- 74 - surgery centers, it seems most likely that one purpose and effect of the containment and contraction of Redlands Hospital’s outpatient surgery activities is to eliminate a competitive constraint for setting Surgery Center fees (a matter delegated to SCA Management under the management contract, excluding charges for physicians’ services). Moreover, market consolidation provided petitioner and SCA Centers mutual advantages by eliminating pressures to compete in spending for expensive equipment.22 There is no per se proscription against a nonprofit organization's entering into contracts with private parties to further its charitable purposes on mutually beneficial terms, so long as the nonprofit organization does not thereby impermissibly serve private interests. Cf. Plumstead Theatre Socy. v. Commissioner, 75 F.2d 244 (9th Cir. 1982); Broadway Theatre League v. United States, 293 F. Supp. 346 (W.D. Va. 1968). In the instant case, however, RHS relied on the established relationship between Redlands Hospital and Redlands physicians to enable RHS and SCA affiliates jointly to gain foothold, on favorable terms, in the Redlands ambulatory surgery market. Then, by virtue of their effective control over the Surgery 22 As stated in a letter in the administrative record written on behalf of petitioner from Ernst & Young LLP to respondent, dated Nov. 23, 1994, “The Hospital and * * * [the Surgery Center] also share surgical equipment so as to avoid a ‘medical arms race’ in the Redlands health care community.”Page: Previous 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 Next
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