Public Reports and Testimonies

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 and healthcare clinic system. Thank you for being with us tonight. This is the fourth of our five annual public meetings for 2011. 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 Staten Island: Arthur Wagner, Senior Vice President of the South Brooklyn/Staten Island Network and Angelo Mascia, Executive Director of Sea View Hospital Rehabilitation Center and Home, our host this evening. My thanks to both of them and their talented staff for the stellar work they do every day serving Staten Island residents.

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, including our newest Board member, Dr. Vincent Calamia. Dr. Calamia is no stranger to the Staten Island health care community and we are fortunate that he has joined HHC. I also want to acknowledge the members of our Sea View Advisory Board and the Auxiliary, who advocate on behalf of our patients and our public system. Our Community Advisory Boards help to keep us grounded and responsive to the needs of our patients and communities.

Finally, I want to thank our local elected officials for their continued support of HHC and its mission.

The Challenges

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 uninsured patients served, had all contributed to a daunting budget deficit of more than $1 billion dollars. At the same time, I spoke about 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 substantially our existing budget gap over a four-year period.

We are now in the second year of this four-year plan. When fully implemented, it will yield several hundred million dollars in new revenue and cost savings. However, the plan requires a number of painful actions, including a significant workforce reduction. We achieved our savings targets for the fiscal year that ended on June 30, 2011, and I am confident that we will execute the next set of plan initiatives and achieve the targeted savings for this fiscal year. To date, we have reduced our budget gap by nearly $350 million, through a combination of cost savings and better revenue collection. As of the close of fiscal year 2011, we had reduced our workforce by approximately 2,500 employees, mostly, but not exclusively, through attrition. We anticipate shedding several hundred more positions by June 30, 2012 and reducing our expenses by about another $38 million.

The cost containment and restructuring initiatives that remain to be implemented as part of our overall four-year plan 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. Medicaid cuts in the current state budget that became effective April 1, 2011 were again deep and sharp. These cuts reduced HHC’s revenues by another $170 million, bringing our total Medicaid cuts over the last four years to roughly $500 million annually. Our pension costs continue to rise dramatically, and in the past year, we experienced another 6% increase in the number of uninsured individuals we serve, to nearly 480,000 patients.

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, the City and the State are projecting multi-billion budget deficits next fiscal year. The City has already directed all City agencies to reduce their expenditure of City funds by 2% for this fiscal year and 6% for next fiscal year. For HHC, these new cuts will mean $1.6 million less revenue this year and $4.6 million less next year.

In addition, complicated Medicaid reforms have been set in motion in our State and they will require major changes in the way that we, and others, deliver care.

While we expect that the end result will be better care and better health for the majority of our patients and for the communities we serve, it will take a lot of hard work to get there.

At the federal level, Congress and the Administration have expressed a willingness to make further significant cuts to Medicare and Medicaid. The failure late last year of the Congressional “Supercommittee” to reach agreement on deficit reduction measures has likely spared us from additional 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. There also are further Medicare cuts being considered by Congress to offset the costs of extending both the payroll tax reduction and unemployment benefits which, if enacted, may trim HHC’s Medicare reimbursement by another $20 million annually.

And under the federal health reform law, in 2014 the federal government will begin to make significant reductions in supplemental the Medicaid and Medicare funding that supports public hospitals and other safety net institutions. Ultimately, these cuts could reduce HHC’s federal funding by more than $325 million annually. There is very little prospect of Congress re-visiting the wisdom of these looming, devastating cuts.

I dwell on this litany of financial challenges because the magnitude of the present threats to our mission as a consequence of sharply rising expenses and deep cuts in revenues is unprecedented.

It is important for our communities to understand what we are up against, and why we have resorted to 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 communities and all of our partners understand the severity of our fiscal dilemma and the advocacy required to preserve HHC’s mission and continue to meet community needs. While in the past we have relied on increases in governmental funding to keep our system solvent in the face of rising costs that were 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 undocumented immigrants (who constitute many of our uninsured patients), make additional significant government support unlikely for the foreseeable future.

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 allowed us to remain faithful to our core mission of serving all New Yorkers without regard to insurance or immigration status. However, the unrelenting financial pressure we are experiencing 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.

Even as we struggle to make our system more efficient and to manage the formidable financial challenges we face, we continue to offer essential and quality services to the communities that we serve. In our effort to promote wellness, we continue to provide our patients with 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.

Our Work on Staten Island

While our fiscal challenges have led us to retrench elsewhere in the City, we have continued working with a variety of local stakeholders to expand the primary care infrastructure here on Staten Island.

Over the past six years we have provided technical and financial support to the Community Health Center of Richmond. We look forward to continuing to work with the Health Center’s Board of Directors and Henry Thompson, the Executive Director, to ensure that the health center can secure additional state and federal funding to further expand its services.

Two years ago, HHC rolled out a Mobile Medical Office on Staten Island, which has been very successful. In the past year, the Mobile Medical Office accommodated more than 700 patient visits; 87% of these patients were uninsured, and the majority of them were undocumented. A second mobile medical office is being added in 2012, and its staff will begin seeing patients in March of this year. This one will offer ophthalmology and podiatric services, two services especially needed by patients with diabetes, a chronic disease that is prevalent here as it is across our entire City.

We continue to make primary care services available at our two Family Health Centers, Mariners Harbor and Stapleton. And we remain firmly committed to build a $23 million state-of-the-art diagnostic and treatment center at 155 Vanderbilt Avenue. Demolition of the existing building on this site is scheduled for March 2012, and we expect to complete the new facility by March of 2014 and begin seeing patients by the end of that summer. The 21,000 sq ft, three-story building will provide adult, pediatric, diagnostic and specialty care, as well as behavioral health services.

We also installed digital mammography equipment at Sea View to provide breast cancer screening and diagnostic services to patients referred from our health centers and mobile medical offices. Last year, 153 mammographies were performed, and we expect this number to increase significantly in the coming year.

As we have in the past, we continue to work with faith-based and community-based organizations in other public health and outreach efforts. We are also committed to collaborating with our colleagues at the Richmond University Medical Center, Staten Island University Hospital, and other Staten Island health and behavioral health organizations as they develop strategic plans to improve health care access for Staten Island residents. Most recently, we have been engaged in borough-based planning efforts for a Staten Island Health Home to better coordinate the healthcare of patients with complex needs. On the long-term care front, we are especially proud of Seaview’s accomplishments. In 2011, Sea View received a five star rating, the highest score available, from the U.S. Centers for Medicare and Medicaid Services (CMS). This is the fourth consecutive year SeaView have achieved this rating, which reflects the high quality of care provided to its residents. Sea View continues to modernize its services, recently adding its first automated prescription drug-dispensing robot as well as a complement of new state-of-the-art patient beds. Sea View also continues to upgrade its physical plant, completing a $1 million renovation of its elevator system and spending $500,000 on roof replacement this past year.

Conclusion

We appreciate that expanded primary care capacity for low-income residents is needed on Staten Island, especially on the North Shore, and we are committed to continuing our efforts to create more such capacity. At the same time, we are working hard on many fronts, as I’ve outlined, to make our entire 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 tonight’s moderator Mr. Russo. I look forward to hearing your comments.