Separating Fact from Fiction Part 2: UPMC’s Nonprofit Status

This is the second in a three-part series looking at UPMC’s tax-exempt status.

A look at some misconceptions about UPMC’s tax-exempt status:

UPMC makes so much money that it can afford to pay taxes without having any impact on its operations or charity care.

FACT: UPMC has always said that it is willing to participate in any city funding plan that would treat all nonprofits fairly.  That said, this added cost would have to be taken into account as we determine how much we can invest in facilities, pay employees or donate back to the community. We would still need to run our organization in a fiscally responsible fashion to ensure that we can serve Pittsburgh for generations to come.

UPMC is subsidizing its international and commercial operations with its Pittsburgh hospitals.

FACT: Our international and commercial operations overall are profitable, and since this division’s start it has created more than $150 million in value to UPMC. These operations have supported the creation of more than 1,200 jobs domestically. We believe that the way to grow the local economy is to “export” Pittsburgh expertise—in this case our medical, technological and managerial knowhow—to places that need these skills, such as China and Kazakhstan. That’s how steel and many other industries contributed in the past to the growth of this region. What’s more, our international and commercial operations are expected to generate more than $110 million in cashflow over the next three years, providing needed funds to reinvest in our health care mission.

UPMC’s corporate jet and the executive kitchen show that UPMC is extravagant and not behaving like a charity.

FACT: The corporate jet supports our international operations by providing the direct flights overseas that are lacking in our home city. The positive cashflow from our international operations is paying for the lease on that jet. This effort to save valuable time for our physicians and executives does not come at the expense of Pittsburgh hospitals or patients. Likewise, the corporate kitchen in U.S. Steel Tower provides thousands of meals every year to visitors at the Center for Connected Medicine, a UPMC-initiated partnership funded by IBM, Alcatel Lucent, GE Healthcare and other industry leaders that are showcasing the power of technology to transform the delivery of health care. These visitors spend money on Pittsburgh hotels, restaurants and other activities that boost the local economy.