ALAN D. AVILES
HHC PRESIDENT AND CHIEF EXECUTIVE
REPORT TO THE BOARD OF DIRECTORS
February 28, 2008

HHC has developed an outreach campaign for Colon Cancer Awareness month in March that is its most ambitious to date. This year's campaign, funded in part by the New York City Health Department, will once again feature high-profile New Yorkers Wesley Autrey and Chita Rivera to reach those over 50, who are at greatest risk, and urge them to get checked at HHC hospitals for colon cancer. The radio campaign will reach over 7 million listeners, HHC doctors will give on-air interviews about colonoscopies, and radio stations will make van appearances at key locations to draw New Yorkers to our screening events. A video public service announcement featuring Mr. Autrey and Dr. Sherrita Bhagan-Bruno of Harlem Hospital will reach nearly 3 million local television viewers, and newspaper print ads will be seen by 1.4 million readers. Poster ads will be on bus shelters located near HHC hospitals, as well as near the Staten Island Mall and Staten Island ferry terminal. Ads will also be placed on ad panels within all of our 11 acute care facilities, to reach our current patients and staff. Over the past five years, HHC has made impressive gains in this area, providing roughly 50,000 more colonoscopies for New Yorkers than in the previous five-year period. This campaign promises to increase those numbers further.

The Age-Friendly New York City Initiative is a partnership among the City Council, the Mayor's Office and the New York Academy of Medicine. As a first step in its participation, HHC is conducting a "self-assessment" of our system, using measures developed by the World Health Organization (WHO) to define the essential features of age-friendly cities. We are also being asked to identify current and potential activities that we are engaged in or plan to embark upon over the next two years. The initiative will be addressing a plethora of related issues, including the availability of health and community support services for older people, the safety and accessibility of health facilities, easy-to-understand information about health services for seniors, support for voluntary services by people of all ages, and emergency planning that considers the vulnerabilities and capabilities of older citizens. Senior leadership convened the first planning meeting on February 13th to launch HHC's participation in this initiative.

Last week the Centers for Medicare and Medicaid Services (CMS) issued three regulations of importance to the Medicaid program. The first is a final regulation implementing legislation that reduces to 5.5%, from 6.0%, the permissible provider tax that states can charge Medicaid Providers. Losses for the State of New York’s Medicaid program could be several hundred million dollars, but it is unclear how CMS will actually implement provisions to disallow the tax’s inclusion for matching purposes. This regulation would be effective April 22, putting pressure on attempts to get a Congressional moratorium before that date.

The other two are proposed regulations to implement two important, but controversial, provisions of the Deficit Reduction Act (DRA) of 2005. The first would allow states to create benefit packages tailored to different segments of the population. The second would allow states to institute new cost sharing for Medicaid recipients between 100% and 150% of federal poverty level (FPL) and monthly premiums for those with incomes above 150% FPL, with costs limited to no more than 5% of family income. Advocates and most Democrats in congress see these provisions as a means of cutting Medicaid payments to the most vulnerable populations, allowing some states to reduce covered services to their Medicaid recipients. We do not anticipate any changes in New York.

Many of you have probably read about the recent failed auctions in the municipal bond market, which have been covered in the Wall Street Journal, Bloomberg News, and the New York Times. As you may know, even though HHC has $346 million in auction rate bonds that were affected by this market disruption, we had structured this debt so that the situation is safeguarded and under control. Also, the disruption is caused by bond insurers’ distress brought about by the weakness in the subprime mortgage sector which surfaced this past summer, and is not a reflection on HHC’s credit at all.

Accordingly, in many ways we are fortunate. Our bond insurer, Financial Security Assurance (FSA) is the best in the market and is unaffected by recent downgrades. Our interest rate on auction rate bonds is currently capped at 175 percent of a bond index, which, when this auction rate crisis first broke two weeks ago, was 3.4 percent and more recently, our interest rate jumped to 5.3 percent. By contrast, many other issuers are paying 10%, 15% or 20% as their maximum rate because of failed auctions. Additionally, our original issuance of auction rate bonds provided for the ability to convert the bonds in case of market disruptions.

We are now in the process of working through a conversion plan, with a view to completing any conversion within three months. In the meantime, our interest rate remains relatively low. A more detailed briefing on this topic will be presented at the Board of Directors meeting in March.

HHC and CIR/SEIU Healthcare, the nation's largest union of resident physicians, sponsored a joint Patient Safety conference on February 6th to address communication during patient hand-overs. Participants included program directors, residents, physician leaders, chief residents, and administrative leaders in medical affairs, information technology, nursing, and patient safety. A total of 110 individuals participated, of which 68 were physicians. The goals of the conference were to share best practices; identify barriers to effective hand-overs; and strategize on ways to improve performance and patient safety. The conference was an excellent contribution from our labor partners to our system-wide campaign to become one of the safest healthcare systems in the country by the end of this decade.

On February 14th, the Office of Behavioral Health launched a new training film, the centerpiece of a Corporate Toolkit on improving the delivery of patient-centered behavioral healthcare. The film featured the wide range of inpatient and outpatient services at our facilities, delivered by our staff and peer counselors. The film confirms that patient-centered care is a central goal of HHC services for all our patients, not just those with mental illnesses. Several illustrative community outreach programs are featured, including Assertive Community Treatment (ACT) Teams and Mobile Crisis Teams. The central message of the film is that clinicians can individualize their treatment approach to each patient, building on strengths and fostering our patients' active role in their own recovery.

The film emphasizes that our work in behavioral health has a significant effect on patient outcomes related to other health conditions. For example, HHC facilities are working to more consistently integrate depression screening into our primary care practice, especially for patients with chronic diseases, such as diabetes, asthma and heart failure. For patients with chronic illness, depression can be a formidable barrier to patient engagement in their own treatment, and can impede medication compliance and modifications to diet and lifestyle that enable more effective management of chronic disease.

Congratulations to Joyce Wale and her staff for developing this effective training tool.

• A web-based risk management education program for nurses will be launched in the next month. The program is offered through ELM (Education in Legal Medicine) Exchange, a nationally-recognized provider of professional development and training courses. The goal of the program is to educate and empower nurses to recognize and manage legal risks and safety issues in clinical practice, enhancing the quality of patient care. Course topics include Patient Safety, Team-Building and Communication.

• HHC's Nursing Leadership Academy, funded in part by the Jonas Center for Nursing Excellence, is now well into its second year. During the first year 102 nurse leaders completed the course, and in the second year 150 nurses registered to participate. Course topics include patient safety, quality, finance, customer service, problem solving, efficiency and transparency. Nursing leadership actively participates as course champions, mentors and role models for their participants. Thanks to those nurse leaders whose contributions have made the Academy such an enriching experience for all participants.

During February, HHC presented art exhibitions at two of our hospitals. "Images of Chinatown" opened on February 13, in conjunction with Gouverneur's celebration of the Chinese New Year, and presented a photographic journal by artist Kitty Katz of the past two decades of New York's Chinese-American community on the lower east side of Manhattan. "Images of Color," a collection of artwork from more than 30 African-American artists, opened on February 21 at Bellevue Hospital, in celebration of Black History Month. The reception featured remarks by best-selling author and patient advocate Terry M. Williams.

• January 28 – Nursing Spectrum Magazine reported on the Harlem Hospital and Renaissance Health Care Center’s efforts to reduce asthma as part of the HHC Asthma Collaborative and the Harlem Children’s Zone Asthma Initiative. Cheryl Dell Scott-Perez, RN, Renaissance Associate Director of Nursing said they are striving to empower the whole community by providing the educational information needed for self-management.

• February 3 – The New York Times reported on Coler-Goldwater Specialty Hospital and Nursing Facility’s unique patient operated radio station. The article focused on WCGH Radio DJ’s/residents Joel Malament and Peter Brenner, and their efforts to entertain, and heal themselves and others through their musical broadcasts.

• February 7 – The Amsterdam News published an HIV prevention advice column by MetroPlus physician Dr. Sanjiv Shah, Associate Director of Medical Services. Dr. Shah offered safe-sex tips and noted that MetroPlus offers “Partnership in Care”, a Special Needs Plan for those individuals who are HIV positive or already diagnosed with AIDS.

• February 12 – The New York Times reported on spending by New York City hospitals for emergency room redesign and expansion. The article noted that emergency rooms remain a vital hospital entry point and city hospitals are expanding and re-configuring the spaces and services to address the increased demand for emergency care. HHC President Alan D. Aviles said that we are seeing enormous pressure at the emergency room door, and in spite of HHC’s emergency room expansions, we may not be able to meet all of the foreseeable need.

• February 14 – Bloomberg News reported on the recent failure of auction-rate securities. HHC Sr. Vice President of Finance and CFO, Marlene Zurack noted that HHC bonds failed to attract bidders in spite of the fact that HHC has good credit, good bond ratings, and an unscathed, creditworthy bond insurer.

• February 19 – The New York Sun featured Harlem Hospital’s Dr. Olajide Williams and his efforts to educate children in the Harlem community about stroke through the HIP HOP Stroke Program. Accompanied by rap pioneer Doug E. Fresh, Dr. Williams said that hip hop is an ideal way to reach young people because its appeal crosses cultural lines.

• February 21 – The New York Times (On-line edition) published a Letter to Editor written by HHC Executive Vice President, Corporate Chief Medical Officer Dr. Ramanathan Raju, in response to an article on a recent study questioning the benefits of controlling diabetics' blood sugar level at 7 percent or below. Dr. Raju pointed out that the group of study participants who had reached lower than recommended levels of blood sugar and suffered higher death rates, were actually switched back to the treatment standard, underscoring the uncommonly aggressive goals the study tried to reach.