ALAN D. AVILES
HHC PRESIDENT AND CHIEF EXECUTIVE
REPORT TO THE BOARD OF DIRECTORS
MARCH 26, 2009

Last week I announced HHC's plan to reduce its next fiscal year budget by $105 million as the first phase of cost containment measures necessary to address unprecedented financial challenges created by the current economic downturn. The gap-closing plan includes targeted service reductions that will downsize or close 10 hospital-based and 10 community-based programs. Patients affected by these program closures or service reductions will be linked to providers elsewhere in our system or in the community.

The plan also includes a reduction of the HHC workforce by approximately 400 positions. The workforce reduction target will be reached by not filling approximately 200 expected vacancies over the next three months and by 200 layoffs that will occur between now and July 1, 2009.

Today, HHC faces a staggering budget shortfall of $316 million for the coming fiscal year, which is the product of rising labor and other operating costs beyond our control as well as a $10 million reduction in city funding and the $66 million reduction in our Medicaid reimbursement enacted by the State earlier this fiscal year. This budget shortfall may worsen by as much as another $300 million if the Governor’s proposed State Medicaid cuts for the next fiscal year are enacted over the next few days.

The need to resort to service reductions and layoffs is painful news to everyone at HHC and we have tried to prevent such drastic action. We imposed a hiring freeze in December, and for many months have been realizing savings through operational efficiencies, improved revenue collection, and other cost-reduction actions - altogether more than $78 million for this and next fiscal year - but these steps have not been enough.

Our cost containment measures and targeted service reductions are necessary first steps to ensure the viability of our public hospital system at the very time that the number of uninsured New Yorkers we serve has skyrocketed to 450,000 - up 8% in the last year alone. Our total cost of serving the uninsured is now approaching $850 million. To help meet this burden, the City of New York has contributed more than $500 million annually to underwrite our care to the uninsured, while New York State contributes a mere $50 million. The State budget negotiations now in progress may worsen our position significantly. Now that the State has received nearly $10 billion dollars of federal stimulus money intended to preserve the Medicaid program and the healthcare safety net in these economically perilous times, we are looking to state leaders to rethink the proposed cuts and support, rather than undermine, our public hospital system.

We will continue to advocate forcefully in Albany and wherever else is appropriate for the preservation of our vital safety net services. However, any further reductions to our Medicaid reimbursement enacted as part of the upcoming State budget agreement, layered on top of our current fiscal challenges, will translate directly into more service cuts and layoffs. We are in the process of planning for those possible reductions now.

Over the next several months, there may be more dispiriting news. I remain confident that the leaders and staff at our hospitals, long-term care institutions, and neighborhood clinics will stand strong and do everything possible to maintain the nationally recognized advances in safe, high quality patient care that we have achieved together.

>As part of the Legislative Days sponsored by the National Association of Public Hospitals and Health Systems on March 10 and 11, HHC Senior Vice President LaRay Brown, together with several senior members of her staff and NAPH Fellows from several HHC hospitals, met with staff members in 10 of the New York Congressional Members' offices. Each of these Members sits on a committee with health jurisdiction.

During their advocacy visits, HHC representatives thanked the legislators for their efforts to increase HHC's federal share of Medicaid, the recent increase in DSH funding for New York State and the sound revenue stream for Health Information Technology contained in the American Recovery and Reinvestment Act (ARRA). We also provided an estimate of the stimulus funds likely to be available to HHC under the ARRA. Legislators received a detailed report on HHC's financial situation, including the current deficit and the pending State budget negotiations.

As part of HHC's advocacy efforts, at end of last month I traveled to Albany with Deputy Mayor Linda Gibbs for a number of meetings to discuss the impact of the Governor's Proposed Budget on HHC. Our discussions with legislators and key staff in the Governor's Office ranged from the potential negative impacts of the proposed Medicaid cuts to HHC issues with hospital inpatient rebasing and nursing home regional pricing reforms. I made clear our need for the State to authorize additional DSH Medicaid funding, as proposed in legislation we have submitted to the Leaders, and for ensuring that we have the priority draw on such funds to maintain our viability as the State's single largest healthcare safety net.

It is expected that the State budget will be adopted by April 1st. While it appears that HHC efforts to restore some of the Governor's proposed cuts and to address significant concerns in hospital and nursing home reforms have been heard by the legislators, there are major new issues over a proposal for a re-configured and enlarged Bad Debt and Charity Care pool that may funnel state-matched DSH dollars in a manner that disadvantages public hospitals and other high-need safety net hospitals in the State. Discussions continue with the executive and both Houses during what can be characterized as a very fluid political situation.

The Board will be provided with a further oral briefing of the latest developments during our meeting.

I testified yesterday before the City Council Health Committee about the HHC Preliminary Budget for FY 2010 and discussed HHC's fiscal challenges and its cost containment strategy. As anticipated, many members were concerned about program closures and layoffs affecting their districts. I explained the basis for the decisions that we have made and discussed the very large budget gap that HHC must address, restating that the announced service and workforce reductions of last week was just the first phase of the cost containment measures necessary. The magnitude of the next phase will largely be dependent on the outcome of the negotiations on the state budget.

Infection rates in the intensive care units of our 11 hospitals are down for the third year in a row and have dropped dramatically since we launched our patient safety program to reduce preventable deaths and unnecessary hospital stays. We have achieved a 90% percent reduction in the rate of ventilator-associated pneumonia (VAP) and a 65% reduction in the rate of central line bloodstream infections among adult patients in intensive care units.

Central line infections at HHC hospital ICUs dropped to 2.7 infections per 1,000 patient days in 2008 from 7.6 in 2005. Over the last four years, the rates of VAP in our ICUs dropped to 1.5 in 2008 from 10.5 in 2005. I am very proud that six ICUs in four hospitals -- Coney Island, Elmhurst, Kings County and Lincoln -- went without a central line infection during all of 2008. And ICUs at Bellevue, Coney Island, Elmhurst, Harlem, Kings County, Lincoln and Woodhull went the full year without a VAP infection.

Our results are evidence that we are now winning the battle against common hospital-acquired infections through increased vigilance, strict adherence to best clinical practices and our relentless focus on optimal hand hygiene. The decline in infection rates represent more than 1,000 infections prevented and a savings of nearly $16 million in healthcare costs.

With the transparent public reporting of these and other quality and safety measures we are demonstrating our willingness to be held accountable for our performance. The new 2008 rates are published in the HHC In Focus section of our Web site at nyc.gov/hhc.

Earlier this month, as part of HHC's recognition of Patient Safety Awareness Week from March 8-14, I had the pleasure of presenting the first annual HHC Patient Safety Champion awards at a ceremony held at Woodhull Hospital. The awards were presented to individuals and teams that best exemplified what our organization is trying to achieve in this critical dimension of patient care.

Although patient safety is now a part of everyone's job description, we wanted to honor staff who have distinguished themselves in helping us to reach our goal of becoming one of the nation's safest healthcare systems by the end of this decade. This year's Patient Safety Champions included not only doctors and nurses, but a dentist, a physician's assistant, an intensive care unit team, a pharmacist, a psychiatric crisis prevention team and a hospital police officer.

Among this year's winners is the team that created a procedure to make it impossible for patients with metallic implanted devices to be mistakenly sent for MRIs; the physician's assistant who makes house calls when necessary to make sure her patients know that their pap smear was abnormal; and the nurse who convinced her colleagues to use green tape to mark the desired bed elevation to reduce the risk of ventilator-associated pneumonia.

Congratulations to all the winners. Their work is an inspiration to us all and reminds us that we can all make a difference when it comes to patient safety.

This month, we also asked all our staff to complete our third annual Patient Safety Culture Survey which helps us better evaluate staff perceptions about the culture of safety at HHC and our overall level of improvement. The survey was made available at all HHC facilities in print and web-based formats, could be submitted anonymously, and took only 10-15 minutes to complete.

Last spring over 25,000 HHC staff -- an astonishing 63% -- completed the survey which identified several areas of strength as well as opportunities for improvement at HHC. This year's survey was completed this past weekend. Our preliminary review shows a response rate of at least 65%. I look forward to reporting the findings of the survey in the near future.

Last week, The Joint Commission conducted a five-day survey of Coney Island Hospital. This was the first full survey conducted at an HHC hospital this calendar year. Five surveyors evaluated the facility's clinical and environmental hospital services, behavioral health, and the acute care addictions program.

I am very pleased to report that Coney Island fared extremely well in the survey and received very few findings. At the Exit Conference on the last day of the survey, the Team Leader stated that in her six years as a Joint Commission surveyor, she could not recall a survey at any facility of comparable size where there were so few findings of significance.

Arthur Wagner, Coney's senior leadership and all of the Coney Island staff are to be commended for their performance. I would also like to thank Dr. John Maese who participated in Coney Island's Leadership Interview.

Kings County and Lincoln Hospitals, and Sea View Hospital, Rehabilitation Center and Home remain to be surveyed in 2009.

On our agenda today is an Affiliation contract renewal with Mount Sinai School of Medicine for the provision of general care and behavioral health services at Elmhurst Hospital Center and Queens Hospital Center. The agreement is a three-year contract from July 1, 2009 to June 30, 2012, for a total contract cost over the three-year period of approximately $560 million.

The proposed agreement uses a cost-based compensation model and incorporates Pay-For-Performance incentives and penalties related to quality outcomes and other business objectives.

Last Friday Elmhurst Hospital opened its newly renovated and expanded Psychiatric Emergency Room. The $2.5 million, 4500 square foot facility is a key component of Elmhurst's Comprehensive Psychiatric Emergency Program (CPEP), which provides emergency psychiatric assessment, evaluation and treatment 24 hours a day, seven days a week. Over 80% of CPEP patients are acutely ill psychiatric patients brought by emergency medical personnel or the police. The facility, whose size has been expanded by 50%, provides more space for patients, increased safety for patients and staff, better separation of children and adolescents from the adult population, and greater privacy and confidentiality during patient evaluations and consultations with families. The renovation was completed two months ahead of schedule and $500,000 below budget.

Gouverneur Health Care Services is focusing on prenatal health and wellness for the month of March with a series of events designed for pregnant women and mothers. The overall goal is to attract new patients through partnerships and events that are engaging and have a health and wellness component. The celebration featured a maternity fashion show with presentations by Gouverneur's prenatal care team, runway models in the latest fashion creations, and free hand massages from Mama Mia, a skincare company that caters to pregnant women. The HHC Art Collection sponsored an art exhibit at Gouverneur titled "Sanctuary," created by artist Schery Markee Sullivan, that focuses on the bond between mothers and children. Pediatricians who speak English, Spanish and Mandarin also hosted evening workshops to familiarize new mothers with the healthcare services needed for their babies from their earliest weeks and continuing throughout childhood.

Earlier this month, I was pleased to announce the appointment of George M. Proctor as Executive Director of Queens Hospital Center. He succeeds Antonio Martin, who assumed leadership of the Central Brooklyn Healthcare Network in February. Like Tony Martin, Mr. Proctor is a veteran HHC executive, with innumerable colleagues across our system with whom he has developed deep bonds of trust and respect.

A graduate of Pace University and a National Association of Public Hospitals Fellow, Mr. Proctor served at Harlem Hospital Center for ten years, ultimately as its Chief Financial Officer. In 1995, he was named as Kings County’s Chief Operating Officer and Chief Financial Officer. For the past four years, he has been Chief Operating Officer for the Central Brooklyn Network, with functional and administrative responsibility for a broad range of hospital operations and network strategic initiatives.

George Proctor brings long and varied experience to his new role, and Queens Hospital Center is fortunate to have this outstanding healthcare leader at the helm.

Gouverneur Skilled Nursing Facility received a federal award for $380,000 through the efforts of Congresswoman Nydia Velazquez to help fund the design of the new nursing facility, in line with the resident-centered care model commonly called Culture Change, which has been shown to provide residential patients with greater control over their environment and better health outcomes. The new design will give residents a more homelike environment, including more inviting dining areas, bathrooms, bedrooms and recreational areas.

The last issue of the widely respected Network Journal named six Harlem Hospital doctors among the 2009 Best Black Doctors in New York and New Jersey. Doctors Alfred R. Ashford, Jay Cowan, John T. Herbert, Ferdinand Ofodile, Orville Palmer and Velvie A. Pogue were acknowledged. Congratulations to all for this well-deserved recognition.

• City's Public Hospital System to Cut Jobs and Programs, The New York Times, 3/20/09 (also covered by The New York Times City Room Blog, Crain's Health Pulse, CrainsNewYorkBusiness.com, New York Daily News, Associated Press, Staten Island Advance, Newsday, El Diario, NY 1 News, WNBC-TV, WABC-TV, FOX 5 News, WCBS-TV, WCBS Radio, 1010 WINS, and WNYC Radio).
• Jacobi Hospital Provides Hope for Afghan Teen featured on NY1, 2/26/09
• Lincoln's Taxi Driver Health Initiative covered by WCBS-TV, 3/20/09 City Says New Yorkers Are Healthier, The New York Times, 3/5/09
• Bronx doctors give Afghan girl a bigger smile, for free, New York Daily News, 2/27/09
• Interpreter is cure for hosp language barriers, New York Daily News, 3/2/09
• Faith gets him back on his feet, New York Daily News, 3/24/09
• City's Public Hospitals Urge People 50 and Older to Get a Life-Saving Colonoscopy, New York Daily News, 3/18/09
• Cutting Errors, Nurse.com, 3/23/09
• Bellevue Says Its Hours Are Flexible for Parents, Downtown Express, 3/12/09
• EHC Gets HHS Organ Donor Medal Of Honor, The Queens Gazette, 2/25/09
• Ribbon Cut on Woodhull's Geriatric Wellness Center, Courier Life, 3/6/09