REDLANDS SURGICAL SERVICES - Page 5




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          The Affiliation of Redlands Hospital With the Surgery Center                
               Before 1990, Redlands Hospital desired to increase its                 
          outpatient surgery capacity but lacked the capital resources and            
          experience to develop and operate its own freestanding outpatient           
          facility.  In addition, such a facility would have been in                  
          competition with the existing Surgery Center, and there was                 
          concern that the Redlands community could not sustain both.                 
               On March 1, 1990, RHS and SCA Centers entered into a                   
          general partnership agreement to acquire jointly a 61-percent               
          general partnership interest in the Surgery Center.2  The                   
          partnership is known as Redlands Ambulatory Surgery Center (the             
          General Partnership).                                                       
               SCA Centers is a for-profit, wholly owned subsidiary of                
          Surgical Care Affiliates, Inc. (SCA), a publicly held corporation           
          based in Nashville, Tennessee, and specializing in owning and               
          managing ambulatory surgery centers.3  Prior to formation of the            
          General Partnership, neither SCA nor any of its affiliated                  
          entities had any relationship, contractual or otherwise, with RHS           
          or any of its affiliated entities, or with the Surgery Center.              



               2 Redlands Hospital is also a signatory to the general                 
          partnership agreement but only with respect to secs. 16 and 17 of           
          that agreement (regarding noncompetition and affiliated status).            
               3 As of 1995, SCA owned, in whole or part, and operated                
          approximately 40 ambulatory surgery centers throughout the United           
          States, some of which were owned in part by tax-exempt health               
          care systems.                                                               




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Last modified: May 25, 2011