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nonlisted services). Under this agreement, Redlands Hospital,
but not the co-general partners or any of their other affiliates,
is allowed to perform nonlisted outpatient services that were
currently available to patients in California at the time the
General Partnership agreement was executed. By contrast, neither
Redlands Hospital nor the co-general partners or their affiliates
are allowed to perform nonlisted outpatient services that first
become available in California during the term of the General
Partnership agreement (i.e., until March 31, 2020), unless the
managing directors of the General Partnership approve.20
Consequently, RHS effectively restricted its own ability to
assess and service community needs for outpatient services until
the year 2020. It is difficult to conceive of a significant
charitable purpose that would be furthered by such a restriction.
The administrative record contains a market research report
on the ambulatory surgery center industry, prepared by Ernst &
Young and transmitted to Redlands Hospital on October 20, 1994.
This report describes the strong movement toward providing health
care services in ambulatory settings, driven both by economic
considerations and technological advances.21 The report notes
20 As previously discussed, petitioner lacks sufficient
control to dictate any such approval by the managing directors,
and, in the event of deadlock, the matter would go to
arbitration.
21 The report states that during the 1980's, hospital-based
(continued...)
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