Hospital, town close on payment

Email|Print| Text size + By Erica Noonan
Globe Staff / February 24, 2008

Town officials and Beth Israel Deaconess Hospital-Needham are close to hammering out a new payment-in-lieu-of-taxes plan for the local institution.

The tax-exempt facility has not made voluntary payments to the town since an agreement with its predecessor, Deaconess-Glover Hospital, to pay Needham approximately $38,000 per year expired in 2001.

Jeffrey Liebman, president and chief executive of Beth Israel Deaconess-Needham, said last week the hospital - which broke ground last month on a $30 million expansion on prime land in Needham Center - was pleased to "be a good neighbor."

Its Boston-based parent, Beth Israel Deaconess Medical Center, reported $485 million in net assets in 2005 federal tax filings. The Needham hospital maintains separate finances, and listed its own assets that year as about $14 million. It did not start breaking even until 2004. But the suburban hospital frequently touts its unrestricted access to the same doctors, technology, and world-class reputation as the medical center in Boston's Longwood Medical Area.

Liebman declined to state the specifics of the Needham agreement - to be formally announced next month - because the town had yet to finalize language in the plan.

Needham's town manager, Kate Fitzpatrick, also declined comment on final numbers until the Board of Selectmen had an opportunity to weigh in. "We hope it will be competed soon," she said.

But both Liebman and Fitzpatrick confirmed that the hospital would pay more than $40,000 annually to the town. Liebman also said the hospital planned to make a "significant" payment to account for the more than $200,000 that had gone unpaid in the five years since Beth Israel Deaconess officially took over the Needham facility in 2002.

Fitzpatrick said she was pleased by Needham's proposed new payment-in-lieu-of-taxes, or PILOT, deal with the hospital. The arrangement is becoming more common between cash-strapped communities and wealthy nonprofit schools, churches, and hospitals that occupy large areas of real estate and consume municipal services.

Needham and Beth Israel Deaconess-Needham have been hashing out the details for about two years, according to correspondence between the hospital and the town obtained by the Globe.

In documents dated July 2005, the hospital proposed its payment be set at 0.0005 of its annual revenues, minus the value of about $60,000 in services provided to the community annually - including $8,500 for a traveling meals program, $6,000 for a monthly health column in the Needham Times written by a public relations agency, $4,500 in donated meeting space for local groups like Alcoholics Anonymous, and $300 for coffee and pastries provided to town snowplow operators.

That could leave the town with a cash payment from the hospital as low as $5,000, the memo noted, a deal the town apparently declined.

Another draft memo, dated September 2006, suggested Beth Israel Deaconess pay $75,000 to Needham in 2007, based on specific property parcels, and enter into a complex "transition" payment schedule for the next decade.

Both Liebman and Fitzpatrick said last week that the new agreement was markedly different from both of those plans.

"We do recognize and appreciate that the hospital provides a long list of valuable community resources," Fitzpatrick said. Needham's proposed budget is balanced at around $106 million, and the town is not negotiating payments in lieu of taxes with any other local nonprofit organizations, she said.

Liebman said the hospital's planned payment is appropriate.

"A lot of towns and places are doing this," he said. "Now that we are doing better financially, it is easier for us to be a good neighbor. We have a good working relationship with the town and look forward to taking care of the health and human service needs for the community."

Erica Noonan can be reached at

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