ALAN D. AVILES
HHC PRESIDENT AND CHIEF EXECUTIVE
REPORT TO THE BOARD OF DIRECTORS
September 20, 2007

On September 6, HHC began to publish certain corporate-wide and facility-specific data related to quality and patient safety on our corporate web site (nyc.gov/hhc), drawing wide media attention and praise from national health leaders. As I have stated in the past, this initiative demonstrates our willingness to step up, voluntarily detail our performance on important patient safety measures, and hold ourselves publicly accountable for doing all we can to keep our patients safe.

The action prompted a major feature article in The New York Times, was covered by broadcast media on NY1, WNBC Today in New York, WABC - Eyewitness News, Fox 5, News 12 The Bronx and CW11 and generated stories in the print media in the Daily News, Crain's New York Business and The New York Sun.

Although our data reflects less than perfect performance, it demonstrates that we have focused our performance improvement efforts on some of the quality issues that should matter most to patients and that we are making steady progress for the better. Sharing our results with our patients, our communities, and all members of our own organization does raise the stakes, but it is the right thing to do and helps us to create the type of open and honest learning environment that will drive further improvement.

Our next step in the months to come will be to publicly share some of the measurable outcomes in our treatment of certain chronic diseases, such as asthma and diabetes, which is another clinical strategic focus for us.

Today I joined Mayor Bloomberg at a press conference at Gouverneur Healthcare Services to announce the expansion of the World Trade Center Environmental Health Center at Bellevue Hospital with additional satellite treatment sites at Gouverneur and Elmhurst Hospital Center. HHC received $16 million from the City of New York to set up the WTC Environmental Health Center at Bellevue Hospital in 2006. In anticipation of federal funds, the City of New York has committed an additional $33 million to help expand access with the two additional locations and serve up to 20,000 patients over the next five years. The Center works in partnership with community organizations, many of which have been instrumental in our outreach efforts, and offers expert specialized health services to people experiencing health problems as a result of exposure to dust and smoke from the WTC disaster. The Center at Bellevue has evaluated and treated more than 1,300 patients thus far.

HHC is one of 12 healthcare organizations in the U.S. and Europe chosen by the Institute for Healthcare Improvement (IHI) to work together over the next year on its new "Triple Aim" Initiative. The goal of the collaborative is to develop innovative models of care delivery that simultaneously improve health for patients, achieve a positive patient experience of care and keep costs low. The Queens Health Network will be representing HHC in the collaborative and will be modeling their work with a population of adult patients enrolled in HHC's Medicaid Managed Care plan MetroPlus, who are being treated for diabetes and other co-morbid illnesses.

As our staff prepares for the impending flu season, HHC hospitals are planning to launch an aggressive program to immunize employees throughout the system. HHC will launch a "flu shot blitz" during the two-week period beginning October 22. Mobile immunization stations will visit every care area during every shift to offer immunization to any employee who requests it. Studies have shown that wide immunization of healthcare workers can be very effective in preventing flu cases, especially among patients in fragile health who may be more vulnerable to infection and the secondary illnesses that can accompany influenza. This is yet another way in which we are promoting patient safety.

On September 26, HHC clinical leaders will gather at Woodhull Medical and Mental Health Center to mark the completion of HHC's system-wide implementation of the Wee Care training program in all HHC neonatal intensive care units. The training, developed by Children's Medical Ventures (CMV) and funded by the New York State Health Department and our own HHC Foundation, was launched on March 5 to standardize the developmental model of neonatal care throughout our system. This approach to neonate care minimizes environmental stress from light and sound, tailors care at each stage of infant development and supports close partnerships with the families of infants. Twenty-two percent of all infants born in HHC facilities each year are admitted to our NICUs and the developmental care model can help to minimize short term and long term complications to which they are vulnerable.

In mid-August, the Centers for Medicare and Medicaid (CMS) found that New York State had made unallowable claims for federal matching funding for Medicaid expenditures for the treatment of undocumented immigrants and temporary residents (i.e., foreign students, visitors and workers) for certain conditions. Federal law restricts payment made to a state for medical treatment provided to certain categories of immigrants. Federal payments to states are available only if such care and services are necessary for treatment of an emergency medical condition. CMS identified and New York State agreed that certain rehabilitation services, physical therapy, chemotherapy and all durable medical equipment did not fall into the definition of emergency medical condition. New York State reimbursed the federal government for unallowable claims for federal match. In addition the state informed local Medicaid agencies that payment for the provision of rehabilitation procedures, physical therapy, chemotherapy, radiation therapy and durable medical equipment to certain categories of immigrants would no longer be allowed. There has been significant concern among the advocacy and provider communities that people who have been receiving these services would begin to be denied treatment, or that people would discontinue their care because they were not covered.

In recent discussions with the State Department of Health, specifically concerning the payment for chemotherapy and radiation therapy, we have been told that there will be revisions made to the guidance provided to local Medicaid agencies so that the potentially very harmful impact can be mitigated.

As part of its strategy to provide health insurance coverage to all uninsured children in the state, New York State sought approval from the federal Centers for Medicare and Medicaid Services (CMS) to expand the eligibility for its SCHIP program, Child Health Plus, to 400 percent of the federal poverty level (FPL). Currently, children whose family incomes are below 250 percent are eligible.

On September 7, CMS notified New York State that its state plan amendment to expand the Child Health Plus program was denied, because New York State did not comply with new rules set forth in an August 17 CMS letter to states which restricted expansions of the SCHIP program. Specifically, CMS denied New York's request because it said that:

• New York could not prove that 95 percent of uninsured children whose family incomes are below 200 percent of FPL were enrolled in either Medicaid or Child Health Plus. In fact, New York has one of the highest participation rates of all states - 88 percent. No state has reached the 95 percent enrollment level;
• New York's plan did not meet CMS requirements that a child be uninsured for 12 months - before becoming eligible for Child Health Plus. In fact, New York's plan requires a six month wait time which is similar to wait times of several states that have received CMS approval for expansions above 200 percent FPL. The State Department of Insurance reports that New York has not experienced a "crowd-out" problem (i.e., privately insured children moving into public insurance programs);
• New York's requirements for what families must pay toward the Child Health Plus premium were too low in comparison to the co-premiums required for private insurance, or were not set at five percent of family income. In fact, New York's co-premium requirements are comparable to amounts set by other states and previously approved by CMS. The private market does not sell policies for children only; and New York's cost-sharing levels are comparable to the incremental cost of covering children through employer-sponsored insurance. Some families cannot afford to pay five percent of their income, thus making insurance coverage for their children impossible.
  
  New York State has argued that the cost of living in New York is among the highest in the nation, even at 400 percent FPL, families in New York City and Long Island, for example have little discretionary income. New York State contends that the level of cost-sharing required should be partly based on the amount of discretionary income available after paying for housing, taxes, child care, food and transportation. New York State found that two-thirds of all uninsured children live in areas in the state where families at 350 percent FPL have no discretionary incomes after paying for these necessities.

New York State continues in its efforts to secure federal approval for its expansion of coverage for children through Congressional pressure on both CMS and the White House to roll-back the August 17 CMS letter and to reconsider its proposal based on arguments that the State has put forth. We will continue to apprise the Board on the status of this important issue.

Earlier this year, we terminated our contracts with several Medicaid managed care plans as we move to consolidate our managed care relationships in a more strategic way. At the beginning of this month, three more Medicaid managed care plans were notified that their managed care contracts with HHC facilities will be terminated. The termination date for this final wave of plan terminations is in early December. However, the terminations will not take effect until early February because of a new State law that automatically extends contracts for 60 days beyond negotiated termination dates. We are working with these plans to minimize disruption for their members and assure continuity of care.

The terminations are part of HHC's efforts to align our insurance reimbursement model with our proactive agenda focused on prevention, and to reduce the high administrative expenses associated with submitting claims to many plans with differing requirements. HHC is opting for “global capitation” reimbursement arrangements with fewer insurance plans that can each cover a minimum of 25,000 HHC patients. Under such a global capitation arrangement, a health plan pays us a standard monthly fee, or “capitation payment” for each member, regardless of a patient's specific medical conditions or actual use of our healthcare services. Unlike “fee for service” models that provide “piece work” payments that are heavily weighted toward specialty and inpatient services, these “global capitation” arrangements create a built-in incentive for HHC to keep investing in preventive care and care management services that help keep patients healthy and out of the hospital.

Despite the terminations that occurred earlier this year, HHC thus far has not suffered a net loss of managed care patients, suggesting that most patients are more loyal to our providers than to their particular managed care plan and, if necessary, will switch plans to continue receiving services at HHC.

On July 31, the eve of World Breastfeeding Week, HHC announced that its hospitals will, among other things, exclude free baby formula samples from gift bags to new mothers, will ban formula promotion materials from labor and delivery units and will encourage initiation of breastfeeding in the baby's first hour as part of a campaign to increase exclusive breastfeeding and improve infant health.

The announcement received broad news coverage on local and Spanish television stations as well as radio coverage on 1010 WINS, WADO Radio and NPR Radio. Print coverage included The New York Times, New York Post, Hoy, El Diario, and EFE. National coverage included ABC World News Tonight, Today Show, CNN and The View.

A multitude of evidence shows that breastfeeding reduces the risks of common childhood infections, asthma, diabetes and other conditions. HHC's comprehensive breastfeeding program, funded in part by the City Health Department, features new gift bags for moms with a breast milk bottle cooler, disposable nursing pads, breastfeeding tips and an “I eat at mom's” baby t-shirt. Breastfeeding education during early prenatal care and a comprehensive lactation counseling and support program are also available to new mothers. We estimate that, on average, about 24 percent of women who deliver in our hospitals now leave the hospital exclusively breastfeeding, up from less than 15 percent just one year ago. Our goal is to triple that number by the year 2010.

For the sixth consecutive year, HHC will be holding a major public health education outreach in October during our annual "Take Care New York" month. The campaign urges all New Yorkers to get screened for cancer, heart disease, diabetes and other serious chronic illnesses. A central part of our mission is to reduce the health disparities that continue to plague the communities we serve, and early detection and treatment is a key factor in keeping people healthy. HHC hospitals will conduct screenings at little or no cost to the participants, as well as major educational activities. The outreach will be promoted through radio ads in Spanish and English, movie theatre advertisements in over 130 locations, direct mail postcards in our communities, and public service announcements in local newspapers. Facilities will be distributing HHC's attractive new "Take Care New York" calendar with year-long health messages, as well as branded plastic bags and frisbees. This year's campaign will also highlight our family of HHC employees with a highly appealing "I take care of New York" message. Posters featuring photos of our staff, who represent a wide variety of healthcare occupations and the rich cultural diversity of New York's neighborhoods, will be prominently displayed in our facilities.

HHC has renewed a campaign, first launched in 2006, to promote child health centers in neighborhoods throughout New York City. Funded by the City Council, the campaign reminds parents that they can receive outstanding, culturally sensitive healthcare for their children at nearby locations. The campaign's message will be seen on buses, at bus stops, on subway platforms and in subway cars that serve areas near the child health centers. New York City Child Health Centers are celebrating a century of service in 2007 and the message is particularly apt at a time when children are going back to school and need immunizations and physical checkups.

On our agenda today is a resolution to renew a Memorandum of Understanding with the City University of New York (CUNY). This document outlines a process for HHC facilities and CUNY colleges to follow when developing joint projects. The implementation of actual programs is contingent upon available funding. HHC has had many successful CUNY collaborations, including undergraduate and graduate nursing and social worker training programs, leadership training, courses for staff in public safety and disaster preparedness, and training in medical records coding. I urge your support for the continuation of this successful agreement with the public university system.

The Department of Education's Licensed Practical Nurse Program, located at Goldwater Hospital, opened as scheduled on September 4, with 39 students. Through the program, which is funded by the Mayor's Center for Economic Opportunity, low-income community members will receive LPN training in exchange for a work commitment to HHC. We welcome this opportunity to collaborate with the Mayor's Office on a program that will help New Yorkers improve their earning skills at the same time they help HHC tackle the nursing workforce shortage.

A large number of high-tech capital projects have been completed at HHC facilities recently.

• On August 7, Metropolitan Hospital Center's new Robot RX Pharmacy Delivery system was formally inaugurated. The system uses bar coding to provide accurate dispensing of medications for inpatient units and automatically maintain inventories.
• A few days later, on August 10, a ribbon-cutting was held for Kings County Hospital Center's new 6,500 square foot Cardiac Catheterization Suite, which will enable the hospital to provide dedicated adult diagnostic cardiac services.
• This week, on September 17, a ceremony was held to mark the second phase of the expansion of Elmhurst Hospital Center's Department of Rehabilitation Medicine for adult and pediatric patients.
• Earlier today, Bellevue Hospital Center held a ribbon-cutting ceremony to celebrate the opening of the facility's new Thoracic Surgery Unit. The new unit will enable surgeons to provide operative, perioperative and critical care to patients with pathologic conditions within the chest. These conditions include the surgical care of coronary artery disease, cancers of the lung, esophagus and chest wall.
• Next week, on September 26, a ribbon-cutting ceremony at Queens Hospital Center will mark the installation of the facility's new positron emission tomography/computer tomography (PET/CT) scanner. The PET/CT technology is considered to be the most accurate means of identifying the dimensions and positions of malignancies as well as determining their metabolic characteristics.

On August 22, Lincoln Medical and Mental Health Center, in collaboration with the New York Yankees, sponsored a back-to-school immunization drive at Yankee Stadium. Children, their parents and guardians, and Lincoln's staff were treated to Yankee giveaways and tickets and Yankee players were on hand. Another joint immunization drive with the Yankees is scheduled to take place at Lincoln this Saturday, September 22.

• July 30 - Channel 4 interviewed Dr. Mark Thompson of Kings County Hospital Center about the remarkable recovery of a 13-year-old boy, treated at the hospital for a gunshot wound to the head.
• August 9 - New York Daily News interviewed Dr. John Palmer, Executive Director of Harlem Hospital, about methods to control childhood obesity in central Harlem, where studies show that 20% to 25% of preschool and approximately 40% of school-age children are overweight or obese.
• August 13 - The New York Sun profiled HHC President Alan D. Aviles about health care issues and improvements for the City's public hospital system including the adoption of electronic health records, a diabetes registry and removing formula samples from gift bags given to new moms as part of its broader breastfeeding promotion efforts.
• August 20 - NPR Radio interviewed Dr. Elliot Goytia of Queens Cancer Center about the importance of cancer screenings in early detection.
• August 22 - The Los Angeles Times, in its article 'New York's Bellevue: From Medicine to Manuscripts,' describes the Bellevue Literary Press, a donor-funded program that has released a novel about sickness and recovery, a collection of editorial cartoons by an accomplished physician-artist and an experimental non-fiction work that explores the mind-set and meaning of awkwardness.
• August 27- For the second year in a row, Alan Aviles was named one of the 100 Most Powerful people in Healthcare by Modern Healthcare Magazine. According to the magazine more than 12,600 nominations were received from readers. The magazine then placed the 300 most nominated on a final ballot for vote. It is the sixth year for Modern Healthcare to put out such recognition and Mr. Aviles, who was ranked in 85th place on the list last year, rose to 55th place this year.
• September 11 - New York 1 News interviewed Dr. Joan Reibman of Bellevue for an update about the WTC Environmental Health Center. The story touched on the number of patients treated at the center since the 9/11 attacks and the additional funding for the expansion of services. Dr. Reibman also spoke about the importance of additional funding for research.
• September 17- Crain's New York Business announced the opening of Elmhurst's renovated department of rehabilitation services. The article highlights the new improvements made, including computerized scheduling and new exam and treatment areas.
• September 18- The New York Times interviewed Daniela Iacoboni of Jacobi Medical Center and North Central Bronx Hospital about her job as a Prenatal Genetic Counselor educating expectant parents about genetic risks of their pregnancies. The article featured the many medical services and other supports available for parents, as they consider all options.