When a Hospital is a Bank

Fascinating article from the Pittsburg Post-Gazette, excerpted below:

"Q: When is a bank not a bank? A: When it is a hospital

UPMC's mission is patient care, but its lending and investments make it a financial institution, too"

With 19 hospitals, a for-profit health insurance subsidiary and a huge network of physicians' offices, UPMC's business clearly is health care. But in many ways, it also is banking -- handling, lending and investing the money that comes through its myriad doors, an estimated $5 billion alone in the fiscal year that ends this month.

In many ways, UPMC is a symbol of modern medicine, which these days seems as much about finance as it is about patient care. Across the country, major health systems have invested in real estate, entrepreneurial ventures and loans for businesses and physicians. They have taken these steps not only to grow their enterprises but to protect what they have from other investors, said Mark Pauly, an economist at the University of Pennsylvania.

UPMC last month released its annual filings with the Internal Revenue Service that show about $460 million in loans and other notes receivable held at the end of fiscal 2004 by UPMC, its 19 hospitals and two physician groups.

While much of the $460 million involves debt financing arrangements between UPMC and its hospitals, there are also loans to recruit and retain physicians as well as loans to related subsidiaries.