Mayor v. Moneybags: UPMC could be beloved if it put patients over profits and perks

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I never thought I'd describe Mayor Luke Ravenstahl in Shakespearean terms, but a paraphrased line from "Macbeth" seems pertinent today: Nothing in his tenure became him like the leaving it.

Last month, in the midst of an FBI investigation of the police credit union, he announced he was dropping his bid for re-election, even though he does not appear to be a target. Monday, he lost no time calling for the firing of an off-duty detective after viewing a damning video of the man going ballistic on a bar patron. And Wednesday, he dropped a bomb that was long in coming: He announced a lawsuit challenging the tax-exempt status of the University of Pittsburgh Medical Center.

That was a profoundly significant move. Someone in power is taking official action against the biggest corporate bully in town. Can I get an Amen?

In fact, I can get many Amens, and that says a lot about the behavior of the region's dominant hospital system.

Has there ever been a "charity" so disliked and mistrusted by the people it's supposed to serve and the people it employs? You rarely hear anyone say "I cannot stand CARE," or "I despise Doctors Without Borders." But you hear it all the time about UPMC, notwithstanding the jobs it creates, the medical innovations it advances, the life-saving care its doctors deliver and its commitment of $100 million for the Pittsburgh Promise scholarship fund. With all that to its credit it should be beloved, but the opposite is true.

Not helping matters is its corporate public relations, which is increasingly tone deaf. In an emailed response to the mayor's announcement, UPMC spokesman Paul Wood said the lawsuit "appears to be based on the mistaken impression that a non-profit organization must conduct its affairs in a way that pleases certain labor unions, certain favored businesses, or particular political constituencies."

No, Mr. Wood. It's based on the correct impression that a nonprofit hospital's top priority should be the patients, not building a monopoly. And that a $10 billion system with a billion-dollar surplus and $2 billion to $3 billion in reserves should be taking care of many more indigent sick people than UPMC has been treating -- especially when it owns land that a Post-Gazette investigation valued at $1.6 billion, even as it enjoys a $20-million tax break every year, underwritten by the good citizens of Pittsburgh and Allegheny County. You can try blaming the SEIU organizing campaign or your arch-enemy, Highmark the insurer, or politics, but this is so much bigger than any of those things. And the public knows it.

So the UPMC challenge may well turn out to be the defining legacy of Mr. Ravenstahl's administration.

True, the burden of pursuing the case will fall largely on his successor, so his detractors no doubt will believe this is just Luke grandstanding on his way out the door. And yes, it is easier to go for broke with nothing to lose.

But that's irrelevant at this point. What matters is that UPMC has been daring this town to do something about its ruthless megalomania, and the mayor has called its bluff.

If this winds up forcing the hospital giant to change its ways and/or pay its fair share, Mr. Ravenstahl will deserve a lot of the credit. Even if it doesn't, he merits thanks for doing the right thing.

The city's lawsuit, filed in Common Pleas Court, seeks six years' worth of back payroll taxes and the removal of UPMC's tax-exempt status. The challenge is based on last year's state Supreme Court decision reinstating the five-point test that public charities must pass in order to qualify as tax exempt.

To recap, a nonprofit must advance a charitable purpose, donate or render gratuitously a substantial portion of its services, benefit a substantial class of persons who are legitimate subjects of charity, operate entirely free from private profit motive and relieve the government of some of its burden.

How do UPMC's activities comport with the law?

UPMC closed the hospital in hard-hit Braddock where it was the last anchor in town while opening a new facility in wealthier Monroeville, not to mention outposts abroad. UPMC spends millions on executive suites, private jets, salaries and advertising instead of putting that money into free or subsidized care. UPMC is trying to drive the financially ailing West Penn Allegheny Health System out of business. Worst of all, in waging its war with Highmark, the region's largest insurer, UPMC threatens to separate countless patients from their trusted physicians by making services unaffordable.

Did I mention that UPMC President Jeffrey Romoff's salary of $5.9 million makes him the highest-paid hospital executive in the nation? Or that at least 20 of his executives are paid $1 million or more?

Meanwhile, the city and county are starving for tax revenues.

In defense of his employer, Mr. Wood wrote that operating free from profit motive "does not mean a nonprofit shouldn't strive to have a positive operating margin -- organizations that don't do that go out of business. All you have to do is look at West Penn Allegheny as an example of an organization that consistently loses money and is on the verge [of being] bankrupt."

He's right about that, but it's also a red herring. Nobody expects UPMC to put itself in financial jeopardy, and paying taxes from its vast reserves would hardly threaten its survival.

Of course, UPMC could avoid taxation by negotiating with the city, but Mr. Wood has said the hospital system would rather go to the mat. Courtesy of a mayor newly empowered by his impending exit, UPMC will get its wish. Game on.


Sally Kalson is a columnist for the Post-Gazette (, 412-263-1610).


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