- 49 -
from providing hospital and professional care to the
sick. [Id. at 238.]
Those are not statements of law but findings of fact. The
findings that the Bluefield hospital is in the customary service
business of hospitals and has no merchandise is not necessarily
applicable to petitioner. Petitioner is not a hospital, but runs
a chemotherapy clinic, where chemotherapy drugs constitute both a
significant cost and a substantial source of revenue. There is
no finding as to how significant drugs and similar items were to
the overall cost of treatment at the Bluefield hospital. In St.
Luke’s Hospital, Inc. v. Commissioner, supra, which dealt with
medicine as it was practiced over more than 40 years ago, the
Commissioner did not even suggest that inventories were required.6
It is no authority for any conclusion of law.
Nor can the majority rely on any rule of law that service
providers need never use inventories: “We have previously
examined service transactions in a variety of industries to
determine whether the transactions in substance involved solely
the sale of a service, or whether the transactions involved the
sale of both a service and merchandise.” Majority op. p. 13.
6 In Abbott Labs. v. Portland Retail Druggists Association,
Inc., supra at 11, decided in 1976, the Supreme Court stated with
respect to nonprofit hospitals: “we recognize * * * that the
concept of the nonprofit hospital and its appropriate and
necessary activity has vastly changed and developed since the
enactment of the Nonprofit Institutions Act in 1938.” Needless
to say, much more has changed in the last 23 years.
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