Charles A. and Marian L. Derby, et al. - Page 13

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          schedules, reduced the management effort required of Foundation             
          in organizing independent physicians to work together.                      
               When the steering committee presented its recommendation               
          (which had not been unanimous) to the group, it was soundly                 
          rejected.  The remaining UHMG physicians, including several of              
          petitioners, were vehemently opposed to any affiliation with                
          Foundation.  Most had had unpleasant experiences with                       
          Foundation's unwillingness to approve certain drugs and                     
          procedures they had recommended for patients.  Foundation                   
          employed "formularies", which were approved lists of drugs the              
          departure from which when prescribing for patients required                 
          substantial justification by the physician.  This and other                 
          Foundation practices, which many of petitioners attributed to               
          Foundation's for-profit, business-driven orientation, caused                
          petitioners to fear a significant loss of professional autonomy             
          were they to practice medicine as employees of Foundation.                  
          IV.  Acquisition by Sutter Health                                           
               A.  Selection of Sutter Health                                         
               The discussions with Foundation were terminated, and after             
          some consideration of the remaining potential acquirers,                    
          petitioners and the other UHMG doctors decided to pursue an                 
          affiliation with Sutter Health.10  Sutter Health was the parent             

               10 Woodland Clinic had offered very little in the steering             
          committee's view, as negotiations revealed that it was merely               
          interested in the UHMG physicians' joining its organization                 

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