On one level, the fact that the University of Pittsburgh Medical Center made $459 million through the first nine months of its fiscal year strains credulity. How is it that a nonprofit can make that much money?

But experts in the nonprofit world argued yesterday that UPMC's good fortune should be celebrated, not criticized, and that nonprofit hospital systems need a healthy surplus to reinvest in their programs, treat poor patients and support their communities, as they are required to do by law.

"Money at the bottom of the page is a beautiful thing," said Peggy Morrison Outon, director of the Center for Nonprofit Management at Robert Morris University. "The idea that we want to find a nonprofit that never shows any kind of cushion or surplus is an antiquated one because they aren't sustainable.? It is a misnomer to say that nonprofit means there is no money at the end of the year."

Nonprofits such as UPMC, which employs 43,000 people and controls 19 hospitals in southwestern Pennsylvania, "have got to make money to provide their services," said Roger Baumgarten of The Hospital and Health System Association of Pennsylvania, a trade lobbying group for state hospitals. "Simply being a nonprofit doesn't mean you are required by law to lose money. You still have an obligation to bring in more than you spend to stay in business."

But is there such a thing as too much profit?

"There's always going to be a debate about what's reasonable amount of reserves for charities to hold onto," said Joel Geiger, director of the Pennsylvania Association of Nonprofit Organizations. "We are not in the business of accumulating wealth for the sake of accumulating wealth."

Large nonprofit health systems such as UPMC do not have to pay taxes or give their money to shareholders, as for-profit corporations do. But they are required to give some of what they make back in the form of "community benefits." Highmark Inc. and its subsidiary companies paid almost $234 million in federal, state and local taxes last year. Only the parent company is exempt from state taxes.

Still, no federal or state standard exists to measure the appropriate level and impact of those activities, or what percentage of profits should be devoted to them. One exception in Pennsylvania was a 2005 agreement between Gov. Ed Rendell and the state's four Blue Cross and Blue Shield plans (one of which is Highmark) requiring the nonprofit insurer to contribute $1 billion in surplus funds to community health programs over six years.

This year, UPMC expects to provide at least $60 million in community services, matching what it provided in 2006, but admits that the figure is "conservative" and could be inflated by using a different methodology. The hospital system also has provided $200 million in charity care through nine months of fiscal 2007, up 17 percent from the year-ago period, meaning more people who could not afford the cost of service are receiving care.

In addition, UPMC maintains hospitals in distressed parts of the region, including Braddock -- a facility that loses money on an annual basis.

"Everything we do is a community benefit," said Robert DeMichiei, UPMC's chief financial officer. "We are a product of the community we live in."

The question of how a nonprofit could make $459 million in nine months is a "legitimate" inquiry, acknowledged Mr. DeMichiei, "but one that deserves further study. You really need those profits to support the infrastructure and reinvest" in the community.

UPMC, he said, expects to spend more than $500 million this year on new capital expenditures, including a new Children's hospital in Lawrenceville costing a total of $575 million. If it is able to merge with Mercy Hospital, a deal still under review by federal and state regulators, it promises to revitalize the Lower Hill, where Mercy is based.

Another point to consider is that UPMC's profit includes exceptionally good investment results.

Take away the $279 million in investment gains on its endowments and other holdings through the first nine months of fiscal 2007, and UPMC's profit margin is 2.5 percent -- in line with other hospital systems in the United States, according to UPMC.

Also, while it's true that UPMC controls a large cash-and-investment portfolio of $3 billion, it also has $2.5 billion in debt. That leaves UPMC with about $500 million in unrestricted cash -- "a little low" for a hospital with a "AA'' bond rating, according to UPMC general counsel Robert Cindrich, who argued that a healthy cushion allows UPMC to borrow money at lower interest rates.

Another argument made in the defense of UPMC's profits is that the bottom-line result is an outgrowth of the system's efficiency and efforts to cut costs. Mr. DeMichiei, the CFO, cited the consolidation of business functions such as billing, collection and legal services for 19 hospitals at one location as one recent example.

"By pushing ourselves to be efficient and lower administrative costs, that creates profitability," he said. "That leaves more profit available to reinvest" in new programs and capital projects. While he admits the discussion of UPMC's large profit "is a difficult tightrope to walk" and that there is a "negative connotation" around profitability, people should know that the money UPMC makes pays for the "best facilities, best equipment, best doctors and the best care."

He added: "You don't want us to be losing money or barely breaking even."