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$20M tax bill would be a drop in the bucket for UPMC

About Luis Fábregas
Picture Luis Fábregas 412-320-7998
Medical Editor
Pittsburgh Tribune-Review

Luis Fábregas is an award-winning reporter who specializes in medical and healthcare issues as a member of the Tribune-Review’s investigations team.

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By Luis Fábregas

Published: Saturday, March 23, 2013, 12:01 a.m.

UPMC had it coming. No one can expect a so-called nonprofit to go unchallenged when its executives and doctors fly in fancy jets to the Mediterranean and eat meals from dinner plates that are prepared by a chef on the 60th floor of the U.S. Steel Building.

Not in Pittsburgh, where some of us would be happy to eat a Primanti's cheesesteak wrapped in wax paper. Not here, where some worry where their next meal will come from.

It comes as no surprise that Mayor Luke Ravenstahl and several other money-hungry politicians are challenging UPMC's tax-exempt status. For a long time they've taken note of UPMC's excess, and they want it to stop. They want UPMC to act like a charity and not merely a collection of glitzy hospitals and overpaid executives.

In building a network that long ago stretched far beyond its humble Western Pennsylvania roots, UPMC leaders allowed their image to become unnecessarily tarnished. That's what happens when you close a hospital in Braddock and open one in Dublin.

UPMC could solve its predicament very easily. City officials have estimated UPMC would have to pay $20 million a year in payroll and property taxes on land that's listed as nonprofit exempt. If you do the math, a $20 million bill to UPMC is much like a $2 cup of coffee to you and me. So UPMC could pay the money and its financial picture would remain virtually unchanged. It still would have a nearly $4 billion investment reserve portfolio, a 2 million-member health plan and nearly $10 billion in operating revenue.

The problem is those pesky politicians who are scrambling to solve the city's money woes, including an anemic pension plan. The reality is that eventually, they will want more from UPMC.

My guess is that UPMC could give the city $1 billion out of its reserves and no one in the city would be able to figure out what to do with so much money. Allegheny County Controller Chelsa Wagner doesn't have a calculator that can handle so many zeroes.

The mayor can dream all he wants about UPMC's billions. It's not going to be that easy to get his hands on it. UPMC knows a good fight and will hire the best lawyers and march to every court in the land before its leaders forgo that nonprofit defense and open up their bank account.

Thing is, Luke and company can solve the problem faster than what it would take UPMC CEO Jeff Romoff to write a check. If UPMC is so evil and worthy of repudiation, why continue to fill their hospital beds?

In its latest financial report, UPMC says its market share accounts for 60 percent of the Allegheny County market. Its inpatient volume is up, and so are emergency visits. That seems to contradict all the hate and rhetoric coming from the unions and politicians. Sounds to me like people can't get enough of UPMC.

That's where this mess gets even messier. Is the reluctance to part ways with UPMC because perhaps their doctors and nurses offer pretty darn good care? Maybe. But they offer darn good care at West Penn Allegheny Health System, and I don't see their hospitals filling up.

Could it be time to do that?

Luis Fábregas is a staff writer for Trib Total Media. He can be reached at 412-320-7998 or




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