Thursday, December 5, 2013
PORTLAND — The planned purchase of Mercy Health System by a for-profit hospital chain could bring $1 million or more in annual tax revenue to Portland, according to the city's tax records.
On the other hand, the for-profit owner might not maintain the same level of support for the city's public health programs, including clinics that serve the poor and the homeless.
Brockton, Mass., was in a similar situation about two years ago, when Steward Health Care System LLC announced plans to buy one of the two not-for-profit hospitals in that city. If Steward does here what it did in Brockton, Portlanders will be very pleased, Brockton's mayor said Tuesday.
"I think (Portland) should be excited. Steward has a lot of resources that they are putting into the places they are purchasing," said Mayor Linda Balzotti.
Steward put $30 million into a new emergency department at Good Samaritan Hospital, and there have been other benefits, she said.
The purchase of a hospital is a big deal in cities like Portland and Brockton. Mercy is the smaller of two hospitals in Portland, but it is a major employer and property owner.
It owns nine properties in the city, valued at a total of $45.7 million. That includes its old hospital campus on State Street and its new hospital campus on the Fore River Parkway.
Like all Maine hospitals, Mercy is a tax-exempt nonprofit so it pays no property taxes. It is allowed to be tax-exempt in return for its benefits to the community, including a 24-hour emergency department, charity care and support of public health programs.
If purchased by Steward, Mercy would become a for-profit operation and lose its tax-exempt status.
If Mercy's properties in Portland became taxable, they would generate about $860,000 a year in property taxes based on the current rate.
Portland would also collect taxes on the hospital's equipment, which could potentially be as much or more than the revenue from land and buildings.
City officials said the actual revenue is unknown and will depend on the details of the acquisition and structure of the new company.
The city does not want to lose Mercy's support for its public health programs.
"Mercy has been a great partner for the city. Their mission and commitment to the poor and vulnerable have meant they have supported a number of city projects," said Nicole Clegg, spokeswoman for the city. "Our hope is that through this transition, we will be able to work with them on that shared mission of caring for those vulnerable populations."
Mercy and Steward officials said this week that Mercy would remain a Catholic institution.
Officials in Brockton had some of the same concerns in 2010 when Steward announced plans to buy Good Samaritan, a Catholic institution and one of two hospitals in the working-class city south of Boston.
"Initially, there was some concern they would not still be partners in the community. They assured the state regulatory agency that they would continue that, and they did," said Mayor Balzotti. "They are still very much a partner in the community even though they are a for-profit."
Hospital employees were even more nervous about the takeover than city officials, Balzotti said, but Steward made sure that pensions were protected and Balzotti could not recall any layoffs since the purchase.
Along with investing $30 million in a "beautiful" new emergency department, Good Samaritan now pays about $1.5 million a year in property taxes that it didn't pay before acquisition, she said.
"In these economic times, when state aid is constantly decreasing ... it helped us, definitely," she said.
Staff Writer John Richardson can be contacted at 791-6324 or at: firstname.lastname@example.org