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and we choose not to rely on it in our analysis. Accordingly, we
will examine respondent’s position to determine whether he has
shown that the allocation percentages and portions of the monthly
service fees allocable to medical care are different from those
calculated by the ad hoc committee.
B. Mr. Powell’s Calculations
Respondent relies on the percentage method as applied by Mr.
Powell. Although Mr. Powell did not believe that the percentage
method should be used, he developed a procedure for generating a
percentage for use with the percentage method. Mr. Powell stated
that the basic formula would examine the relationship between
total costs and amounts allocated to medical care, with
adjustments for specific items. In his report, Mr. Powell stated
that because the sum of entrance fees and monthly service fees
over the resident’s lifetime is expected to cover the costs of
care for residents in a CCRC, it is reasonable to assume that the
costs of medical care in the fee structure represent the same
proportion or percentage in the total costs. Mr. Powell relied
on the financial figures in AFVW’s Health Facility Information
report. He did not rely on the 1998 financial document.
Mr. Powell stated that total costs would include
departmental cash expenses plus depreciation and interest
expense. Subtractions would be made for issuance costs
associated with debt financing, room and board revenues and
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