IHC Group, Inc. - Page 5




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          as ambulatory surgery, home health care, and kidney dialysis.               
               Primary Children’s specialized in pediatric care in the                
          Intermountain West (defined generally as the area covering                  
          eastern Nevada, western Colorado, and the States of Utah, Idaho,            
          Wyoming, and Montana).  The McKay-Dee Institute operated a free-            
          standing psychiatric and behavioral health facility located in              
          Ogden, Utah.                                                                
               During 1998, Health Services provided $42 million worth of             
          charity services to indigent patients.                                      
               2.  The Physician Division                                             
               As of December 31, 1998, Health Services’ physician division           
          employed 245 primary care physicians and 215 specialist                     
          physicians.  The physicians generally practiced in Health                   
          Services’ clinics and other community-based settings.                       
          C.  IHC Health Plans, Inc.                                                  
               During 1983, IHC organized Health Plans as a nonprofit                 
          affiliate for the purpose of establishing a state-licensed health           
          maintenance organization (HMO)2.  IHC was Health Plans’ sole                


          2    Utah Code Ann. sec. 31A-8-101(5) (1999 Repl.) defines the              
          term “Health maintenance organization” (HMO) as follows:                    
               (5) “Health maintenance organization” means any                        
               person, other than an insurer licensed under Chapter 7                 
               or an individual who contracts to render professional                  
               or personal services that he performs himself, which:                  
                        (a) furnishes at a minimum, either directly or               
                    through arrangement with others, basic health care                
                                                             (continued...)           





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