Delbert L. and Margaret J. Baker - Page 54

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                    1.   Appropriate Financial Information To Use                     
               The ad hoc committee and Mr. Powell both relied primarily on           
          the financial information for 1997 and 1998 that was contained in           
          the Health Facility Information report.  For 1998 revenues and              
          expenses, the committee relied on the 1998 financial document               
          that should have been included in the report.  There are minor              
          differences between the figures presented in the 1998 financial             
          document and the report.  Respondent has not argued that the                
          financial information used by the ad hoc committee is inaccurate            
          or unreliable, and Mr. Powell acknowledges in his report that the           
          1998 financial document was based on actual results for that                
          year.  With respect to the explanation of expense allocation                
          assumptions by AFVW, Mr. Powell stated that he reviewed the                 
          assumptions and relied on AFVW’s management’s judgment because he           
          believed the final results were reasonable.  Accordingly, we                
          proceed under the assumption that the financial figures and                 
          expense allocation assumptions contained in the Health Facility             
          Information report are appropriate, with the exception that                 
          revenue and expense figures for 1998 should be based on the 1998            
          financial document.                                                         
                    2.   Interest Expense and Depreciation and Amortization           
               In calculating total costs, the ad hoc committee subtracted            
          interest expenses and depreciation and amortization.  In                    
          calculating allocable medical costs, the committee also                     






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