UPMC defends charitable status

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UPMC has begun answering the $1.6 billion question -- is it really using its 550 acres of tax-free property in Allegheny County for charity?

So far, the health care giant's answer is as clear: You bet we are.

In response to a top-to-bottom survey of tax-exempt properties initiated earlier this year by Allegheny County Executive Rich Fitzgerald, UPMC has sent in paperwork for at least 80 parcels, according to documents provided by the county. These properties include the new Children's Hospital of Pittsburgh of UPMC in Lawrencville, Magee-Womens Hospital of UPMC in Oakland, UPMC Presbyterian Shadyside and UPMC East in Monroeville, among others.

In almost every case, the health care company defended its properties' nonprofit status, holding aloft charity care statistics and deficit spending as proof they're not in it for the money.

UPMC operates "entirely free from any private profit motive and applies all of its excess revenue in furtherance of its charitable mission," the hospital chain wrote several times in separate filings. "Also, the compensation, including benefits, of any employee ... is not based primarily upon financial performance."

If you thought that sentence was tough to get through, good luck reading the rest: The filing for UPMC Presbyterian and UPMC Shadyside, which the hospital system consider one legal entity, alone totaled 572 pages. Allegheny County solicitor Andrew Szefi hasn't even begun to look through the stack of paperwork, preferring to wait until all the filings are in.

And when he does, he won't single out the 20-hospital chain for special scrutiny, he said. Fair is fair.

"We're reviewing everything and making sure that everyone that should be paying taxes is paying taxes," he said.

Of the 83 property parcels reviewed by the Post-Gazette, 74 were deemed by UPMC to be rightfully tax-free. That included parking garages, rented office space -- and a Subway sandwich shop. ("The provision of food ... is essential to the hospital's operations," UPMC defended in its filing.)

The company packed its reports with plenty of stats. At UPMC Presbyterian Shadyside, which includes the network's flagship facility in Oakland and its Centre Avenue counterpart in Shadyside, doctors and nurses volunteered services worth $34 million in 2012, the filings claim.

That's on top of the $229 million the hospital wrote off in hospital bills that patients couldn't afford or Medicare wouldn't pay for fully, UPMC said. The filings made similar justifications for the network's smaller hospitals.

By last count, UPMC has nearly 200 tax-free parcels in Allegheny County, making it the county's largest private landholder. Spokeswoman Susan Manko said the hospital network still has paperwork to submit but expects to meet its Wednesday deadline.

In addition to Allegheny County, UPMC has found itself in the crosshairs of outgoing Pittsburgh Mayor Luke Ravenstahl, who launched a challenge of the chain's charitable status earlier this year. It also has come under fire by labor unions, who say hospital management has squashed attempts to organize lower-paid workers.

But paperwork aside, deciding whether UPMC is truly a charity probably won't be determined by the county's parcel-by-parcel review, said Janet Burkardt, a Downtown attorney who specializes in local tax law.

She believes that question will have to be answered by a more comprehensive look at the organization, with an eye to whether its total operations -- from its offices on the top floors of the U.S. Steel Tower all the way down to its clinics in McKeesport -- match up with the state definition of a charitable nonprofit.

"It's a larger question," she said. "And what's 'charity' is the big question. Learned minds differ."

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Andrew McGill: amcgill@post-gazette.com or 412-263-1497. First Published October 7, 2013 4:00 AM


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