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physician services through Clinic, an exempt affiliate, Geisinger
HMO enrollees received approximately 20 percent of their hospital
services from independent hospitals. Because the record did not
disclose why Geisinger HMO enrollees received hospital services
from hospitals outside of the Geisinger system, we were unable to
conclude that Geisinger HMO’s operations were substantially
related to the functions of its tax-exempt affiliates. Id. at
404-406.
Like Geisinger HMO, petitioner neither owned nor operated
any medical facilities and did not employ any physicians or
health care professionals. Petitioner fulfilled its obligation
to provide medical services to its enrollees by contracting with
physicians (both physicians employed by Health Services and
independent physicians) and hospitals (both Health Services
hospitals and independent hospitals) to provide such services.
In contrast to Geisinger HMO, however, the administrative record
in this case indicates that the medical services that
petitioner’s enrollees received from independent hospitals were
largely attributable to admissions to either UMC or Davis
Hospital and Medical Center. Further, these admissions were
undertaken to: (1) Take advantage of specialized services (such
as burn treatment and pain management) provided at UMC; (2)
address occasional shortages of psychiatric beds in Health
Services hospitals; and (3) accommodate petitioner’s enrollees
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