Remarks by Alan D. Aviles
President, NYC Health and Hospitals Corporation
Good evening, I am Alan Aviles, President of the New York City Health and Hospitals Corporation, our City’s public hospital system. Thank you for being with us tonight for our Brooklyn annual public meeting for FY2012, one of five borough-specific meetings we convene each year. As always, I am eager to hear what HHC’s communities have to say about our performance, especially during what continues to be a very challenging time in healthcare generally and for HHC specifically.
At the outset, let me recognize HHC’s senior executives here in Brooklyn. Our host this evening is George Proctor, the Senior Vice President of the North and Central Brooklyn Network and the Executive Director of Woodhull Hospital. Also in attendance is Arthur Wagner, the Senior Vice President of the South Brooklyn Network and Executive Director of Coney Island Hospital. Roslyn Weinstein, who has been serving as Acting Executive Director of Kings County Hospital Center since August, is also here with us. I thank all three of them for the excellent work they do every day as leaders helping us to render the best possible care to the residents of Brooklyn.
I also want to acknowledge the support and guidance of our Board of Directors, under the leadership of Dr. Michael Stocker. My special thanks to Board members who are here tonight and to the members of our Woodhull, Kings County and Coney Island Hospital Community Advisory Boards, who advocate on behalf of our public system and help to keep us grounded and responsive to the needs of our patients and communities.
As I did last year, I begin my remarks tonight by focusing on the financial challenges that continue to face HHC. Last year, I stressed that deep Medicaid cuts, skyrocketing pension costs, and a steady increase in our uninsured patients had all contributed to a daunting budget deficit of more than $1 billion dollars. At this time last year, I was able to say that we had put together the second phase of a comprehensive cost-containment and restructuring plan, which together with earlier cost-savings measures and substantial additional funding from the City, would close our existing budget gap over a four-year period.
We are only in the second year of our four-year plan, but when fully implemented, it will yield several hundred million dollars in new revenue and cost savings. However, as we have seen this past year, the plan includes a number of necessary but painful actions, including the outsourcing of some services and the targeted layoff of a significant number of employees. During the past year, we completed seven of the 39 initiatives encompassed by our four-year plan and we achieved our savings targets for the fiscal year that ended on June 30. I am confident that we will execute the next set of plan initiatives and achieve targeted savings for this year as well. To date, we have reduced our workforce by approximately 2,500 employees, mostly through attrition, and we have reduced our budget gap by nearly $350 million. We anticipate shedding another 600 positions through attrition by the end of this fiscal year and reducing our expenses by about another $38 million. Upon completion of the four-year plan we will have reduced our workforce by approximately 3,700 full-time positions.
I will not delineate all of the cost containment and restructuring initiatives that remain to be implemented as part of our overall plan because they can be reviewed in some detail on our public website.
Even as we make steady progress in closing the budget gap that I described last year, we have seen more financial challenges arise in the intervening year. First, the Medicaid cuts in the current state budget that became effective April 1, 2011 were again deep and sharp. They will reduce HHC’s total revenue by another $170 million, bringing our total Medicaid cuts over the last four years to roughly $500 million annually. Second, pension costs have continued to rise sharply and may increase by as much as $100 million this year, bringing our pension costs to more than $400 million. By comparison, just eight years ago our pension costs were less than $50 million. And third, we have seen another 6% increase in the number of uninsured patients we serve, bringing the total number of uninsured patients served in fiscal year 2011 to nearly 480,000.
And, of course, all of this is occurring in the context of the continuing, severe economic downturn. Because of declining tax revenues associated with persistently high unemployment rates, both the City and the State are projecting budget deficits approaching or exceeding $4 billion for the upcoming fiscal year. The State may be compelled to impose still more Medicaid cuts, while the City has already directed all City agencies (as well as HHC) to reduce their expenditure of City funds by 2% for this fiscal year and 6% for next fiscal year. For HHC, these new City budget cuts will mean $1.6 million less revenue this year and $4.6 million less next year.
At the federal level, both political parties are focused on reducing a federal debt that now stands at $15 trillion dollars and both parties have expressed a willingness to make further significant additional cuts to both the Medicare and Medicaid program. The recent failure of the Congressional “Supercommittee” to reach agreement on deficit reduction measures has likely spared us from further federal Medicaid cuts for the moment, but the Committee’s inability to agree triggers automatic Medicare cuts that will take effect on January 1, 2013. Those cuts will reduce HHC’s Medicare revenue by an estimated $20 million.
And, of course, under the federal health reform law, in 2014 the federal government will begin reducing dramatically the supplemental Medicaid and Medicare funding that supports public hospitals and other safety net institutions. Ultimately, these scheduled cuts could reduce HHC’s federal funding by more than $325 million annually. And there is very little prospect of Congress re-visiting the wisdom of these looming, devastating cuts.
I dwell on this litany of financial challenges not to depress everyone in the room, but because the magnitude of the present threats to our mission arising from sharply rising expenses in the face of falling revenues is unprecedented. It is important for our communities to understand what we are up against, and why we have resorted to extreme measures such as targeted layoffs, the closure of some small community clinics, and the outsourcing of certain services when such outsourcing lowers our expenses.
And it is important that our community and all of our partners understand the severity of our fiscal dilemma and the advocacy required by all of us to preserve HHC’s mission and continue to meet community needs.
I know that there are those in the audience who are concerned about the outsourcing that we have done to date, including our laundry services, and the management of our dietary and housekeeping services. I must emphasize, however, that we have moved forward with outsourcing only after careful analysis has demonstrated that we could achieve significant savings. The dietary outsourcing initiative has saved us roughly $40 million over the past five years and will save us even more in the next year when the heavy capital investment in retrofitting our cook chill plant will have been paid off.
We are projecting that the outsourcing of our laundry services and the outsourcing of our housekeeping management will save us about $242 million over the next nine years. All three of the outsourcing initiatives implemented thus far have been achieved without laying off a single unionized staff member. Also, we have been open to “insourcing,” that is, the hiring of additional directly employed staff to replace contracted workers where our analysis shows that it will save money. This past year we hired 48 new staff to do work in information technology that was previously performed by contracted vendors and we estimate that by doing so we are saving more than $2.8 million annually. We plan to hire 76 additional staff over the next two years to shift still more IT work away from contracted vendors to save an even greater amount.
Unlike some public hospitals in the country, our willingness to make tough and at times painful decisions has enabled us to avoid closing any major HHC facilities and to remain faithful to our core mission of serving all New Yorkers without regard to insurance or immigration status. But the unrelenting financial pressure represents a grave threat to our mission and to our long-term ability to maintain sufficient service capacity to meet the needs of our patients across the City. And more tough decisions surely lie ahead.
Here’s why: Serving 1.3 million New Yorkers – more than one-third of who are uninsured – will cost our system about $6.7 billion this year. Yet, our revenue from all sources will fall several hundred million dollars short of that amount, requiring us to tap limited and dwindling cash reserves to cover our costs. While in the past we have relied on increasing governmental funding to keep our system solvent in the face of rising costs that are outside our control, the current economic conditions at all levels of government, the resulting clamor for reducing healthcare costs, and the growing hostility in Washington to the undocumented immigrants who constitute many of our uninsured patients, make additional significant government support unlikely for the foreseeable future.
Given this harsh reality, we must redouble our efforts to make our system as efficient as possible. And we are doing that in many ways. One of the most promising is our work to involve as many of our front-line employees as possible in learning and applying process improvement techniques that enable teams of employees to identify ways to make our operations more efficient.
We call this continuous operational improvement approach Breakthrough and over the past four years more than 4,000 of our employees have participated in team-based rapid improvement Breakthrough events that have helped us generate more than $211 million in combined new revenue and cost savings.
By way of example, Kings County Hospital Breakthrough teams dramatically reduced the time that patients spend in the Emergency Department, effectively reducing the walk-out rate. For adults, the time from triage to seeing a clinical provider went from 31 minutes to 15 minutes, and for pediatric patients the average triage to provider waiting time was shortened from 52 minutes to 20 minutes.
And at Coney Island Hospital, staff used Breakthrough to reduce the incidence of catheter associated urinary tract infections by more than 50%, avoiding patient harm while also reducing the length of stay and unnecessary expense for these patients. There are scores of examples from all HHC facilities on how our employees are helping us to make our system more effective and efficient.
Even as we struggle to make our system more efficient and to manage the formidable financial challenges we face, we continue to be responsive to the needs of our communities day after day. We still provide about 225,000 hospital inpatient stays, more than 1 million emergency department visits, and more than 5 million outpatient visits annually.
Here in Brooklyn, HHC provides 70% of all hospital-based clinic visits and 40% of all inpatient stays by uninsured Brooklyn residents. And we continue to provide our patients with a full range of primary and preventive care services, with an emphasis on the early detection of disease and the effective management of chronic diseases such as asthma, diabetes, and hypertension.
HHC has also been committed to making HIV testing available in as many clinical settings as possible, as a critical part of the City’s strategy to prevent and treat HIV. This past year, HHC facilities tested more than 195,000 patients – more than three times the number tested just six years earlier. Since 2005, HHC has tested more than one million New Yorkers for HIV, an important milestone formally recognized by the US Centers for Disease Control and Prevention on World AIDS Day earlier this month. More than 10,700 HIV-positive individuals have been diagnosed as part of our testing efforts and thousands have been linked to care, improving their health and the health of the community.
As a measure of how well our facilities meet the primary care needs of our patients, all of our primary care sites here in Brooklyn and across the City – encompassing nearly 600 HHC primary care providers – have been certified as patient-centered medical homes, the highest standard for provision of effective and comprehensive primary care services.
It is a tribute to our hard working and dedicated staff that despite the reduction of our workforce by more than 2,500 employees over the past two and one-half years, we have maintained essentially the same scope and volume of services. We are also maintaining and, in many respects improving, the quality and safety of care provided across all of our facilities.
And, on a brighter note, we now can clearly see opportunities on the horizon to do an even better job for our patients and communities. Although the US Supreme Court will soon decide the fate of federal healthcare reform, and whether expanded healthcare coverage will begin as planned in 2014, earlier this year New York State began its own version of healthcare reform.
Over the next three years, New York State will change the way it pays for Medicaid services to help strengthen the coordination of healthcare services, especially for patients with chronic disease and for patients with significant mental illness. In addition, New York State also will require providers to do a better job of helping frail elderly and other patients in need of long-term services to receive their care in their home and in their community as long as possible rather than being institutionalized.
These changes in the New York State Medicaid program here are meant to reduce Medicaid costs by improving the health status of patients who are at highest risk of needing expensive emergency department, inpatient, or skilled nursing facility services.
And in a recent report along the same lines, a State-appointed workgroup recommended that several financially challenged Brooklyn hospitals agree to merge or otherwise join together to improve access to primary care, operate more efficiently, and reduce the high numbers of preventable hospital admissions and avoidable emergency department visits in the borough.
This proactive approach to promoting health and providing robust primary care has long been a central part of HHC’s mission-driven strategy and is a far better way to reduce long-term healthcare costs than continued Medicaid and Medicare rate cuts. We are fully supportive of the Governor’s efforts to redesign the Medicaid program in ways that bolster and better reimburse comprehensive primary and preventive care, more effective chronic disease management, and better overall care management and care coordination to reduce the need for hospitalizations or nursing home admissions.
We are already taking concrete steps to align our services with this new direction in the State Medicaid program. For example, our health plan, MetroPlus, has just submitted an application to offer long-term managed care services that would help patients at risk of entering a nursing home to stay at home and receive the services they need there.
We also recently submitted an application to become what is known as a “Health Home” for patients with multiple chronic disease and/or serious mental illness.
The “Health Home” initiative will leverage funds available under federal healthcare reform to pay providers to hire and train care managers and related staff who will become part of a patient’s care team.
These care managers will establish relationships with patients and help educate them about the importance of adhering to their treatment plans and medication regimens; encourage patients to change behaviors, including diet, that will better control their diabetes or hypertension; help patients navigate the healthcare system; and ensure that multiple providers who are caring for the same patient have a common understanding of the patient’s needs and a single, integrated plan of how to meet those needs to produce the best possible outcomes.
And, for patients with serious mental illness, there will be an increased focus on integrating mental health services with primary care and other general medical services required to treat patients in a more holistic way. For too long, patients with serious mental illness have died prematurely precisely because the health system has focused on their mental illness to the exclusion of other serious medical conditions, like diabetes and cardiovascular disease that put them at great risk.
We fully expect to be certified as a “Health Home” by the end of this year and to begin enrolling patients in the Bronx and Brooklyn into our care management support services by very early next year. We expect to be able to do the same for our eligible patients in Queens and Manhattan by the Spring of 2012.
The full range of Medicaid reforms now set in motion in our State are more complicated than what I have just described and will require major changes in the way that we and others deliver care. But the end result should be better care and better health for the majority of our patients and for the communities we serve.
We are committed to being at the forefront of these Medicaid program reforms, and our health plan, MetroPlus, will be a very important partner with us in providing better care. The commitment of our MetroPlus colleagues to our patient care mission is underscored by the fact that this year – for the sixth time in seven years – MetroPlus was rated the best New York City Medicaid managed care plan based upon quality and patient satisfaction scores measured by the NYS Department of Health.
Our Work in Brooklyn
Right here in Brooklyn, our public hospitals continue to exceed national benchmarks on many important publicly reported measures of quality and patient safety. Before I touch on some of the accomplishments of Brooklyn’s individual public hospitals, health centers and nursing home, I would like to highlight one recent accomplishment that particularly deserves praise.
We were all fortunate to weather Hurricane Irene earlier this year without experiencing the worst-case storm scenarios, and thanks to our staff’s responsible planning and solid follow-through, we met the needs of our patients and our City under extremely challenging circumstances. A prime example of this exceptional work was the evacuation of Coney Island Hospital.
With the storm advancing and Coney Island at high risk of flooding, hospital administration and staff evacuated more than 250 patients in just a few hours, discharging some to home and transferring many to other healthcare facilities, including Kings County and Woodhull. Coney’s caregivers often accompanied their transferred patients, continuing to provide care throughout the storm.
Additionally, HHC employees staffed a special needs shelter in the borough that safely accommodated the evacuated residents of several private nursing homes, together with many other vulnerable neighborhood residents with significant medical needs. HHC staff, both at the shelter and at our hospitals, performed magnificently throughout the storm emergency.
Turning to some noteworthy accomplishments at the facility level, Kings County continues to make excellent use of its peer case-management program -- the centerpiece of its institutional commitment to patient-centered care, wellness, and recovery. There is no question but that peers who have experienced mental illness themselves offer a unique sensitivity and insight to the treatment team.
Other noteworthy achievements for the year at Kings County include more rapid patient recoveries in its rehabilitative medicine department, enabling the hospital to serve 425 new patients while generating almost $12 million in new revenue; a one-year federal grant to provide patient support and linkages in the community in the wake of the Haiti earthquake; and recognition by the American Cancer Society for the hospital’s robust cancer services, which now include increased capacity for the provision of radiation oncology.
Early next year, as part of a broad HHC effort, Kings County will introduce the Kings Against Violence Initiative (KAVI), a multi-dimensional hospital-based program that will tailor programs for youth to address behavior and risk factors associated with gang violence.
East New York Diagnostic Treatment Center just completed renovations to add new digital mammogram and other imaging equipment, as well as new dental chairs, computers, and X-Ray systems for its dental clinic. The facility also has added two new WIC sites, one at the Crown Heights family clinic and the other to open soon at its Brownsville family clinic. In addition, East New York has qualified for the national Diabetes Recognition Program based upon the outcomes it is achieving for its patients with diabetes.
The Dr. Susan Smith McKinney Nursing & Rehabilitation Center has reduced its average length of patient stay by more than 20%, helping patients to get back home sooner and increasing capacity for new patients. Visiting hours have recently been expanded and new approaches to care have been introduced as part of an ongoing effort to give residents a greater sense of community and independence.
Last month Woodhull Hospital opened a new Center for Integrated Health that will provide the hospital’s psychiatry patients with access to mental and physical health services in one setting. This more holistic approach will improve coordination of patient care, and ensure that psychiatric patients have ready access to primary care services.
Woodhull also redesigned its nursing pain management, fall prevention, and pressure ulcer prevention programs, resulting in an 18% improvement in pain management scores, a 20% decrease in falls, and a more than 50% decrease in acquired pressure ulcers.
At Cumberland Diagnostic Treatment Center, the staff recently has streamlined the process for following up on abnormal PAP tests, effectively getting women with abnormal test results back for additional diagnostic services more quickly. In addition, Cumberland staff has used a multi-disciplinary approach to boost HPV vaccination compliance rates by 35 percent among 9-12 yr. olds, 87 percent for 13-18 year olds, and 61 percent for 19-21 year olds.
At Coney Island Hospital, staff has done significant work to improve geriatric services, and among other things, has sustained very low rates of hospital-acquired pressure ulcers among admitted nursing home patients. Additionally Coney’s reputation for excellent eldercare is seen in its Community-Based Physicians Program, which now refers to the hospital a striking 50% of all Nursing Home patients admitted to Coney Island.
In the area of behavioral health, Coney’s success in using its Psychiatric Crisis Prevention Team Model to effectively reduce the incidence of violence among hospitalized psychiatric patients was recently acknowledged by an award from The Crisis Prevention Institute (CPI).
On the capital side, a much-needed renovation and expansion of Coney’s Emergency Department is under way, and a project has begun to replace the hospitals’ windows to make the facility more resistant to potential storm damage in the future.
I am proud of the work that our dedicated HHC staff performs every day here in Brooklyn and across our city to provide accessible, high quality health care to our patients. We are working hard on many fronts, as I’ve outlined, to make our system as efficient and effective as possible. And we are advocating strenuously at every level of government to fend off additional cuts that would undermine our ability to continue meeting the needs of our vulnerable patients and communities.
We appreciate the strong advocacy support that we continue to receive from our partners in labor, from our community advisory boards and auxiliaries, and from many community-based organizations that care about our mission. Our strong connection to, and support from, the communities we serve continues to be one of our most important assets.
Thank you all for your attention and for being here. I now will turn the program over to Mr. Russo. I look forward to hearing your comments.