While Providence Mayor Brett P. Smiley has celebrated the passage of the latest payment-in-lieu-of-taxes agreements with Providence’s four colleges and universities, uncertainties remain about similar negotiations between the city and Lifespan Corp.
The newest agreements include $223.5 million in direct payments from Brown University, Providence College, Rhode Island School of Design and Johnson & Wales University to the city over the next 20 years, marking a $94 million increase from previous deals. Care New England Health System has an existing PILOT agreement that is set to expire in 2026 and includes annual payments of between $375,000 and $400,000.
Meanwhile, Lifespan’s last PILOT payment was in September 2021 for $400,000, and the hospital group has contributed $4.35 million in total PILOT payments to the city since 2012, according to Lifespan spokesperson Kathleen Hart. Hart also noted that Lifespan had a $186 million total loss in fiscal year 2022.
But Lifespan – which is the state’s largest employer and operates Rhode Island Hospital, Hasbro Children’s Hospital and The Miriam Hospital in Providence – had been noticeably quiet in this year’s PILOT discussions until Oct. 4 when executives for the not-for-profit entity and city officials met.
“It went well and the conversation was good, so we’re going to keep working on it,” John Fernandez, Lifespan CEO and president, said on Oct. 6.
Josh Estrella, Smiley spokesperson, told PBN that the mayor’s office has been frustrated with how long it’s taken to get Lifespan to the table but is thankful conversations have officially begun.
“We are looking forward to continuing these conversations over the next several months,” Estrella said.
Estrella did not provide specifics about what Smiley is seeking from Lifespan but noted that the health system is the only major tax-exempt entity in Providence without a payment agreement. Estrella added, “The administration’s goal is to negotiate a new PILOT agreement that ensures that Lifespan contributes fairly to the Providence community.”
While the city’s latest agreements are likely placing pressure on Lifespan to increase PILOT payments, some observers say health systems shouldn’t be forced to pay up.
Edinaldo Tebaldi, a Bryant University economics professor, said that nonprofits, especially health systems, contribute to the economy through supporting jobs and attracting people to cities and towns with their amenities. Tebaldi said these benefits should be considered during PILOT discussions and that nonprofits shouldn’t be forced to negotiate direct payments to the city if they choose not to.
“Nonprofits are a critical resource ... and their contribution to the economy should be acknowledged in negotiations,” Tebaldi said. “We should create protections from arbitrary demands that might be politically driven.”
Tebaldi noted that his own research shows nonprofits support over 100,000 jobs and $6 billion in wages yearly in Rhode Island.
Robert Hackey, professor of health policy and management at Providence College, also noted that health systems are still financially recovering from the COVID-19 pandemic and facing staffing shortages.
On top of this, hospitals, unlike higher education institutions, are legally required to provide community benefits in Rhode Island and are also federally required to treat everyone who comes into an emergency room, Hackey said. This leads to a lot of unreimbursed care for the uninsured. And while colleges and universities award scholarships, it’s not necessarily the same as providing uncompensated treatments, Hackey said.
“Given these differences, health systems shouldn’t be expected to make cash payments to the city,” Hackey said.
