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(educational, training and community-oriented programs conducted
at a hospital and funded by a third party were not sufficient to
merit the hospital’s tax exemption where other disqualifying
factors were present).
C. Competitive Restrictions and Market Advantages
By entering into the General Partnership agreement, RHS
(petitioner's parent corporation and predecessor in interest in
the General Partnership) not only acquired an interest in the
Surgery Center, but also restricted its future ability to provide
outpatient services at Redlands Hospital or elsewhere without the
approval of its for-profit partner. Paragraph 16 of the General
Partnership agreement, supra, prohibits the co-general partners
and their affiliates from owning, managing, or developing another
freestanding outpatient surgery center within 20 miles of the
Surgery Center, without the other partner’s consent. Moreover,
Redlands Hospital may not “expand or promote its present
outpatient surgery program within the Hospital.” In fact,
outpatient surgeries performed at Redlands Hospital decreased
about 17 percent from 1990 to 1995, while those performed at the
Surgery Center increased.
The General Partnership agreement also restricts the parties
and their affiliates from providing outpatient surgery services
and procedures that the agreement does not specifically authorize
to be provided at the Surgery Center (hereinafter referred to as
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