By Stephen M. Barro – The Presbyterian and UNM hospitals in Rio Rancho have improved access to health care for many area residents and contributed to county employment and economic development, but it does not follow that they should continue to be subsidized by Sandoval County taxpayers. The hospitals now are well established and growing. The health systems to which they belong are two of New Mexico’s largest and richest institutions, each with ample resources to sustain and expand its hospital without further county funding.
The Presbyterian Health System, which includes both nonprofit hospitals and a major for-profit insurance company, had revenue of $2.9 billion in 2015. As of March 2016, it held cash and investments valued at $2.3 billion. Its 2015 income, after expenses, was nearly two hundred million dollars, and its CEO’s compensation runs four million dollars per year.
The UNM Sandoval Regional Medical Center is a component unit of the UNM Health System, which took in $1.2 billion in revenue in 2015. UNM, as a whole, had 2015 revenue of $2.6 billion and holds a $1.2 billion investment portfolio.
Compared with these impressive revenues, the Sandoval County subsidies—about seven million dollars per hospital per year—are tiny; they provide only one-fourth to one-half of one percent of each Health System’s annual receipts.
But the burden on county homeowners and businesses is not tiny. A family with a three hundred thousand dollar home will have paid over $3,300 to the hospitals from 2009 to 2016. If the tax is renewed, every homeowner will pay another two thousand, three thousand, five thousand dollars or more (depending on his or her property assessment) over the next eight years. The county’s total tax collections for the hospitals will reach $108 million this year, and that figure will more than double if the hospital levy is extended.
To deter voters from ending the hospital tax, Presbyterian and UNM officials have taken to claiming that the loss of subsidies could result in service cutbacks at the Rio Rancho units, but such claims would make sense only if each local hospital were on its own financially, not part of a multi-billion dollar system. In fact, Presbyterian views the profit-making potential of its Rust Hospital so positively that it is implementing a program to more than triple the hospital’s capacity. UNM has announced plans to expand services and build additional Rio Rancho facilities. Each system recognizes that its Sandoval County hospital is a good investment—with or without county subsidies—and each has both the means and the motivation to provide its hospital with the working capital it needs to reach its profitability goal.
When one weighs the heavy burden on county taxpayers against the marginal and unneeded contributions to UNM’s and Presbyterian’s massive budgets, the conclusion is clear: extending the subsidy is unjustified, and voters should reject the hospital tax on the ballot this November.
Stephen M. Barro, PhD, is a retired public finance economist living in Placitas.