- 46 -
member. They also presented a supplemental report prepared by
Mr. Baker as another means of establishing the appropriate
allocation percentage. As previously mentioned, we interpret
their position to be that the allocation percentage is
approximately 41 percent under either the ad hoc committee’s
calculations or Mr. Baker’s supplemental report.
In order to complete its calculations regarding the
appropriate allocation percentage, the ad hoc committee relied on
certified data from the financial records of AFVW. The committee
coordinated and worked with AFVW’s management in reaching its
calculations. Petitioners have adequately demonstrated to the
Court how the ad hoc committee used the information provided by
AFVW management to arrive at its conclusions regarding the
appropriate allocation percentage.
The ad hoc committee calculated an allocation percentage by
dividing medical expenses by total operating costs, with specific
item adjustments to both figures. In calculating total operating
costs, the committee subtracted interest expense, depreciation
and amortization, issue cost, and noncontract patient expenses
from total costs. In calculating medical expenses, the committee
included SNF, ALU, and SCU operating expenses, and subtracted out
noncontract patient fees and depreciation and amortization
allocable to the three facilities. The committee then made
certain upward adjustments to account for the emergency-pull-cord
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