Public Reports and Testimonies

NEW YORK CITY COUNCIL
FISCAL YEAR 2014 EXECUTIVE BUDGET HEARING

COMMITTEE ON HEALTH

OVERSIGHT HEARING: HHC RESTRUCTURING – AN UPDATE ON THE ROAD AHEAD

Good afternoon Chairperson Johnson and members of the Health Committee. I am Alan Aviles, President of the New York City Health and Hospitals Corporation (HHC). I am joined this afternoon by Antonio Martin, HHC Executive Vice President and Chief Operating Officer, Thank you for the opportunity to provide an update on HHC’s (2010 – 2013) restructuring plan: The Road Ahead.

Before providing a summary of the initiatives and their status, I would like to provide some context for why we needed to undertake significant restructuring, cost containment and revenue optimization efforts over the last several years.

The safety-net role of our public hospital system has made HHC especially vulnerable to deep cuts to Medicaid, the cost of serving a rising tide of uninsured patients, and the erosion of federal funding. Our system served nearly 1.4 million patients last year, and almost 500,000 of these patients had no health insurance coverage. In total, approximately 80% of HHC’s patients are either Medicaid or Medicaid Managed Care beneficiaries or are uninsured.

HHC provides much of the care received by uninsured New Yorkers. In 2012 HHC provided 70% of the clinic visits received by uninsured patients in all hospitals in New York City; 43% of the emergency visits; and 34% of the inpatient care.

Since 2008, repeated cuts to Medicaid reimbursement rates have slashed HHC’s revenue base by more than $540 million a year. In addition, HHC has had to absorb astronomical increases in pension and employee health insurance costs—from Fiscal Year 2002 through Fiscal Year 2010 up $500 million, from Fiscal Year 2010 through Fiscal Year 2013 up another $180 million. In FY10, facing a projected $1.2 billion budget gap for FY13, we put together a gap closing plan, “The Road Ahead”, that called for $600 million in cost containment and restructuring actions and $600 million in additional revenue ($300 City/ $300 Federal). Achieving the $600 million in revenue required New York State to enact legislation that directed $300 million in supplemental Medicaid payments to HHC, and the City putting up the entire non-Federal match.

The Road Ahead included a wide ranging set of cost-containment and revenue initiatives that yielded the other $600 million in gap closing and we believe better positioned HHC to adapt to unprecedented changes in the healthcare delivery system.

Despite achieving our $1.2 billion gap-closing plan, the challenges ahead are daunting. HHC is projecting continued out-year deficits that grow from $430 million in Fiscal Year 2015 to nearly $1.4 billion in Fiscal Year 2018. This partly reflects that Super Storm Sandy made a bad situation worse. HHC lost $142 million net of federal reimbursements in FY13 from the storm. Also, due to further cuts to Medicaid reimbursement and reduced utilization, HHC lost another $150 million in revenue in FY13.

I will now briefly review the Road Ahead initiatives and the principles that guided us in their implementation. I will close with a very brief overview of the difficult financial landscape still before us, which will demand more tough choices to ensure the viability of our public healthcare system and protect our mission to care for all New Yorkers.

Click here to download and read the HHC presentation of The Road Ahead.