Fiscal Year 2017: Executive Budget Hearing | NYC Health + Hospitals

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Fiscal Year 2017: Executive Budget Hearing

Tuesday, May 10, 2016



Good morning Chairpersons Cohen, Ferreras-Copeland, Johnson and Committee members, I am Dr. Ram Raju, President of NYC Health + Hospitals. I am joined this morning by Mr. P.V. Anantharam, our Senior Vice President for Finance, Mr. John Jurenko, our Vice President for Intergovernmental Relations and Planning and the senior members of my team.

Thank you for the opportunity to discuss the Fiscal Year (FY) 2017 Executive Budget.

Introduction/ essentiality

I have testified at several council hearings over the past 2 years, and each time I have made the point that the public hospital system is absolutely essential to the safety, well-being and success of New York City.

I begin my remarks today by restating the same point.

NYC Health + Hospitals is the city’s healthcare safety net. The public system provides a tremendous volume of high quality care to this city. It is our mission to provide that essential care for all New Yorkers, whether or not they have the ability to pay for that care.

We believe that for the greatest city in the world to function properly, there must be a system in place to care for its residents.

  • There must be a system to provide high quality trauma care
  • There must be a system to protect New Yorkers against the outbreak of special pathogens like Ebola, Zika, or whatever the next threat to health and safety may be
  • There must be a system to provide care that assists entire communities in coping with epidemics like obesity, diabetes and asthma

That system is NYC Health + Hospitals. And no other healthcare system in New York City is dedicated to carrying out this mission. But the mission costs money. Money that covers the costs of the safe, quality, culturally responsive care we provide. I believe it is a mistake to think of this money as simply expenses on the public system’s ledger. The value of a public healthcare system cannot only be measured by its balance sheet alone, but by the social value it provides.

Because, when we talk about expenses, what we are really talking about is demand being placed on the public hospital system:

  • Demand on our Emergency Departments
  • Demand on our pharmacies
  • Demand for Behavioral Health Services
  • Demand to carry out public health policies:
    • like managing asthma and other diseases
    • or preventing the spread of STDs
    • or meeting challenges posed by drugs like K2 when they hit our streets

When we talk about the expenses of the public system we are also talking about

  • Demand for the social services we provide, because we have an acute understanding of how social problems undermine the health of our patients and the care we provide them
  • Demand quantified by the 1.2 million patients we cared for last year, approximately one-third of whom were without health insurance

In the final analysis, the public hospital system meets this enormous demand and it must be reimbursed for the services we render in doing so.

  • Our doors need to be kept open
  • Our patients need to be cared for
  • Our employees need to receive the paychecks they earn each and every day with tremendous dedication and commitment

We are tremendously appreciative that Mayor de Blasio recognizes this, and has extended the City’s support to our operations while we redesign public healthcare to meet the challenges posed by a healthcare environment undergoing huge and constant change. We are grateful to this Council for its support. We are grateful to our sister agencies like HRA for doing what they can to assist us. We are very grateful to our labor partners for their backing. We are grateful for the continued strong support from our Community Advisory Board members, our elected officials, our community leaders, and all our stakeholders.

Urgent Transformation

But let me be clear. Our gratitude in no way diminishes the sense of urgency we bring to the task of converting financial support into the long term sustainability of this organization. We understand that the support we have received from the Mayor and this Council does not alleviate our need to change. The status quo simply is not an option.

We strongly believe that financial prudence and mission can, and must co-exist. Which is why we view city funding simply as bridge to our necessary transformation. Transformation that meets the challenges wrought by:

  • the Affordable Care Act’s exclusion of the undocumented
  • the need to strengthen primary care and preventive services and reduce unnecessary hospitalizations

As well as:

  • rapid technological advances
  • shifts from volume based payments to a system that pays for value

And even more changes involving:

  • newly empowered healthcare consumers
  • Federal regulatory mandates
  • a gathering wave of hospital consolidations
  • Seismic changes in health care insurance leading to greater competition in the health care marketplace

We must adjust to this constantly evolving healthcare environment while continuing to serve as the largest provider of healthcare to New York’s uninsured population at a time when state and federal funding that has historically covered some of the cost of this care has been slashed. All of this means that the public system, like hospital systems everywhere, must transform, in order to survive.

Strategic Plan

NYC Health + Hospitals strategic plan evolved over the past decade, starting with the Road Ahead program that focused on cost reduction, and then the Vision 2020 plan that focused on growth and efficiency, and now the Mayor’s report that charts transformation of our workforce and better utilization of underutilized space on our campuses to meet our patients’ great need for social services and stable housing. Combined, these strategies comprise a blueprint that we must undertake so that New Yorkers continue to have access to the healthcare services that they need now – and they will need in the future.

A great deal of work has already occurred to reposition and strengthen the public system. We are proud that some of that work is already bearing fruit:

  • By expanding hours—staying open longer at night and on weekends, we have shown significant reductions in wait times for pediatric, primary care and behavioral health appointments. The accompanying chart will show you the progress we have made.
  • We have made a very substantial investment by implementing a state-of-the-art patient electronic medical record system that will be an indispensable building block to providing excellent patient care.
  • And we are becoming leaner, we are down by 735 full time equivalent positions over the past 6 months.

But a lot more needs to be done: Our path forward involves creating more access and identifying greater efficiencies so that we can provide better care where it’s needed and directing resources where communities need them most.

It’s a path that simultaneously involves reduction, growth and transformation. Because all three of these elements are essential. We’ve re-organized our system around three principal lines of business: outpatient care; inpatient care; and post-acute care. Our previous structure, appropriate for a different time but outmoded now, focused on networks of care across these three lines of service.

Going forward, the need to demonstrate quality and to manage expenses will require a consistency that spans our system no matter the borough, no matter the hospital, no matter the clinic. There are significant clinical, outcome, and operational benefits to standardizing care and work processes across sites of care, and our new structure will bring the discipline necessary to compete, to grow, and to serve our patients with dignity and respect.

And let me emphasize that this is what national best practices looks like. It’s about moving care to where patients are, in the communities, not just in the hospitals. It’s about partnering with other organizations across the continuum of care to enhance this more effective community-based care.

With the release of the transformation plan to place the public hospital system on sounder financial footing, we are moving to develop multiple initiatives with measurable targets—putting meat on the bone— to implement these 4 goals.

  • Provide sustainable coverage and access to care for the uninsured
  • Expand community based services with integrated supports that address the social determinants of health
  • Transform Health + Hospitals into a higher performing health system; and
  • Restructure payments and build partnerships to support the health outcomes of communities

Financial Plan

Again, we thank the Mayor for the considerable new support provided including the previously announced $337 million funding commitment for FY 16 and an additional just added $160 million which increases to $180 million each year thereafter. We expect to close this year with a small cash balance of $119 million. For FY 2017, our operating expenses are projected to be $7.8 billion and revenue is projected to be $7 billion. This leaves a gap that will need to be addressed through our transformation initiatives.

Which means we must do more to transform and bring operating expenses more in line with revenue projections. We look forward to developing and pursuing different strategies with the guidance of a Blue Ribbon Panel of experts, the Commission on Health Care for our Neighborhoods.

I want to emphasize two major points here – the Mayor’s Transformation recommendations, and the implementation strategies that will follow, do not include layoffs or hospital closures.

In fact, with the additional investments from the City, we will be expanding access to care. However, the plan will require that we also rethink the role of hospitals because in the future they will no longer be the single hub of care. Instead, hospitals will be one component of an integrated healthcare delivery system. This means continuing our work to expand ambulatory care capacity, and to find more efficiencies within our system, as well as developing innovative care management programs to keep patients healthier and out of hospitals.

DSH funding

Among our goals, one important item that I hope we will work on together, is the distribution by the State, of federal Disproportionate Share Hospital (DSH) funding. DSH funding is critical to supporting our mission and allowing us to serve low-income and uninsured patients. Under federal law, DSH funds are going to be reduced starting October 1st, 2017 unless Congress acts to delay the scheduled cuts. We are advocating with members of New York City’s Congressional delegation to postpone reductions in DSH funding and ask that you do so also.

We strongly believe that New York State’s policy should be changed so that DSH funds are more closely targeted to safety net and public hospitals that serve disproportionately high numbers of low-income and uninsured patients. We are supportive of legislation introduced by Assembly Member Richard Gottfried and Senator Kemp Hannon on this topic.

We are concerned that without changes to the present methodology of distribution of DSH funds, we will absorb all of the initial federal DSH cuts. New York must adjust its DSH funding distribution formula prior to enactment of federal cuts. Over the past year, we have been advocating for this change with a coalition of our union partners and health advocates and would also ask the Council to consider lending their support to effort.

Care for the uninsured

NYC Health + Hospital is very supportive of the Mayor’s ActionHealthNYC initiative to improve health care access for the city’s immigrant population. It will offer low or no-cost coordinated primary and specialty health care to enrollees who are immigrant New Yorkers and do not qualify for health insurance. We are happy to partner with the Mayor’s Office of Immigrant Affairs on this endeavor.

In addition to looming DSH cuts, federal regulatory policy is shifting from a fee-for-service system to a managed care system with capped payments. This curtails our access to supplemental federal funds to cover the true costs of care. As the largest provider of care for Medicaid patients in New York City, the impact of these changes on Health + Hospitals is an order of magnitude greater than other health care providers. One of the strategies that we will be pursuing is to seek new federal funding that delivers coordinated care to uninsured New Yorkers.

Insurance coverage

For uninsured New Yorkers who are eligible for health insurance but not enrolled, another strategy calls for comprehensive outreach citywide to make New Yorkers aware of the availability of health insurance options and enroll them. We will partner with the Human Resources Administration on this effort. This effort will both lead to greater financial security for Health + Hospitals and that of a newly insured patient who may face a major illness.

Our health plan, MetroPlus, is a critical partner in our strategic plans. Over the past year, it has worked to increase membership, which is now at 493,000. This number will grow as MetroPlus has taken many steps over the past several months to expand marketing, advertising, member retention, increased member engagement and provider satisfaction. Since MetroPlus is now back to being the most affordable option in New York’s healthcare marketplace, more individuals will choose their plan.

New York State created a new option for low income New Yorkers who earn just above the Medicaid threshold but are still under 200% of the federal poverty limit. MetroPlus has done extremely well with nearly 45,000 members now enrolled in the new Essential Plan. In January we received state approval to expand Metro Plus availability to all City employees. We are working with the City and our union partners to promote this option. Also in January we received state approval to expand Metro Plus to include Staten Island. MetroPlus staff are also now working with our Correctional Health Services division at the visitor’s center on Rikers Island to educate visitors about health insurance options.

Correctional Health

As I stated at our Preliminary Budget Hearing in March, Health + Hospitals has created a new division of Correctional Health Services (CHS), employing approximately 1,700 staff members in twelve jails citywide. We are proud that during our transition period last fall, there were no lapses in coverage and no disruptions in patient care.

In the short time that we have operated CHS, we have already begun reshaping the framework to support what we hope will be an improvement in the quality of care for patients. We are leveraging existing programs to increase continuity of care upon release.

Looking ahead, we will be able to provide enhanced care in the City’s jails for some of the most vulnerable patients. The Program for Accelerated Clinical Effectiveness (PACE), has helped increase medication adherence while also reducing the rate of injuries among this population. Health + Hospitals will expand on this model by opening two enhanced clinical service units per year through 2020.

Additionally, we will expand our pilot of the enhanced pre-arraignment medical screening to all tours at the Manhattan central booking area. These screenings allow for early identification of high risk patients during intake, conserve resources by addressing certain medical needs on-site, and offer a unique opportunity to leverage health information hand-in-hand with criminal justice information and—with patient consent—promote alternatives to detention.

CHS will also provide additional on-island hepatitis C treatment to inmates who have tested positive for the disease or are continuing treatment initiated in the community by expanding the provision of a drug regimen that cures Hepatitis C. Access to care within the jails will be improved and made more efficient through a telehealth program and the creation of 12 new mini-clinics, both of which will bring providers closer to where patients already are.

Behavioral Health

Consistency of care is also demonstrated by our role as a key partner in ThriveNYC, the “mental health roadmap” launched by Mayor de Blasio and First Lady Chirlane McCray to create a more responsive and holistic system to support the mental well-being of New Yorkers. Our health system has a significant leadership role in advancing the roadmap’s goal of achieving universal screening and connection to treatment for maternal depression within two years. We will screen for depression in pregnant women from the early prenatal stages of pregnancy through postpartum care.

Capital Work and Sandy Remediation

Increasing access to primary and specialty care in neighborhoods that need it the most is another strategy contained in the recommendations. More than $100 million in new capital funding was included in the four-year plan for the expansion of primary care services in underserved neighborhoods. This new funding adds to support added last year through the Mayor’s Caring Neighborhoods Initiatives program for expansions at six existing sites. Next year, we will go beyond expanding services at existing locations by opening new sites in underserved neighborhoods. This initiative will add more than 200,000 new primary care slots, which will help to improve access to care.

For other capital projects, work has been completed or is underway on several major projects:

  • Design work is proceeding on the expansion and renovation of Elmhurst Hospital’s Emergency Department. Construction is scheduled to begin January 2017. I want to thank Council Members Ferreras, Dromm and Borough President Melinda Katz for providing capital funding.
  • The Roberto Clemente Center which provides behavioral health services and is part of Gouverneur Healthcare Services in lower Manhattan is about to undertake extensive renovations that are expected to take 3 months. I’d like to thank Council Member Mendez and Manhattan Borough President Gale Brewer for supporting this project.
  • Design work is now underway for our new ambulatory care center on Staten Island at 155 Vanderbilt Avenue. Construction at this site will be complete in September 2017. I’d like to thank Council Member Rose for supporting this project.

Lastly, to reiterate our testimony in February before the Health Committee and the Committee on Recovery and Resiliency on the status of our projects to rectify the damage caused by Hurricane Sandy. NYC Health + Hospitals has secured more than $1.8 billion in funding from the Federal Emergency Management Agency (FEMA) for projects designed to protect our facilities from damage in the event of future storms and to cover the costs of repairs that have been made. We have been working closely with our partners in the Mayor’s Office of Recovery and Resiliency and the New York City Economic Development Corporation on these initiatives. The projects at Bellevue, Coler, Coney Island and Metropolitan will succeed and like the Epic project, these projects will come in on time and on budget.

Social Determinants of Health

Over the next year Health + Hospitals will continue to emphasize the provision of social services, as well as healthcare at our facilities across the city. We are reaching beyond the walls of our facilities to address social determinants that undermine our patients’ health, like the lack of availability of nutritious food in communities we serve, or the difficulty some patients have in accessing government benefits. These conditions can create tremendous barriers to care.

That’s why we are building new partnerships with other social service providers across the spectrum. We are applying our resources, talents and unique knowledge of the communities we serve in order to: make legal services available to our patients right in our hospitals, and encourage green markets in the neighborhoods we serve, among many other initiatives.


We know that financial sustainability is essential to our ability to continue carrying out our mission. It must be determined by considering the care this system provides for 1.2 million patients who come through its doors when they are sick or injured. Or by the assistance the most vulnerable in our city receive every day in every borough, when social conditions threaten to undermine their health and well-being.

Moving forward, we recognize that for a system as large as ours to transform we will need to recalibrate, to shift tactics, and to place new priorities, as we proceed to our ultimate destination of a cost-effective, quality driven system. Ultimately this flexibility will help us prevail. And frankly, the consequences for the City of New York are simply too high for us not to prevail.

Because again, it bears repeating. The public hospital system is essential:

We are essential because, like no other healthcare delivery system, we go where people need healthcare, rather than only where there are patients who make up profitable service lines. We market our services to Mott Haven, rather than Larchmont. And to East New York, instead of to West Palm Beach.

We are essential because we are the safety net…the safety net

  • for the uninsured
  • for the mentally ill
  • for people suffering from substance abuse
  • for people who are recently incarcerated
  • for all the people who have fallen through the cracks of the social fabric in New York City

And you have our ironclad commitment that we will continue to do so.

This concludes my testimony. I now look forward to listening to your comments and answering your questions.