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| Future Regulatory Risk                          |   | IRF                                               | SNF                                                   | LTCH                                                                                | HH                                                                                                    |
|-------------------------------------------------|--------|---------------------------------------------------|-------------------------------------------------------|-------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------|
|                                            |   |                                              |                                                  |                                                                                |                                                                                                  |
|  1. Re-basing payment system          |   | No                                                | Yes; RUGS IV and MDS3.0 being implemented FY2011/2012 | No                                                                                  | Yes; would be required as part  ofPPACA starting in 2014                                    |
|  2. Major outlier payment adjustments |   | No                                                | No                                                    |  Yes; will occur whenMMSEA relief expires (shortstay outliers)                 | Yes; 10% cap per agency;2.5% taken out of outlier pool(per PPACA)                                     |
|  3. Upcoding adjustments              |   | No                                                | Yes; occurring inFY 2010                              |  Yes; occurring in FY 2010and proposed (-2.5%)for FY 2011                      |  Yes; occurring in CYs2010 (-2.75%), and proposed(-3.79%) for 2011 and 2012                      |
|  4. Patient criteria                  |   |  No; 60% Rulealready in place                | No                                                    | Study dictated aspart of MMSEA                                                      | PPACA requires a patient -physician “face-to-face”encounter; new therapycoverage proposed |
|  5. Healthcare Reform                 |   |                                              |                                                  |                                                                                |                                                                                                  |
| – Market basket update reductions    |   | – Known                                | – Known                                    | – Known                                                                  | – Known                                                                                    |
| – Productivity adjustments           |   | – Begins 2012                          | – Begins 2012                              | – Begins 2012                                                            | – Begins 2015                                                                              |
| – Bundling                           |   | – Pilot to be established by 2013 | – Pilot to be established by 2013     | – Pilot to be established by 2013                                   | – Pilot to be established by 2013                                                     |
| – Independent Payment Advisory Board |   | – FY 2019                              | – FY 2015                                  | – FY 2019                                                                | – CY 2015                                                                                  |
| – New quality reporting requirements |   | – Begins 2014                          | – N/A                                      | – Begins 2014                                                            | – N/A                                                                                      |
| – Value based purchasing             |   | – Pilot begins 2016                    | – Post 2012                                | – Pilot begins 2016                                                      | – Post 2012                                                                                |
|  6. Other                             |   | N/A                                               | Forecast errorbeing implementedin FY 2011             | 25% Rule regulatory reliefexpires in 2012/2013;prohibition on newLTCHs through 2012 | Limits on transferof ownership                                                                        |

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|                                                     | Freestanding(2) | Units(2) | Total   |   | HealthSouth |
|----------------------------------------------------------|-----------------|----------|---------|--------|-------------|
|                                                     | Hospitals(2)    |
| Number of IRFs                                           | 228             | 953      | 1,181   |   | 94          |
| Average # of Discharges per IRF                          | 649             | 237      | 316     |   | 822         |
| Outlier Payments as % of TotalPayments                   | 1.32%           | 4.08%    | 3.00%   |   | 0.43%       |
| Average Estimated Total Paymentper Discharge for FY 2010 | $16,452         | $16,741  | $16,626 |   | $15,996     |
| Average Estimated Cost perDischarge for FY 2010          | $14,021         | $17,207  | $15,945 |   | $12,633     |

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