Providence’s Next Battle: Will the Hospitals Pony Up?
Monday, March 12, 2012
More than a month after Mayor Angel Taveras called on Providence’s tax-exempt institutions to contribute just over $7 million to help the cash-strapped city avoid filing for bankruptcy, an agreement with the major hospitals —which combine to pay zero in taxes on about $1.2 billion in property— appears to be nowhere in sight.
The administration has been unwilling to allow its talks with the city’s three health care systems (Lifespan, Care New England and CharterCARE) play out in public the way it did earlier this year with Brown University, and neither side suggested that negotiations were even in the works when asked by GoLocalProv last week.
For the city, everything comes down to sacrifice. Mayor Taveras has pointed to his own staff, the unions and taxpayers as examples of groups that have had to make concessions or pay more in taxes in an effort to keep the city afloat.
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For Lifespan (which oversees Rhode Island Hospital and The Miriam Hospital) and the other health care providers, that sacrifice has been made every year in the form of charity care. Lifespan says it has provided over $390 million in uncompensated care over the last five years.
“We have the utmost respect for Mayor Taveras and the City Council,” said Mark Montella, Lifespan's senior vice president of external affairs. “We understand the city has major issues and we understand that we have been a major part of the economic activity in Providence. I think the main question is can we arrive at a recognition in the central role we play.”
Ignoring Their Responsibility
Montella said Lifespan, which paid its CEO George A. Vecchione $2.9 million in compensation and benefits according to the organization’s most recent 990 form, has also fallen on hard times. Last week, its bond rating was downgraded. And with no hope in sight when it comes to the state’s economy turning around, Montella said the amount of uncompensated care offered by the hospitals will continue to rise.
Still, the city contends that all of the nonprofits need to pay their fair share. In Lifespan’s case, Rhode Island Hospital and the Miriam Hospital would owe just under $30 million if they were forced to pay full price on their property taxes. Care New England (which operates Women & Infants and Butler) and CharterCARE (which operates Roger Williams Hospital and St. Joseph’s) would combine to owe just under $16 million.
City Council President Michael Solomon said the hospitals are ignoring their responsibility to city.
“Our hospitals, along with our institutions of higher learning, contribute a great deal to the economic vitality of our city,” Solomon said. “However, our hospitals have continued to ignore their responsibility to pay their fair share to Providence and its taxpayers. The sooner our hospitals recognize that their future economic well-being is inextricably linked to the capital city, the sooner we can move forward as one city.”
Hospitals Should Not be Exempt for Paying Fair Share
During his State of the City address last month, Taveras said the hospitals, college and universities own nearly $3 billion of property in the city which would be worth $105 million in tax revenue if they paid full price. He said that while the city supports their continued growth, their continued expansion creates a heavy burden on taxpayers.
"It's a system that's unfair and simply unsustainable," Taveras said at the time.
"We stare into that black hole because some have failed to sacrifice," he said. "Our tax-exempt institutions and city retirees have yet to join the rest of our community in helping to save our city."
To date, only Johnson & Wales University has reached an agreement with the city.
For City Councilman David Salvatore, the argument that the hospitals already make sacrifice based on uncompensated care holds little merit. Salvatore said taxpayers pay more because of the tax-exempt statuses held by the non-profits. He said it’s time for the hospitals to help the city.
“We are grateful for our large tax exempt institutions who should be given credit for the community benefits and uncompensated care they provide,” Salvatore said. “However, we also recognize that there is very little evidence that shows Providence receiving services from our hospitals relative to the tax burden our small business community faces. Additionally, our neighborhoods pay more for city services due to the high percentage of property that is exempt from paying taxes. I am calling on all stakeholders to share in the sacrifice of saving our city. Hospitals are not exempt from paying their fair share.”
Lifespan: No Formal Decision
For now, the talks continue. Montella said he would not rule out reaching an agreement with the city, but he continued to defense the work Lifespan has done in the city.
“Our community is South Providence,” he said. “The unemployment rate in South Providence is higher than the rest of the state.”
Neither side was willing to elaborate on the conversations being had.
“We've made no formal decision about whether we're going to pay in some PILOT payment,” Montella said. “That conversation is continuing.”
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