ALAN D. AVILES
HHC PRESIDENT AND CHIEF EXECUTIVE
REPORT TO THE BOARD OF DIRECTORS
September 16, 2010

As I reported in May, the New York State Medicaid program has adopted the National Council for Quality Assurance (NCQA) Patient-Centered Medical Home standards and is offering payment incentives to any provider who has been recognized by NCQA as a Patient-Centered Medical Home (PCMH).  The program recognizes physician practices and primary care clinics that can demonstrate the required standards for the use of systematic, patient-centered, and coordinated care management processes.  The standards are well-aligned with many of the goals that are already in place in our hospitals and health centers, and have been enthusiastically embraced by HHC facilities.  Gouverneur Health Services was the first HHC facility to receive formal certification, at Level 3, the highest possible recognition.  Elmhurst is expecting to receive a determination on its certification application in several weeks, and other HHC sites will follow soon after.  At this time, 43 sites in HHC facilities will apply for the PCMH recognition by the end of 2010.  Certification by all sites could yield as much as $15 million in increased annual revenue to HHC. 

HHC RECEIVES $10 MILLION STATE GRANT FOR
IMPROVED HEALTH INFORMATION TECHNOLOGY

HHC is one of eleven healthcare organizations slated to receive competitive state grants to support projects that build health information technology infrastructure to improve the delivery of healthcare for patients with complex health problems, with a focus on improving the delivery and coordination of mental health, long-term care and home care.  HHC will receive $10 million to support coordinated care for patients with schizophrenia.

NATIONAL AWARDS FOR EXCELLENCE IN PALLIATIVE CARE AND QUALITY
ON DISPLAY IN BOARD ROOM

Last month I reported on the recent awards that have been presented to HHC and one of our facilities, Queens Hospital, from the American Hospital Association.  One is the Circle of Life award for system-wide excellence in palliative care and the other is a citation of merit for quality to Queens Hospital as a highly rated finalist in the AHA-McKesson Quality Award competition.  Both awards are now on proud display in our Board Room.

TOP RECOGNITION FROM AMERICAN PSYCHIATRIC ASSOCIATION  

The Kings County Hospital KCHC Intensive Crisis Stabilization & Treatment (ICST) Program was one of only eight programs nationwide to be selected by the American Psychiatric Association for full site review, during consideration for its 2010 Achievement Awards.  The program provides up to 12 weeks of intensive services to children and adolescents, ages 5-17, who are at imminent risk of psychiatric hospitalization and/or are in the midst of an acute crisis. ICST therapists meet with the child/adolescent and their family in their home, school and/or community in order to stabilize the crisis, provide intensive short-term treatment, and ready the client for continuing community services.  Although the ICST Program was a runner-up for an award, the Committee praised the program and noted that it should be a special point of pride for KCHC and the community it serves.

EFFICIENT RESPONSE TO POWER OUTAGE AT METROPOLITAN HOSPITAL

On the morning of August 26th a serious fire in a ConEdison generator led to a general power outage at Metropolitan Hospital.  The hospital’s leadership activated their emergency command center and the superb staff response demonstrated our facility readiness to meet emergencies of this type.  Metropolitan’s emergency generators immediately kicked in to supply emergency power to critical areas of the facility, including the emergency department, operating suites and all inpatient units.  A 1000 Kilowatt portable generator was dispatched from the Sea View Hospital as a backup to the hospital’s emergency generators.  Two additional 500 KW portable generators were also available in the event additional back up was required.  Some portions of the facility remained without power until approximately 6:00 PM, when Con Edison tied in its own emergency generator to restore about 70% of the facility’s power requirements to these areas.  Full power was restored in the following 24 hours.  Executive Director Meryl Weinberg, Facilities Director Gary Giovinazzo, and other members of the executive team, together with other Metropolitan staff, worked around the clock during this crisis to ensure that all essential services continued to be delivered.  Their collective performance under this stressful situation was exceptional and speaks volumes about their commitment to our patients.

UPGRADING OF HHC ELECTRONIC MEDICAL RECORD
TO INSURE MEANINGFUL USE

HHC is embarking on a major database upgrade to our electronic medical record to ensure our eligibility for financial incentives of more than $121 million under the American Recovery and Reinvestment Act of 2009 (ARRA).  This month our electronic record-keeping systems at Harlem Hospital, Metropolitan Hospital and Lincoln Medical and Mental Health Center became the first to be converted to the new Cache database architecture.  When the conversion of HHC's other systems is completed in the spring of 2011, the necessary groundwork will be laid for installation of a fully certified version of the Quadramed CPR electronic medical record software.  Certified software is necessary in order to meet the requirements of "meaningful use" under the ARRA criteria.  Among the critical meaningful use criteria are exchange of discharge and care summaries, e-prescribing, and required clinical decision supports.  Final installation of the certified Quadramed software in all HHC facilities is anticipated by the second quarter of 2011.

NEW BOND FUNDING PENDING TO MEET FUTURE CAPITAL NEEDS
AND REDUCE EXPENSES

On your agenda today is a resolution authorizing a bond issuance within broad parameters.  This authorization would be conditioned upon final approval from the Finance Committee of the Board of a more specific authorization on October 5, 2010.  

We have been planning a refunding of HHC bonds to take advantage of current interest rates to achieve debt service savings.  In addition, we have been planning to include new money as part of that debt issuance to fund future capital needs.  Management had planned on presenting a resolution to the October Finance Committee and Board to authorize this issuance.  This plan would have enabled us to sell bonds in mid-November, which is most opportune, because the advantage of the Federal Build America Bond program will diminish substantially after December 31, 2010 and we expect the market will be crowded with issuers in December.

The documents required to be released to investors must include a New York City Financial disclosure of its current financial condition, but we have just learned that this will not be available during the requisite timeframe.  To be able to take this issuance to market at an optimally opportune moment, we need to obtain the Board's authorization earlier. 

The resolution sets an amount not to exceed for re-funding and an amount not to exceed for new money and limits the issuance to fixed rate tax exempt debt and Build America Bonds.   The refunding amounts are based on an analysis of the maximum savings opportunity likely in mid-October ($500 million).  The new money amount is based on an estimate of HHC capital needs for the next two years ($225 million).  We believe that this approach will enable us to take advantage of market conditions and provide substantive Board oversight, and I urge your support for this resolution.

HHC ENTERS CONTRACT AS PART OF
NEWAFFILIATION AGREEMENTS FOR PHYSICIAN SERVICES

As I mentioned in my last report, HHC has embarked on a strategic initiative to revise and consolidate our professional affiliation agreements.  The New York Times and Crain’s New York Business covered HHC’s new affiliation strategy early this month in the context of our restructuring agenda to save millions of dollars and better position us for health reform.

To move this critical initiative forward expeditiously, I have granted a deviation from Operating Procedure 100-5 (Contract Review and Authorization by the Board of Directors), due to exceptional and urgent circumstances resulting from the ending of the contractual relationship between HHC and University Group Medical Associates (“UGMA”).  UGMA was the affiliate that supplied medical and other staff to Coney Island Hospital under a series of Board-approved contracts, the last of which expired on June 30th and was continued on a month-to-month basis until August 31st. 

On September 1st, HHC contracted with Physician Affiliate Group of New York, P.C. (“PAGNY”) to supply physicians and other professional staff to work at Coney Island until such time as an appropriate formal selection process for a new affiliate is completed.  PAGNY is a professional corporation created and operated by Downtown Bronx Medical Associates, P. C., which supplies physician services for Lincoln Medical & Mental Health Center.  Because of time constraints and the need to ensure our ability to keep CIH appropriately staffed with physicians and other essential clinical personnel, the selection of PAGNY as the interim affiliate of CIH occurred without seeking approval of the HHC Board. 

I note that the contract entered into with PAGNY continues the same essential provider services at an annual cost that is within the amount approved by the Board under the prior UGMA contract.

HHC is now in active negotiation with Columbia University medical school to transition that affiliation from a combined service delivery and academic affiliation to an academic affiliation only.  Such a transition will continue to allow Harlem Hospital physicians to hold academic posts with Columbia and would support current and future clinical research at the hospital, while the provision of physician services and the employment of physicians for the purposes of rendering care to our patients would become the responsibility of PAGNY.  The contract to be executed with PAGNY for Harlem Hospital will be brought through the normal Board process for review and approval later this year. 

ANNOUNCED CLINIC CLOSINGS TO BE IMPLEMENTED IN OCTOBER;
LAYOFFS OF HHC EMPLOYEES EFFECTIVE SEPTEMBER 17

As we announced in May, part of HHC’s cost-containment and restructuring plan involves the closing of six health clinics in Brooklyn, Queens and the Bronx.   These closures are now scheduled to occur on October 15^th.  HHC remains committed to ensuring New Yorkers access to quality outpatient care, and our reductions to existing clinic operations are minimal.  The clinics slated for closure were selected based on low utilization, physical conditions of the clinics, and the relatively close proximity of alternative service locations to accommodate affected patients.  Advertisements will be published, in English and Spanish, in 11 community newspapers, to notify the public of the closures and tell patients how to continue to receive services at another HHC facility nearby.  The ads will run during the last two weeks of September and the first two weeks in October.  Although most affected staff are being reassigned to vacant positions in other facilities, approximately two staff members will be laid off in connection with these clinic closures.

As I reported in July, we regretfully will lay off approximately 325 workers in various trade titles at the end of this week.  We will continue to try to reach the staff reduction goals in our cost-containment plan through attrition, but it is not possible to rely upon attrition alone.  The layoffs this week reflect a diminished need for employees in the construction and plant maintenance area, given the markedly reduced capital budget over the next few years and our inability to sustain the past pace of construction and renovation.

TAKE CARE NEW YORK OUTREACH CAMPAIGN BRINGS
HEALTH SCREENING & FLU SHOT MESSAGE TO NEW YORKERS IN OCTOBER

During the ninth annual “Take Care New York” month this October, HHC facilities will once more be urging NYC residents to get preventive health care screenings at New York City public hospitals and clinics.  The program focuses on health issues that cause preventable illnesses and deaths each year.  New Yorkers can get blood pressure, cancer, asthma, diabetes and other screenings and flu shots for children and adults.   HHC facilities will conduct health screenings at little or no cost to participants. Take Care New York outreach will be promoted via public service announcements, community calendars, a postcard mailing to approximately 300 community-based organizations, and strategic partnerships with healthcare non-profits, like the American Cancer Society, the American Diabetes Association and the American Lung Association.  MetroPlus will have a major presence at these events.  Facilities will also be distributing hand sanitizers, Diabetes Wellness Center pillboxes and the 2010-2011 edition of the TCNY HHC calendar.

WTC ENVIRONMENTAL HEALTH CENTER ACTIVITIES AROUND 9/11

This year's observance of the ninth anniversary of 9/11 led to renewed attention for HHC's WTC Environmental Health Center, which currently serves nearly 5,000 patients.  The Center treats people adversely affected by the events of 9/11 at Bellevue Hospital, Gouverneur Health Services and Elmhurst Hospital.  This year, media attention included news stories and interviews that aired on outlets as diverse as Fox 5, WFUV radio and AlJazeera international television.  The Center's staff and their community supporters participated in various 9/11 related events such as the Voices of 9/11 Conference, the Young People from 9/11 rally, and the Battery Park City Block Party.  Beginning on August 23rd our annual subway ad campaign began and will be on all subway lines into early October.  Along with grassroots outreach by community based organizations, this particular approach has proven to be one of the most effective ways to inform affected communities of the services within the WTC Environmental Health Center.  As a result of these activities, we continue to experience an increase in the volume of affected patients seeking these specialized services. 

Earlier this week, the WTC EHC hosted an educational forum, attended by over 500 people, for residents, area workers, students, clean-up workers and passersby who were exposed to the aftermath of 9/11.  Yesterday was also an active day in Washington with a rally promoting passage of the James Zadroga 9/11 Health and Compensation act.  The first attempt at passage failed in late July but the bill may be reconsidered sometime next week.  Our WTC EHC staff, patients and community advocates have worked tirelessly to educate Congress about the ongoing and increasing need for federal funding to cover 9/11 related health conditions.  Earlier this week the National Institute of Occupational Safety and Health, the federal agency that oversees our program, approved $10 million for the last year of an existing three-year grant totaling $30 million.  Though we don't yet know what the process will be, the WTC Environmental Health Center should be eligible for future federal dollars either through new legislation along the lines of what will be reintroduced next week or through the yearly federal appropriations process.

FEDERAL EXTENSION OF FMAP FUNDING LEGISLATION

In early August, as you know, Congress approved a six month extension of the enhanced Federal Medicaid Assistance Percentage (FMAP) originally included in the American Recovery and Reinvestment Act (ARRA).  The bill that passed included $16 billion in funds for the FMAP extension, which is worth $800 million to New York State in the current fiscal year and $600 million in State fiscal year 2011.  The six month extension will bring about $400 million to New York City.

STATE BUDGET AND FMAP CONTINGENCY

Last month, the State Senate passed the remaining revenue portion of the State Budget during a Special Session that was called by the Governor.  While the State Assembly had passed the revenue bill at the end of June, action on the bill in the State Senate was stalled due to non-budget related issues.  However, even though action on the State Budget is now technically complete for this year, it looks as though we will face additional Medicaid funding reductions.

During the Special Session in August, the Assembly and Senate also passed an FMAP contingency bill that authorized the State Division of the Budget to reduce spending up to 10% across the board in the event that an extension of enhanced FMAP funding did not materialize. The day after the Special Session in Albany, the U.S. Senate passed a funding bill for states that extended enhanced FMAP funding, albeit it at a lower amount, along with additional education funding. The U.S. House of Representatives subsequently passed the bill the following week and it was signed by the President

New York State will receive approximately $800 million in enhanced FMAP funding, which is less than the $1.085 billion that the State had booked.  However, New York will also receive $600 million in unanticipated federal education funding.  Regardless of the extra education funding, it appears that the State Division of the Budget is going to proceed with across-the-board spending reductions pursuant to the FMAP contingency law. Based on estimated 1.1% Medicaid rate reductions, the potential loss to HHC for this fiscal year could be approximately $15 million when the reduction goes into effect later this month.

There is support among many State Legislators to repeal the FMAP contingency provisions. It is unclear though, if there are enough votes to support an override in the event that the Governor was to veto a repeal of the contingency law if it were to be passed by the State Legislature. 

To briefly recap the impact to HHC of the health provisions of the State Budget that were passed in early June, HHC will see a reduction of approximately $45 million as a result of the:

• elimination of the trend factor for hospitals, nursing homes and home care agencies,
• 1.7 percent rate cut to MetroPlus, and
• penalty for readmissions within 15 days for certain patients.

There was some good news this year.  Language that HHC was seeking to extend the current authorization for DSH funding was included in a separate Article VII budget language bill that was signed by the Governor.  This language authorizes an increase in managed care payments to MetroPlus, authorizes increased upper payment limit payments to HHC’s Diagnostic and Treatment Centers and grants authority for HHC to work with the State to seek federal funding based on certified public expenditures for dually eligible patients.  In total, these actions could bring in more than $250 million in new federal funding to HHC.

HHC staff continues to advocate with members of the Assembly and Senate and their key staff against future budget cuts and to emphasize the fact that HHC’s Medicaid funding was reduced by approximately $45 million already this year and by $285 million over the past three years.

HHC CHIEF MEDICAL OFFICER TESTIFIES BEFORE CITY COUNCIL
ON QUALITY ASSURANCE PROGRAM

Dr. Ross Wilson, HHC's Senior Vice President for Quality and Corporate Chief Medical Officer, testified on HHC's Quality Assurance protocols this week before the New York City Council Health Committee.  Dr. Wilson described the system used to monitor the quality and safety of health care that HHC's facilities deliver, identify opportunities for improvement and the oversight that is performed at the department, facility and system levels.  A description of the role that HHC's Board of Directors, the Quality Assurance Committee and the facility-level quality assurance processes were described.  

HHC LEADERSHIP UPDATE

As you know by now, José R. Sánchez has decided to step down as Senior Vice Pesident of the Generations+/Northern Manhattan Health Network and Executive Director of Lincoln Medical and Mental Health Center, effective October 4, 2010, to accept a position as President and CEO of a hospital in Chicago.  For nearly 15 years, José has served HHC, first as Executive Director of North Central Bronx, Metropolitan, and Lincoln hospitals, then as Senior Vice President of the Generations+ network.  I can’t say enough about José’s leadership contributions over the years – but I will get a chance to sing his praises at his upcoming farewell party.  For the moment, I will simply say that while his departure is a big loss for HHC, we congratulate him on his new opportunity and wish him well in Chicago.

Pending approval by the Board of Directors, I have made the following leadership appointments.  Iris R. Jimenez-Hernandez will leave her position as Senior Vice President of the North Brooklyn Health Network and Executive Director of Woodhull Medical Center to serve as Senior Vice President of the Generations+ Network and Executive Director of Lincoln.  Iris has headed our North Brooklyn Network for four years and before that has had a distinguished career in public service for a total of 26 years.  Her former leadership role at the North Brooklyn network will be filled by George Proctor, currently Executive Director of HHC’s Queens Hospital.  Mr. Proctor is being appointed to the Network Senior Vice President position on an acting basis, and his appointment will be formally presented for Board ratification next month.  George has been with HHC for 27 years and has a proven track record of commitment, deep operational knowledge and leadership skill. 

A search committee is being formed to identify a new Executive Director for Queens Hospital Center, and Dr. Ann Sullivan, Senior Vice President of the Queens Health Network will serve as Acting Executive Director in the meantime.

HHC IN THE NEWS HIGHLIGHTS

• HHC Peer Counseling Program, NY1-TV, 08/31/10
• Dr. Joan Reibman, World Trade Center Environmental Health Clinic, FOX 5 -TV, 09/09/10
• Terry Miles, World Trade Center Environmental Health Clinic, AlJazeeraEnglish- TV, 09/11/10
• Dr. Wendy Wilcox at NCB Hospital, How Pregnant Women Can Take Better Care Of Themselves, News 12 Bronx - TV, 08/18/10
• Terry Miles, Dr. Joan Reibman, World Trade Center Environmental Health Clinic, WFUV- Radio, 09/04/10
• Dr. Biggs at King County Hospital, Treating Stab Wounds, CNN- Radio, 08/13/10
• Financial failure not an option, Modern Healthcare, 08/09/10
• Public Hospitals Look to Overhaul Affiliations With Medical Schools, The New York Times, 09/03/10
• HHC shifts affiliation contracts for Coney Island, Harlem, Crain’s Health Pulse, 09/03/10
• N.Y. awards $109 million to push medical homes, Modern Healthcare, 09/12/10
• At Hospitals, New Methods With a Focus on Diversity, The New York Times, 09/07/10
• Peers Bring Hope to the Mentally Ill, New York Daily News, 08/08/10
• QHC Improves Cancer Care Access, Crain's Health Pulse, 08/04/10  (Also covered by Staten Island Advance)
• Coney Island Partners to Prevent Pressure Ulcers, Nursing Spectrum, 08/23/10
• City paramedics now use hypothermia therapy in ambulances to save cardiac arrest patients, New York Daily News, 08/03/2010
• Tots taken on ripe tour of hospital market, New York Daily News, 09/02/10
• Hospitalized grandmother attends her granddaughter's wedding, Bronx Times Reporter, 08/18/10
• BCC celebrates 50th anniversary of nursing department, Bronx Times Reporter, 09/08/10
• Lincoln tops in stroke care, Bronx Times Reporter, 08/06/2010
• NYC HHC & Metroplus Health Plan Expand Medicaid Telehealth Monitoring for Chronic Heart Failure, Open Minds Weekly News Wire, 08/17/10
• More classrooms coming to Queens, The Queens Chronicle, 08/19/10
• Around Town, Skyline News, 08/23/10