Alpha Medical, Inc., f.k.a. Alpha Medical Management, Inc. - Page 8

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               Rogers, Tankersly, and Worley attended State and national              
          home care association meetings, entertained and recruited                   
          clients, visited exhibit halls to see what vendors were offering,           
          and shared the information they obtained with each other.  In               
          1990, petitioner's board of directors included:  Rogers,                    
          president/CEO; Tankersly, vice president/CFO; and Worley,                   
          executive vice president/secretary.                                         
          D.  Petitioner's Services                                                   
               Petitioner provides its clients with a team of employees who           
          have advanced skills and knowledge in dealing with Medicare and             
          Medicaid regulations.  The team conducts a mock survey to                   
          determine whether the clients are in compliance with State                  
          licensing, Federal conditions of participation, and the rules of            
          other accrediting bodies and recommends ways to comply or                   
          improve.  Rogers developed the parameters for the mock survey               
          team and, together with Worley, developed the product line for              
          the mock survey.  The mock survey replicates the annual                     
          inspection required by State and Federal regulatory authorities,            
          and as a result of the mock survey, petitioner's clients have               
          exceptional records with respect to their inspections.                      
               Petitioner has policy manuals that discuss petitioner's                
          products and explain how services are to be provided to its                 
          clients.  The policy manuals are periodically revised.  By 1989,            
          petitioner had 8 policy manuals, and by 1992 petitioner had 11              





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