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Press Releases

HHC Announces Service and Workforce Reductions In Response to State Budget Cuts and Higher Costs of Operations While Serving Growing Number of Uninsured New Yorkers

Mar 19, 2009

New York, NY

The New York City Health and Hospitals Corporation today announced a plan to reduce its next fiscal year budget by $105 million to address unprecedented financial challenges created by a $66 million cut to HHC’s Medicaid reimbursement already imposed by the State this fiscal year, along with growing expenses resulting from a sharp spike in uninsured patients, increased wage and fringe benefits, and the rising costs of drugs and medical supplies. The gap-closing plan contains projected savings from operational efficiency measures, improved revenue collection, and targeted service reductions that include closing or downsizing 10 hospital-based and 10 community-based programs, and reducing the HHC workforce by approximately 400 positions through attrition and layoffs to take effect by July 1, 2009.
The cutbacks announced today are only the first round of reductions that HHC will need to implement to address a $316 million shortfall for the coming fiscal year. The city’s public hospitals, nursing homes, and health clinics also face proposed State Medicaid cuts that would widen the budget gap for the next fiscal year by as much as another $300 million.
“HHC is the single largest healthcare safety net in the state. It cost nearly $850 million to care for the 450,000 uninsured New York State residents without health insurance who relied on our services last year. The City of New York has contributed more than $500 million annually to support the cost of serving the uninsured, while the State contributes a mere $50 million,” said HHC President Alan D. Aviles. “Now that the State has received nearly $10 billion of federal stimulus money intended to shore up the Medicaid program and the healthcare safety net in these economically perilous times, we hope our state leaders will rethink the proposed cuts and support, rather than undermine, our public hospital system.”
The HHC plan includes savings of $23.3 million from operational and procurement efficiencies; $34.4 million from optimizing revenue collection; $20.3 million from cost reduction measures such as ending consultant contracts, curbing use of per diem staff and cutting the health marketing and advertising budget; and $26 million from service reductions, staff attrition, and layoffs.
“The measures we are taking today are necessary first steps to ensure the viability of our public hospital system at the very time that the number of uninsured New Yorkers we serve has skyrocketed to 450,000 – up 8% in the last year alone.” said Aviles. “We are doing all we can to help reduce our share of the escalating healthcare costs affecting the entire country. We continue to achieve savings through greater efficiency by leveraging our purchasing power to lower procurement costs, reducing waste, streamlining operations and consolidating services. But the pace and the magnitude of Medicaid cuts, together with increasing expenses that we don’t fully control, now leave us no choice but to begin curtailing healthcare services to our communities.”
The cost-cutting actions most directly affecting service delivery include the closure of 4 school based mental health programs, 4 community clinics, 3 satellite pharmacies, 2 hospital-based case management programs, two mental health day treatment programs, and a hospital-based therapy program for TB patients. Three other hospital-based programs will be consolidated with reduced staffing for greater efficiency. The service reductions focused on programs that are disproportionately under funded and would have a limited impact on patients because HHC would be able to identify sufficient capacity to redirect patients to services elsewhere.
“We have worked hard to limit service reductions and will ensure that patients affected by these changes can receive care elsewhere in our system or in the community,” added Aviles. “Even as we struggle to do more with less, we are determined not to sacrifice the hard-earned gains in quality of care and patient safety that have garnered national recognition in recent years.”
Required program closure plans, which detail how patients will be redirected to alternative services either within the HHC system or in the community, will be submitted to the relevant state authorities next month. HHC expects all the closures to be finalized by the end of June.
The workforce reduction target of 400 will be reached by not filling approximately 200 expected vacancies over the next three months and 200 layoffs that will occur between now and July 1, 2009, the beginning of HHC’s new fiscal year.
“Additional reductions, including more service cuts and layoffs, are imminent in order to deal with our current operating revenue shortfall. However, the outcome of the State budget negotiations in Albany will ultimately determine the magnitude of any future cuts,” Aviles said.

Contact: Ian Michaels (HHC)(212) 788-3339.

About HHC

The New York City Health and Hospitals Corporation (HHC) is a $6.7 billion integrated healthcare delivery system with its own 420,000 member health plan, MetroPlusHealth, and is the largest municipal healthcare organization in the country. HHC serves 1.4 million New Yorkers every year and more than 475,000 are uninsured. HHC provides medical, mental health and substance abuse services through its 11 acute care hospitals, five skilled nursing facilities, six large diagnostic and treatment centers and more than 70 community based clinics. HHC Health and Home Care also provides in-home services for New Yorkers. HHC was the 2008 recipient of the National Quality Forum and The Joint Commission’s John M. Eisenberg Award for Innovation in Patient Safety and Quality. For more information, visit www.nychhc.org/hhc or find us on facebook.com/NYCHealthSystem or twitter.com/NYCHealthSystem.