Fiscal Year 2018: Executive Budget Hearing | NYC Health + Hospitals

Fiscal Year 2018: Executive Budget Hearing

Stan Brezenoff, Interim President and Chief Executive Officer
NYC Health + Hospitals
Tuesday, May 9, 2017

NEW YORK CITY COUNCIL FISCAL YEAR 2018 EXECUTIVE BUDGET HEARING

COMMITTEE ON FINANCE,
COMMITTEE ON HEALTH &
COMMITTEE ON MENTAL HEALTH, DEVELOPMENTAL DISABILITY, ALCOHOLISM, SUBSTANCE ABUSE AND DISABILITY SERVICES

Good afternoon Chairpersons Ferreras-Copeland, Johnson, and Cohen, and members of the Health, Finance, and Mental Health, Developmental Disabilities, Alcoholism, Substance Abuse, & Disability Services Committees. I am Stan Brezenoff, Interim President and Chief Executive Officer of the NYC Health + Hospitals (“Health + Hospitals”). I am joined by P.V. Anantharam, our Chief Financial Officer, Machelle Allen, MD, our Chief Medical Officer, and John Jurenko, our Vice President for Government & Community Relations; as well as leadership from Health + Hospitals. Thank you for the opportunity to share our thoughts on the FY18 Executive Budget as well as other programmatic initiatives.

Health + Hospitals is the safety net provider for all New Yorkers, serving nearly 1.2 million people, of which more than 425,000 are uninsured. In 2016, there were 4.5 million outpatient visits, and approximately 1.2 million emergency room visits, which is approximately 30 percent of the City’s emergency department visits. There were 195,000 patient discharges, including 18,000 newborn deliveries. Our commitment to the patients and communities we serve is unwavering, and we will continue to uphold our mission of providing high quality, affordable, culturally responsive health care to all regardless of their ability to pay or immigration status.

But, the stark reality is that we are facing a fiscal cliff. We have a large budget gap – $1.1 billion in FY18, which is increasing to $1.9 billion by FY21. This is brought on by higher costs and inefficiencies in our system, and reimbursement policy changes at the federal and state levels that have yielded severe shortfalls associated with being the city’s single largest provider of care to Medicaid and uninsured patients.

We have busy emergency departments – some of the busiest in the country – with low admission rates, which indicate patient needs could be better addressed in lower-cost, lower acuity settings. We also have excess inpatient bed capacity, as do other hospitals across New York City, reflecting the success of strategies to better serve patients in their communities before intensive inpatient care is needed. And as always, we need greater investment in outpatient, post-acute care, and integrated social services. Hence the need to transform into a high-performing, competitive, and financially sustainable community based system.

As you know, we have developed an ambitious plan to address these dual challenges of financial stress and the imperative of better serving our communities. The transformation plan – a combination of savings initiatives, revenue enhancements, and targeted investments in the long term transformation of our system – will meet its financial targets this fiscal year. Next year the plan will be more challenging, as some of our expectations around enhanced federal support will probably not be met. We continue to innovate and look for new ways to enhance the effectiveness of our services while meeting the stiff financial challenges in front of us.

Finance – FY18 Gap Closing Initiatives

While we are transforming public health care delivery in response to structural changes to the national and local health care landscape, especially in the midst of our financial crisis, we are also making strategic changes to meet our budget gap-closing targets. We are taking the opportunity where we can, at the managerial level to adopt industry standard organizational models and reduce the layers of management within our system to bring it more in line with other health care organizations. This necessary restructuring will help us function more efficiently and yield savings to address our serious financial challenges, and will have no impact on services or patient care, quality or safety.

Six weeks ago, when I testified before Chairman Johnson and members of the Health Committee, I outlined how we will close our $779 million gap for FY17, and will end the year with a cash balance of $100 million and meet our obligations with the City. I am pleased to report that we will remain on track.

In FY18, I am confident that we are on a path to greater financial solvency, and will build a stronger, agile, and more stable organization. We will aggressively pursue opportunities to close the projected $1.1 billion gap by pursuing $820 million in revenue generating initiatives, and $387 million in expense reductions. This will be accomplished by the following:

Revenue

  • Implementing Medicaid Waiver Programs ($483 million)
  • Pursuing federal and state charity care funding ($85 million)
  • Implementing health insurance initiatives ($252 million)

Expense

  • Implementing Supply Chain and Care Management Initiatives ($137 million)
  • Restructuring and Personnel Initiatives ($250 million)

Revenue Enhancing Initiatives Highlights:

Medicaid Waiver Programs ($483 million): The Medicaid waiver funds are primarily in programs that are ongoing, such as the NYS Delivery System Reform Incentive Payment (DSRIP) program, or that have been implemented this year, such as Value Based Payment Quality Incentive Program (VBP QIP), and the Care Restructuring Enhancement Pilots (CREP). We anticipate these programs to continue, and we will continue to work in partnership with both the State and Federal governments to realize additional waiver revenue opportunities.

Federal and State Charity Care ($85 million): Health + Hospitals will seek approval to avert the loss of Disproportionate Share Hospital (DSH) funding using an existing 1115 waiver provision to convert a portion of authorized Federal Supplemental Medicaid funds to DSRIP performance based payments; and we will work with stakeholders around the state to ensure an equitable distribution of any DSH cuts.

Health Insurance Initiatives ($252 million): Health + Hospitals will pursue many efforts to improve our revenue collection, including improved documentation and coding, and denials management. We will receive additional revenue from enhanced Medicaid and Medicare rates through the establishments of Federally-Qualified Health Centers (FQHCs). MetroPlus is expected to deliver significant additional revenue through care management of its population, achieving high quality scores that result in bonus funds, and increasing membership both generating additional enrollments and decreasing disenrollments. Lastly, through the implementation of new and additional outreach and enrollment strategies, we will ensure that all uninsured patients are evaluated for existing subsidized health care programs.

Cost Reduction Initiative Highlights:

Supply Chain and Care Management Initiatives ($137 million): Savings will be achieved through product standardization, contract negotiations, and leveraging corporate wide volumes to achieve better pricing. In addition, the 340B contract pharmacy program will be expanded, and Health + Hospitals will expand its care management program to improve patient care, thereby controlling costs.

Restructuring and Personnel Initiatives ($250 million):Health + Hospitals is embarking on an organizational restructuring that is based on industry best practices, to create a more efficient and financially sustainable management structure to direct resources where we need them the most – at the front line of patient care. This effort will assist us in functioning more efficiently and yield savings to address our serious financial challenges.

We are pleased to report positive, but modest news out of Albany. The final version of the State FY 2017-18 budget provides $20 million gross over two years in new funding for enhanced safety net hospitals serving a high share of Medicaid and uninsured individuals. Although the budget does not outline a methodology for funding distribution, based on an internal analysis, Health + Hospitals anticipates receiving funding on qualifying hospitals’ Medicaid and uninsured discharges. We estimate that we could be eligible for 40-50% of the funds. This represents an important first step in recognizing the challenges facing safety net hospitals. We are thankful to members of the New York State Legislature for this critical funding, our labor and community partners, and the members of the City Council for weighing in on our behalf.

While these initiatives and new State funding are promising in bringing much needed financial and operational relief, there still remains budgetary actions emanating out of Washington that will have a negative impact on the system. As you know, Washington continues to roil the nation’s healthcare landscape with a revived attempt to repeal and replace the Affordable Care Act (ACA) with the Republican-sponsored American Health Care Act (AHCA). We will continue to oppose the AHCA, and are working closely with the Mayor’s Office, health care associations, our labor partners, and New York’s congressional delegation to keep the ACA the law of the land.

In light of these uncertain times, I would like to remind members of the Committees that Health + Hospitals remains committed to the health of all our patients, regardless of their immigration status. Over the last several months, we’ve implemented the following programs to protect our patients.

  • Immigrant Forums: Health + Hospitals, along with the Mayor’s Office of Immigrant Affairs, the New York Immigration Coalition, and the New York Legal Assistance Group (NYLAG) has held – and is continuing to hold – a series of forums at our facilities aimed at informing our patients of their rights, and Health + Hospitals’ commitment to protecting patient privacy (and not inquiring about immigration status). We held four of these forums in March 2017, and throughout the months of April and May, we will host three additional forums.
  • Legal Strategies: We continue to pursue legal strategies with the City and State to oppose the travel ban and the damaging effect it would have on immigrant communities and our physician workforce.
  • Educating Our Employees: We are educating our staff on helping immigrant patients in an uncertain climate, and have communicated with all our staff to assuage their concerns and direct them to Health + Hospitals’ Office for Diversity and Inclusion with any questions.
  • Open Letter to Patients: In December 2016, Health + Hospitals, along with the Mayor’s Office of Immigrant Affairs, posted an “Open Letter to Patients” reaffirming Health + Hospitals’ and the City’s commitment to serving the immigrant community, and protecting the privacy rights of all those we serve.

We also share the Council’s concerns about immigration actions taking place at our facilities involving patients and employees. This is consistent with the ICE Sensitive Locations Policy that states that enforcement actions at locations such as hospitals, places of worship, and schools, generally should be avoided. Health + Hospitals will exercise its right to review and challenge any document that ICE produces that seeks to grant access to non-public areas or patient information.

Update on Programmatic Initiatives

Delivery System Reform Incentive Payment Program (DSRIP) – OneCity Health

OneCity Health is Health + Hospitals’ DSRIP performing provider system (PPS) that is leading our system in the State’s triple aim of improving care, improving health, and lowering health care costs, by building a population health and care management infrastructure to better manage the access, outcomes, and utilization of our patients. These efforts are preparing us to shift from volume-based payments to value-based reimbursement from the federal and state governments. It is also in keeping with the recommendations made in the One New York Health Care for Our Neighborhoods report issued by the Mayor last year, and the recently released Commission on Health Care for our Neighborhoods issue brief on building clinical partnerships.

By way of background, the DSRIP program is not a grant program; there is performance risk associated with achieving certain health outcome targets as set by the New York State Department of Health. Because of this risk, on the basis of analysis provided to all PPSs from the Greater New York Hospital Association, we have to expect that our earnings may be lower than the maximum valuation of $1.2 billion. The partnership may earn above that amount by accelerating the care management efforts to care for high-risk, high-needs patients with high inpatient utilization and by investing in staffing and other infrastructure needed to improve primary care access and frontline-level population health management and that has to be our priority.

OneCity Health Highlights

OneCity Health has several charges, including establishing more effective partnerships with organizations that care for the same patients, including other health systems and community based organizations; designing and implementing new interventions in the clinical, emergency department and inpatient setting, intended to reduce unnecessary utilization; developing and advancing models intended to better integrate primary care and behavioral health, both at Health + Hospitals and in community clinics; and supporting capacity building to help sustain organizations important to meeting social needs, including community based organizations. These goals are being implemented through many initiatives, including but not limited to:

Centralized Care Management: In our hospitals, we are supporting high-risk patients for 30 days following discharge through the Care Transitions program. Transition Management Teams are now in five Health + Hospital facilities, with five more beginning soon. Over 900 patients have been followed by the team, who meet the patient while in the inpatient setting and support them in the community. Additionally, in our primary care sites we are expanding the Health Home program by providing care management services to all appropriate patients who have complex medical and social needs. The primary care provider can make referrals to embedded care coordinators provided by OneCity Health’s Health Home lead agencies. The program launched at six Health + Hospital sites and four OneCity Health DSRIP community partner primary care practices – 100 referrals have been made in this pilot phase. In 2014, six Health + Hospitals facilities received a 3-year grant from the Centers for Medicare & Medicaid Services’ (CMS) Health Care Innovation Awards Program to use a multidisciplinary team to assess patients who present in the emergency room with ambulatory care sensitive conditions, create a plan that would avoid unnecessary hospitalizations, and provide support after discharge. OneCity Health is transitioning from the grant program at these six sites, and will provide a uniform approach to screening and enrolling into care management for all appropriate patients who are treated and released.

Outpatient-clinic based improvements: At five of our Health + Hospital sites and five of our community partner sites, we are beginning to integrate behavioral health services into primary care appointments to more effectively screen and treat patients for depression, and provide treatment for medical needs common among patients with severe behavioral health needs. We are assisting 52 primary care partner sites to achieve Patient-Centered Medical Home (PCMH) recognition to ensure a larger network of high-quality primary care services, and we are integrating palliative care into primary care appointments to better manage patients’ pain or other distressing symptoms. Lastly, we are referring pediatric patients with frequent asthma exacerbations to community health workers who complete an asthma assessment, and conduct home visits to evaluate the environment for asthma “triggers.”

Community Outreach and Linkages to Services: We have contracted with 38 community (non-hospital) partners across four boroughs to connect individuals to insurance and primary care – to date, they have connected approximately 2,500 people to primary care and approximately 3,200 individuals to insurance. These efforts are in alignment with Health + Hospitals’ efforts to enroll all eligible uninsured patients. And, 55 OneCity Health partners, including five Health + Hospitals sites, are currently completing cultural competence and health literacy assessments to better understand opportunities for improvement.

Infrastructure: We are implementing universal screening and identification of social supports needs using tools in our electronic health record or care management platform; and training and engagement of care management and social work staff, including access to the Mayor’s Office of Operation’s Worker Connect portal. This will allow social workers to better identify the scope of patients’ needs and current services.

Social Service Integration: We are expanding access to social services of known high need patients, including partnering with New York Legal Assistance Group (NYLAG), which is a nonprofit organization dedicated to providing free legal services in civil law matters to low-income New Yorkers, as well as addressing food insecurity through SNAP enrollers and WIC outreach to Health + Hospitals facilities.

Last year, we transitioned from the system’s old organizational structure based on geographic networks centered around hospitals to three service lines focused on patient care – hospitals, ambulatory care, and post-acute care. Here are some highlights.

Administrative Structure

  • Hospitals: We are in the process of developing a system-wide clinical service plan that will guide us in appropriately scaling our inpatient service capacity to meet the needs of the communities we serve, and redesign the distribution of clinical services across facilities to better manage the access, outcomes, and utilization by our patients. The CEO for each hospital will be held accountable for the performance of their hospital, based on a hospital-specific scorecard.

  • Ambulatory Care: In coordination with inpatient, post-acute, and OneCity Health initiatives across the system, on the outpatient side we are focused on improvements to meet the needs of the community and grow our patient base by increasing access, and improving quality of care. And, in keeping with the Mayor’s Caring Neighborhoods initiative, our primary care expansion is well underway. Of the seven identified facilities – we completed renovating three in the Bronx and Brooklyn within the last six months, and over the summer and fall of 2017, we expect the remaining four in Brooklyn, Queens, and Staten Island to be done. Expanded services at these sites will now include, comprehensive primary care, and specialties based on community needs, which include behavioral health, cardiology, endocrinology, and after-hours urgent care.

  • Post-Acute Care: Each year, our post-acute care facilities provide 800,000 patient encounters for frail and elderly New Yorkers at five skilled-nursing facilities, three adult day health centers, a home health agency, and a long-term care acute care hospital. Four of our five skilled nursing facilities have received a 5 star quality rating – the highest grade given by CMS. While we have some of the highest rated facilities in the country, we are always seeking to make improvements by implementing new skilled-nursing facilities services, and identifying ways to collaborate with our managed care partners to improve quality.

LGBTQ Health Care

Recently, 22 Health + Hospitals sites received the designation “Leader in LGBTQ Healthcare Equality” from the Human Rights Campaign Foundation for 2017. The honor acknowledges hospitals, community health centers, and nursing homes across the country that embrace LGBTQ inclusion and patient-centered care.

Accomplishments in LGBTQ Health Care:

  • In 2011, Health + Hospitals became the first public health care system in the United States to mandate LGBT Cultural Competence Training for staff, and it has continued to develop and evolve LGBTQ training.
  • In 2014, Health + Hospitals/Metropolitan was the first public hospital in New York City to open an LGBTQ Health Center to help reduce barriers and increase access to health care for the LGBTQ community. Last year, the hospital expanded its health services for transgender patients, including gender-affirming surgeries and increased access to hormone therapy. We thank the Speaker for the funding.
  • Earlier this year, the health system received a multi-million dollar grant from the New York State Department of Health for staff training, which includes strategies for fostering diversity and inclusion in the workplace related to LGBTQ issues.
  • Health + Hospitals has partnered with the National LGBT Health Education Center, a program of the Fenway Institute, to optimize the health system’s ability to effectively serve LGBTQ communities by creating a certification track for physicians interested in completing intensive training to increase core competencies in LGBTQ health services. The pilot program launched in April.

Capital

Critical to Health + Hospitals transformation is upgrading its information technology infrastructure to support an integrated patient-focused approach for care delivery and more efficient operations. In the FY18 Executive Budget, Health + Hospitals received upwards of $200 million in capital funding for FY18-FY27 for the installation of a new patient registration and billing system that will integrate with the clinical records system at all sites, as well as funding to upgrade network infrastructure equipment and bio-medical devices at multiple facilities.

Below are highlights of some of the key Capital projects that have received council support.

  • The renovation, expansion, and outfitting of the Roberto Clemente clinic is complete. Patients will now have access to behavioral health programs. We would like to thank Council Member Rosie Mendez for her support and contribution to the successful completion of this project.
  • On Staten Island, the Vanderbilt Avenue site will open this fall. This new $28 million, 18,000 square foot ambulatory care facility will offer comprehensive primary medical and mental health services for children and adults. The site will also feature an after-hours urgent care center to better accommodate patients’ needs. I want to thank Council Member Debi Rose for her contribution to this project.
  • In Queens, work is underway at Elmhurst Hospital to renovate and expand its adult emergency room. The project is currently in a design phase, and we expect that it will be completed in 2019. We would like to thank the Queens Borough President and the Queens City Council delegation for their support.
  • I also want to thank Council Member Mathieu Eugene for his commitment to provide funding for Kings County Hospital to replace and upgrade needed medical equipment.

FEMA

In addition to the aforementioned ongoing capital projects, we continue to work on key projects to rectify the damage caused by Hurricane Sandy and to make our facilities more resilient to protect them from future storms. 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. Projects to relocate and/or protect critical infrastructure equipment including electrical, mechanical, heating and ventilation units as well as projects to mitigate the effects of floods are underway at Bellevue, Coler, Coney Island and Metropolitan.

Information Technology

Epic: We are in the process of implementing a new Epic revenue cycle, which will integrate seamlessly with our Epic patient electronic medical records system that we began adopting last year. The new technology will standardize revenue collection in Health + Hospitals 11 acute care facilities and across dozens of our community based sites, and yield up to $142 million annually in revenue, based on FY16 patient volume. The benefits of the integrated suite are significant. Health + Hospitals will now experience improved clinical documentation to support billed services, reduced claims denials, and accelerated reimbursement; providers will now have access to consolidated and complete patient record to improve efficiency, and patients will more easily understand the costs of their care, and pay their bills online. The 2-year launch of the integrated revenue cycle and electronic medical record platform is expected to begin by the end of 2018, and fully completed by the end of 2020. Health + Hospitals will invest $289 million over the next five years to fully implement the integrated suite across the system. The City of New York has allocated $150 million in capital funds, and Health + Hospitals will invest $139 million from its operating costs – pending approval by our Board of Directors.

The Enterprise Resource Planning (ERP): The project is designed to replace the existing financial systems that are over 30 years old. The new system will replace six existing systems into one integrated system. A single ERP system allows for organic integration, workflow, business process, and reporting, streamlining operations and reducing cost of implementation and system maintenance. Reporting is much quicker and easier since all the information is stored in the same manner and in the same place. An ERP allows for increased productivity, accountability, performance-based management reporting and dashboards using outcome-based indicators. The goal is to implement a user-friendly and fully integrated ERP application with related modules, data integration, training, implementation assistance and ongoing software support. The ERP architecture will be highly flexible to enable rapid change to support business needs and provide access to data. First phase of this implementation will begin this summer, which will replace the existing back office accounting systems and the core supply chain management system.

Radiology: We are implementing a new radiology system that will increase efficiency, bring about standardization to our system, and improve patient outcomes and quality care. Health + Hospitals will realize savings by eliminating duplicate hardware needs, redundant applications and related resources thus resulting in a more efficient support model. This work is underway at four facilities, and will be completed by the end of the year.

Behavioral Health

As the provider of the majority of inpatient psychiatric treatment in New York City, Health + Hospitals understands the critical need for greater access to mental health care in New York City. We continue to lead and expand efforts to provide much-needed behavioral health services for New Yorkers at every stage of life, at our many patient care locations. We have integrated universal depression screenings for adults in primary care practices across the City, have successfully led efforts throughout the boroughs, to screen all pregnant women and new mothers for maternal depression. We have focused efforts to promote health care services to young people at YouthHealth neighborhood centers. And, we are very proud to be expanding a pilot program established at the Bronx Family Justice Center (FJC) to provide on-site behavioral health services at each of the city’s five FJCs, which are designed to provide a comprehensive range of services to survivors of domestic violence in each borough. And lastly, Health + Hospitals is leading efforts in NYC to address the opioid epidemic that is devastating many of our communities. We have begun efforts to routinely screen and offer team-based care for harmful substance use in our primary care clinics. And as part of the Mayor’s HealingNYC initiative, we are quadrupling the number of providers able to treat opioid use disorder with medication, and are establishing an innovative addiction consult service to help care for the tens of thousands of patients we diagnose with substance use disorder every year.

Correctional Health

This year –2017– marks the first year in which Correctional Health Services (CHS) is the direct provider of care in the city’s jails. We have made and continue to make tremendous progress in increasing the quality of and access to care for one of New York City’s most vulnerable patient populations. Our infrastructure has been re-engineered to enhance the expertise and support of our providers. We continue to successfully roll out our initiatives including enhanced pre-arraignment health screening, expansion of PACE units, extension of telehealth services, and treatment of Hepatitis C. We continue to leverage the resources of Health + Hospitals to improve continuity and quality of care during and after incarceration, including linkages with Metroplus, Gotham Health and Health + Hospitals/Coler, one of our skilled nursing facilities.

As part of the City’s opioid strategy, CHS is also expanding its substance use services including doubling the methadone maintenance program, tripling the buprenorphine program, quintupling Naloxone distribution at the visit center, and extending re-entry services for opioid addicted patients who are at high risk of overdose death after release from the jail system.

Thank you for the opportunity to testify, and I look forward to your questions.

WE ALWAYS PUT PATIENTS FIRST