ALAN D. AVILES
HHC PRESIDENT AND CHIEF EXECUTIVE
REPORT TO THE BOARD OF DIRECTORS
October 28, 2010

Early this month, we launched the annual campaign offering flu vaccine to our employees, with the theme “The FLU Ends with U” to emphasize the important role that employee vaccination plays in improving patient safety. Many of our patients, including the elderly and those with acute or chronic diseases, are especially susceptible to the flu and for them its effects can be devastating. Since infected workers can pass the flu on for 24 hours before they develop symptoms and 4 to 5 days afterward, they can be infected or infect others without knowing. Until the end of November, we will administer the vaccine to workers in the workplace on most shifts. Last year, 65 percent of all facility and Central Office staff received a seasonal flu shot, surpassing the national and city averages for employee vaccinations. This year, the corporate-wide goal is 70 percent or higher.

As part of this corporate-wide campaign, Information Services has updated it web-based Employee Health Vaccination Registry (EVR). The new EVR minimizes data-entry for all employees and provides custom reports to allow analyses of vaccination rates for employees. Facilities can also use the EVR to monitor flu vaccination patterns among their "contract and affiliate" staff.

We have also been providing flu vaccinations to all New Yorkers as part of our annual Take Care New York campaign, and to our patients at all pediatric and primary care clinics across HHC. Our Mobile Medical Office on Staten Island is also offering free vaccines in five different Staten Island communities. As of the end of last week, we already have immunized more than 60,000 patients.

HHC facilities are continuing to receive designation as patient-centered medical homes and are doing so at the top level. The seven facilities certified thus far have earned scores from 87 to 93 out of 100 possible points - far exceeding a minimum score of 76 required by the National Committee for Quality Assurance (NCQA) for level three status. The designations will qualify HHC for as much as $15 million in Medicaid reimbursement rate increases, after all of our primary care sites receive the NCQA certification by early 2011, as expected. HHC facilities now certified as patient-centered medical homes include four acute care hospitals and three diagnostic and treatment centers (D&TC): Elmhurst Hospital Center, Woodhull Medical Center, Lincoln Medical & Mental Health Center, Harlem Hospital Center, Gouverneur Healthcare Services, Cumberland D&TC, Segundo Ruiz Belvis D&TC. In addition to our 17 hospitals and diagnostic and treatment centers, 26 of our community-based health centers will also be applying for the designation.

For years, we have been piecing together the building blocks necessary to provide a true medical home for New Yorkers. It's meant a tremendous investment in our primary care services, a robust electronic patient medical record system, and an increased focus on real care management -- particularly for our patients with chronic disease. The supplemental payments that will now be directed to support this work are a welcome reward for doing what we know is right for our patients. It is ultimately a front-end investment to help us keep patients healthy and avert future costs to treat illness and long-term complications.

On October 7th, HHC and the Committee of Interns and Residents/SEIU Healthcare (CIR) joined forces in sponsoring their 3rd annual patient safety conference ”Improving Patient Safety and Reducing Infections through Effective Teamwork and Communication.” After the success of previous conferences, several more of HHC's labor partners were enthusiastic about participating. This year's one-day conference was jointly sponsored by the Committee of Interns and Residents/SEIU Healthcare and the CIR Policy and Education Initiative; District Council -37; Doctors Council/SEIU Healthcare; 1199 SEIU/United Workers Healthcare East; and, HHC. A total of 205 attended the conference, which provided an opportunity to discuss how a hospital team on an inpatient unit can improve patient safety and reduce infections through effective teamwork and communication. In addition, the participants were asked to develop an infection reduction plan in their facilities with a three-month and a six-month goal. The Keynote Address, provided by Dr. Richard P. Shannon, Chair, Department of Medicine, University of Pennsylvania Health System, was entitled “Creating a Culture of Safety…Is it Possible? …Is it Sustainable…Is it Worth it?”

On Tuesday this week, the Office of Emergency Management conducted a corporate wide functional exercise of facility Command Center Operations of our acute care facilities, testing a broad range of critical operational capabilities related to emergency disaster response.

The exercise included a mock set up of the Health and Medical Unit of the NYC Office of Emergency Management's (OEM) Emergency Operations Center. Representatives from OEM, the Fire Department and EMS, NYC Department of Health and Mental Hygiene, New York State Department of Health, Office of the Chief Medical Examiner and Greater New York Hospital Association participated along with our HHC OEM liaisons, Susan Meehan and Karen Mattera. Incident Management Solutions, Inc., a consulting firm with deep expertise in emergency preparedness training, assisted in developing the exercise and served as the controller/evaluator.

Scenarios of the exercise included the detonation of improvised explosive devices with a chemical and radiological dispersal component at various locations across the City. The exercise's grim scenario essentially locked down one of our major facilities for a 96 hour period, allowing us to review the facility's preparedness to cope with sustaining operations without outside assistance or staff relief. In addition, the scenario's burns, chemical and radiological exposures caused activation of the burn bed system, the CHEM PAKS of chemical antidotes that are pre-positioned to expedite the treatment of individuals exposed to nerve agents, and the Chief Medical Examiner's Mass Fatality Plan.

Exercise objectives were developed with measurable performance standards so we can track performance improvement for the overall HHC Emergency Management program and the emergency response readiness of each of our acute care facilities. The exercise was an opportunity to identify gaps and best practices in facility emergency operations plans and deployment, and the debriefing assessments of performance will inform our future training scenarios.

An Evaluator/Controller was placed in each facility's Emergency Command Center to assist during the exercise, document strengths and weaknesses of response efforts, and to provide a detailed evaluation and recommendations for improvement within 30 days.

Last month, HHC completed the first phase of an ambitious effort to bring standardized electronic documentation to all the Corporation's emergency departments. Queens Hospital Center and Jacobi Medical Center became the first EDs to go live with the new module, designed to ensure that key aspects of patient care -- such as triage and disposition of the patient from the emergency department -- are captured according to protocols established by HHC's ED Council. This consistency in data capture will allow the Corporation to conduct true “apples-to-apples” reporting and trend analysis. Just as important, the project will bring electronic documentation to the Corporation's last paper-based EDs. This corporate-wide, “meaningful use” of the electronic medical record will satisfy a key criterion for receiving the HIT financial incentives of the American Recovery and Reinvestment Act. All HHC hospital EDs are expected to be using the new electronic system by the end of June, 2011.

On October 6th and 7th, 14 HHC facilities participated actively in National Depression Screening Day. This annual initiative saw our Departments of Psychiatry provide vital community outreach through the distribution of educational material, the screening for mood disorders, and the dissemination of resource and referral information. With 776 patients screened, the total number of patients screened increased from last year, as did the number of follow-up appointments scheduled, at 256. Over 2500 people participated and received educational materials.

We have successfully concluded the sale of $510 million of tax-exempt fixed rate bonds at a very favorable all-in interest rate of 3.89 percent. With this sale, we raised approximately $200 million of new money to fund our ongoing capital program and refunded all of the 1999 Series A bonds and substantially all of the 2002 Series A bonds with a present value savings of 9.5 percent or $32.6 million. With strong support from NYC Office of Management and Budget and the NYC's Comptroller's Office, and a well-received investor presentation combined with radio ads, we were able to generate an outsize retail investor interest. Marlene Zurack, Senior Vice President of Finance will give a more detailed briefing at the next Finance Committee meeting.

I want to offer special thanks for a job exceptionally well-done to Ms. Zurack and her finance division colleagues, Paulene Lok, Nini Mar and Linda DeHart, our pivotal OMB colleagues Mellanie Choi and Alan Anders, and Michael Stern from the NYC Comptroller's Office.

Since many of our doctors participate in important medical research, HHC has developed resources to insure that they are well supported in their research and that our patients continue to benefit from the advantages available with access to cutting-edge clinical trials. On October 5th and 6th, HHC's Office of Research Administration and Lincoln Medical Center co-sponsored a conference to provide a forum for discussion about regulations, guidelines, and best practices in research. The conference also allowed those involved in research across the corporation to discuss current issues and brainstorm potential multi-facility projects to benefit all HHC patients. The conference at Lincoln was attended by about 200 people. Topics included Translational Research to Improve Access and Treatment for Minority Populations, Research Billing Compliance, a discussion on the role of research in quality improvement, and a grant writing workshop.

On October 13th, a rally organized by Doctors Council SEIU, the union representing doctors at Harlem Hospital, was held outside the hospital to protest some of the changes being made at the hospital as part of HHC's cost-containment and restructuring plan. Doctors Council also ran advertisements before the rally in several community newspapers. In an open letter to the community on October 14th, Harlem Hospital Executive Director Dr. John Palmer published a letter addressing the concerns and correcting misrepresentations that had been made during the rally and in advertisements. He stressed that the $300 million modernization of Harlem Hospital is still scheduled to be completed in 2012. He affirmed the hospital's continued commitment to a partnership with the physician workforce, including its academic relationship with Columbia University. And he expressed the hospital's continuing commitment to medical excellence, including retention of the level 1 trauma center, stroke center, bariatric surgery, plastic surgery, neurosurgery and rehabilitation medicine in Harlem Hospital.

HHC's negotiations continue with the Columbia University Medical Center to transition that affiliation from a combined service delivery and academic affiliation to an academic affiliation only. After that transition, Harlem Hospital physicians will continue to hold academic posts with Columbia and conduct 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 Physician Affiliate Group of New York, P.C. (PAGNY). The contract with PAGNY for those services at Harlem Hospital will be brought through the normal Board process for review and approval later this year.

Earlier this year, HHC and the HHC Foundation of New York City were invited by Hank Carter, a longtime and revered benefactor of Coler-Goldwater, to collaboratively initiate a series of events to both benefit New York City's public healthcare facilities and to raise awareness for our facilities and what they do for New York.

The events -- collectively organized under the banner of STAT! For New York City's Public Hospitals! as an immediate call to action to benefit New York City's public hospitals -- are a week-long series of music and arts events throughout the five boroughs. The STAT! events, which will feature high-profile performers, New York celebrities, and the stories of compassion and care that make our public hospitals great, are scheduled to begin on December 5th and run through December 12th.

The HHC Foundation will oversee all fundraising, donations, ticket sales, and other associated financial activities and responsibilities of STAT!

HHC is expanding its partnership with Carnegie Hall Musical Connections, a non-profit organization which provides free interactive performances in healthcare settings, and other institutions for those who have limited access to live music. The program has given performances at Jacobi, Metropolitan, Kings County, and Bellevue hospitals, and will expand its presence to other HHC facilities in the months and years to come. HHC has long recognized and supported the strong connection between art and healing, through extensive art therapy programs, concerts and art displays in our facilities, and our impressive art collection of works that have been donated by distinguished artists and collectors. This afternoon HHC is participating on a conference panel with other New York City agencies to discuss how this work will be extended next year to a nationwide program that includes conference attendees from Los Angeles, Chicago, Boston, San Francisco, Philadelphia, Seattle, Austin, and New Orleans. I look forward to seeing HHC continuing to play a leadership role in the nationwide movement to include the arts in aspects of the healing process.

September 23rd marked the sixth month anniversary of the passage of the Patient Protection and Affordable Care Act (PPACA). There are a number of key provisions that became effective on this date. For most people, these provisions will kick in at the beginning of a new plan year, which is often January 1st. Among these provisions are: 1) the prohibiting of lifetime dollar limits on benefits; 2) prohibiting insurance companies from rescinding coverage to a person currently receiving coverage, except in the case of fraud; 3) requiring plans that cover dependent children to provide such coverage until the age of 26 if the young person does not have health insurance available at their place of employment; 4) prohibiting plans from denying coverage to children (up to age 19) because of pre-existing conditions (in 2014 this will apply to adults as well); and 5) prohibiting newly issued or modified insurance policies from charging co-payments for many preventive services such as mammograms, colonoscopies and immunizations.

As you know, on September 29, 2010, the James Zadroga 9/11 Health and Compensation Act passed the House by a vote of 268 to 160. The entire New York House delegation worked very hard to achieve this victory, with Representative Nadler as the champion for the related HHC community program. The hope is that Senators Schumer and Gillibrand will be successful in getting a Senate floor vote on the House bill during the lame duck session of congress in November. It is likely that 60 votes will be needed for passage to avoid a filibuster. The bill would provide health care for 9/11 first responders and community members exposed to toxins released by the collapse of the World Trade Center towers. The bill would also reopen the federal Victim Compensation Fund to provide economic relief to those harmed by the attacks.

Last month I reported that HHC's Chief Medical Officer, Dr. Ross Wilson testified to The City Council Health Committee on hospital Quality Assurance oversight practices and policies. Members of the Health Committee were impressed by the size, scope and commitment to the Quality Assurance process that HHC has in place.

A second hearing saw Dr. Wilson making a return trip to testify before the Health Committee and Women's Issues Committee. At this hearing, the Council was interested in learning more about the range of birthing options available to women in New York City. Dr. Wilson testified on the services that HHC's facilities offer to pregnant women and infants. Committee members focused most of their questions on the rising Caesarean section rates nationally and in New York City. The Council was glad to hear that HHC's C-section rates were below the New York City and national averages. Council members also asked about the availability of midwives at HHC facilities and Dr. Wilson testified about the commitment that HHC has to offering midwifery services.

As the Board knows, during the past year HHC fundamentally reorganized its corporate compliance operations and consolidated all enterprise-wide compliance responsibilities and personnel under our corporate compliance officer. This reorganization has strengthened our corporate compliance program and capabilities.

With the lessons learned from the corporate compliance reorganization, we have been reviewing, together with the Audit Committee of the Board, the structure of HHC's Office of Internal Audits and ways in which this essential operation could be made more effective. Internal Audits plays an important role in assuring management and the Board that key business risks are managed appropriately, assets are adequately safeguarded and the system of internal controls is operating effectively.

As a result of this review, we now intend to restructure our internal audit function along the same lines as our corporate compliance reorganization. It is anticipated that decentralized internal auditing resources at the networks will be realigned as part of the Corporate Chief Internal Auditor's staff. This centralization will provide additional resources to the Office of Internal Audits, and this will allow that office to expand its auditing responsibilities to targeted areas - like our affiliation contracts -- previously outsourced to outside accounting firms. This should enable us to expand our centralized internal audit operations without incurring additional net costs.

The changes that will be made will be reflected in a new Internal Audit Charter and Operating Procedures, which are expected to be formally issued by year end.

• Kings County Hospital Cancer Care Center - On October 14th, Kings County Hospital Center Hosted a ribbon-cutting ceremony to mark the opening of a new 15,000 square-foot Cancer Care Center that brings under one roof cancer care services that previously were spread out across multiple locations throughout the hospital campus. The new one-stop service center offers oncology, chemotherapy, surgery, medicine, pharmacy, nutrition and social services for cancer patients. The $7.3 million Cancer Center received $200,000 in funding from the hospital's auxiliary and $5 million from the New York City Council.
• Data Center consolidation - Earlier this month, we also announced the completion of the data center consolidation project that reduces the footprint of our eleven hospital data centers into two centralized data centers designed to improve security, strengthen our disaster recovery plans and reduce costs. The new data centers will host HHC's electronic medical records system and more than 300 business and clinical computer applications used by 20,000 users. The consolidation will help standardize systems, reduce the total IT footprint by 70 percent, and is projected to save $88 million over the next five years in reduced maintenance, power consumption, space and cooling needs.
• Lincoln Hospital Breast Imaging Center of Excellence - Lincoln Medical and Mental Health Center has been designated a Breast Imaging Center of Excellence by the American College of Radiology, a recognition given to breast imaging centers that have earned accreditation in mammography, stereotactic breast biopsy and breast ultrasound. The 2,800 square-foot Breast Imaging Center at Lincoln underwent a $600,000 modernization this spring, and offers a larger and centralized location designed to improve efficiency and maximize patient privacy and comfort.

This month, HHC is launching the fourth and final episode of Believing, our multimedia series about our patient safety initiatives and achievements. Episode Four, Innovating Success, includes sections on several of the innovative technological tools we use, such as electronic chronic disease registries and sophisticated pharmacy robots. It also includes a slide-show that highlights the awards and recognitions HHC and our staff have received for our patient safety work since 2005, and data that reflect the effectiveness of our progress in helping patients stay free from infection while they are in our hospitals.

Believing is a powerful statement about HHC's commitment to patient safety. Through the personal stories of our patients, the strong visual and written accounts of our consistent dedication to core patient safety principles, and the depictions of our efforts to advance with boldness and passion, it has become a lasting record of our impressive accomplishments during the past five years. As opposed to the traditional letter that begins such reports, the final episode of Believing closes with my summary letter, which I hope helps to reaffirm our elemental patient safety promise for the future -- that we will keep our patients free from harm while they are in our care.

The Believing series is available on our website, and a printed version will be published for all employees in early 2011.

• Kings County Hospital Unveils New Cancer Center, News 12 Brooklyn- TV, 10/13/10 (Also covered in NYC TV)
• Take Care New York, News 12 Bronx- TV, 10/19/10
• Lincoln Hospital Photo Gallery, News 12 Bronx- TV, 09/24/10
• Dr. Ethan Cowan at Jacobi Medical Center, HIV testing, NY1- TV, 09/20/10
• Shape Up NYC, Harlem Hospital, WPIX -TV, 10/04/10
• Mental Health Peer Counseling at KCHC, Brooklyn Independent Television, 10/18/10
• Making Hospitals Lean In A Time Of Financial Trouble, The Capitol, 09/29/10
• For 53 yrs., hosp's breath of fresh air, New York Daily News, 10/22/10
• State is Helping Hospitals to Boost Psychiatric Care, The Wall Street Journal, 10/18/10 (Also covered in El Diario, The Chief)
• Fitch Rates New York City Health and Hospitals Corp, NY 2010 Ser A Rev Bonds 'A+'; Outlook Stable, Forbes.com, 10/14/10 (Also covered in Pharmacy Choice, Insurance News Net, MyCFO, Crain's Health Pulse)
• Checkup? Pay With a Painting, Crain's Health Pulse, 10/12/10
• For NY Diabetes Patients, Help Is a Phone Call Away, AOL News, 10/17/10
• Lincoln Hospital has been named a Breast Imaging Center of Excellence, New York Daily News, 10/27/10
• Elmhurst Hospital Center Gets Stroke Care Award, The Queens Gazette, 10/20/10
• HHC Receives State Grants to Construct, Renovate Specialty Facilities, Medical Construction & Design, 09/20/10 (Also covered in Healthcare IT News, Health Leaders)
• Almost 5,000 treated for WTC sickness, UPI.com, 09/17/10
• Jacobi community remembers 9/11, Bronx Times Reporter, 09/17/10
• End of Shift: Graduation Day, Nursing Spectrum, 09/27/10
• Hospitals Reduce Pressure Ulcer Prevalence, Nursing Spectrum, 10/25/10
• Camara, Clarke promote school readiness, Caribbean Life News, 09/24/10
• Hospital's photo exhibit traces center's history from 1900s, New York Daily News, 09/28/10
• Hospital Rounds, Lincoln Hospital, MD News, September 2010
• Free Depression Screenings, Myfoxny.com, 10/07/10
• Brooklyn Public Hospitals To Offer Life-Saving Screenings, Flu Shots, Brooklyn Daily Eagle,10/12/10 (Also covered in Queens Courier)
• Sexual assault victims have place to turn, Long Island City Journal, 10/14/10
• HHC Opts for Tax-Exempts, The Bond Buyer, 10/18/10
• HHC Consolidates Hospital Data Centers to Strengthen Disaster Recovery Plan and Reduce Maintenance, Energy Costs, Hospital Newspaper, 10/19/20
• "Kings County Hospital Center Opens 6.5 Million Dollar Cancer Care Center”, The New York Carib News, 10/22/10 (Also covered in Hospital Newspaper, Modern Healthcare)