ALAN D. AVILES
HHC PRESIDENT AND CHIEF EXECUTIVE
REPORT TO THE BOARD OF DIRECTORS
May 25, 2006

HHC SENDS STRONG MESSAGE OF REASSURANCE TO IMMIGRANT NEW YORKERS

Over the last few months, there has been much debate about proposed changes in our federal immigration laws and the bolstering of our nation's border security. On the extreme end, some in Congress have proposed harsh criminal sanctions aimed at both undocumented immigrants and those who aid them. The Senate and the House have now both passed differing immigration reform bills and the contours of final federal legislation, if any, remains unclear.

Amid this contentious debate, there are reports that growing fear among immigrants is leading some to cancel doctor appointments or not seek care in clinics, hospitals or emergency rooms. Trust is fundamental to the relationship between patients and their healthcare providers. Our public hospitals, in particular, have been successful in serving the new immigrant communities of this City because we have worked hard to earn that trust. We have been steadfast in our policy of protecting the confidentiality of all information obtained from patients. Indeed, last year we determined that we would forgo some modest but nonetheless significant federal funding being made available to emergency departments to offset some of the cost of serving uninsured, undocumented immigrants. We made the decision to forgo this supplemental funding because accepting it would have required that we keep patient-specific records related to undocumented status and that those records be made available to federal authorities for auditing purposes. We believed then, as we do now, that participation in that federal program came at too high a price because we would have been required to share a patient's sensitive documentation status with other governmental authorities.

Despite our commitment in this area, many of our immigrant patients are unaware of our strong policies around patient confidentiality. So this month HHC is launching a vigorous public awareness campaign to send a reassuring message to immigrant New Yorkers that they may safely use public hospitals without fear that any of their personal information, including their immigration status, will be disclosed to any third party. I reached out to Commissioner Guillermo Linares of the Mayor's Office of Immigrant Affairs and asked him to join HHC in this effort and use the resources of his office to spread our message even more widely. Commissioner Linares and I have drafted a joint Open Letter to the immigrant community to convey this important message. That Open Letter will be distributed widely among HHC patients, staff, immigrant groups, community-based organizations, elected officials and others. We are also reaching out to print, radio and cable television media outlets that reach immigrant New Yorkers throughout the city to ask them to publish the letter and to air public service announcements to echo this reassuring message.

To insure that all HHC staff are well-informed about the campaign, last week I sent a letter to all employees reinforcing HHC's long-standing confidentiality policy. Over the next few weeks, HHC staff will be invited to participate in small group sessions and larger town hall meetings to discuss these issues in more detail. Commissioner Linares and Immigration Coalition Executive Director Adam Gurvitch have graciously agreed to join me at some of my meetings with front line staff at our facilities to discuss how we can reach out effectively to immigrant New Yorkers and answer questions about HHC's policies regarding the protection of privacy for all our patients.

Treating patient information as confidential is critical to our mission and to the public's health. We have always understood that we must earn and keep our patients' trust before we can expect to help improve their health. Together with the Mayor's Office and our partners in the media and the community, we will do everything possible to assure immigrant New Yorkers that when they seek healthcare at our facilities, their privacy is safe.

CRITICAL CARE COLLABORATIVE TURNS ITS ATTENTION TO IMPROVING OUTCOMES FOR SEVERE SEPSIS

HHC's Critical Care collaborative continues to register positive results as teams from each of our facilities work to implement evidence-based clinical practices that have been shown to improve patient safety and reduce mortality. Most recently, some teams have begun to focus on evidence-based interventions, first developed through an international collaboration on sepsis care improvement, to better manage patients with severe sepsis or septic shock. Severe sepsis and septic shock are virulent blood stream infections that implicate internal organs; in the case of septic shock, there is also a sudden life-threatening drop in blood pressure. Mortality rates from severe sepsis and septic shock are very high, often approaching or exceeding 50%. It is estimated that 750,000 patients die each year from severe sepsis or septic shock across the United States.

The critical care team at Lincoln Medical and Mental Health Center was the first to implement a newly defined "bundle" of evidence-based interventions in their management of sepsis earlier this year. During the first two months of implementation, the mortality rate of severely septic patients at Lincoln has dropped to below 25% from a previous average of 45%. These results translate to as many as six lives saved among those who were treated for severe sepsis during the first two months of full implementation and illustrates the potential importance of this promising work. The specified interventions they have put in place must each be accomplished within very narrow time constraints and require close cooperation between the ICU and the emergency department. I congratulate the team at Lincoln for these very encouraging preliminary results. We are now working with critical care teams at other facilities to incorporate these practices more broadly.

HHC NEARS GOAL FOR ELECTRONIC DIABETES REGISTRY

Earlier this year I announced our Corporate-wide goal to track and treat more than 45,000 adult diabetics by June 30th through a web-based computerized tool that helps our physicians closely monitor and improve care for their diabetic patients. I'm confident we will reach this goal since we already have more than 40,000 patients entered into our electronic registry. We continue to train physicians in the use of the registry to more closely track the status of their diabetic patients and to support better disease management.

HHC INTEGRATES DEPRESSION SCREENING INTO ELECTRONIC MEDICAL RECORD FOR BETTER CHRONIC DISEASE MANAGEMENT

On a related front, HHC facilities are now training staff throughout our system in the effective use of the nationally recognized PHQ-9 depression screening tool, which has been integrated directly into our electronic medical record system. We are using the screening tool first for our patients with diabetes and congestive heart failure who, like many other patients with chronic disease, tend to suffer from higher rates of depression. Treating underlying depression is often an essential first step before patients with chronic disease can be engaged fully in effective self-management efforts. I want to thank Commissioner Frieden and Executive Deputy Commissioner Lloyd Sederer for their support and assistance in our ongoing efforts to train primary care providers to appropriately treat much of the mild and moderate depression that is uncovered through this screening activity.

NURSING EXCELLENCE

• I am pleased to inform you that on May 22nd the membership of the New York State Nurses Association (NYSNA) ratified a new contract with HHC and the City of New York. The new agreement, which is effective from January 1, 2003 through November 30, 2007, will bring our nursing staff a well-deserved 12.5% increase over the life of the contract. The new contract will bring the nurse entry-level base salary to $61,526, effective October 1, 2006, from $54,691 under the previous contract. This new agreement is an important step forward in acknowledging the hard work of our nurses and should assist us in our efforts to recruit and retain capable nursing staff.
   
• On May 3rd, HHC participated in the opening of the Jonas Center for Nursing Excellence where founders Barbara and Donald Jonas announced their grant award recipients for 2006. HHC received two of 11 awards granted, for a total of $818,000, with funding awarded to Queens Hospital Center for its Registered Nurse Retention project and to HHC Corporate Nursing for its Leadership Academy. The program at Queens was developed in partnership with Adelphi University. The HHC Corporate Nurse Leadership Academy was developed in collaboration with several local colleges, and HHC's Office of Clinical and Health Services Research. The HHC Foundation was instrumental in providing technical assistance in the preparation of the successful grant proposal. Congratulations to all for their success in securing this important support for the professional development of our nursing staff.
   
• Last week, on May 17th, I had the opportunity to acknowledge HHC's exceptional nursing staff at the annual Corporate Nursing Recognition event which was held in the new Conference Center at Jacobi Medical Center. The 2005-2006 professional accomplishments by individual nurses and facilities throughout HHC were featured and outstanding nurse leaders were recognized for distinguished service. Our thanks to Board member (and Nurse Practitioner) Josephine Bolus for her participation in that celebratory event.

HHC RECEIVES FUNDING BOOST FROM NEW YORK CITY EXECUTIVE BUDGET

On May 4th, Mayor Bloomberg announced his $52.7 billion Fiscal Year 2007 Budget, which will include a one-time $385 million supplemental allocation for HHC. The Mayor noted in his remarks that the additional funding for New York City's public hospitals is needed in the upcoming Fiscal Year because hospitals everywhere, including those in the voluntary sector, are struggling financially as rising costs exceed available reimbursement revenues. We are grateful to the Mayor for his strong support of our mission, and look forward to the concurrence of the City Council in approving this aspect of the Executive budget.

MARINER'S HARBOR CHILD HEALTH CLINIC ON STATEN ISLAND TO EXPAND

On today's agenda for your consideration is the approval of a lease for a 1,975 square-foot space at 2040 Forest Avenue to house an expanded Mariner's Harbor Child Health Clinic on Staten Island. The space is currently occupied by St. Vincent's Catholic Medical Center and will close soon. The rental terms for the space are more favorable than alternative spaces in the vicinity and funding has been secured for needed renovations. The Mariner's Harbor clinic is currently operated by Coney Island Hospital in a much smaller facility and this expansion would ensure that HHC is able to provide greater access to pediatric services for the medically underserved population on the North Shore of Staten Island. I urge your approval of this lease to support this expansion.

AFFILIATION AGREEMENT LINKS COMPENSATION TO PRODUCTIVITY AND EXCELLENCE IN NATIONAL HEALTH MEASUREMENTS

Also on today's agenda is an affiliation contract renewal with the Downtown Bronx Medical Associates, P.C. ("DBMA") for general care and behavioral health services at Lincoln Medical and Mental Health Center. The agreement is a three-year contract from July 1, 2006 to June 30, 2009. The proposed compensation is based on productivity and performance and includes standards for measuring improvement in the quality of documentation by attending physicians, achieving excellence with the targeted core performance indicators of the Centers for Medicare and Medicaid Services ("CMS"), and improvement in risk management. New goals that have been added include the development of a Geriatric Inpatient Service and development of a Palliative Care Service. The proposed total contract cost for the three-year agreement is $176 million, approximately a 6% increase over the previous contract.

HHC TO PROVIDE HEALTH SERVICES FOR DEPARTMENT OF JUVENILE JUSTICE

Last month HHC entered into an agreement with the New York City Department of Juvenile Justice (DJJ), effective May 1st, to provide comprehensive medical and dental services in general pediatrics and adolescent medicine to approximately 5,000 young residents annually in three juvenile centers operated by DJJ - two in the Bronx and one in Brooklyn. HHC already provides emergency and special clinical care to DJJ children. The new HHC clinical teams - a total of 42 staff at all three facilities - will include some of the current staff at the centers, supplemented by clinical staff from Lincoln Medical and Mental Health Center and Kings County Medical Center. This is an interim arrangement to meet the healthcare needs of these children and adolescents while DJJ conducts a competitive procurement for a new health services vendor.

HHC FINANCIAL HEALTH CONFIRMED BY BOND RATING UPGRADE

I am happy to report that yesterday Standard & Poor's upgraded their ratings for HHC bonds to A- with a stable outlook, from the previous BBB+ rating. The rating agency's published analysis confirmed the fiscal health of the Corporation and credited strong support from New York City, particularly the City's substantial support for our capital projects.

STRATEGIC REINVESTMENTS FOR CAPITAL IMPROVEMENTS

• The Corporation's major modernization projects at Kings County Hospital Center, Harlem Hospital Center, Queens Hospital Center, and Jacobi Medical Center are continuing to progress satisfactorily.
   
• Elmhurst Hospital Center held a ribbon cutting ceremony on May 5, 2006 to open the renovated Junction Boulevard Child Health Clinic. The clinic is operated by Elmhurst Hospital Center in a neighborhood with a large Mexican-American population, so it is appropriate that the new opening occurred in the midst of a Cinco de Mayo celebration in the neighborhood. The clinic serves an average of 850 patients per month, primarily from Queens, but also accommodates patients who come to it from the other five boroughs.
   
• Kings County Hospital Center held a community open house on May 16th for the recently completed 249,000 square-foot, five-story Emergency, Diagnostic and Treatment Pavilion, which centralizes services that were previously distributed in several buildings throughout the 44-acre hospital campus. The new building houses Adult and Pediatric Emergency Services, Radiology, Diagnostic and Treatment, Operating and Recovery Rooms, Ambulatory Surgery and Labor and Delivery Suites. The Lower Level of the building will hold the hospital's first Linear Accelerator, offering Brooklyn residents state-of-the-art cancer treatment services. Phased occupancy of the new building began on May 22nd. Ironically, the first patient in the new building, Mr. Ronald Reed, was born at Kings County Hospital in 1937 - a fitting tribute to the hospital's proud tradition of service to the Central Brooklyn community.

HHC EXPANDS PREVENTIVE HEALTH SERVICES THROUGH NEW CONTRACT WITH HEALTHFIRST

HHC recently entered into an agreement with Healthfirst, a non-profit, provider-sponsored Health Maintenance Organization for Medicaid, Family Health Plus and Child Health Plus, effective June 1, 2006. As a result of the terms of this agreement, HHC is now one of the full owner hospitals of Healthfirst and will earn revenues from capitated fees for members who select one of our facilities as the primary site for their care. The additional revenue generated through this strategic partnership will be available for investment in the preventive health services that are so crucial to the long-term health of the communities we serve.

HHC has been a partner in Healthfirst since 1997, first through Elmhurst Hospital then Queens Hospital. Participation then grew to include all the remaining HHC hospitals and D&TCs for Medicare only. Through this new agreement, all HHC facilities now will be Healthfirst providers for Medicaid, Child Health Plus and Family Health Plus.

Healthfirst will have on-site marketing at all HHC facilities, a privilege which has only been granted to MetroPlus in recent years. MetroPlus has been and will continue to be an invaluable partner. We fully expect that the new agreement will allow us to maintain and grow our membership at MetroPlus, while we build our membership at Healthfirst.

HHC FOUNDATION ACKNOWLEDGES COMMUNITY LEADERS AT SECOND ANNUAL FUNDRAISING BREAKFAST

I want to congratulate the HHC Foundation for their success in raising a record $556,000 at the HHC Foundation's Second Annual Breakfast on Tuesday, May 16th. The money raised will support some of HHC's priority initiatives. The event was attended by an impressive array of supporters, including Mayor Michael Bloomberg and over 500 attendees from the corporate, medical and philanthropic community.

The program included a video which highlighted the work of our facilities and an interview with Bruce Hammonds, President of Bank of America Services. Last summer, Hammonds, then CEO of Delaware based MBNA, was plucked from the East River after a helicopter carrying him and five senior executives crashed into the water. Mr. Hammonds' acknowledgment of the expert emergency care he and his colleagues received at Bellevue Hospital was a potent tribute to the exceptional services that HHC facilities offer to New Yorkers every day.

HEALTH LEADERS SHARE STRATEGIES TO REDUCE HEALTH DISPARITIES AT FIFTH ANNUAL URBAN HEALTH CONFERENCE

The Generations + Northern Manhattan Health Network will host the fifth annual Urban Health Conference on June 14th and 15th. The event will bring together health leaders from throughout New York City to share the strategies that have been developed to reach out to patients with preventive programs and effective treatments for many of the health conditions that disproportionately affect the communities we serve. The opening keynote address will be presented by Bellevue Hospital Medical Director Eric Manheimer and will address HHC's corporate priority of Patient Safety. Additional presentations will focus on improving outcomes for stroke patients, effective patient care in a managed care setting, the challenges of rehabilitation medicine and helping patients to cope with the challenges of post traumatic stress syndrome.

RETIREMENT OF RUTH OGIESTE

At the end of this month, our colleague Ruth Ogieste will be retiring from her position as Executive Director of the Dr. Susan Smith McKinney Nursing and Rehabilitation Center. Since first joining HHC in 1970, Ruth has served in a variety of financial and administrative positions at Elmhurst and Sea View before coming to McKinney to accept the position of Executive Director in 1997. As a result of Ruth's leadership, McKinney earned full accreditation from the Joint Commission on Accreditation of Healthcare Organizations (JCAHO) during its first 10 months of operation and 100% occupancy in 15 months. Also under her guidance, McKinney has become one of only two skilled rehabilitation centers in Brooklyn to achieve accreditation from the Commission on Accreditation of Rehabilitation Facilities (CARF). Ruth's contributions to McKinney and to HHC have been exceptional and we wish her good health and happiness in her retirement.

PASSING OF RUTH BLOOM

We are deeply saddened at the recent passing of long-time Board member Ruth Bloom. Ruth had been the longest serving Board member on our current Board, having been appointed during Mayor Koch's administration. Her fierce dedication to HHC's mission and the best interests of our patients was well-known. Ruth was devoted to her duties as a Board Member and was a familiar face in many of our facilities where she visited frequently. Her contributions were not limited to her Board activities - she was an educator and was involved in a wide variety of community activities. She was an esteemed Board member who earned our respect and affection, and she will be greatly missed.

HHC IN THE NEWS HIGHLIGHTS

• May 4- Crain's Health Pulse reported on HHC and Queens Hospital Center receiving grants of $150,000-$400,000 from the Jonas Center for Nursing Excellence. The funds will support nurse recruitment, ethnic and racial diversity and better practice models.
   
• May 22- Channel 2 featured the multi-lingual signage at Bellevue Hospital in its recent coverage of the U.S. Senate's pending immigration legislation. Bellevue officials told reporters that, regardless of legislation, the hospital will make certain that non-English speaking patients can communicate effectively with their healthcare providers. Mayor Bloomberg confirmed that the City has no plans to end programs that help immigrants receive services.
   
• May 24- Crain's Health Pulse reported that nurses employed by HHC approved a new 59-month contract that gives a 12.5% salary increase over the term of the contract. The contract was praised by the New York State Nurses Association.
   
• May 25- The New York Times reported that Local 1188 of the Transportation Workers Union won a decision by the Office of Collective Bargaining to represent an additional 1,300 Health and Hospital employees in administrative positions. An HHC spokeswoman was quoted saying the corporation looks forward to working with the union to assure a smooth transition.