Good morning Chairpersons Cohen, Ferreras, Johnson and members of the respective Committees. I am Ramanathan Raju, M.D., President of the New York City Health and Hospitals Corporation (HHC). I am joined this morning by Marlene Zurack, HHC’s Senior Vice President and John Jurenko, HHC’s Senior Assistant Vice President. Thank you for the opportunity to testify before you today.
Since this is my first hearing before the Council as President, let me begin with my background and then review the priorities that we will be working on. I’m a surgeon by training with more than 30 years of healthcare experience in both the private and public sectors. Many of these years were spent here in New York City.
I served for several years as HHC’s Executive Vice President for Operations and also as HHC’s Chief Medical Officer. Prior to that I was the Chief Medical Officer and Chief Operating Officer at Coney Island Hospital. I have also worked in similar positions in Brooklyn at Lutheran Medical Center.
It is a great honor and privilege for me to return to HHC after being away for 2 ½ years to serve as the Chief Executive Officer of the Cook County Health and Hospitals System in Chicago. I enjoyed the work I did for Chicago’s public healthcare system, but the opportunity to be the President of the nation’s preeminent public hospital and healthcare system is a once in a lifetime chance that could not be passed up.
My time in Chicago deepened both my experience and commitment to the mission of public healthcare systems – to treat all patients, to treat them respectfully and to ensure that they always have access to healthcare…to leave no one behind. One of the things that I knew from working in New York, and my understanding was reinforced while I was working in Chicago, is that people need – and deserve – better access to high quality healthcare services. HHC proudly offers care to all New Yorkers from every borough – more than one million patients each year. We are the single largest municipal healthcare system in the country. Our role extends beyond that of the biggest safety net provider in New York City and we need to be seen more clearly in this light. My aim is that HHC is seen as the first choice for health care by all New Yorkers.
We are an essential part of New York City’s health care infrastructure. We are an integrated healthcare delivery system offering comprehensive high quality health, behavioral health, long term care and home care services with a wide variety of access points from small neighborhood centers to large acute care hospitals and long term care facilities. Our health plan, MetroPlus, is perennially ranked at the top by the New York State Department of Health in terms of quality and customer satisfaction. HHC is an industry leader in language access services and culturally competent care.
However we cannot rest on these laurels. HHC and other healthcare providers at all levels in New York City must do more. We must focus on reducing healthcare disparities while expanding access to care. Disparities unfortunately persist across racial, ethnic, language, and economic basis. They also exist along the basis of gender identity, age, sexual orientation, immigration status and for individuals with disabilities. All providers need to step up their efforts to be inclusionary rather than perpetuate care that is exclusionary. At the same time, we must expand access to care in the traditional sense of extending hours and capacity. And, we must also eliminate barriers that deter or make it difficult for people to consistently access the care they need.
I know that HHC cannot do any of this alone. I look forward to partnering with the Council, other elected officials at all levels, community representatives, healthcare advocates, our labor partners and healthcare providers throughout all five boroughs. For example, I am firmly committed to working with our Staten Island representatives to expand access to health services. I am open to your ideas and suggestions on how we can build on HHC’s accomplishments to improve the health of all New Yorkers.
There is no better time than now to act. The healthcare system is changing dramatically right before our eyes. HHC must continue to evolve and adapt to recent changes so that we can continue to provide excellent care to all NYC communities. The paradigm has shifted from a hospital-centric healthcare system to one in which the goals are focused on preventive care that keeps patients healthy thereby reducing the need for hospitalizations. We must seize on the opportunity to transform how we deliver care that is provided by the State’s recently approved Medicaid waiver.
As you may know, New York State received approval of their 1115 Medicaid waiver last month. The waiver is expected to bring in $8 billion in new Federal funding that will be distributed on a statewide basis over the next 5 years if performance targets are met on the whole by New York State. The majority of these dollars are to be mainly used to support delivery system reforms throughout the healthcare sector.
HHC will formally submit applications for Delivery System Reform Incentive Payment (DSRIP) program funds in mid-December. Last week, we sent the State a letter of intent that was required for all applicants who seek to become a Performing Provider System under the DSRIP program. We have already been informed that HHC has been approved as an Emerging Performing Provider System. In addition, we will be applying for Interim Access Assurance Funds which are designed to support public hospitals and non-public, safety net hospitals through next March. At this time, we do not know how much funding we will receive in IAAF funds or for the DSRIP projects.
It is most important to emphasize the waiver funds that we ultimately receive are not grant funds. Waiver funds will initially flow to support the creation of projects. Over time, funds will flow only after specific statewide performance thresholds are achieved. If performance targets are not met statewide, funds will be reduced accordingly. Collaboration and coordination will be critical to ensure success. HHC will be working with other providers over the next few months on our DSRIP project applications. We are still in the process of identifying potential partners and projects. Applications for DSRIP funds are due in mid-December. Initial program funds are expected to flow in April 2015.
Statewide, funding will largely be invested to improve access, care management and care coordination and ultimately to reduce avoidable inpatient and Emergency Room use. HHC has worked diligently over the last several years on these very same initiatives. Over the next several years, we will continue to pursue these goals by engaging with our patients to improve their health and taking the lead in changing the way healthcare is delivered to better manage healthcare spending.
While we work over the coming months with new partners on DSRIP projects, we will continue working with a familiar partner, MetroPlus, to engage new enrollees who gained coverage through the expansions under the Affordable Care Act. I am thrilled that more than 90,000 individuals chose MetroPlus as their health insurance plan through New York’s health insurance marketplace. MetroPlus’ success will be a primary means of HHC increasing market share and improving our financial health. The premiums MetroPlus receives for these newly insured individuals will generate increased net revenue for HHC that can be used to reinvest in service capacity. We would also seek for MetroPlus to be the insurer or choice for all New York City employees.
However, for all of our health plan’s success in enrolling more New Yorkers onto health insurance, there will continue to be hundreds of thousands of HHC uninsured patients who are undocumented individuals who will not benefit from the Affordable Care Act. HHC will continue to need funding to support the cost of serving these patients and to cover other shortfalls caused by inadequate reimbursement.
As our budget stands now, HHC’s total expenses in the FY 2015 Executive Budget are projected to be $6.9 billion and total revenue is projected to be $6.7 billion. This leaves us with a $200 million gap to close this year. Our out-year gaps continue to be uncomfortably large. In FY 16 our gap is projected to be $833 million. This grows to $1.36 billion in FY 18.
These gaps could increase if we do not achieve one hundred percent of our corrective actions plan. The plan includes the continuation of HHC’s restructuring and cost containment programs that are forecasted to achieve additional annual savings of between $82 million and $90 million. Most of these savings will be achieved by receipt of Federally Qualified Health Center status for HHC’s six Diagnostic & Treatment Centers, improved environmental service initiatives and lower pharmaceutical costs through the federal 340B drug program.
The Financial Plan also anticipates a new round of savings initiatives to achieve $200 million in FY 15 growing to $400 million by FY 18. These initiatives include the centralization of procurement, revenue enhancement projects and on-going performance improvement activities through HHC’s Breakthrough program.
Lastly, the Financial Plan also assumes an additional $400 million in gap closing savings from state & federal actions. We hope to attain this amount through DSRIP & IAAF funding.
We are continuing work to secure federal funding as a result of Hurricane Sandy. As you know, HHC suffered serious losses due the storm. We experienced nearly $250 million in losses due to the closures of Bellevue and Coney Island hospitals. On top of these losses, we need capital funding to offset the cost of repairs and spending to prevent future storm-related closures. We have submitted multiple applications to the Federal Emergency Management Agency (FEMA) for relief.
Specifically, we are seeking $137.5 million in reimbursement of emergency expenses incurred to restore operations as quickly as possible at Bellevue, Coney Island and Coler – our facilities most severely impacted by Hurricane Sandy. To date, we have received $65 million in FEMA reimbursement through the City, as well as an additional $95 million in capital funds from the City for storm related projects. We have made substantial progress with FEMA to resolve the outstanding issues that have impeded our receipt of these funds which were intended for emergency stabilization and the restoration of services.
In addition, we are seeking funding under the FEMA 406 Hazard Mitigation Program to improve the resiliency of our facilities that are most at risk of future storms. Specifically, we are seeking:
Before I conclude, I want to note that our capital budget remains largely the same since the Preliminary hearing. Work was recently completed on several capital projects. These include new Emergency Departments at both Harlem Hospital in Manhattan and Lincoln Medical and Mental Health Center in the Bronx. At Elmhurst Hospital in Queens, we opened a new Women’s Health Pavilion which expands access to prenatal care and comprehensive obstetrical services.
In addition, last year the City Council appropriated $2.5 million in Capital funding for Fiscal Year 2014 and another $2.5 million in Fiscal Year 2015 to improve access to services for women with disabilities at HHC facilities. These funds will be used to make renovations and purchase equipment to make exam rooms and bathrooms optimally accessible for persons with disabilities in our hospitals, diagnostic and treatment centers and long term care facilities.
The first phase of our preliminary design work including cost estimates for ten projects at eight facilities is nearly done. Once the budgets are finalized, work will begin at some of these sites beginning this fall. We anticipate construction will be complete by the end of the calendar year. If the $2.5 million in capital funding for Fiscal Year 2015 is re-appropriated, we will identify similar projects at other facilities where we can improve access for persons with disabilities.
We are very appreciative of the Council for this investment. In particular I would like to thank Council Member Maria Del Carmen Arroyo and Council Member Julissa Ferreras for their leadership and dedication to ensure that women with disabilities receive health care in respectful and appropriate settings.
This concludes my written testimony. I now look forward to listening to your comments and answering your questions.