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To determine the General Partnership’s investment, the
Operating Partnership was valued at four to five times earnings.
No formal appraisal was acquired; rather, the valuation was
determined based on SCA’s experience and knowledge of the market
and by a review of historical records. An unrelated bidder (a
for-profit company, not otherwise identified in the record) was
offering the Operating Partnership a higher purchase price based
on approximately six times earnings. The existing partners of
the Operating Partnership agreed to the offer made by the General
Partnership due to the desire to have an affiliation with
Redlands Hospital for quality control review and other reasons,
such as to supervise the teaching and maintenance of up-to-date
surgery methodologies.
The General Partnership is the sole general partner of the
Operating Partnership. There are 32 limited partners. Except
for Beaver Medical Clinic, Inc., the limited partners are all
physicians who are also on the medical staff of Redlands
Hospital. Two of the limited partners are board members of
Redlands Hospital and RHS. The amended Operating Partnership
agreement contains no statement of charitable purpose and imposes
no requirement that the Operating Partnership operate for a
5(...continued)
physician, with that interest then being converted to a limited
partner interest. The limited partners currently have a 41-
percent interest in the Operating Partnership.
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