Good evening, I am Alan Aviles, President of the New York City Health and Hospitals Corporation (HHC). Thank you all for coming tonight. This is our first annual public meeting for 2010; over the next eight weeks, there will be one in each of the other four boroughs. As always, I am eager to hear what HHC’s communities have to say about our performance, especially at this very challenging time in health care.
First, I want to recognize HHC’s senior executives here in the Bronx: our host this evening William Walsh, the Senior Vice President of the North Bronx Network and Executive Director of Jacobi and North Central Bronx Hospitals, and Iris Jimenez-Hernandez, the newly appointed Senior Vice President of the Generations + Network and the Executive Director of Lincoln Hospital. When Jose Sanchez retired last month after a distinguished 15-year career with HHC, I asked Iris to move to Generations + from the North Brooklyn Network, where she had been an exceptionally effective leader for the past four years. My thanks to Bill, Iris, and their talented staff for the committed work they do every day caring for our communities here in the Bronx.
I also want to acknowledge the support and guidance of our Board of Directors, under the leadership of Dr. Michael Stocker. My special thanks to the Board members who are here tonight…… and to the members of our Community Advisory Boards, who advocate on behalf of our pubic system and work hard to keep us grounded and responsive to the needs of our patients and communities.
Before Mr. Russo calls upon tonight’s speakers, I’d like to share with you a brief overview of the last year. A year ago, I spoke at this meeting about healthcare reform and the financial crisis that HHC then faced. Dealing with those financial challenges has made this a very difficult year, and more difficulties lie ahead, but with healthcare reform enacted, there is some light at the end of the tunnel, as I will explain.
Before I begin, however, let me stress the important role that we all must share, if we want to preserve the mission of our public hospital system. Despite these challenging economic times, we at HHC are absolutely committed to continuing to provide broad access to quality care, to remain a strong presence as employer in our communities, and to render care in a way that reduces healthcare disparities and steadily improves the health of our communities. We ask in return that as government at all levels looks to reduce their own budget deficits you actively advocate for continued funding of our mission to serve all New Yorkers without regard to their ability to pay.
Last year, our public system served about 1.3 million adults and children. We admitted about 225,000 patients into our hospitals, approximately a quarter of them right here in our Bronx hospitals. We provided outpatient care to another one million patients. We delivered 23,000 babies. More than one-third of our patients – a total of more than 450,000 last year – were uninsured. Providing all of this care is extremely expensive; it now costs us roughly $6 billion annually.
At this time last year, I told you that we were anticipating a deficit of more than $1 billion going forward, meaning that we would fall more than $1 billion short of the roughly $6 billion needed to operate all the facilities in our system for an entire year. This huge shortfall resulted from the combined effects of rapidly rising costs in such areas as medications, medical equipment and employee pensions; hundreds of millions of dollars in cuts to our Medicaid reimbursement from the state and federal governments; and a dramatic increase in uninsured patients.
Those of you who attended last year’s annual meeting will remember that I discussed a $300 million cost-containment plan that we had launched earlier in the year. It included a hiring freeze, a sharp reduction of all discretionary spending, and improvements in revenue collection to capture every dollar owed to us from government payors and private insurance companies for the services that we provide. We have carried out virtually that entire plan successfully and by the end of this year, we will have reduced our budget gap by about $300 million. These measures helped, but still fall short.
This past year, with the help of a consulting firm, our senior leadership completed work on a second plan to further reduce our budget gap without compromising our ability to meet the essential needs of our communities. I won’t go through all the elements of this second cost-containment and restructuring plan; it consists of 39 projects that we will complete over the next four years. To fully implement the plan, we must consolidate some programs, right-size some of our operations, contract for targeted support and technical services, close some low-volume clinics, and phase-out a portion of our long term care beds. The entire plan – which will reduce our budget gap by another $300 million – was released this past May and is available for review on our public website.
Together with the attrition from the hiring freeze incorporated into our first cost-containment plan, we expect that the full implementation of this second deficit reduction plan will reduce our workforce to about 35,000 employees, down from about 38,700 employees in early 2009. This would represent a nearly 10% reduction in our workforce or roughly 3700 fewer full-time positions. In fact, we now project that we will have achieved roughly one-half of this total reduction by the end of this calendar year. The balance of the reductions will occur over the next three and one-half years and will be a combination of highly targeted layoffs and further attrition that seeks to minimize the impact on our direct patient care services and allows us to preserve the substantial quality and patient safety gains that we have made in recent years.
Nonetheless, these actions have serious consequences for the employees affected, will cause anguish within our organization and will strain important relationships that we have forged over the years, especially with our union partners. Layoffs of central office staff, as well as construction and plant maintenance staff, have already occurred in recent months. And we closed five small clinics last month, including the Glebe Child Health Clinic here in the Bronx. We have reached out to all the patients served by these clinics to link them to alternative care either at another HHC facility or with available community providers.
We deeply regret that some site closures and involuntary workforce reductions are necessary, especially at a time when alternative employment opportunities continue to be scarce. But, these are the tough choices we have to make if we are to remain faithful to our mission, protect our core patient care programs, and prevent the need for a more drastic reduction or elimination of services.
Yet, even after effectuating these painful measures, we still fall short of a balanced budget by hundreds of millions of dollars. Fortunately, our goal to stabilize HHC’s finances has been aided greatly by significant additional financial assistance — in the amount of $350 million — authorized by the Mayor and the City Council earlier this year. We are grateful for this critical financial support, especially at a time when the City is struggling with a budget deficit of its own and has very limited flexibility. Without this City support, however, we would not have had the ability to target and phase-in the planned reductions and restructuring over a four-year period to minimize disruption to our delivery of care.
The gap closing actions on our part – both those already taken and those planned – will ultimately address only about $600 million of our projected $1.2 billion budget deficit. However, in addition to the $350 million in immediate financial support, the City has included in its financial plan an average of almost $300 million annually over the next several years and, with the help of the State, it appears that these amounts will be matched by federal funds under the supplemental Medicaid program. We are awaiting final federal approval of this additional funding, and with it we will have achieved a more secure fiscal footing for the next several years. We are grateful for this strong support of our safety net mission from all three levels of government.
Turning to a brighter note about the past year, we finally saw the enactment of comprehensive healthcare reform. As a result, important insurance reforms are already taking place, allowing children to remain on their parents’ insurance coverage up to the age of 26 and giving patients with pre-existing conditions more affordable insurance options.
But most of the important provisions of the new health reform legislation begin in 2014 and it is projected that more than one million uninsured residents of New York State may become insured, either through an expanded Medicaid program or through new insurance options that will be made more affordable through federal subsidies.
Equally important, the new health reform legislation provides funding opportunities for healthcare systems that are working to be more accountable for improving the health of their communities through comprehensive primary care, better coordination of care, and more effective chronic disease management. Such “accountable care organizations” may elect to work out arrangements with the federal government and the state to be reimbursed in ways that better support an activist approach to promoting health and preventing unnecessary hospital admissions. Of course, our public hospitals and health centers here in the Bronx and across the City have invested heavily in very comprehensive primary care services, including smoking cessation services, routine HIV testing, and the use of advanced information technology tools to help patients better manage their asthma, diabetes, hypertension and depression.
A foundation to becoming a recognized “accountable care organization” is to first be certified as delivering primary care as a “patient-centered medical home”. Every one of our primary care sites across HHC will be applying for certification as a “patient-centered medical home” by the end of this year. I am delighted that Lincoln Hospital, and Belvis and Morrisania D&TCs have already received their formal designations as “patient-centered medical homes”. Not only does the medical home designation establish that we are delivering primary care in the way that is most calculated to improve the health of our patients, but achieving this designation for all of our primary care sites will increase our Medicaid reimbursement by roughly $15 million annually.
We are pursuing opportunities under the new health reform legislation to capture additional federal funding to further promote our prevention and early screening efforts and to better manage the health of patients with multiple chronic disease, including mental illness and/or chemical dependency. It is gratifying that the federal government is finally looking to change the reimbursement system to recognize the value of, and pay for, the health promotion activities that can lower long term healthcare costs and that have been a central focus of our work in recent years.
And despite the turmoil of health reform and the ongoing fiscal challenges, there are some things that remain constant. For example, Lincoln — a hospital with especially deep connections to its community — has focused aggressively on the disproportionately high incidence of cancer in the South Bronx.
This year, Lincoln’s Breast Imaging Center underwent a major modernization, and now offers a larger, centralized location designed to offer the full spectrum of preventive care and diagnostic testing while maximizing patient privacy and comfort. In its first year of operation, almost 10,000 mammograms were performed at the Breast Imaging Center. In September, the American College of Radiology designated Lincoln as a Breast Imaging Center of Excellence.
Also in the past year, the Commission on Cancer bestowed its Outstanding Achievement Award on Lincoln’s Cancer Center, recognizing its excellence in providing quality care to cancer patients. Only 18 percent of more than 430 cancer programs surveyed in 2009 received this honor.
Over the past 5 years, our system-wide HIV Testing Expansion Initiative has enabled us to steadily increase the number of patients tested for HIV as part of routine care, doubling from 92,000 tests in FY2006 to almost 190,000 in FY2010. This means that many more patients now know their HIV status and those that test positive for HIV can linked to care earlier, producing better outcomes.
Our Bronx facilities tested almost 60,000 individuals in FY2010, in part because Jacobi’s innovative program, Project BRIEF, enables providers to administer rapid HIV screenings in non-traditional settings like the Emergency Department and Urgent Care areas. The program received the 2009 NOVA Award from the American Hospital Association.
In other positive news, several important capital improvements have been completed here in the Bronx in the last year, including a $3.7 million renovation of the Oncology and Infusion Services suites at Jacobi and $4.1 million in renovations to the Labor and Delivery/Maternity Unit and the Women’s Imaging Center at Lincoln. Another $91 million worth of projects are expected to be completed at our Bronx facilities in FY2011.
And we have just completed construction of our new Institute for Medical Simulation and Advanced Learning housed on the Jacobi Hospital campus. The Institute will use state-of-the-art computerized simulation equipment and other techniques to focus on training our clinical teams from across our system to improve their collaboration and communication during high stress, complicated emergency scenarios, when every minute counts and cohesive teamwork can make a life or death difference. This focus on training all clinical staff to increase their ability to function as high performance teams is the next major chapter of our patient safety journey. All New Yorkers can be proud of the patient safety advances that have been achieved across our system over the last five years – and the data reflecting those achievements, including a dramatic reduction in hospital-acquired infections, are available on our website. The public can also view on our website a special four-part multi-media series, including video, highlighting our patient safety accomplishments over the last several years. It can be accessed by clicking on the flashing icon entitled “Believing” on our home page, www.nychhc.org/hhc.
Having begun my remarks with a focus on our financial challenges, let me conclude by returning to them. Although we are implementing a cost-containment and restructuring plan that addresses our immediate financial crisis, we are facing a future where there will be a relentless attempt to reduce the spiraling costs of healthcare services, especially those such as Medicaid that are subsidized by taxpayers.
Our new governor will soon assume office to face a projected $9 billion state budget deficit for the coming year. Because Medicaid is the second-largest part of the state budget — after education – we can be sure that there will be continuing pressure to reduce the Medicaid budget with further rate cuts possible. In addition, because the City continues to face its own multi-billion dollar deficits, we cannot expect our city government to make up for further state cuts.
All of this underscores the importance of our pursuing a methodical ongoing approach to continuously making our hospitals, nursing homes and health centers as cost-efficient as possible. Over the last four years, we have been working on training our staff how to do this using an approach that has been very successful in other industries. Others call this approach LEAN, but we have adapted it to our own use and we call our version Breakthrough.
Breakthrough is a highly effective method of engaging all levels of staff to identify inefficiency and waste and to help develop sustainable solutions to improve the work processes that they know best. Breakthrough helps to improve quality by standardizing work and by eliminating effort that does not add value for the patient. It is also a very effective way of developing our workforce by empowering staff at all levels to identify improvements that they agree should be made and then to support them in working together to make those changes.
Since we began to use Breakthrough in 2007, more than 2,500 employees have participated in more than 500 Rapid Improvement Events (RIEs). These RIEs are week-long, intensive working sessions during which a multi-disciplinary team assesses how something is currently done, determines what the ideal process should be, and maps out how to get from the current way work is done to the ideal way it should be done. We estimate that Breakthrough has yielded about $110 million thus far in additional revenue and reduced expenses, most of which is already included in our $600 million four-year plan.
Jacobi and NCB were early adopters of Breakthrough and have begun to master the methodology to increase productivity, streamline operations, and deepen staff satisfaction, while also generating at least $5.2 million thus far in savings and new revenue. Lincoln has also begun its Breakthrough journey this year, concentrating on making its Emergency Department and Operating Rooms more efficient.
We believe that the effective use of Breakthrough across our large system leverages all of the talent and experience of our committed workforce and can help us keep ahead of the continuing demands to slow the rapid increase of healthcare costs, without resorting to more painful cuts to services or personnel.
Jacobi, Lincoln, North Central Bronx, Morrisania, and Segundo Ruiz Belvis all excelled this year, stepping up to meet challenges and maintain a standard of care that rivals that of any healthcare system in our city. I am proud that these facilities and their dedicated staff members so effectively represent our public system’s commitment to our patients and our communities.
But, even as I applaud our work in the Bronx, allow me to again sound this note of concern: the challenges we face are far from over and are likely to increase. For this reason, it is incumbent upon us to work together to advocate vigorously to ensure HHC’s ability to carry out its noble mission now and in the future.
Thank you for your attention and I now will turn the program over to Mr. Russo. I look forward to hearing your comments.