Fiscal Year 2019 Preliminary Budget Hearing | NYC Health + Hospitals

Fiscal Year 2019 Preliminary Budget Hearing

Mitchell Katz, M.D.
President and Chief Executive Officer
Thursday, March 15, 2018

New York City Council
Committee on Hospital Systems
Fiscal Year 2019 Preliminary
Budget Hearing

Good afternoon Chairperson Rivera and members of the Committee on Hospital Systems. I am Mitch Katz, M.D., President and Chief Executive Officer of the NYC Health + Hospitals (“Health + Hospitals”). Thank you for the opportunity to review the Fiscal Year 2019 Preliminary Budget and some programmatic initiatives.

When I testified before the committee two weeks ago, I laid out my priorities for the system. To summarize, these are to invigorate and expand primary care, improve access to needed specialty care, and bring fiscal solvency to Health + Hospitals. I enjoyed our conversation two weeks ago and I am very grateful for your partnership to advance these shared priorities. Since we are here to talk about our budget, let me address fiscal issues first.

Over the past year, Health + Hospitals has worked to reduce costs by $387 million and increase revenue by $820 million in order to meet our $1.2 billion target. Due to the hard work of our staff, the delay in federal funding cuts and strong partnership with the city, I am able to report that we are on track to close the fiscal year with a projected balance of $250 million. We still must take action to address our core fiscal challenges and out-year risks.

Some of the initiatives to decrease costs this year include:

  • Negotiating for lower prices on products and improving our supply chain operations to save $133 million;
  • Refocusing our resources on doctors, nurses, pharmacists, and social workers through attrition and reductions in our managerial workforce – $250 million;
  • Eliminating $16 million of consultant costs over the past three months; and
  • Decreasing administrative staffing at central office by 35 positions for an annualized savings of $4.9 million.

On the revenue side of the equation, our work this year will result in:

  • $110 million through improved billing and revenue cycle initiatives;
  • Additional MetroPlus revenue of $84 million;
  • Expanded value-based payments of $120 million;
  • Increase in Delivery System Reform Incentive Program funds of $60 million;
  • Care Restructuring Enhancement Pilot program funding of $125 million;
  • Federally Qualified Health Center increase in rates of $25 million; and
  • The 2-year delay in cuts to Disproportionate Share Hospital funding, which will yield over $600 million over two years.

These actions have enabled Health + Hospitals to meet our budget targets while making the organization more efficient and effective. But much more work can, and has to be done, to make Health + Hospitals a more resilient organization and lessen our future budget shortfalls. The out-year risks reinforce the need to take action now. It is worth repeating what I mentioned last month. My prescription for improvement includes:

  • Reduce administrative expenses. Attrition has been a successful tool for decreasing the headcount at Health + Hospitals without jeopardizing care. We have reduced head count by more than 4,900 positions since November 2015. I will continue to use attrition for non-clinical, non-grant funded positions, but having made a sizable reduction, we have likely obtained much of the benefit that can be achieved through this means. Where possible, I will look to reduce administrative expenses and shift staff into more strategically important functions so that limited resources can be directed toward patient care and the people that directly support it. Let me assure you that I have our patients’ interests at the forefront and will not take any actions to jeopardize quality or safety.
  • Bill insurance for insured patients. The majority of our patients are insured. We need to capitalize on this to recoup as much as we can from insurance companies which will help to cover the costs for uninsured patients. While Health + Hospitals has lagged behind on billing, a concerted effort on revenue cycle optimization is underway now and is already reaping over $100 million in benefits. It will take us two to three years to fully realize this previously lost revenue but I am certain that there is significant opportunity in this area.
  • Code and document effectively so that we can receive the payment we deserve. This goes hand in hand with billing. Proper coding and documentation for billing insurance companies must contain the information necessary to receive the full payment. Teaching people how to code records correctly can be the difference between fair payment from insurance companies and collecting tens of millions of dollars in underpayments.
  • Stop sending away paying patients. To stress what I said last month, I have learned that in many different parts of our system we discourage or even prohibit the care of insured people. There is a widespread urban myth at Health + Hospitals that insured patients should be referred out so that we can focus on care for the uninsured. This results in lost revenue and Health + Hospitals paying outside providers for the care of our own MetroPlus patients.
  • Invest resources into hiring positions that are revenue generating. As I reduce administrative costs, I need to look at the other side of the coin and hire revenue generating positions, including primary care doctors, nurse practitioners, pharmacists, and other specialized professionals. This has a twofold benefit of both increasing access to timely care and generating much needed new revenue from additional visits.
  • Start providing those specialized services that are well reimbursed. Health + Hospitals is the largest provider of behavioral health in New York City, and one of the largest providers in the country. These services are poorly reimbursed, but I am happy to do them because they fit our mission. What I do not agree with is the idea that we would not do services such as cardiac angioplasty that are well reimbursed. In the case of angioplasty, not only do we lose money when we need to send our patients elsewhere, but ambulances with patients with chest pain have to bypass our hospitals because we are not providing the right mix of services. This is going to change across the system, with Coney Island Hospital leading the way.
  • Convert uninsured people who qualify for insurance to be insured. New York City has had success in increasing insurance for those eligible. The Mayor announced last week that approximately 80,000 New Yorkers were enrolled in health insurance programs through the GetCoveredNYC campaign. This is great news and I want to build on this success and work to make it easier for patients to gain insurance. This helps them and helps us because insurance company payments will be much larger than the copays low income uninsured people can afford and patients will have real coverage.

I am confident that we can succeed in these efforts through hard work, determination, and partnership with this committee, City Hall, and all our wonderful staff. It will not be easy and it will not be quick but we must take steps now to ensure our long term financial health.

As I’ve mentioned, we cannot simply cut our way out of our financial challenges. We need to make investments that can generate revenue and improve patient care. One area where investment remains critical is in our patient care infrastructure – if done responsibly, this can increase access and generate revenue from new patients. Health + Hospitals completed renovations at several sites over the past year to increase access to primary and specialty care. Through the Mayor’s Caring Neighborhoods initiative, we are expanding in the Bronx, Brooklyn and Queens. 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. The seven sites will be able to serve 42,000 more patients than before the expansion.

In addition, we are looking to add staff and increase service offerings where they are needed at our existing sites throughout our system, as well as adding hours where it strategically makes sense. I would look to partner with the Council and others to increase awareness of the expanded services at these sites.

On Staten Island, we are in the final stages of opening a new $28 million community health center. We will offer pediatrics, women’s health, behavioral health, asthma care, diabetes care, radiology, ophthalmology, podiatry and walk-in services. After we receive final approval from the New York State Department of Health, we expect to open this spring.

Our expansions have not been exclusively for outpatient care but also post-acute care services. Last month, we hosted a ribbon cutting ceremony to mark the opening of 60 new beds at NYC Health + Hospitals/Gouverneur. With the addition of these beds, we will now accommodate more clinically complex and short-term rehabilitation patients. The new space is designed to reflect a modern therapeutic environment that is more home-like than what you would normally think of for a skilled nursing facility. The rehabilitation area features state-of-the-art equipment to serve the needs of patients recovering from heart attacks, strokes, traumatic brain injuries, and other debilitating conditions. My thanks to the Chair and Council Member Margaret Chin for joining us at the event.

We are also investing in improving the quality of care. For example, our work through OneCity Health, a subsidiary charged with changing the way health care is delivered and paid for through the State’s Delivery System Reform Incentive Payment (DSRIP) program, we are helping to transition from volume-based payments to value-based reimbursement from the federal and state governments. OneCity Health and community partner organizations are striving to improve quality and outcomes through standardized care and a population health approach, increase primary care access, improve the patient experience and ensure financial sustainability through value-based contracting and community partnerships.

Some of the work that OneCity Health performed helped to guide recent efforts to implement a care management program. We recently announced a system-wide care management program designed to improve access to care and health outcomes for thousands of New Yorkers most at risk of frequent, preventable hospitalizations and emergency room visits. The model incorporated best practices from several programs and will target intensive navigational resources to patients with greatest need, regardless of insurance or immigration status. We will have dedicated care coordinators who will guide patients through the range of health care services, as well as work with community partners to address social determinants of health, like housing and access to healthy food. This program will expand to cover our system by the end of this year.

Investments in quality improvement activities are not just good for patients, they can be good for Health + Hospitals bottom line. For instance, we’ve increased the amount of value-based payments and quality bonuses we received by $120 million, increased Delivery System Reform Incentive Program funds by $60 million and received Care Restructuring Enhancement Pilot program funding of $125 million. These new funding streams are made possible by smart investments in clinical services and improving quality.

There are several areas of investment that are central to our mission but do not have the same near-term benefit for our financial performance. As I’ve mentioned, we provide the majority of inpatient psychiatric treatment and behavioral health services in New York City. Many other providers have scaled back these services and as a result, mental health care in New York City is in need of expansion. Recognizing this shortfall, we’ve broadened access to behavioral health services and are continuing to integrate behavioral health and primary care to provide more comprehensive care to our patients.

Last year, universal depression screenings for adults in primary care practices across the City became common practice at Health + Hospitals. Similarly, we screen all pregnant women and new mothers for maternal depression and linked to care. On-site behavioral health services are provided by Health + Hospitals at each of the city’s five Family Justice Centers, which provide a comprehensive range of services to survivors of domestic violence.

For those New Yorkers suffering from opioid addiction, we are screening patients for harmful substance use in our primary care clinics and providing team-based care. Our work over the past year has been to focus on addiction prevention, training physicians about pain management without prescription opioids and/or with less frequent prescription opioids. To prevent overdoses, we now have routine naloxone dispensing in clinical settings (Emergency Departments, Substance Use and Behavioral Health Clinics, Opioid Treatment Programs). Naloxone kits are now available to the community for free at NYC Health + Hospitals/Lincoln. This will be expanded to all of our hospitals this year. Everyone who receives a kit will be trained on how to use it and you do not need a prescription to receive one.

One of the questions that came up at our last hearing was how many providers we have who can prescribe buprenorphine. By 2020, we will have increased the number of providers to 450 who are certified to prescribe buprenorphine. Through our efforts, the number of patients who received medication assisted treatment in our system will increase to 2,500 over the next three years. Additionally, we have addiction medicine consult teams at four of our facilities to care for our hospitalized patients with substance use disorders. Our goal is to ensure that 5,000 more New Yorkers gain access to medication-assisted treatment, buprenorphine and methadone, by 2021.

I will now turn to the Capital budget for a brief overview of some projects for which we have received Council funding.

  • I want to thank Council Member Debi Rose for her generous contribution to our future community health center on Staten Island.
  • I also want to thank Council Member Mathieu Eugene for his ongoing contributions to NYC Health + Hospitals/Kings County.
  • We are renovating and expanding the adult emergency room at NYC Health + Hospitals/Elmhurst. We expect that it will be opened in phases given the complexity of constructing space in an active Emergency Department. We would like to thank the Queens Borough President and the Queens City Council delegation for their support.
  • We are very close to completion of renovations to the Roberto Clemente clinic in Manhattan. This vital site provides behavioral health services to many residents on the Lower East Side. We would like to thank Chairperson Rivera, former Council Member Rosie Mendez and the Manhattan Borough President for their support.

And a thank you to all the members who have supported new equipment purchases at our facilities. Your support enables Health + Hospitals to provide better care to our patients. Another important component of our capital program is the ongoing work to rectify the damage caused by Hurricane Sandy and to make our facilities more resilient to protect them from future storms. 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 have been completed at the Bellevue, Coler, Coney Island and Metropolitan sites.

We will build a new hospital tower at NYC Health + Hospitals/Coney Island with an elevated emergency department and some of our inpatient services. Demolition is underway now on existing buildings to make way for the new tower which will take approximately four years to fully complete. While this work is underway, short term storm barriers have been put in place to protect the hospital in the event of a future storm.

As we upgrade our physical infrastructure we are also progressing through the upgrade of our new electronic infrastructure – Epic. This state-of-the-art electronic medical record system has been installed at three of our acute care hospitals now and will continue to rollout in stages with an expected completion date of 2020. Our new enterprise electronic medical record system will improve clinical care, as well as documentation to support our efforts to bill and code optimally, reduce claims denials, and accelerate receipt of reimbursement. Also, we are currently standardizing a new billing component that will integrate seamlessly and standardize revenue collection across our acute care, and long-term care facilities, as well as our ambulatory care sites.

Before I conclude, let me speak about our work in Correctional Health Services. With over 50,000 admissions per year and an average daily population of approximately 9,000 in twelve jails citywide, at the NYC Health + Hospitals division of Correctional Health Services, we operate one of the nation’s largest correctional health care systems. We deliver health care to patients from pre-arraignment through discharge, providing medical and mental health care, substance use treatment, dental care, social work services, discharge planning and re-entry services 24-hours a day, 7-days a week.

Over the last two years, we have received funding to expand and improve services. For example, we:

  • Operationalized the 24/7 enhanced pre-arraignment screening unit (EPASU) in the Manhattan Detention Center, which helps us to better identify and respond to acute medical and mental health issues before people enter DOC custody. The City funded in the FY19 Preliminary Budget an expansion of EPASU so CHS can replicate this model in the other borough courthouses.
  • Nearly tripled the number of patients receiving Hepatitis C treatment, with 95 patients treated in the first half of FY18, compared to 34 in all of FY16.
  • Opened seven satellite clinics to bring our services closer to patients.
  • Opened two new specialized housing units for patients with serious mental illness, called Program for Accelerating Clinical Effectiveness (PACE). This brings us to a total of six PACE units in operation.
  • Nearly tripled the number of daily patients on methadone maintenance and buprenorphine, and have distributed thousands naloxone kits to members of the public at the Rikers Island visit center. The FY19 preliminary budget includes funding that will enable us to expand the naloxone distribution program citywide.
  • Will conduct a Queen’s pilot to streamline the conduct of court-ordered forensic psychiatric evaluations of fitness-to-stand-trial examinations.
  • Will enhance mental health services for women in jail.

As you know, the age of criminal responsibility will raise to 18 this year. In New York City, both 16- and 17-year-old children in custody will be removed from Rikers no later than October 1, 2018. We are working closely with City agencies to ensure that health care is provided without disruption and in a manner that best supports the positive development of these adolescents.

As the City embarks on its ambitious plan to create a smaller, safer, and fairer correctional system over the next decade, we are a critical partner in planning the future system and how quality health care will be provided to a changing patient population.

We are thankful for the support that we have received to improve health care in the City’s jails and better prepare our patients to leave jail and not return.
This concludes my testimony. I look forward to hearing your comments, answering your questions, and partnering with you to improve Health and Hospitals for all the people of New York.