Federal Law Update: Ancillary Joint Ventures After ... - Honigman

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Redlands: Why Not Exempt? • High returns vs. losses at RCH outpatient dept. • SCA subsidiary as manager with broad authority – 25 year no cut management contract – Compensation: 6% of collectable revenues + expenses – No clear incentive for charity care/Medicaid services • Arbitration with no requirement to consider community benefit • No pure charity care (as opposed to bad debt) • Negligible Medicaid (
Redlands: Why Not Exempt? • RSS was a shell – Minimal QA and other activities (contract terminated) – No employees or paid officers • Zero community need; could not support 2nd ASC • Noncompetition covenant with RSS and Hospital – Eliminated price competition – Avoided pressure to upgrade equipment • No proof RSS had any impact on proprietary operations of ASC • Education programs at ASC insufficient
Page 1 and 2: Federal Law Update: Ancillary Joint
Page 3 and 4: Areas not addressed • Non-tax con
Page 5 and 6: Audit Activity • Ongoing joint ve
Page 7 and 8: Defining “Insiders” • No Free
Page 9 and 10: TBOR2 Basics • Two-tier tax on di
Page 11 and 12: Ancillary Joint Ventures •Two-pro
Page 13 and 14: Typical Whole Hospital Joint Ventur
Page 15 and 16: Ancillary Services Joint Venture (H
Page 17 and 18: Redlands Community Hospital Foundat
Page 19: Redlands: Why Not Exempt? • Sole
Page 23 and 24: Expanded Control Test • Initiatio
Page 25 and 26: Community Benefit •New services
Page 27 and 28: Exemption Impact of 50/50 Ventures
Page 29 and 30: Other Structuring Options • Taxab
Page 31: Non-tax Considerations • Antifrau

Federal Law Update: Ancillary Joint Ventures After ... - Honigman

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