REDLANDS SURGICAL SERVICES - Page 68




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                    c. Coordination of Activities of Redlands Hospital and            
                    the Surgery Center                                                
               In arguing that it plays an active role in the conduct of              
          the Surgery Center’s activities, petitioner cites a number of               
          ways in which Redlands Hospital has integrated its activities               
          with those of the Surgery Center since the General Partnership              
          acquired its interest in the Operating Partnership.  These                  
          include Redlands Hospital’s use of the Surgery Center as a site             
          for training and surgeon proctoring, as well as various other               
          cooperative training and educational activities between Redlands            
          Hospital and the Surgery Center.19                                          
               Although there may be cooperation between the Surgery Center           
          and Redlands Hospital, nothing in the record suggests that these            
          various cooperative activities are more than incidental to the              
          for-profit orientation of the Surgery Center’s activities.  Cf.             
          Harding Hosp., Inc. v. United States, supra at 1075-1076                    


               19 The administrative record contains unexplained                      
          inconsistencies regarding certain of these training procedures.             
          On the one hand, a letter in the administrative record, dated               
          Nov. 23, 1994, from Ernst & Young to respondent’s representative,           
          cites laproscopic cholecystectomy (gall bladder surgery) as an              
          example of a new procedure that Redlands Hospital was extensively           
          involved in teaching to physicians using the Surgery Center.  On            
          the other hand, an affidavit of Gary J. Cottingham, president of            
          RHS and Redlands Hospital from Sept. 22, 1987, to May 12, 1995,             
          states that SCA Centers requested that the Surgery Center begin             
          to perform outpatient cholecystectomies at the Surgery Center,              
          but that the General Partnership’s managing directors rejected              
          the proposal.  Mr. Cottingham’s affidavit states:  “At least                
          through May 1995, * * * Outpatient cholecystectomies were not               
          performed at [the Surgery Center].”                                         




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