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activities, however, does not establish that petitioner has
effective control over the manner in which the Surgery Center
conducts activities within its predesignated sphere of
operations. Nor does it tend to indicate that the Surgery Center
is not operated to maximize profits with regard to those
activities. Indeed, given that all the partners except
petitioner are for-profit interests not shown to be motivated or
constrained by charitable objectives, and given that all the
limited partners except Beaver Medical Clinic were issued SCA
common stock when the General Partnership acquired its interest
in the Operating Partnership, and given that SCA Management
derives a management fee computed as a percentage of gross
revenues, we find, in the absence of evidence to the contrary,
that a significant profit-making objective is present in the
Surgery Center’s operations. The high rates of return earned on
the partners’ investments (including petitioner’s) in the
Operating Partnership bolster this finding.
In sum, the composition of the managing directorship
evidences a lack of majority control by petitioner whereby it
might assure that the Surgery Center is operated for charitable
purposes.12 Consequently, we look to the binding commitments
12 The managing directors of the General Partnership are
functionally equivalent to a hospital's board of directors, the
importance of which has been described as follows:
(continued...)
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