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2. Petitioner’s Lack of Formal Control
a. Managing Directors
Under the General Partnership agreement, control over all
matters other than medical standards and policies is nominally
divided equally between petitioner and SCA Centers, each
appointing two representatives to serve as managing directors.
(As discussed infra, matters of medical standards and policies
are determined by the Medical Advisory Group, half of whom are
chosen by the General Partnership’s managing directors.)
Consequently, petitioner may exert influence by blocking actions
proposed to be taken by the managing directors, but it cannot
initiate action without the consent of at least one of SCA
Center’s appointees to the managing directors. For instance,
petitioner lacks sufficient control unilaterally to cause the
Surgery Center to respond to community needs for new health
services, modify the delivery or cost structure of its present
health services to serve the community better, or, as discussed
in more detail infra, terminate SCA Management, if SCA Management
were determined to be managing the Surgery Center in a manner
inconsistent with charitable objectives.
The administrative record shows that petitioner has
successfully blocked various proposals to expand the scope of
activities performed at the Surgery Center. Petitioner’s ability
to veto expansion of the scope of the Surgery Center’s
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