CBS Calls Out UPMC

From CBS This Morning: University of Pittsburgh Medical Center (UPMC) "made $948 million in profits from 2011-2012."  And tax returns show UPMC spending just 2% of its annual budget on charity care.  And UPMC's CEO, Jeffrey Romoff, makes almost $6 million a year.  And Romoff also has more than a dozen administrators that take in annual salaries of over $1 million a year.  And now Pittsburgh Mayor Luke Ravenstahl is suing to revoke UPMC's nonprofit status.  Good.  I hope he wins.

From the article:

Professor Martin Gaynor of Carnegie Mellon has published papers on hospitals that enjoy nonprofit status but do not always function like charities.

"There's a lot of concern here in the community," Gaynor told "CBS This Morning."

"They've taken some actions that don't appear to be consistent with an organization whose mission is to benefit the community."

Some of UPMC's funds are directed at facility improvement, but Gaynor has concerns about even some of that spending. He likened the new, state-of-the-art pediatric center to a palace.

"It's a tremendous asset to the community," he said. "On the other hand...one has to ask whether it was so important to make it so beautiful, or whether some of those dollars could've been used to better purpose -- to offer lower prices to members of the community, to offer more charity care."

Hard to argue with the Gaynor, isn't it?  I've worked in and around not-for-profit healthcare for most of my career and it's not that difficult to distinguish community benefit-centered organizations from the edifice-centered.  I know which I prefer.  And I wish the others would stop kidding themselves, the IRS and us.

More of my thoughts on hospitals' tax exemption, in this post about the politics of tax exemption in Illinois.

11:40 AM

The Battle Over Hospitals' Tax-Exempt Status Heats Up In Illinois

Chicago News Cooperative:  "State Challenges Hospitals' Tax Breaks."

“Hospitals think they should get tax exemptions for merely what they do in the community,” said John Colombo, a professor of law at the University of Illinois at Urbana-Champaign who has followed the issue of nonprofit hospital tax exemptions nationally. “It’s problematic: The overall number that each of these hospitals is reporting is abysmally low. Given the state of the economy, one would expect the charity services going up.”

Bloomberg Business Week:  "Illinois Says Hospitals No Longer 'Poorhouses' Shielded From Taxes."

“Hospitals aren’t poorhouses anymore,” (says Colombo.)  “Just because they were exempt in 1900 doesn’t mean they should be exempt in 2011. The world is different.”

Yes, the world is different in 2011, especially when for-profit Vanguard Health Systems can buy 4 hospitals in the Chicago area, pay taxes AND deliver charity care in amounts "not materially different" from their tax-exempt, not-for-profit competitors.

I don't think anybody (even Illinois' tax authorities) begrudges a "no margin, no mission" mindset.  But to my NFP brethren in Illinois, I'll simply say this: if you wish to be thought of as a charity, then act charitably. 

In case you're unclear on the concept, let's return to the source - Merriam-Webster:

Char-i-ty.  A noun, meaning (1) benevolent goodwill toward or love of humanity, or (2) generosity and helpfulness, especially toward the needy or suffering.

The more you act like any other business (even one that just happens to deliver a social good like health care) the more you'll be treated like any other business.  That is to say rudely, at arms' length and  'just show me the money.'   But fair's fair since that's pretty much how indigent patients feel leaving your ER.

One percent of revenues devoted to charity care?  I'm not sure where lies the tipping point between business and charity, but c'mon.  That falls on the side of  'caught red-handed.'

3:32 PM