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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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