ALAN D. AVILES
HHC PRESIDENT AND CHIEF EXECUTIVE
REPORT TO THE BOARD OF DIRECTORS
May 31, 2007

On May 21, HHC's Critical Care Improvement Collaborative received prominent attention at the international conference of the American Thoracic Society in San Francisco when Dr. Irwin Berlin of Elmhurst presented our corporate-wide reductions in the incidence of ventilator associated pneumonia (VAP). As you know, we have seen a significant reduction in VAP rates over the last two years at HHC, thanks in large part to the highly collaborative work of our critical care teams, and their focus on implementing a set of best practices known as the "ventilator bundle” to reduce the incidence of this form of hospital-acquired infection. Many of our ICU's have achieved reductions in VAP rates of 50 to 100 percent. Overall, we've seen a 69 percent decrease in VAP for our system, and sustained compliance with the ventilator bundle of approximately 95 percent. During calendar year 2006, six of our ICUs went six months or more without a single instance of VAP.

We continue to strengthen our patient safety program by deepening our understanding of how we create and sustain an organizational culture that is perceived by all staff as being open, just, fair and supportive of system safety. We have made tremendous strides in patient safety over the last year and, as a recent corporate-wide patient safety survey confirmed, our staff recognizes the commitment that HHC leadership has made to patient safety and the high priority we have placed on it.

Last month, I reported that over 100 members of my senior clinical and administrative team participated in a full-day training by David Marx, a nationally recognized expert and leading proponent of a “just culture” approach to patient safety. The training was designed to outline and reinforce the basic concepts of building a Just Culture of Patient Safety - one where we can learn from our mistakes and errors while holding each other accountable for making safe behavioral choices that prevent harm to patients.

During the week of June 4th to June 8th, Mr. Marx will join us once again to provide on-site training on Patient Safety and the Just Culture for Managers. He will provide five, eight-hour in-depth training sessions for approximately 700 network and facility leaders, including clinical and administrative middle managers. This training is a critical component of our strategic work to equip our staff with the knowledge, tools and techniques to support safe, patient centered care.

Last week, Metropolitan Hospital Center was the first HHC acute care hospital to be surveyed by The Joint Commission this year and underwent a five-day review by a team of five surveyors. The facility received unconditional accreditation.

We were all particularly struck by the survey Team Leader’s laudatory remarks about the evident dedication of Metropolitan’s staff to the patients they serve and her pronouncement that if she had to be admitted to a hospital in New York City she would be happy to be a patient at Metropolitan. Congratulations to Meryl Weinberg, Jose Sanchez and all the staff at Metropolitan for their successful survey outcome and, more importantly, for rendering exemplary care to their patients.

Following New York State's recent adoption of a new hospital Charity Care Law, HHC has revised its HHC Options financial assistance program to meet the administrative requirements of the new legislation. HHC Options already met or exceeded most of the new regulations, and the Corporation took this opportunity to further expand many features of the program, beyond the requirements of the new law. The changes include increasing the asset threshold for inpatients from $4,000 to $8,000, significant fee reductions for patients whose income is between 100 and 150 percent of the federal poverty level, and reduced fees for every category of inpatient. We have been working closely with the Commission for the Public's Health and Judy Wessler in particular and would like to extend our thanks for their help in improving and promoting this important program.

On our agenda today, for your review and approval, is an Affiliation contract renewal with the State University of New York/Health Science Center at Brooklyn (SUNY/HSCB) for general care and behavioral health services at Kings County Hospital Center (KCHC). The agreement is a three-year contract commencing July 1, 2007 and terminating on June 30, 2010.

This agreement between KCHC and SUNY/HSCB continues a half century relationship between both organizations. Most recently, they are collaborating to provide cardiac catheterization services at Kings County Hospital Center, with construction of the new cardiac catheterization unit expected to be completed within a month.

The total contract cost for the agreement is expected to be approximately $53.2 million for the three-year contract period.

Also, on the agenda for your consideration is a new affiliation contract with the New York University School of Medicine (NYUSOM) for the provision of general care and behavioral health services at Woodhull Medical and Mental Health Center and Cumberland Diagnostic and Treatment Center. Under this agreement, NYU School of Medicine will assume responsibility for the services now provided by the current affiliate, Medical Associates of Woodhull, P.C. The proposed agreement is for a three-year period commencing July 1, 2007 and terminating on June 30, 2010.

The proposed Affiliation Agreement will compensate NYUSOM based on performance and productivity. The total contract cost for the agreement is expected to be approximately $270.54 million for the three-year contract period. This Affiliation Agreement extends HHC's existing relationship with New York University School of Medicine, a long-time provider of services at Bellevue and Gouverneur, and provides an opportunity for the patients of North Brooklyn Health Network to benefit greatly from the expertise available from a relationship with an outstanding academic medical center.

The Central Brooklyn Family Health Network, which includes Kings County Hospital, has now completed implementation of the eCommerce electronic procurement system, moving HHC closer to achieving paperless system-wide integration of inventory control and procurement. The program can help facilities achieve cost savings through both “just-in-time” ordering, and through bulk “requirements” contracts. The Generations Plus Network, with Lincoln, Harlem and Metropolitan hospitals, will be the next network to come online with eCommerce, followed by the North Bronx Network, with Jacobi and North Central Bronx hospitals. Complete implementation of eCommerce is scheduled for early 2008.

The new geriatric outpatient center at Metropolitan Hospital will soon offer both mental health and physical health services, thanks in part to a grant award of $248,000 from the New York State Office of Mental Health (OMH) and the New York State Office of the Aging (NYSOFA). Metropolitan will partner with the Jewish Board of Family and Children Services to provide mental health care, including pharmacological interventions, individual and family counseling, and group counseling to assist seniors in dealing with chronic diseases, alcohol abuse, and depression.

HHC remains committed to expanding ambulatory healthcare services to Staten Island residents and, to further this initiative, on May 1st, I authorized a deviation from Operating Procedure 100-5, to permit the submission of a binding bid of $1,320,000 for the purchase of an existing Staten Island ambulatory care center. The center, located at 155 Vanderbilt Avenue, is presently owned and operated by Saint Vincent Catholic Medical Centers. As part of Saint Vincent's emergence from Chapter 11 bankruptcy, it is divesting itself of certain real estate holdings, including this site. Since ours was not the only bid submitted on May 1st, a competitive auction of the property then took place on May 8th, at which time HHC was the winning bidder for the price of $1,375,000. This constitutes a binding agreement for HHC to purchase the property.

This matter would ordinarily have been submitted for prior approval of the Board of Directors. However, Saint Vincent's creditors' committee established an extremely tight time frame for the sale of this property, and we determined to bid on the property only after an inspection of the site by our appraiser was granted a few days before the final deadline. Under the circumstances, and because it has been so difficult for us to find suitable space for the expansion of primary care services on Staten Island’s North Shore, I exercised by authority under OP 100-05 to authorize the bid.

On May 17, HHC senior leadership gathered to honor 32 outstanding nurses whose dedicated service has earned them the respect of their colleagues and the gratitude of all of us in New York City's public hospital system. In addition to our extraordinary board member, Josephine Bolus, we recognized nursing excellence in nearly every specialty area and in all of our facilities.

Even as we celebrated the achievements of these exceptional nursing leaders, we recognized as well the work of all the 12,000 dedicated women and men who provide excellent nursing care in our hospitals, medical centers, nursing homes and home care division every day. HHC nurses have been leaders in our system-wide initiatives to improve patient safety, enhance chronic disease management and reduce the health disparities that affect many of the communities we serve.

Many thanks again to our outstanding nursing staff for their skillful professionalism and their dedicated passion to HHC’s mission and to our patients.

This month communities throughout the nation observed Asian/Pacific American Heritage Month. HHC has benefited immeasurably from the many accomplishments of our Asian and Pacific American employees. Many of our medical and administrative leaders represent these rich heritages and in every field they contribute, not only to the high quality healthcare we provide for all New Yorkers, but also to the outreach efforts which address some of the specific health care concerns that affect New York City's Asian and Pacific American communities. For example, a program at Bellevue and Gouverneur addresses the high rate of Hepatitis B among Chinese-Americans and Korean-Americans, through immunization and screening for early diagnosis and treatment. Likewise, Coney Island Hospital reaches out to Pakistani, Bangladeshi and Indian New Yorkers, many of whom experience premature coronary artery disease, through their South Asian Healthy Heart program. We applaud HHC's employees of Asian and Pacific American heritage for their contributions to improving the healthcare of our patients. The breadth and uniqueness of Asian and Pacific American cultures greatly benefits HHC and enhances the health of all New Yorkers.

• April 30- Modern Healthcare announced that HHC President Alan D. Aviles had been selected as a recipient of this year’s CEO IT Achievement Award for his leadership and commitment to using information technology to advance the Corporation’s healthcare goals. Aviles was selected from over 60 CEOs around the nation and is one of three honorees this year.

• May 1- The Safety Net interviewed HHC President Alan D. Aviles on transforming hospital operations despite financial challenges, highlighting how HHC leverages technology, using an electronic disease registry to help doctors monitor diabetic patients. The magazine also featured comments from Dr. Crystal Clark, HHC’s Assistant VP of Corporate Quality Improvement and Lynda Curtis, Senior VP and Executive Director of Bellevue Hospital Center on how to address health care disparities.

• May 9-20- HHC received significant media coverage this year for the Mother's Day mammography campaign. An editorial in El Diario on May 9 encouraged women over 40 to sign up for low- or no-cost mammograms at HHC facilities, noting that breast cancer is the most commonly diagnosed cancer for Hispanic women. On May 11 WPAT Radio interviewed Dr. Natalia Calderon, Medical Oncologist at Queens Hospital Center, about the importance of mammographies, and on May 12 El Diario covered the same topic in an interview with Bellevue Hospital's director of Oncology and Hematology, Dr. Mary Lynn Nierodzik, who also emphasized the importance of screening for cervical cancer. Staten Island Advance reporter Lisa Schneider also reported on HHC’s campaign to encourage women on Staten Island to get screened for the disease.

• May 20- In a Letter to the Editor of The New York Times HHC President Alan D. Aviles discussed how the City’s public hospitals have met the demand for mammogram screenings despite the national downward trend. Aggressive multilingual outreach and investing in digital imaging technology has led to HHC performing nearly 90,000 mammograms last year.

• May 22- New York Daily News reporter Nicole Bode profiled Dr. Sushma Nakra, Associate Chairperson of Obstetrics and Gynecology about her 30 years of service at Coney Island Hospital, as part of their Big Town Big Dreams series on outstanding immigrant New Yorkers. Nakra works closely with South Asian women and local religious leaders to keep cultural differences from becoming barriers to high quality medical care.

• May 25- The New York Times reporter Anthony DePalma interviewed Dr. Joan Reibman, Director of the WTC Environmental Health Center at Bellevue Hospital Center about medical care for those with 9/11-related illnesses.