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return (consolidated return) on Form 1120 with the Director of
the Internal Revenue Service Center at Memphis, Tennessee.
Petitioners' primary business is the ownership, operation,
and management of hospitals. Petitioners' hospitals provide
health care customarily provided by hospitals. Most of
petitioners' hospitals are acute care hospitals providing a
facility, personnel, equipment, and medical supplies and
pharmaceuticals needed to perform medical and surgical procedures
to treat sick or injured persons with various physical disorders.
Some of petitioners' facilities are psychiatric hospitals
providing medical treatment to persons with mental or emotional
disorders and drug and alcohol dependency problems.
Additionally, certain petitioners operate a variety of medically-
related businesses ancillary to petitioners' primary business.4
A fundamental component of petitioners' business philosophy is
the use of their combined purchasing power to obtain goods and
services at the lowest possible cost whenever practical to do so.
At the outset of its organization, HCA generally placed all
newly constructed or acquired hospitals in separate corporations.
In later years, in some cases, HCA placed all newly acquired or
newly constructed hospitals located in a particular State in a
4 See Hospital Corp. of Am. v. Commissioner, T.C. Memo. 1996-
105, for a detailed description of petitioners' hospital
operations. We incorporate herein our findings of fact contained
in that Memorandum Opinion.
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Last modified: May 25, 2011