REDLANDS SURGICAL SERVICES - Page 34




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          managed care (i.e., care provided by health maintenance                     
          organizations (HMO's)).  Prior to April 1990, the Surgery Center            
          had HMO contracts with 7 HMO's and preferred provider                       
          organizations (PPO's).  As of April 1994, the Surgery Center had            
          contracts with 21 HMO's and PPO's.  For the last 6 months of                
          1993, managed care (i.e., care provided by HMO's and PPO's)                 
          accounted for almost half of the Surgery Center's total facility            
          invoices.  The General Partnership agreement states that Redlands           
          Hospital agrees to recognize the Surgery Center as an affiliate             
          for managed care services to the extent legally permissible.                
               For the last 6 months of 1993, Medicare accounted for about            
          12 percent of total Surgery Center invoices.  Because greater               
          medical risks attend surgery of older patients, such as the                 
          typical Medicare patient, most Medicare surgeries are performed             
          in a hospital setting, rather than in a surgery center.                     
               Medicaid reimbursements are substantially below those                  
          provided by Medicare.  Medi-Cal is the State of California's                
          Medicaid program under Federal law.  The California Medi-Cal                
          patient group consists, in large part, of indigents, mothers, and           
          children.  These patients' greatest needs are for emergency room            
          and obstetrics and gynecology (OB/GYN) medical service.  As a               
          result, this group of patients is more likely to avail themselves           
          of the emergency room facilities at Redlands Hospital rather than           








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