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corporation of a regional health care system comprising a wide
range of inpatient and outpatient clinics as well as acute care
hospitals located in Northern California. Sutter Health had a
section 501(c)(3) subsidiary, Sutter Medical Foundation (SMF),
that operated group medical practices that were integrated with
Sutter Health's affiliated hospitals in an integrated delivery
system. SMF operated its group medical practices through
professional service agreements with groups of local physicians.
Sutter Health hoped to expand into the Davis area in 1994 by
acquiring a local medical group to integrate with its hospitals
in the area. To accomplish this, Sutter Health envisioned having
SMF purchase the assets of local physicians and enter into a
professional services agreement with those physicians organized
as a medical group. Acquiring a physician group was important to
Sutter Health, as it represented an immediate roster of patients
for its clinics and acute care hospitals.11
Many of the UHMG physicians had privileges at the existing
Sutter Health hospital in Davis and had been involved in the
10(...continued)
individually. Moreover, Woodland typically required physicians
it employed to sign noncompete agreements, and petitioners were
unwilling to agree to such restrictions. The committee
terminated discussions with U.C.-Davis and Mercy Healthcare for
reasons not fully disclosed in the record; at least one UHMG
physician believed U.C.-Davis Medical Center was too large and
"bureaucratic".
11 SMF was not interested in contracting with physicians
individually.
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