REDLANDS SURGICAL SERVICES - Page 54




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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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Last modified: May 25, 2011