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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
physicians that were members of independent medical groups) 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 living in Davis County, Utah,
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