Advisory Opinion to Fancher (06-20-95)

June 20, 1995

Derrell O. Fancher
407 Lay Dam Road
P.O. Box 185
Clanton, AL 35045

This letter responds to your two letters dated March 6, 1995, requesting an advisory opinion concerning a proposed joint venture between your clients, Elmore Community Hospital and Community Hospital, for the purchase of certain services required by the hospitals.

Elmore Community Hospital, Inc., (Elmore) is a 69-bed general acute care hospital located in Wetumpka, Alabama. Elmore is a public corporation organized under Alabama's Health Care Authorities Act.1 Community Hospital, Inc. (Community), is a 77-bed general acute care hospital located in Tallassee, Alabama, about 20 miles from Wetumpka. Community is a not-for-profit corporation and is exempt from federal income taxation. Each hospital offers both inpatient and outpatient medical and surgical services.

Both hospitals are located in Elmore County, which is part of the Montgomery, Alabama, Metropolitan Statistical Area. However, both hospitals are rural facilities. According to your letter, Elmore and Community compete with one another as well as with four general acute care hospitals located in Montgomery2 and four smaller facilities located in surrounding counties. You have further informed us that residents of the areas served by Elmore and Community are generally referred to Montgomery hospitals if they do not use the local hospital, and that the two hospitals are not significant direct competitors.

1 Ala. Code