Skip to content

More on the Steward tax cuts

March 15, 2012

Since Steward Health Care System made some major amendments to its purchase agreement for Landmark, and Felice Freyer reported on Woonsocket’s plans to give the for-profit hospital some tax breaks, there have been a fair amount of jokes about the quality of this “deal.”  Here’s a video a listener sent me-

So I decided to follow up with the city of Woonsocket to learn the exact nature of these tax cuts. Are officials really willing to do whatever it takes to sell Landmark? Matt Wojcik, the head of economic development says no.

We’re not just sitting here with our arms open, saying whatever you want.

Wojcik says the story of tax cuts for Steward is a long and complicated one. Way back in 2010, when Steward was known as Caritas and the then catholic hospital chain was thinking about buying Landmark, Woonsocket worked out a tax deal with the company. Wojcik says the General Assembly even approved a way for the company to pay less in state taxes. But then the sale never happened.

Since then, Caritas was bought by Cerberus and is now Steward. Wojcik says he’s not going to bother with any negotiations until he knows for sure that Steward is the owner of Landmark, but in the meantime, he’s been thinking about how the city and Steward can work together. But he says any tax cuts would involve a series of conditions including-

  • Cooperation with local social service agencies to help offer job training.
  • Some incentives to hire folks from those job training programs.
  • A health care needs assessment so what Steward offers lines up with the medical needs in the community.
  • A commitment to make the hospital more than an “outpost.” Wojcik says the hospital should serve as a hub for some type of service so people have a reason to come into the city.

Wojcik says the tax cuts themselves would also be strategic. Companies are taxed on both “real property”- land and buildings, as well as “tangible assets”- medical equipment, exercise machines, etc.  He says the city would gain $1.5 million dollars on taxing the hospital’s “real property” and he intends to offer only a small tax break or none at all for that category.

Where he’s flexible is in the second realm of taxation, the “tangible assets.” He says he doesn’t want to discourage Steward from making significant investments in the hospital by running up a huge tax bill. If the for-profit wants to buy new machines and other fancy equipment, it should spend whatever it can on those investments and less on taxes.

So, he’s hoping to offer a three to five year tax break on those “tangibles.” After that, Steward can pay for any general upgrades or improvements on those initial purchases.

To Wojcik, this deal isn’t “being too soft.” He says it’s a way to make a fair chunk of money and encourage major improvements at the hospital. Wojcik sees it this way- there are scores of empty buildings in the city that aren’t generating any money. If he negotiates a deal for $80 in taxes, it’s still $80 Woonsocket didn’t have before.

Do you agree with him?

3 Comments leave one →
  1. Moe Howard permalink
    March 15, 2012 7:40 pm

    I can see that Woonsocket has the benefit of deep economic thinkers. Mr. Wojcik’s “conditions” are laughably naive. Sure give municipal tax breaks to Steward for a kiss and a promise. Take a look at the court approved amendments to the Asset Purchase Agreement. Big changes from the initial agreements and as amended now requires independent and essentially unrelated third parties (i.e., Thundermist, and the General Assembly) to yield to Steward’s wishes or Steward can back out of the deal.

    Also, the so called “Asset Purchase Price” is stated in the court approved deal as $40.1 million- this is a total fraud and misrepresentation. Steward served up the Kool-Aid and Special Master Savage and Judge Silverstein drank it uo. If you look at the APA, only $10.1 million is paid to the “sellers” (i.e., the Court and the creditors of Landmark). The remaining $30 million of the so called “asset purchase price” is “pledged” to be spent on capital improvements etc at the future Steward owned hospital. In plain language they are promising to invest in their own asset- that they own and can presumably sell and recover their investment! How is this investment in any way a “purchase price”??? What a charade. No one has the intestinal fortitude to expose the truth – read the Asset Purchase Agreement!!!!!

    The APA is available as an attachment to the Change in effective Control application of Steward on the DoH Health Systems Development webpage.

Trackbacks

  1. How will the public respond to Landmark sale? « The Pulse: health care in RI
  2. Landmark and other updates « The Pulse: health care in RI

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: