ALAN D. AVILES
HHC PRESIDENT AND CHIEF EXECUTIVE
REPORT TO THE BOARD OF DIRECTORS
DECEMBER 18, 2008

In light of the continuing deterioration of both the City and State budgets, and the likelihood of further significant budget cuts that will impact our revenue, on December 9th, I imposed a series of austerity measures on our entire system, including a total hiring freeze. With the exception of a number of pending hires already in the pipeline, there will be no additional hiring, even for direct care personnel, without extremely compelling justification. Any future hires will need to be reviewed and recommended for approval by our central office Vacancy Control Board, and then will need my final approval. This and other austerity measures outlined in a memorandum, dated December 10, 2008, from me to our senior leadership will remain in place until further notice. A copy of that memorandum is included in your Board packet.

On December 10th, the City announced that all City agencies must submit to OMB their plans to reduce spending in line with an additional 7% cut in direct city funding support for the next fiscal year. For HHC, this means a reduction of about $6.5 million. This reduction is on top of the previously announced reduction of 5% in direct city funding which translates to another $5 million cut for HHC.

Much more significantly, on Tuesday, December 16th, Governor Paterson released his budget proposal for the remainder of the current State fiscal year and State fiscal year 2009-2010, which begins April 1, 2009. The Executive Budget includes a Deficit Reduction Plan to go into effect January 1, 2009 to eliminate the current year $1.7 billion budget gap, as well as other proposed actions to close a $13.7 billion gap projected for 2009-2010. The Executive Budget includes deep Medicaid cuts to hospitals, nursing homes and home care providers. As you know, cuts to the Medicaid program cause an equal loss of federal funds; and Medicaid inpatient cuts trigger a loss in Medicaid managed care payments.

The preliminary estimate of the total cuts to the healthcare sector is $3.5 billion, $1.4 billion to hospitals, $845 million to nursing homes, and $360 million to home care. If the Executive Budget is enacted, HHC will receive $140 million in across-the-board rate cuts, $130 million in cuts as a result of a new inpatient reimbursement methodology, including the acceleration of Medicaid inpatient detox reimbursement changes from a 4 year phase-in to 2 years, and a loss of $80 million from the implementation of new nursing home rates -- a total of $350 million in cuts. Obviously, a cut of this magnitude would be devastating and could be managed only by a very significant reduction of service delivery across our system.

This $350 million cut could be offset by $139.8 in funding from a proposed transfer of graduate medical education funding (or Professional Education Pool funds) to a new indigent care pool for teaching hospitals which would allocate funds to hospitals using a different methodology than what is currently used under an existing pool methodology. The new inpatient reimbursement rate methodology is estimated to save the State $96.9 million in the next State fiscal year. Some of the savings ($29.6 million) would be shifted to increase hospital outpatient rates under a new outpatient reimbursement methodology. The rest of the savings would be retained for budget savings and higher payments for community clinics, community-based detox and behavioral health services. HHC could receive between $14 million and $19 million from this proposal to support its hospital-based ambulatory care services, but we stand to lose several times that amount in inpatient revenue.

The Executive Budget also proposes more generous eligibility requirements for public health insurance programs. Current requirements for face-to-face interviews, finger imaging and asset testing under Medicaid and Family Health Plus (FHP) would be eliminated. Limitations on FHP enrollment for public employees and 19-20 year olds who do not reside with parents are eliminated; and FHP maximum income eligibility is proposed to be increased from 150% of the federal poverty level (FPL) to 200% FPL, with no additional cost to the State and subject to federal approval. We are still studying the proposed budget bill language to understand how this expansion could be accomplished without state funds and whether it compromises city or federal funding streams that support HHC's current service to the uninsured.

We will be receiving many more details on all of the budget proposals over the next week in order to further analyze the impact of the proposed cuts and the reforms (including the FHP expansion proposals) on HHC and the City. I note that the Executive Budget proposal makes no assumptions about federal assistance to the states, but we do expect such assistance to be included in a federal stimulus package once the new administration takes office in Washington. We will be advocating strenuously that any federal assistance dedicated to supporting the state Medicaid programs be used, in part, to mitigate the deep cuts to HHC currently reflected in the Governor's Executive Budget proposal. We will keep you apprized.

In 2009, The Joint Commission will survey four HHC facilities: Coney Island Hospital, Kings County Hospital Center, Lincoln Medical and Mental Health Center, and Sea View Hospital, Rehabilitation Center and Home. A Corporate Orientation session, which the Board is invited to attend, will be held on January 27th. The Orientation will provide an opportunity for me and my senior leadership team to brief this year's survey team leader Suzanne G. Brauer, RN, on HHC's corporate-wide initiatives related to quality, patient safety, and performance improvement, as well as HHC's approach to ensuring compliance with The Joint Commission standards.

Over the last two years, The Joint Commission has begun to roll out its Standards Improvement Initiative (SII) - a multi-year project designed to improve and enhance the survey process and scoring, and focus accreditation on those factors that have the greatest impact on patient care and outcomes. There are new standards in the area of Leadership that focus on creating and sustaining an organizational culture of quality and safety. This approach very much aligns with the patient safety work we have been engaged in for the last few years. Standards have also been added at the Medical Staff chapter and there are modifications to the National Patient Safety Goals.

The Joint Commission surveys will continue to be conducted on an unannounced basis and may occur at any time between January and the end of December. Accreditation decisions will continue to be based on the number of standards that are found to be out of compliance at the time of the survey. However, in the new survey process, greater weight will be given to non-compliance with standards that could result in an immediate threat to life or that have direct impact on patient safety or quality of care.

Last month I reported to the Board about the multi-pronged transition plan we are putting in place to provide healthcare services for low-income Staten Island residents after the expiration of the Staten Island Health Access (SIHA) program. This includes the launch of the mobile medical unit by mid to late January, addition of adult primary care services in our Mariner's and Stapleton health centers, and investment in the Community Health Center of Richmond, including funding renovations that will double its outpatient capacity. This week HHC announced the extension of the SIHA program beyond the earlier deadline of December 31st, for another 90 days, until March 31st, 2009. We are extending the program to ensure all the other points of access to care are firmly in place for a smooth transition for SIHA participants. We also plan to offer access to some specialty services beyond primary care services, such as gynecology, cardiology and endocrinology. Additionally, we want to make sure there is ample time and communication to SIHA participants to guide their connection to a new medical home. HHC is committed to continue working with all Staten Island stakeholders to make additional investments, increase service capacity and improve access to primary and preventive healthcare services for the borough's low income, uninsured and other vulnerable populations.

Last week the Institute for Healthcare Improvement (IHI) held its annual National Forum on Quality Improvement in Healthcare, a conference that is widely considered to be one of the most informative healthcare events of the year. For the second year, HHC hosted a satellite broadcast of the keynote and mini keynote addresses at Metropolitan Hospital's Draper Hall for employees and affiliated staff. HHC was well represented at the conference by many speakers from our facilities. HHC is recognized as a national leader in patient safety and I congratulate all the HHC healthcare leaders who shared their expertise this year in this prestigious national forum.

On world AIDS Day, December 1st, Mayor Bloomberg recognized Project BRIEF, an HIV testing initiative from Jacobi and North Central Bronx Hospitals, with a proclamation honoring its life-saving leadership in the struggle against HIV and AIDS.

Project BRIEF offers rapid HIV counseling and testing, in English and Spanish, in both hospitals' emergency departments. The idea behind Project BRIEF is to boost the number of people tested for the AIDS virus by offering the test via individual, portable HIV kiosks. The kiosks give patients privacy as they answer a short questionnaire on a computer and watch informational videos while waiting approximately 20 minutes for the results from their oral cotton-swab tests.

Over the past year alone, Project BRIEF has quadrupled the number of its HIV tests - from 350 tests in October 2007 to nearly 1,700 twelve months later. It's a key part of "Bronx Knows" - the campaign to offer HIV testing to every Bronx adult in the next three years. The striking success of Project BRIEF is also being studied by public health officials from Washington to Scotland. Congratulations to Jacobi and NCB on this honor.

This holiday season, from December 15-19, New Yorkers can call a financial empowerment phone bank to discuss their financial issues and concerns and receive quick and reliable financial information, tips, and referrals. HHC is collaborating with Mayor Bloomberg and the Department of Consumer Affairs' Office of Financial Empowerment (OFE) office, together with the City University of New York (CUNY) and the New York Daily News, to staff the phone bank.

More city residents are facing unexpected financial hardship and need to know how they can access affordable healthcare for themselves and their families, and what payment and insurance arrangements and other options they can expect if they come to HHC facilities. There have been numerous media reports recently about people postponing medical care or rationing their medications because they are concerned that they may not be able to pay their bills. HHC's participation in the phone bank can ensure that people are aware of the options we provide to avert the negative outcomes that postponing care can lead to. My thanks to those HHC staff members who have volunteered to give their time to this worthy initiative.

Last month, Woodhull Medical Center announced a Latina Adolescent Suicide Prevention Campaign, encouraging young Latinas struggling with suicidal thoughts to seek appropriate help from suicide prevention sources in the community including those at Woodhull Medical Center. Two stars of the cast of the Tony Award-winning musical "In the Heights," Lin-Manuel Miranda and Janet Dacal, were on hand to promote the program launch.

Although suicide is the fourth leading cause of death among young people between the ages of 10 and 24 years of age in the United States, the attempted suicide rates for Latina adolescents between ages for 14 and 17 are double the rates for African-American and non-Hispanic white adolescent girls in the same age range.

This multi-media awareness and education campaign was developed by Woodhull Medical and Mental Health Center and was made possible through a grant awarded by the New York State Office of Mental Health.

Woodhull Medical Center opened a new training center for radiology students that will serve as a clinical research center for radiographers, in a collaboration with New York Medical College. The new center received a federal funding allocation of $321,000 from Congresswoman Nydia M. Velázquez. The Lab will expand radiology services for the community, while increasing career opportunities in the healthcare arena for the youth of North Brooklyn.

Several HHC facilities were honored early this month when the United Hospital Fund recognized its 2008 Health Care Improvement Grant recipients at its annual awards ceremony.

• Bellevue Hospital received a $55,000 grant to extend its pilot program of intensive care management services to high-cost Medicaid patients with complex medical and social needs.

• Children of Bellevue received $70,000 to test the effectiveness of picture-based health communications to reduce medication errors in young patients.

• Lincoln Hospital was awarded a $40,000 grant to recruit and train volunteers to help patients learn chronic disease management skills.

• HHC received a two-year $200,000 grant to build clinical competency in palliative care through physician and nurse training, and deploy electronic database and decision support tools.

On November 8, Jacobi Medical Center was honored by the Bronx County Medical Society as the 2008 Hospital of the Year. The society has conferred the award annually since 2004. The Society's Executive Director, Diane Miller, said, "Jacobi was at the top of our list. It is one of the best equipped hospitals in the Bronx and one of the most active." The group cited Jacobi's new hospital wing and many centers of excellence. William Walsh, Executive Director of Jacobi, accepted the award on behalf of the hospital. Congratulations to Jacobi on this honor.

What's New at Area Hospitals: Jacobi New Ambulatory Care Pavilion, M.D. News, 11/08/08

Seven Years and Still Struggling to Breathe Easier; Nursing Spectrum, 11/17/08

Generous Gift Used to Repair JMC's Rotunda; Bronx Times Reporter, 11/20/08

HHC Promotes Wellness; New York Daily News, 11/23/08

Latina Suicide Prevention; News 12TV, 11/24/08

Surgical Safety Checklist Program; WABC-TV Eyewitness News, 11/25/08

Her Healthy Outlook; New York Daily News, 11/25/08

Surgical Safety Checklist; Crain's Health Pulse, 11/26/08

Flu Myths, Fears but Docs Urge Vaccination; Caribbean Life, 11/26/08

Med Society Taps Jacobi as Hospital of the Year; Bronx Times Reporter, 11/27/08

Understanding Human Behavior; Advance for LPNs, 11/28/08

Local Rabbis to Enhance Safety Net; Grand Street News; 12/01/08

Primary Care Training; Crain's Health Pulse, 12/03/08

Jacobi Addresses Sudden Infant Death; Bronx Times Reporter, 12/04/08

Balancing Transparency and Confidentiality; The Safety Net, 12/08/08

"Colors of Safety" Help Prevent Medical Errors; The Safety Net, 12/08/08

Bringing Better Health to Workers on the Go; New York Daily News, 12/08/08

Geriatric Care; Crain's Health Pulse, 12/09/08