How wise is it to go after a wealthy UPMC?
By Luis Fábregas
Published: Saturday, Nov. 24, 2012, 11:42 a.m.
Everyone wants a piece of UPMC.
Revenues at the health-care juggernaut have soared to $10 billion over the past decade, which helps to explain the fascination with UPMC's Midas touch.
Now the folks who run Allegheny County have a renewed appetite for some of the pie. Some county leaders maintain that UPMC owns too many properties but does not pay its fair share of property taxes. Some taxpayers and other critics say UPMC should be taxed like most property owners.
County Council, which never has been known for its wise management of public funds, is looking for ways to generate more money for its coffers. A hearing on the UPMC issue is set for Dec. 5.
It's not my place to argue whether or not UPMC should or shouldn't pay property taxes. Let's leave that to our savvy lawmakers.
It is important, however, that we not pounce on UPMC for the wrong reasons.
The popular argument seems to be that “UPMC has too much money,” followed closely by “How much money do they need?”
To which I ask: “What would you rather have? A solvent, successful health-care system, or another hospital chain on the brink of bankruptcy? Isn't the nearly $1 billion bond debt and pension liability at West Penn Allegheny Health System enough for one city?”
Our region has had plenty of poorly run health-care organizations. About a decade ago, I remember writing about the closure of St. Francis Medical Center, a gem of a hospital in Lawrenceville run by the lovely Sisters of St. Francis.
Charitable as the nuns were, St. Francis became undone by a string of bad money choices. The nuns gave so much free care that they amassed about $115 million in debt. As the losses piled up, key doctors' groups bailed out. The nuns were forced to shut down what once had been the city's largest hospital.
On the last day of operations at St. Francis, I took a walk through the 137-year-old hospital. There were empty beds, blinking heart monitors and an eerie silence that I'll never forget. One nurse manager in the cardiac intensive-care unit told me: “It's a shame that hospitals have to be treated like businesses. People shouldn't be a business. Health care shouldn't be a business.”
In many ways, she was right. The state's acute-care hospitals are nonprofit organizations that must always care for people even if they can't pay.
But not-for-profit doesn't mean no brain. It doesn't mean hospitals should abstain from being judicious with their money. That's important at a time when they face shrinking reimbursements from government and private payers.
Although health care shouldn't be a business, sometimes it's forced to act like one in order to stay afloat.
The $10 billion revenue figure attached to UPMC makes it almost impossible to understand why it should be considered a charity, let alone be immune to property taxes. Add to that the glitzy offices in the U.S. Steel Tower in Downtown and the multimillion-dollar salaries of some executives, and the picture gets a bit muddier.
There's always been plenty of venom to spread about UPMC, some of it warranted and some of it not.
Yes, they have a reserve portfolio worth nearly $4 billion. Is that reason to vilify them?
Although some might deem it prudent to examine UPMC's property holdings, let's do it for the right reasons, not because they have smart accountants.
Luis Fábregas is a staff writer for Trib Total Media. He can be reached at 412-320-7998 or email@example.com.
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