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                                                                    EXHIBIT 99.1
 
                PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
                        SAFE HARBOR COMPLIANCE STATEMENT
                         FOR FORWARD-LOOKING STATEMENTS
 
     In passing the Private Securities Litigation Reform Act of 1995 (the
"Reform Act"), 15 U.S.C.A. Sections 77z-2 and 78u-5 (Supp. 1996), Congress
encouraged public companies to make "forward-looking statements" by creating a
safe harbor to protect companies from securities law liability in connection
with forward-looking statements. Medaphis Corporation ("Medaphis" or the
"Company") intends to qualify both its written and oral forward-looking
statements for protection under the Reform Act and any other similar safe harbor
provisions.
 
     "Forward-looking statements" are defined by the Reform Act. Generally,
forward-looking statements include expressed expectations of future events and
the assumptions on which the expressed expectations are based. All
forward-looking statements are inherently uncertain as they are based on various
expectations and assumptions concerning future events and they are subject to
numerous known and unknown risks and uncertainties which could cause actual
events or results to differ materially from those projected. Due to those
uncertainties and risks, the investment community is urged not to place undue
reliance on written or oral forward-looking statements of Medaphis. The Company
undertakes no obligation to update or revise this Safe Harbor Compliance
Statement for Forward-Looking Statements (the "Safe Harbor Statement") to
reflect future developments. In addition, Medaphis undertakes no obligation to
update or revise forward-looking statements to reflect changed assumptions, the
occurrence of unanticipated events or changes to future operating results over
time.
 
     Medaphis provides the following risk factor disclosure in connection with
its continuing effort to qualify its written and oral forward-looking statements
for the safe harbor protection of the Reform Act and any other similar safe
harbor provisions. Important factors currently known to management that could
cause actual results to differ materially from those in forward-looking
statements include the following:
 
     FUTURE OPERATING RESULTS.  While Medaphis has in the past expanded its
operations through acquisitions and internal growth, the 1997 business plan of
the Company does not provide for further acquisitions and, in any event, any
such acquisitions would require the unanimous consent of the Company's existing
lenders. While the Company has and continues to implement management initiatives
designed to enhance and improve its business and operations, there can be no
assurance that Medaphis will be able to achieve or sustain profitability or
revenue growth on an annual or quarterly basis in the future, that fluctuations
in quarter-to-quarter or year-to-year operating results will not occur or that
any such quarter-to-quarter or year-to-year fluctuations will not be material.
Future operating results of Medaphis will be dependent upon, among other things,
(i) successful integration of certain recently acquired businesses, (ii)
successfully exiting non-core businesses, (iii) improvement in operations of the
Company's physician billing business, (iv) successful implementation of various
management initiatives designed to reduce costs and increase efficiencies within
the Company's core business and (v) successful growth in sales of the Company's
business management services and information products.
 
     The Company has recently consummated a number of significant acquisitions,
many of which the Company is in the process of integrating into its operations.
In addition, the Company recently announced its intention to focus on its core
business of delivering business management services and information products to
healthcare providers and to divest non-strategic businesses, including
Healthcare Recoveries, Inc. ("HRI"). The Company also recently announced that it
was assessing alternatives for its client/server integration businesses (the
"BSG Group), including, but not limited to, seeking a buyer, a spin-off
transaction or other capital-raising alternatives. There can be no assurance
that the Company will be able to successfully integrate any of the recently
acquired companies, that Medaphis will be able to continue to operate recently
acquired companies in a profitable manner or that any of the recently acquired
companies will not have a material adverse effect upon Medaphis' results of
operations, particularly while such acquisitions are being integrated into the
Company. Similarly, there can be no assurance that the Company will be able to
successfully exit
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non-core businesses in a timely fashion or at all, that the Company will be able
to divest HRI on favorable terms, that the Company will be able to find a buyer
or develop suitable alternatives for the BSG Group or that any such divestiture
and/or assessment will not have a material adverse effect upon the results of
operations of the Company. Additionally, there can be no assurance that any such
divestiture or assessment will not have an adverse effect upon the results of
operations of HRI or the BSG Group or the reputation and standing of each of
these businesses in their respective markets or their ability to attract and
retain key employees.
 
     During the six months ended December 31, 1996, the Company undertook to
reorganize its Imonics operating unit, integrate the Imonics operations into BSG
Corporation ("BSG") and to discontinue the custom software development business
previously pursued by the Imonics unit. This process involved, among other
things, recording large restructuring and other charges during the relevant
period, significant downsizing of Imonics' employee workforce, renegotiation of
Imonics' significant client contracts and other restructuring, reorganization
and exit activities. There can be no assurance that such restructuring and
reorganization activities will not have an adverse effect upon the reputation
and standing of Medaphis, BSG and/or Rapid Systems Solutions, Inc. in the
information management and client/server information technology marketplaces or
that such matters will not have an adverse effect upon the results of operations
of Medaphis in future periods or adversely effect BSG's ability to attract and
retain key employees.
 
     The Company's expansion strategy in the past has involved both acquisitions
and internal growth. The Company recently announced that it intends to focus on
its core business of delivering business management services and information
products to healthcare providers and to divest non-strategic businesses.
Moreover, the Company does not currently anticipate pursuing any significant
acquisitions. There can be no assurance that such shift in focus will not have
an adverse effect upon the Company's revenue and operations.
 
     The Company is experiencing margin pressure in the billing and accounts
receivable management services operations of Medaphis Physician Services
Corporation, a wholly owned subsidiary of the Company ("MPSC"). MPSC has not
significantly contributed to the Company's overall results of operations for the
past eighteen months. Management does not expect this trend to improve
significantly until further progress is made with, among other things, ongoing
initiatives designed to reduce redundant costs, improve efficiencies and enhance
operational effectiveness in MPSC's operations. One of the major components of
the Company's 1997 operating plan is to reduce costs and increase efficiencies
in the core business. During 1996 and going forward, the Company has and will
continue to implement various initiatives within the Company's Services Division
(which includes MPSC) designed to reduce costs and improve operational
efficiency. These initiatives have included, among other things, downsizing of
management ranks and improvements in operational processes through the
implementation of best practices. Although the preliminary indications from such
management initiatives have been positive, there can be no assurance that the
Company will be able to successfully implement such initiatives throughout
MPSC's operations, that such management initiatives ultimately will be
successful, that MPSC's margins will improve or that MPSC will contribute
meaningfully to the Company's overall results of operations in future periods.
 
     The Company's future operations are dependent upon, among other things,
continued growth in sales of its healthcare information technology ("HIT")
products, including, but not limited to, sales of its clinical information
management system in both domestic and international markets. The markets for
these products are characterized by rapidly changing technology, evolving
industry standards and frequent new products and product enhancements. The
Company's success in its HIT business will depend upon its continued ability (i)
to enhance its existing products, (ii) to effect conversions of existing
products into foreign languages, (iii) to introduce new products on a timely and
cost effective basis to meet evolving customer requirements, (iv) to achieve
market acceptance for new product offerings and (v) to respond to emerging
industry standards and other technological changes. During the six months ended
December 31, 1996, the Company experienced slower than expected sales of certain
of its enterprise-wide and departmental scheduling products. There can be no
assurance that sales of such scheduling products will improve, that Medaphis
will be able to effectively enhance existing products, create new products or
respond to technological changes or new industry standards. Moreover, there can
be no assurance that competitors of Medaphis will not develop competitive
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products, or that any such competitive products will not have an adverse effect
upon Medaphis' operating results.
 
     The Company recently announced its operating plan for 1997. As noted above,
the operating plan involves refocusing the Company on its core business of
providing business management services and information products to healthcare
providers. The major components of the plan include (i) exiting non-core
businesses, (ii) achieving improved predictability of business results through
enhanced management accountability and controls, (iii) reducing costs and
increasing efficiencies in the core business, (iv) achieving excellence in
customer service, and (v) implementing cross-selling initiatives. Although
management believes that the 1997 operating plan reflects the key action items
which will contribute to Medaphis' efforts to improve and enhance the operations
of the Company, there can be no assurance that the operating plan will result in
meaningful improvements to the Company's operating results in future periods or
that the plan will ultimately be successful.
 
     ABANDONED REENGINEERING PROGRAM; EXISTING SYSTEMS AND TECHNOLOGY.  The
Company recently announced that it had abandoned its reengineering program. This
decision was reached at the conclusion of a comprehensive assessment of the
program begun during 1996. The conclusions of the assessment were that it was
not cost effective to continue the development and deployment of the software
and technology upon which the reengineering program was based and that the
reengineering software and technology had no alternative useful application in
the Company's operations. In lieu of further developing and deploying the
reengineering software and technology, the Company intends to further refine,
enhance and develop certain of the Company's existing software and billing
systems and to migrate over time the Company's billing and accounts receivable
management services operations to the Company's most proven software systems and
technology, so as to reduce the number of systems and technology that must be
maintained and supported. Moreover, management intends to continue to implement
"best practices" and other established process improvements in its operations
going forward. There can be no assurance that the Company will be able to
successfully refine, enhance and develop its software and billing systems going
forward, that the costs associated with maintaining, enhancing and developing
such software and systems will not increase significantly in future periods,
that the Company will be able to successfully migrate the Company's billing and
accounts receivable management services operations to the Company's most proven
software systems and technology or that the Company's existing software and
technology will not become obsolete as a result of ongoing technological
developments in the marketplace.
 
     CASH FLOW FROM OPERATIONS; SENIOR CREDIT FACILITY.  During the year ended
December 31, 1996, the Company used approximately $7.9 million in cash for
operating activities. At March 31, 1997, approximately $244 million in
borrowings were outstanding under the Company's second amended facility. The
previous senior credit facility was amended and restated on February 4, 1997
(the "Second Amended Facility") to, among other things, increase the loan
commitments from $250 million to $285 million and extend the maturity through
June 30, 1998. The Second Amended Facility is secured by substantially all of
the Company's assets and is guaranteed by substantially all of the Company's
subsidiaries. The loan commitments under the Second Amended Facility will reduce
to $200 million on July 31, 1997 (unless extended to September 30, 1997) and
$150 million on January 31, 1998. Certain of the other material terms of the
Second Amended Facility include adjustment of the interest rates, fees and
charges and other compensation to be paid to the lenders by the Company,
including the vesting of certain warrant arrangements for 1% of the common stock
of the Company on each of January 1, 1998 and April 1, 1998; modification of the
financial reporting requirement to the lenders; restrictions on new acquisitions
and certain litigation settlement payments; and establishment of a maximum
permitted capital expenditures covenant for the fiscal quarter ending March 31,
1997 and additional financial covenants for fiscal quarters ending on and after
June 30, 1997. This summary of certain terms of the Second Amended Facility and
the warrants are subject to the terms of the agreements which have been
incorporated by reference as exhibits to the Company's Annual Report on Form
10-K filed March 31, 1997.
 
     While management presently anticipates that the liquidity provided in the
Second Amended Facility (together with anticipated results from operations based
on the 1997 business plan) will be sufficient to fund the Company's anticipated
operating and capital expenditure requirements during 1997, there can be no
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assurance that there will not be material deviations in actual operations from
the 1997 business plan which would make it necessary for the Company to seek
either further modifications to the Amended Facility or other sources of
liquidity. Similarly, while the Company presently anticipates that the timing
and proceeds from the previously announced non-core business divestiture program
will be sufficient to meet the Company's principal amortization and other
obligations under the Second Amended Facility, there can be no assurance that
the timing or amount of the proceeds to be generated from business divestitures
for debt service purposes will not require further modifications of the Second
Amended Facility, some of which modifications would require the consent of all
of the lenders thereto. Finally, while the Second Amended Facility incorporates
an extension of maturity through June 30, 1998, the Company will be required to
renegotiate the Second Amended Facility prior to maturity and complete its
non-core business divestiture program in order to provide adequate liquidity for
the Company's 1998 business plan. There can be no assurance that the Company's
lenders will agree to further modifications of the Second Amended Facility or
that the Company will complete the non-core business divestiture program as
required. The Company may also be required to consider other alternative
financing arrangements and/or equity transactions, which could prove costly
and/or involve further dilution to the Company's stockholders. There can be no
assurance that any such alternative financing arrangements and/or equity
transactions will be available to the Company on acceptable terms or at all.
 
     PENDING FEDERAL INVESTIGATION; PUTATIVE CLASS ACTION LAWSUITS.  The United
States Attorney's Office for the Central District of California is conducting an
investigation (the "Federal Investigation") of Medaphis' billing and collection
practices in its offices located in Calabasas and Cypress, California (the
"Designated Offices"). Medaphis first became aware of the Federal Investigation
when it received search warrants and grand jury subpoenas on June 13, 1995.
Although the precise scope of the Federal Investigation is not known to the
Company at this time, Medaphis believes that the U.S. Attorney's Office is
investigating allegations of billing fraud and that the inquiry is focused upon
Medaphis' billing and collection practices in the Designated Offices. Numerous
federal and state civil and criminal laws govern medical billing and collection
activities. In general, these laws provide for various fines, penalties,
multiple damages, assessments and sanctions for violations, including possible
exclusion from Medicare, Medicaid and certain other federal and state healthcare
programs. Although the Designated Offices represent less than 2% of Medaphis'
annual revenue, there can be no assurance that the Federal Investigation will be
resolved promptly, that additional subpoenas or search warrants will not be
received by Medaphis or that the Federal Investigation will not have a material
adverse effect upon the Company. The Company recorded charges of $12 million in
the third quarter of 1995 and $2 million in the fourth quarter of 1996, solely
for the administrative fees, costs and expenses it anticipates incurring in
connection with the Federal Investigation and the putative class action lawsuits
described below which were filed following the Company's announcement of the
Federal Investigation. The charges are intended to cover only the anticipated
expenses of the Federal Investigation and the related lawsuits and do not
include any provision for fines, penalties, damages, assessments, judgments or
sanctions that may arise out of such matters.
 
     Following the announcement of the Federal Investigation, Medaphis, various
of its current and former officers and directors and the lead underwriters
associated with Medaphis' public offering of common stock in April 1995 were
named as defendants in putative shareholder class action lawsuits filed in the
United States District Court for the Northern District of Georgia. In general,
these lawsuits allege violations of the federal securities laws in connection
with Medaphis' public statements and filings under the federal securities acts,
including the registration statement filed in connection with Medaphis' public
offering of common stock in April 1995. On October 13, 1995, the named
plaintiffs in these lawsuits filed a consolidated class action complaint (the
"Consolidated Complaint"). On January 3, 1996, the court denied defendants'
motion to dismiss the Consolidated Complaint. On April 11, 1996, certain of the
named plaintiffs to the Consolidated Complaint voluntarily dismissed with
prejudice all of their claims. As a result of these dismissals, the Consolidated
Complaint no longer contains any claims based on the Securities Act of 1933, as
amended, and the Company's underwriters and outside directors are no longer
named as defendants. On June 26, 1996, the court denied the plaintiffs' motion
to certify a plaintiffs' class. The plaintiffs and the defendants have reached
an agreement in principle to settle this action on a class-wide basis for $4.75
million, subject to court approval and other customary conditions (the "1995
Class Action Settlement"). The 1995 Class Action Settlement would also include
the related putative class action lawsuit currently pending in the Superior
Court of Cobb
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County, Georgia, described more fully below. The Company expects to receive
approximately $3.7 million from insurance to fund a portion of the 1995 Class
Action Settlement and accrued approximately $1.2 million in the quarter ending
December 31, 1996 to fund the anticipated balance of the 1995 Class Action
Settlement and to pay certain fees incident thereto.
 
     On November 5, 1996, Medaphis, Randolph G. Brown, Michael R. Cote and James
S. Douglass were named as defendants in a putative shareholder class action
lawsuit filed in Superior Court of Cobb County, State of Georgia. This lawsuit
alleges violations of Georgia securities laws based on the same public
statements and filings generally described above. The lawsuit is brought on
behalf of a putative class of purchasers of Medaphis common stock during the
period from March 29, 1995 through June 15, 1995. The plaintiffs seek
compensatory damages and costs. As noted above, it is currently contemplated
that this action will be settled as part of the 1995 Class Action Settlement.
 
     The Company and its clients from time to time have received, and the
Company anticipates that they will receive in the future, official inquiries
(including subpoenas, search warrants, as well as informal requests) concerning
particular billing and collection practices related to certain subsidiaries of
the Company and its many clients. In March 1997, the Company was informed by the
Civil Division of the Department of Justice that it is investigating allegations
concerning the Company's Gottlieb's Financial Services, Inc. ("GFS") subsidiary.
The Company has received a request from the Department of Justice for records,
and may receive additional requests. The Company intends to cooperate in
producing records. There can be no assurance that this matter will be resolved
promptly or that the investigation will not have a material adverse effect upon
Medaphis.
 
     Following the Company's August 14, 1996 announcement regarding earnings
expectations and certain charges, Medaphis and certain of its current and former
officers, one of whom was also a director, were named as defendants in nineteen
putative shareholder class action lawsuits filed in the United States District
Court for the Northern District of Georgia. On November 22, 1996, the plaintiffs
in these lawsuits filed a Consolidated Amended Class Action Complaint (the "1996
Consolidated Complaint"). In general, the 1996 Consolidated Complaint alleges
violations of the federal securities laws in connection with Medaphis' filings
under the federal securities acts and public disclosures. The 1996 Consolidated
Complaint is brought on behalf of a class of all persons who purchased or
otherwise acquired Medaphis common stock between January 6, 1996 and October 21,
1996. The 1996 Consolidated Complaint also asserts claims on behalf of a
sub-class of all persons who acquired Medaphis common stock pursuant to the
merger between Medaphis and Health Data Sciences Corporation ("HDS"). On
December 30, 1996, the defendants filed a motion to dismiss most of the 1996
Consolidated Complaint. On February 3, 1997, the plaintiffs filed a Consolidated
Second Amended Complaint. On February 14, 1997, the defendants moved to dismiss
the Consolidated Second Amended Complaint in its entirety.
 
     On November 1, 1996, Thomas W. Brown, Administrator, Thomas W. Brown Profit
Sharing Plan filed a shareholder derivative lawsuit in the United States
District Court for the Northern District of Georgia alleging that certain of
Medaphis' current and former directors breached their fiduciary duties, were
grossly negligent, and breached various contractual obligations to Medaphis by
allegedly failing to implement and maintain an adequate system of internal
accounting controls, allowing Medaphis to commit securities law violations and
damaging Medaphis' reputation. The plaintiff seeks compensatory damages and
costs. On January 28, 1997, Medaphis and certain individual defendants filed a
motion to dismiss the complaint. On February 11, 1997, the plaintiff filed an
amended complaint adding as defendants additional current and former directors
and officers of Medaphis. On April 23, 1997, Medaphis and certain of the
defendants filed a motion to dismiss the amended complaint.
 
     On November 7, 1996, Health Systems International, Inc. filed suit in the
Superior Court for the State of California, County of Los Angeles against
Medaphis, Randolph G. Brown and "Does 1-50," who are alleged to be unnamed
Medaphis directors, officers and employees. Generally, this lawsuit alleges that
the defendants violated federal and California securities laws and common law
by, among other things more fully described in the complaint, making material
misstatements and omissions in public and private disclosures in connection with
the acquisition of HDS. Plaintiff seeks rescissory, compensatory and punitive
damages, rescission,
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injunctive relief and costs. On January 10, 1997, the defendants filed a
demurrer to the complaint. The demurrer was denied on February 5, 1997. On March
18, 1997, the court denied the plaintiff's motion for a preliminary injunction.
As a result of the Company's restatement of its fiscal 1995 financial
statements, the Company may not be able to sustain a defense to strict liability
on certain claims under the 1933 Act, but the Company believes that it has
substantial defenses to the alleged damages relating to the 1933 Act claims.
 
     A putative class action complaint was filed by Ernest Hecht and Stephen D.
Strandberg against Steven G. Papermaster, Robert E. Pickering, Jr., David S.
Lundeen, Norman Smith, Raymond J. Noorda, Gregory A. Grosh, Medaphis and
Randolph G. Brown on November 12, 1996 in the Superior Court, Law Division,
Essex County, State of New Jersey. The alleged class consists of persons and
entities whose options to purchase BSG common stock were converted to Medaphis
stock options in connection with Medaphis' acquisition of BSG. The plaintiffs
allege failure to perform diligence, breaches of fiduciary duties of candor,
loyalty and fair dealing and negligence against the BSG defendants (Papermaster,
Pickering, Lundeen, Smith, Noorda and Grosh) and fraud and deceit against the
Medaphis defendants (Medaphis and Brown). On April 18, 1997, the Medaphis
defendants and BSG defendants filed motions to dismiss the complaint.
 
     On February 28, 1997, Steven G. Papermaster, Raymond J. Noorda and two
entities they control made a demand for indemnification under an indemnification
agreement executed by Medaphis in connection with its acquisition of BSG in May
1996. On the date of the demand, Mr. Papermaster was an executive officer and a
director of Medaphis. Mr. Papermaster resigned such positions on March 21, 1997,
although he remains an executive officer of BSG. The indemnification demand
claims damages of $35 million (the maximum damages payable by Medaphis under the
indemnification agreement) for the alleged breach by the Company of its
representations and warranties made in the merger agreement between Medaphis and
BSG.
 
     On April 21, 1997, James F. Thacker, Alyson T. Stinson, Carol T. Shumaker,
Lori T. Caudill, William J. Dezonia, the James F. Thacker Retained Annuity
Trust, and the Paulanne H. Thacker Retained Annuity Trust filed a complaint
against the Company and Randolph G. Brown in the United States District Court
for the Southern District of New York arising out of Medaphis' acquisition of
Medical Management Sciences, Inc. ("MMS") in December of 1995. The complaint is
brought on behalf of all former shareholders of MMS who exchanged their MMS
holdings for unregistered shares of Medaphis common stock. In general, the
complaint alleges both common law fraud and violations of the federal securities
laws in connection with the merger. In addition, the complaint alleges breaches
of contract relating to the merger agreement and a registration rights
agreement, as well as tortious interference with economic advantage. The
plaintiffs seek rescission of the merger agreement and the return of all MMS
shares, as well as damages in excess of $100 million. Additionally, plaintiffs
seek to void various noncompete covenants and contract provisions between
Medpahis and plaintiffs.
 
     The Company also has received other written demands from various
stockholders, including stockholders of recently acquired companies.
 
     On January 8, 1997, the Securities and Exchange Commission (the
"Commission") notified the Company that it is conducting a non-public
investigation into, among other things, certain trading and other issues related
to Medaphis' August 14, 1996 and October 22, 1996 announcements of the Company's
loss for the quarter ending September 30, 1996 and its restated consolidated
financial statements for the three months and year ended December 31, 1995 and
its restated unaudited balance sheets as of March 31, 1996 and June 30, 1996.
The Company intends to cooperate fully with the Commission in its investigation.
 
     Although the Company believes that it has meritorious defenses to the
claims of liability or for damages in the actions against, and written demands
placed upon the Company, there can be no assurance that additional lawsuits will
not be filed against the Company, that the lawsuits, the written demands and the
pending governmental investigations will not have a disruptive effect upon the
operations of the business, that the written demands, the defense of the
lawsuits and the pending investigations will not consume the time and attention
of the senior management of the Company or that the resolution of the lawsuits,
the written demands and the pending governmental investigations will not have a
material adverse effect upon the Company.
<PAGE>   7
 
HEALTHCARE FRAUD INITIATIVES; HEALTHCARE REFORM MEASURES
 
     The federal government in recent years has placed increased scrutiny on the
billing and collection practices of healthcare providers and related entities.
This scrutiny has been directed at, among other things, fraudulent billing
practices. The Department of Health and Human Services in recent years has
increased the resources of its Office of the Inspector General ("OIG")
specifically to pursue both false claims and fraud and abuse violations of the
Medicare program. This heightened examination has resulted in a number of high
profile investigations, lawsuits and settlements.
 
     In 1996, Congress enacted the Health Insurance Portability and Accounting
Act of 1996, Pub. L. No. 104-191, 1996 U.S.C.C.A.N. (110 Stat. 1936) (the
"Health Insurance Act"), which includes an expansion of certain fraud and abuse
provisions, such as expanding the application of Medicare and Medicaid fraud
penalties to other federal healthcare programs, and creating additional criminal
offenses relating to "healthcare benefit programs," which are defined to include
both public and private payor programs. The Health Insurance Act also provides
for forfeitures and asset freezing orders in connection with such healthcare
offenses. Civil monetary penalties and program exclusion authority available to
the OIG also have been expanded. The Health Insurance Act contains provisions
for instituting greater coordination of federal, state and local enforcement
agency resources and actions through the OIG. There also have been several
recent healthcare reform proposals which have included an expansion of the
anti-kickback laws to include referrals of any patients regardless of payor
source.
 
     In addition to the provisions of the Health Insurance Act, submission of
claims for services or procedures that are not provided as claimed may lead to
civil monetary penalties, criminal fines, imprisonment and/or exclusion from
participation in Medicare, Medicaid and other federally funded healthcare
programs. Specifically, the Federal False Claims Act allows a private person to
bring suit alleging false or fraudulent Medicare or Medicaid claims or other
violations of the statute and for such person to share in any amounts paid to
the government in damages and civil penalties. Successful plaintiffs can receive
up to 25-30% of the total recovery from the defendant. Such qui tam actions or
"whistleblower lawsuits" have increased significantly in recent years and have
increased the risk that a company engaged in the healthcare industry such as
Medaphis and many of its customers may become the subject of a federal or state
investigation or may ultimately be required to defend a false claims action, may
be subjected to government investigation and possible criminal fines, may be
sued by private payors, and may be excluded from Medicare, Medicaid and/or other
federally funded healthcare programs as a result of such an action. The
government on its own may also institute a Civil False Claims Act case, either
in conjunction with a criminal prosecution or as a stand alone civil case.
Whether instituted by a qui tam plaintiff or by the government, the government
can recover triple its damages together with civil penalties of $5,000-$10,000
per false claim. Under applicable case law, a party successfully sued under the
False Claims Act may be jointly and severally liable for the damages and
penalties. Some state laws also provide for false claims actions, including
actions initiated by a qui tam plaintiff. There can be no assurance that
Medaphis will not be the subject of false claims or qui tam proceedings relating
to its billing and collection activities or that Medaphis will not be the
subject of further government scrutiny or investigations relating to its billing
and accounts receivable management services operations. See "Pending Federal
Investigation; Putative Class Action Lawsuits." Any such proceeding or
investigation could have a material adverse effect upon the Company.
 
     In the 1995 and 1996 sessions of the United States Congress, the focus of
healthcare legislation was on budgetary and related funding mechanism issues. A
number of reports, including the 1995 Annual Report of the Board of Trustees of
the Federal Hospital Insurance Program (Medicare), have projected that the
Medicare "trust fund" is likely to become insolvent by the year 2002 if the
current growth rate of approximately 10% per annum in Medicare expenditures
continue. Similarly, federal and state expenditures under the Medicaid program
are projected to increase significantly during the same seven-year period. In
response to these projected expenditure increases, and as part of an effort to
balance the federal budget, both the Congress and the Clinton Administration
have made proposals to reduce the rate of increase in projected Medicare and
Medicaid expenditures and to change funding mechanisms and other aspects of both
programs. In late 1995, Congress passed legislation that would substantially
reduce projected expenditure increases substantially and would make significant
changes in the Medicare and the Medicaid programs. The Clinton
<PAGE>   8
 
Administration has proposed alternate measures to reduce, to a lesser extent,
projected increases in Medicare and Medicaid expenditures. Neither proposal
became law prior to Congress' 1996 adjournment. Medaphis anticipates that both
the Clinton Administration and the Republican majorities in Congress will
introduce legislation in 1997 designed to reduce projected increases in Medicare
and Medicaid expenditures and to make other changes in the Medicare and Medicaid
programs. Medaphis anticipates that such proposed legislation would, if adopted,
change aspects of the present methods of paying physicians under such programs
and provide incentives for Medicare and Medicaid beneficiaries to enroll in
health maintenance organizations and other managed care plans. Medaphis cannot
predict the effect of any such legislation, if adopted, on its operations.
 
     A number of states in which Medaphis has operations either have adopted or
are considering the adoption of healthcare reform proposals at the state level.
Medaphis cannot predict the effect of proposed state healthcare reform laws on
its operations. Additionally, certain reforms are occurring in the healthcare
market which may continue regardless of whether comprehensive federal or state
healthcare reform legislation is adopted and implemented. These market reforms
include certain employer initiatives such as creating purchasing cooperatives
and contracting for healthcare services for employees through managed care
companies (including health maintenance organizations), and certain provider
initiatives such as risk-sharing among healthcare providers and managed care
companies through capitated contracts and integration among hospitals and
physicians into comprehensive delivery systems. Consolidation of management and
billing services by integrated delivery systems may result in a decrease in
demand for Medaphis' billing and collection services for particular physician
practices, but this decrease may be offset by an increase in demand for
Medaphis' consulting and comprehensive business management services (including
billing and collection services) for the new provider systems.
 
     CLIENT/SERVER INFORMATION TECHNOLOGY PROJECTS.  Medaphis' client/server
information technology business involves, among other things, projects designed
to reengineer significant client operations through the strategic use of
imaging, client/server and other advanced technologies. Failure to meet
expectations with respect to a major project could damage the Company's
reputation and standing in the client/server information technology marketplace,
affect its ability to attract new client/server information technology business,
result in the payment of damages to the client and jeopardize the Company's
ability to collect for services already performed on the project.
 
     VOLATILITY OF STOCK PRICE.  Medaphis believes factors such as announcements
with respect to the Federal Investigation, the Company's liquidity and financial
resources, divestiture of businesses, the ongoing governmental investigations,
putative class action lawsuits, other lawsuits or demands, healthcare reform
measures and quarter-to-quarter and year-to-year variations in financial results
could cause the market price of Medaphis common stock to fluctuate
substantially. Any adverse announcement with respect to such matters or any
shortfall in revenue or earnings from levels expected by securities analysts
could have an immediate and material adverse effect on the trading price of
Medaphis common stock in any given period. As a result, the market for Medaphis
common stock may experience material adverse price and volume fluctuations and
an investment in the Company's common stock is not suitable for any investor who
is unwilling to assume the risk associated with any such price and volume
fluctuations.
 
     COMPETITION.  Medaphis faces intense competition in each of the areas in
which it does business. In providing business management systems and services to
physicians and hospitals, Medaphis competes with certain national information
management systems and transaction processing organizations, certain regional
companies which provide such systems or services and certain physician groups
and hospitals which provide their own business management services. In providing
subrogation and recovery services, Medaphis competes primarily with the internal
recovery operations of potential customers and with certain regional subrogation
recovery vendors. In terms of providing client/server information technology
services, Medaphis competes with national, regional and local companies
specializing in information technology and systems integration consulting
services, national and regional application development companies and the
software development and systems integration units of national computer
equipment manufacturers, large information systems facilities management and
outsourcing organizations, national "Big Six" accounting firms and the
information systems groups of large general management consulting firms. Certain
of Medaphis' competitors have longer
<PAGE>   9
 
operating histories and greater financial, technical and marketing resources
than Medaphis. There can be no assurance that competition from current or
potential competitors will not have a material adverse effect upon Medaphis.
 
     This Safe Harbor Statement supersedes the Safe Harbor Statement filed as
Exhibit 99.6 to the Company's Annual Report on Form 10-K for the year ended
December 31, 1996.