IHC Health Plans, Inc. - Page 47




                                       - 47 -                                         
          with Health Services, while petitioner contracted for the                   
          remaining 80 percent of such physician services directly with               
          independent physicians.  In other words, petitioner’s enrollees             
          received nearly 80 percent of their physician services from                 
          physicians with no direct link to one of petitioner’s tax-exempt            
          affiliates.                                                                 
               Petitioner contends that its contracts with independent                
          physicians are not relevant to the question of whether it                   
          qualifies for tax-exempt status as an integral part of its tax-             
          exempt IHC affiliates because all such independent physicians               
          were required to maintain privileges at Health Services’                    
          hospitals.  We disagree with the basic premise underlying                   
          petitioner’s argument.                                                      
          Health Services comprised the hospital division, which                      
          operated a large number of hospitals and clinics, and the                   
          physician division, which employed approximately 400 primary care           
          and specialist physicians who generally practiced in Health                 
          Services’ clinics and other community-based settings.                       
          Considering that petitioner does not provide free or low cost               
          health services, we fail to see how petitioner’s operations,                
          including its heavy reliance on independent physicians, would be            
          essential to or substantially related to Health Services’ exempt            
          functions.  To the contrary, petitioner’s method of arranging for           
          its enrollees to receive physician services suggests that                   






Page:  Previous  29  30  31  32  33  34  35  36  37  38  39  40  41  42  43  44  45  46  47  48  Next

Last modified: May 25, 2011