The bitter, patients-be-damned dispute between UPMC and Highmark, two of Pittsburgh’s corporate giants, has been making news for months.

Last week, an Allegheny County judge ruled against the city, which wanted to apply the city payroll tax to everyone under the UPMC umbrella. The judge said the city would have to target the UPMC’s different hospitals.

UPMC called the judge’s ruling a victory and confirmation of its nonprofit status, which had been challenged by the administration of former mayor Luke Ravenstahl.

The larger battle between UPMC and Highmark Health over the expiring contract agreement is leaving hundreds of thousands of UPMC patients and Highmark insurance customers worried about losing their regular doctors or having to pay more, through out-of-network status, to continue seeing their regular doctors.

Beyond worrying patients and doctors, the UPMC-Highmark feud should also focus attention on the nonprofit status of these two big organizations.

In Pittsburgh, as well as other communities, there is ongoing tension between the tax exempt, and thus taxpayer-subsidized, nonprofits and city governments straining with tight budgets.

UPMC is the largest employer and the largest property owner in Allegheny County. If UPMC were not tax exempt, it’s been estimated the city and county would be receiving tens of millions more in tax revenue. Highmark is another nonprofit giant.

In Pittsburgh, about 40 percent of the property is tax exempt. That includes UPMC hospitals, health clinics, Highmark facilities, several universities, scores of churches and many smaller nonprofit social and arts organizations. Other older cities have similar percentages of tax exempt properties.

There are big differences between UPMC and smaller nonprofit organizations, but those differences are not recognized in the tax code.

Many, actually most, nonprofits have small staffs, shoestring budgets and sometimes struggle to pay routine bills. UPMC, on the other hand, has more than 50,000 employees, including 26 executives who were paid over $1 million in 2012. It owns property worth billions of dollars. Its CEO was paid over $6 million in 2012. Highmark is a bit smaller, but still has 37,000 employees and $17 billion in annual revenues. Its CEO made about $3 million in salary and benefits last year.

Compare these two giants with small social service nonprofit agencies or small arts organizations, such as the Associated Artists of Butler County, the Dunbar Community Center or a local library — they operate in completely different worlds.

Given that, they should be treated differently when it comes to tax exemption benefits.

UPMC and Highmark operate like highly competitive Fortune 500 corporations. It’s time for federal officials to redefine nonprofit status, to include different levels of tax exemption based on a formula that includes total budget, value of real estate holdings, employees and top administrative salaries.

Some communities receive some revenue from local nonprofits through a “payment in lieu of taxes” (PILOT) program. But it’s voluntary, and easily terminated, putting a greater burden back on the taxpayers.

There should be several different steps or levels recognizing the difference between a small nonprofit operating with $100,000 budget and with a handful of employees versus a corporate giant like UPMC with 20 executives paid over $1 million a year, billions of dollars in revenue and real estate worth billions.

Despite UPMC and Highmark both doing good things in the community, providing some charity health care and supporting many worthy causes, both organizations can afford to contribute more to the tax base of Pittsburgh and Allegheny County.

Tax-exemption benefits should be applied to organizations on a stepped scale, similar to different federal income tax rates. Small non-profits, with few employees and small budgets should retain their current tax-exempt status. But large organizations, such as UPMC and Highmark, with tens of thousands of employees, some salaries over $1 million a year and billions in revenue, should pay some level, say 25 percent of what would be paid by a for-profit company, of tax to support their host city’s budget.