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made between petitioner and the other parties to ascertain
whether other specific powers or rights conferred upon petitioner
might mitigate or compensate for its lack of majority control.
b. Arbitration Process
The General Partnership agreement provides for an
arbitration process in the event that the managing directors of
the General Partnership deadlock over a matter other than medical
standards and medical policies, such as approval of new surgical
procedures. Under these provisions, in the event of a deadlock,
each of the co-general partners selects one arbitrator, and these
two arbitrators select a third. The arbitrators have final
authority to decide matters referred to them. The ground rules
for the arbitration process are minimal and provide petitioner no
assurance that charitable objectives will govern the outcome.
Under the General Partnership agreement, the arbitrators are not
required to take into account any charitable or community benefit
12(...continued)
The board of directors, its composition, and its
functions are relevant to tax exemption * * * the
composition of the board provides important evidence that
the hospital serves public rather than private purposes.
For example, it is fair to presume that a board of directors
chosen from the community would place the interests of the
community above those of either the management or the
medical staff of the hospital. Thus, the relevance of the
board is that its process should indicate whether the
hospital is operated for the benefit of the community or to
secure benefits for private interests. [Mancino, “Income
Tax Exemption of the Contemporary Nonprofit Hospital”, 32
St. Louis U.L.J. 1015, 1051 (1988).]
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