- 9 - recognition that HMOs were gaining in popularity. IHC also decided to organize an affiliate to operate as an HMO in order to gain practical experience, to attempt to realize its own cost savings by enrolling IHC employees in the HMO, and to counter a potential competitive threat posed by the combination of national for-profit hospital chains and HMOs (and their perceived capacity to direct large numbers of patients to Health Services’ competitor hospitals). During 1983, IHC organized petitioner as a nonprofit affiliate. IHC was petitioner’s sole corporate member. Petitioner’s articles of incorporation stated that petitioner is organized and shall be operated exclusively for charitable, educational or scientific purposes as described in section 501(c)(3) * * *. In furtherance of such purposes, the Corporation may develop and operate alternative health care delivery plans and financing systems to provide cost-effective and high quality care to participating employer groups and patients including elderly and disadvantaged persons, and conduct research and educational demonstration projects with various health care delivery systems. The articles also stated that petitioner’s business and affairs would be conducted by a board of trustees elected by IHC and composed of physicians, hospital personnel, and “buyer- employers”; i.e., employers offering petitioner’s health plans to their employees.3 Petitioner was organized as a separate entity 3 Petitioner’s By-Laws stated in pertinent part: (continued...)Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011