UPMC announces $618 million profit, fends off critics - Pittsburgh Tribune-Review: "Allegheny County Prothonotary Michael Lamb, the Democratic nominee for city controller, wondered whether UPMC pays its fair share for city services, a recurring theme among critics. 'They do have the state law regarding nonprofits on their side, but given the fiscal situation of the city, we want to ensure everyone pays their fair share. The question is, what is their fair share?' Lamb said."I sent an email to the reporter that wrote the article.
Hi,
I see you give ink to Michael Lamb, D, candidate against me in the controller's race. I am so glad you did. He has been absent in recent months. He has nothing to say. And, what he said in the article you published is perfect -- as it is nothing but the sound of him scratching his head wondering what in the world is going on.
If you'd like more quotes -- call me or email. I have a very close relationship to UPMC. Plus, I have a real plan that can be deployed throughout the city with UMPC and the other nonprofts.
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full article:
UPMC announces $618 million profit, fends off critics
By Rick Stouffer, TRIBUNE-REVIEW
Friday, August 24, 2007
The University of Pittsburgh Medical Center posted a record annual profit of $618 million, the health care giant announced Thursday.
"Being a nonprofit under the IRS code does not mean such an entity makes no profit," said UPMC spokeswoman Wendy Zellner. "In fact, nonprofits must make an excess margin (profit) to reinvest in their core missions and to maintain their vitality."
Chief Financial Officer Robert DeMichiei said the profits will be reinvested to strengthen the region's largest health care provider, enhance clinical programs and increase academic support for the University of Pittsburgh.
Some questioned the size of the profit, which covered the fiscal year that ended June 30.
"The question is, what do they do with all the money?" said Robert Strauss, professor of economics and public policy at Carnegie Mellon University.
Allegheny County Prothonotary Michael Lamb, the Democratic nominee for city controller, wondered whether UPMC pays its fair share for city services, a recurring theme among critics.
"They do have the state law regarding nonprofits on their side, but given the fiscal situation of the city, we want to ensure everyone pays their fair share. The question is, what is their fair share?" Lamb said.
UPMC's profit for fiscal 2007 compared with a profit of $525 million for the previous 12-month period that ended June 30, 2006. The hospital system reported record revenues that jumped 13 percent to $6.8 billion, compared with $6 billion a year earlier.
The majority of UPMC's profit in fiscal 2007 came from investment returns of $403 million, compared with $206 million the year before.
"Our diversified portfolio mirrored the stock market in producing stellar gains for the year," DeMichiei said. "However, we don't count on such gains every year, given the volatility of the stock market."
Profit from patient services and insurance operations for the year was $220 million, down $101 million from an operating profit of $321 million a year earlier.
Medical-surgical admissions for the fiscal year rose 2.6 percent, while outpatient activity increased 11 percent. Membership in UPMC's health insurance companies increased to 1.2 million in fiscal 2007, up more than 276,000 members. The increase was attributed primarily to a large Medicaid behavioral health contract, strong Medicare growth and implementation of a new disability insurance product.
UPMC said operating profits were lower because it added 2,000 employees, including 170 physicians, and spent $105 million on new and expanded electronic health record technology. UPMC also spent $185 million on construction of the new Children's Hospital in Lawrenceville.
Employment totals more than 45,000 worldwide.
"There is nothing in the law that prohibits a nonprofit corporation from making money," Zellner said. "Unlike for-profit entities, we have no stockholders, and excess revenues must be used to reinvest in our facilities and programs or to otherwise provide a community benefit."
UPMC's profit as a percentage of revenues for the fiscal year was 9.1 percent, higher than the same ratio at U.S. Steel Corp., 8.9 percent; H.J. Heinz Co., 8.7 percent; Alcoa Inc., 7.2 percent; and PPG Industries Inc., 6.5 percent.
The four companies in their most recent fiscal years paid income taxes of $324 million, $332.8 million, $835 million and $278 million, respectively. UPMC's income tax paid was $5 million.
Whether a nonprofit organization is fulfilling its core mission to better the communities where it does business is taken on faith, said professor Mark V. Pauly, professor of Health Care Systems and Economics at the Wharton School of the University of Pennsylvania in Philadelphia.
"The real issue is whether or not the new things UPMC is spending money on are more important than if it instead lowered its prices," he said.
Pauly added that pediatric hospitals nationwide are undergoing a "growth spurt" and that the new Children's won't hold down costs.
Rick Stouffer can be reached at rstouffer@tribweb.com or 412-320-7853.
"I have a very close relationship to UPMC. Plus, I have a real plan that can be deployed throughout the city with UMPC and the other nonprofts."
MR,
A few questions for you...
First, what qualifications do you have for the controller position?
Next question - when will you tell us your plan for the non-profits contributing to the city?
And finally, is having a "very close" relationship to UPMC something you want to be bragging about when running for a city office?
I would never "brag." That isn't my style. Well, I would never 'try to brag.'
Facts and honesty are different.
I've talked about nonprofits and the city for some years. When is in the past. I'll do a redo again, shortly. More in hours, not days.
The lion's share of my qualifications to serve the public as the city's elected controller are harbored within my watchdog ways and open philosophy.
DeSantis enters the fray on UPMC with coverage from another media outlet, Pittsburgh Channel.com & WTAE TV.
Pittsburgh Talks Taxes With Nonprofit Groups; UPMC Has Big Year
POSTED: 4:53 pm EDT August 24, 2007
UPDATED: 5:33 pm EDT August 24, 2007
[NEWSVINE: Pittsburgh Talks Taxes With Nonprofit Groups; UPMC Has Big Year]
PITTSBURGH -- A Pittsburgh nonprofit institution is reporting its best profits ever.
The University of Pittsburgh Medical Center posted a $618 million profit for the just-ended fiscal year.
Word of UPMC's banner fiscal year comes just as the health system and other area nonprofits are in talks with Mayor Luke Ravenstahl and his administration.
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One-third of property in Pittsburgh is not taxed and nonprofits own about half of that.
The discussions are about their future role in providing financial support to the city.
UPMC might be the biggest of the nonprofits in the talks.
The Rev. Ron Lengwin is a spokesman for the Pittsburgh Public Service Fund, a coalition of more than 100 nonprofits that made a three-year financial commitment to helping the city that runs out this year.
"We're meeting to say, 'What is it that we want to do,'" Lengwin said. "We understand the city is still in severe financial problems. Not right now, but as payments come down the line. We have people who are aware, very much aware, of those problems."
A Ravenstahl spokesman said the city is in discussions with UPMC concerning payments in lieu of taxes and that the talks are going well.
UPMC isn't saying whether its record profits will make it any more likely to recommit to helping Pittsburgh deal with budget concerns.
A spokesman for the health system confirms that UPMC has been in talks concerning future contributions and hasn't reached an agreement just yet.
The fund's deal won't break out details of what any of the nonprofits, including universities, health systems and churches might give.
"Legally, we don't have to give anything," said Lengwin. "This is not payment in lieu of taxes. If it had been conceived as that, we would not have participated."
UPMC said the amount of its contribution to the city is confidential. It said it has always been the largest contributor to the Pittsburgh Public Service Fund, which promised to give the city $13.2 million over three years.
Republican candidate for mayor Mark DeSantis said the nonprofits might give more if they money didn't go to the city's general fund.
"Rather it would be targeted to specific uses," DeSantis said. "It would be a nondiscretionary use of the money for important things. Perhaps, like public safety or reducing the debt. I think if we can do that, the nonprofits would be much more willing to put more money in."
Ravenstahl must present his 2008 budget plans to the oversight board by Sept. 22. There's no word yet on how much revenue he will budget from contributions by nonprofits, including UPMC.
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