Taxpayers to UPMC: Cough it up

The health care giant isn't contributing its fair share for public services

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Pittsburghers have known for years that UPMC was expanding throughout Allegheny County, taking land off the tax rolls to the detriment of public services while behaving more and more like a ruthless for-profit entity that doesn't deserve its "nonprofit" tax exemptions.

We've known about the multimillion-dollar executive pay packages, the posh corporate suite with the $750,000 sign atop the U.S. Steel Tower, the private jet, costly ad campaigns and overseas expansions. And we've wondered: How much free or reduced-price care could that money have bought for the uninsured in our region?

We've watched as the $10-billion health system shut down Braddock Hospital, the last remaining institution in that feisty-yet-struggling town, because it said it was losing money, yet built facilities to compete with existing ones in wealthier communities in an attempt to corner the health care market. And we've asked: Is this how a good citizen behaves?

We've sweated bullets over UPMC's plan to divorce Highmark, the region's largest health insurer and would-be acquirer of West Penn Allegheny Health System. That split would make many of UPMC's medical services unaffordable to the very people whose donations, premiums and taxes allowed the system to grow. (On Friday WPAHS canceled its agreement with Highmark, so it's hard to say where that situation is headed.)

And we've asked, repeatedly: Why is a public charity getting away with this? If UPMC's corporate side wants to act like a rapacious business, shouldn't it be taxed like one?

Yes, we realize all the good UPMC doctors and researchers do, the importance of the jobs it creates and the talent it attracts. But it's long past time for the corporate megalomania to be reined in.

Now, thanks to a four-day investigative series in the Post-Gazette, we know the full extent of UPMC's holdings, how it bought land at inflated prices and sold it at a loss with no consequences, obfuscated its ownership under a long list of different names, how it arranged to make, or not make, payments to municipalities and school districts in lieu of taxes.

It took reporters Sean Hamill and Jonathan Silver six months of digging to expose the big picture. What emerged speaks volumes about how the near-monopoly operates, and at what cost to the region. [See the series here: "UPMC: Forging a Giant Footprint."]

Mr. Hamill and Mr. Silver reported that UPMC is by far the richest private property owner in Allegheny County, with 656 acres worth $1.6 billion based on 2002 assessments. Some 86 percent of those holdings are exempt from taxes. It doesn't take a genius to see how those exemptions are starving public services. Yet the county has records for only a third of UPMC's parcels, so even if it decides to go after payment in lieu of taxes (called PILOT agreements) its quiver will be two-thirds empty. Meanwhile, the health care giant is getting tax breaks on things like parking lots that serve no charitable purpose.

PILOTS could make a big difference to strapped municipalities and school boards, but UPMC often declines to make them and cannot be forced to do so unless someone challenges its tax-exempt status and wins. It will, however, agree to payments to avoid going to court. That's what happened with the former Hamot Medical Center in Erie, where UPMC agreed to pay the equivalent of taxes on half the assessed land value. And earlier this year, when UPMC decided to buy a parcel in South Fayette for an $18.5 million branch of Children's Hospital, it made a similar deal in order to win a bidding war against another developer.

Not surprisingly, officials from Pittsburgh and Allegheny County say they want the same deal as Erie and South Fayette -- from Joe King, president of the city firefighters union, and Mayor Luke Ravenstahl to County Controller Chelsa Wagner and County Executive Rich Fitzgerald. Mr. Hamill and Mr. Silver found at least five PILOTs that UPMC has with taxing bodies in three counties. But the Erie and South Fayette deals are the only ones that use a benchmark of half the assessed value of property.

Other communities that are home to tax-exempt UPMC properties have no PILOTs -- Franklin Park, O'Hara, Harmar, Penn Hills, West Deer, Monroeville, McKeesport and, of course, Pittsburgh. McKeesport officials say they're afraid to push for a PILOT because UPMC might shut down McKeesport Hospital as it did Braddock.

Contrast UPMC's posture with a statement from John Lines, spokesman for Lancaster General Hospital in Lancaster County, Pa. His $849 million hospital system has an informal agreement to pay $1.38 million to the city of Lancaster and $1.5 million to the school district through a PILOT in cash and services.

"As goes the city, so goes Lancaster General Health," Mr. Lines said. "Without these contributions the well-being of the city would be severely challenged."

That's exactly what's been happening here. The financial health of the city and county are severely challenged, while the $10 billion UPMC health system refuses to pay its fair share.

One could argue that UPMC's commitment to give up to $100 million to the Pittsburgh Promise college scholarship program amounts to a fair share. But as Ms. Wagner noted, no other entity gets to decide how much it pays and to whom.

This has to change. Some taxing body -- the city, county or school district -- has to go after UPMC's tax exemptions. A win for one will open the gates for all. Only fear of that will force the heath care giant into voluntary contributions that help pay for the public services they use. Then maybe we can restore some balance to the books and some trust in UPMC's leadership.

sallykalson

Sally Kalson is a columnist for the Post-Gazette (skalson@post-gazette.com, 412-263-1610).


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