beginning in February 1987 at four test sites in the United States, which was preceded by substantial clinical testing of the Lithostar(TM) at the Urological Clinic of the Xxxxxxxx Jxxxxxxx Xxxxxxxxx University of Mainz, West Germany. The General Partner estimates that more than 400 Lithostar(TM) systems are currently operating in over twenty countries, and the General Partner and its Affiliates operate over 30 Lithostars(TM) in this and other ventures. In the General Partner's opinion, the Lithostar(TM) has proven to be reliable and dependable medical equipment; however, any downtime periods necessitated for maintenance or repairs of the Partnership's Mobile Lithotripsy System will adversely affect Partnership revenues. In 1996, the FDA approved a new higher intensity shock-head system for the Lithostar(TM), which the General Partner believes has shortened procedure times. The Partnership's Lithostar(TM) has been operated by the Partnership was upfitted with the new tube systemshock-head system in 1996. Based upon a detailed follow-up study of 86,000 renal and 51,000 ureteral stones treated on the Partnership's Lithostar(TM) in all of the General Partner's affiliated partnerships using both the original and newer shock-head systems, the General Partner notes an 86% total success rate with an overall retreatment rate of only 15approximately 8%. This retreatment rate included stones of all sizes and locations, including staghorn calculi which at times required multiple treatments. Based upon this study and the General Partner's experience in doing well in excess of 128,000 cases over the past ten and one-half years in its affiliated limited partnerships, the General Partner is of the opinion that the Lithostar(TM) is presently a very generally an effective and sound alternative for the treatment of renal stones. Investors should note that some studies indicate that lithotripsy may cause high blood pressure and tissue damage. The General Partner Partnership questions the reliability of these studies and believes lithotripsy has become a widely accepted method for the treatment of renal stones.

Impact of Insurance Reimbursement. The prices Partnership's revenues are expected to continue to be derived from the Partnership will be able to charge its patients for the lithotripsy of kidney stones is significantly dependent upon the amount of reimbursement private health care insurers will allow for this procedure. Most of fees paid by Contract Hospitals under contract with the Partnership's patients would pay . The Partnership does not plan to directly bill or collect for services directly from private payment sources, primarily from patients or their third-party insurers such as Blue Cross/Blue Shield and other commercial payors, though it may do so in the future in the General Partner's discretion. Payments received from Contract Hospitals may be subject to renegotiation depending on the reimbursement they receive. Such reimbursement may be reduced for several reasons, including the introduction of an outpatient prospective payment system regarding Medicare patients, which in turn could lower reimbursement available from private health insurers. Coverage and payment levels for these private payment sources vary depending upon the patient's individual insurance policy. The increasing influence of health maintenance organizations and other managed care companies has resulted in pressure to reduce the reimbursement available for lithotripsy procedures. The Some of the General Partner and some of its Partner's Affiliates have recently been informed by several hospitals and commercial insurers that reimbursement rates must be reduced, or the hospitals and commercial insurers would negotiate with competing lithotripsy servicesexperienced declining revenues based on these managed care pressures in other health care markets. Additionally, the Health Care Financing Administration ("HCFA"), the federal agency which administers the Medicare program, has proposed issued rules which would reduce the reimbursement available for lithotripsy procedures provided at hospitals to $2,6122,265. This rate is lower than the typical charge for lithotripsy services historically charged by the Partnership. However, in See "Regulation - Federal Regulation." In some cases, cases reimbursement rates payable to Affiliates of the General Partner and other Affiliates from commercial third party payors are less than the proposed HCFA rate. Because of the competitive pressures from managed care companies as well as threatened reductions in Medicare reimbursement, the General Partner anticipates that reimbursement available for the lithotripsy procedure procedures may continue to decrease. Such decreases would have a material adverse effect on Partnership revenues. Regarding the professional fees paid to physicians who treat patients on the Mobile Lithotripsy SystemSystems, the General Partner anticipates that similar competitive pressures may result in lower reimbursement paid to physicians, both by private insurers and by government programs such as Medicare. See "Regulation." Reliability and Efficacy of the Partnership's Lithotripters. The Partnership currently owns and operates two Lithostars(TM). The Lithostar(TM) has an eleven eleven-year United States operating history, having received premarket approval from the FDA for renal lithotripsy on September 30, 1988. This approval followed a period of clinical testing beginning in February 1987 at four test sites in the United States, which was preceded by substantial clinical testing of the Lithostar(TM) at the Urological Clinic of the Xxxxxxxx Xxxxxxxxx University of Mainz, West Germany. The General Partner estimates that more than 400 Lithostar(TM) systems are currently operating in over twenty countries, and the General Partner and its Affiliates operate over 30 Lithostars(TM) in other ventures. In the General Partner's opinion, the Lithostar(TM) has proven to be reliable and dependable medical equipment; however, any downtime periods necessitated for maintenance or repairs of the Partnership's Mobile Existing Lithotripsy System Systems will adversely affect Partnership revenues. In 1996, the FDA approved a new higher intensity shock-head system for the Lithostar(TM), which the General Partner believes has shortened procedure times. The Partnership's Lithostar(TMLithostars(TM) has been were upfitted with the new tube systemsystem in 1996. Based upon a detailed follow-up study of 86,000 renal and 51,000 ureteral stones treated on the Lithostar(TM) in all of the General Partner's affiliated partnerships using both the original and newer shock-head systems, the General Partner notes an 86% total success rate with an overall retreatment rate of only 15%. This retreatment rate included stones of all sizes and locations, including staghorn calculi which at times required multiple treatments. Based upon this study and the General Partner's experience in doing well in excess of 128,000 cases over the past ten and one-half years in its affiliated limited partnerships, the General Partner is of the opinion that the Lithostar(TM) is presently a very generally an effective and sound alternative for the treatment of renal stones. However, the Partnership's Lithostars(TM) are older models, and the General Partner believes that these machines need to be replaced in order to retain the Partnership's current level of efficiency and respond to competitive pressures. The Partnership anticipates purchasing two new Storz Modulith(R) SLX-T model extracorporeal shock wave lithotripters with the proceeds of this Offering and Partnership debt financing. See "Business Activities - Acquisition of the New Lithotripsy Systems." The General Partner believes the Modulith(R) SLX-T offers several advantages over the Lithostar(TM). In particular, the General Partner believes that the Modulith(R) SLX-T provides clearer imaging than the Lithostar(TM). In addition, because the Modulith(R) SLX-T is transportable, it can be moved from site to site more quickly, and the Modulith(R) SLX-T offers more flexibility since it can be used in a Coach or in hospital procedure rooms. The Modulith(R) SLX-T received FDA premarket approval on March 27, 1997. Although the General Partner and its Affiliates have limited but positive direct experience with the use of the Modulith(R) SLX-T, any downtime periods necessitated by maintenance and repairs of the New Lithotripsy Systems will adversely affect Company revenues. Preliminary reports from abroad and "word of mouth" anecdotal evidence indicate that the Modulith(R) SLX-T is as effective as most of the "portable" lithotripters in the market. The General Partner is aware that early data from abroad concerning one precursor to the Modulith(R) SLX-T reflected a high retreatment rate, and that an Affiliate of the General Partner experienced electrical and mechanical problems using another precursor, the Modulith(R) SLX. However, the General Partner's and its Affiliates' limited experience with the transportable Modulith(R) SLX-T has shown acceptable retreatment rates. A high retreatment rate may adversely affect the Partnership. Investors should note that some studies indicate that lithotripsy may cause high blood pressure and tissue damage. The General Partner Partnership questions the reliability of these studies and believes lithotripsy has become a widely accepted method for the treatment of renal stones.