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entitled to deductions (before application of the 7.5-percent
floor) of $5,67731 and $7,628.32
C. Analysis of Parties’ Positions
Our approach in this case is to examine the ad hoc
committee’s calculations regarding the appropriate allocation
percentage in light of respondent’s allegations of error, which
are primarily based on Mr. Powell’s calculations, his testimony,
and the testimony of Mr. Dalton.33 In order to accomplish this
task, we will address the portions of the committee’s
calculations that respondent claims are inaccurate. Because
respondent relies on Mr. Powell’s application of the percentage
method, we generally compare this approach with that used by the
ad hoc committee.
The ad hoc committee computed the denominator by starting
with total costs and subtracting total interest expense, total
depreciation and amortization, total issue cost, and total
noncontract patient expense. Mr. Powell did not subtract total
interest expense and total depreciation and amortization.
31Calculated as 21.8 percent of 12 x $2,170.
32Calculated as 28.2 percent of 12 x $2,254.
33We note that to the extent respondent has not challenged
certain assumptions by the ad hoc committee, we treat these as
concessions by respondent and express no opinion as to the
validity or accuracy of the assumptions.
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