UPMC’s Community Benefits Go Beyond State Law, CFO Testifies

From its world-class medical care to community programs and economic revitalization efforts, UPMC is focused on meeting the needs of the community, said Robert DeMichiei, Chief Financial Officer for the University of Pittsburgh Medical Center (UPMC), in testimony today before the State Senate Finance Committee meeting in Pittsburgh.

The committee met to hear testimony on Act 55 of 1997, the Institutions of Purely Public Charity Act, which clarified the criteria that determine a charitable institution’s property and sales tax exemption status.

In his remarks before the committee, Mr. DeMichiei acknowledged that some type of property tax reform is necessary to ease the burden on communities like Pittsburgh with large concentrations of tax-exempt, non-profit assets. But, he added, changes in Act 55 are not the mechanism for doing that. UPMC, he noted, goes “far beyond what Act 55 and federal law strictly demand in trying to be a good neighbor and a valuable community asset. Our strong board of local community leaders actively manages this asset called UPMC in the best interests of this region, not for the benefit of any shareholders or individuals.”

He added that to provide world-class health care in Pittsburgh, UPMC continually invests in doctors, nurses, facilities, equipment and information technology. UPMC’s capital spending budget this fiscal year alone will top $600 million. In the years ahead, UPMC expects to spend hundreds of millions of additional dollars renovating the hospitals on the Oakland campus?a community benefit that will be paid for primarily by UPMC, not by taxpayers.

“These investments are not counted as part of any official calculation of our community contribution. But a new, state-of-the-art $575 million Children’s Hospital is a significant community benefit. Likewise, our $1 billion commitment so far to electronic health records for improved patient safety is a community benefit,” he said.

UPMC also supports money-losing hospitals in economically distressed areas such as Braddock and McKeesport and will spend millions of dollars upgrading Mercy Hospital in Uptown, if the FTC allows UPMC’s merger with the hospital to proceed.

“This promises to help revitalize that neighborhood just as our new facilities and expansions are doing in parts of Shadyside and Lawrenceville. We are supporting these hospitals and these communities because it’s the right thing to do,” he said.

In his remarks, he also made the following points:

In the last fiscal year, UPMC’s uncompensated care topped $279 million, more than double the amount five years ago. The health system provided more than $60 million in community services and donations, including health screenings, anti-smoking programs and summer camps for children.
UPMC supports more than 450 not-for-profit civic and arts organizations, including the United Way, the Greater Pittsburgh Community Food Bank and the Urban League of Pittsburgh.
UPMC and its employees pay over $20 million each year in parking and payroll taxes plus other financial contributions to the city. UPMC is the largest voluntary contributor to the Pittsburgh Public Service Fund, a group of non-profit organizations that collectively gives $4.4 million annually to the city.
The health system’s community benefits go beyond its direct $6 billion in spending and 45,000 jobs. UPMC is investing in new companies and international ventures to bring new revenue and new talent into this region
UPMC is partnering with such industry leaders as IBM, General Electric and Alcatel to jointly develop new products and services for the health care industry. This work is expected to create new jobs in Pittsburgh.
The University of Pittsburgh and UPMC together attract more than $400 million annually in grants from the National Institutes of Health, money that might otherwise flow to institutions outside of western Pennsylvania.