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

STAT! EVENTS RING IN THE HOLIDAY SEASON

Last week saw the triumphant culmination of STAT! For New York City's Public Hospitals, an outstanding series of awareness and fund-raising events, organized and presented by the HHC Foundation and HHC. The series enabled us to celebrate our accomplishments and raise awareness about all HHC does for New York. STAT! events - music, dance, art, and spoken word - took place in every borough, and recognized our hospitals and healthcare facilities in a way that was exciting and new for HHC. Every STAT! event forged new connections with the communities we serve, demonstrated how vital our healthcare services are for all New Yorkers, and reaffirmed for our staff how important their roles are and how much they are valued.

Thousands of people throughout the city attended the STAT! events, which ranged from salsa to gospel to jazz to rock to Broadway. A press conference with Mayor Bloomberg began the STAT! events and the Mayor later hosted a star-studded kickoff VIP event in the Bellevue Hospital atrium that celebrated the arts and their role in healing, a theme that was frequently in evidence throughout the week.

An astonishing breadth of artists contributed their time and talent, as well as leadership from all our facilities, who got the word out and helped to host our events. I will take this opportunity to express my appreciation to all the performers, but mention a few who earned extraordinary praise during the week. In Staten Island, the HHC Art Collection and the classic rock group Repeat Offenders (which includes Gary Belanich, a transportation supervisor here at Central Office); in the Bronx, the vocal stylings of Frankie Negron and the sensational India; in Brooklyn, the lilting jazz of Anat Cohen, Haitian artist Alan Cavé, and the dance troupe Full Circle; in Queens, the delightful dancing of Omar and Eboni Edwards, the powerful words and music of the Impact Repertory Theatre, and Elmhurst Hospital's wonderful Cido the Clown. Finally, in Manhattan, the inspirational performance of Pastor John P. Kee and his choir, and a special and rare New York appearance of the Temptations Review, really put the week over the top.

It's not often that we have the opportunity to celebrate ourselves and to thank the frontline staff of HHC for all they do. STAT! accomplished those goals and more. I want to offer special thanks to the great support given to us by Dr. Stocker and the entire HHC Board of Directors. My chief of staff, Joe Schick, worked tirelessly over the course of the last three months in his role as Executive Director of the HHC Foundation to manage the entire STAT! initiative. And of course, we continue to build a never-ending debt of gratitude to philanthropist Hank Carter for his long-term commitment and contributions to HHC.

METROPLUS NAMED #1 MEDICAID MANAGED CARE PLAN IN NYC

For the fifth time in the past six years, MetroPlus Health Plan, Inc. has been rated the number one Medicaid Managed Care health plan in New York City. The rating is based on indicators chosen by the New York State Department of Health (NYSDOH) and is published in the NYSDOH 2010 Consumer's Guide to Medicaid Managed Care in New York City.

The guide, based in part on quality ratings submitted by the health plans and a member satisfaction survey, shows MetroPlus with an eighty-two percent overall rating, ranking it first among New York City's ten Medicaid Managed Care plans. The ratings are based on measures including preventive and well-care for adults and children, quality of care and patient satisfaction with access and service. MetroPlus not only ranked first among New York City plans, the organization scored higher than all Medicaid Managed Care plans in New York State. Congratulations to MetroPlus Executive Director Dr. Arnold Saperstein and his staff, for their tireless efforts to support high quality healthcare as well as excellent customer satisfaction.

JOINT COMMISSION PRESENTS POSITIVE SUMMARY OF 2010 HHC SURVEYS

The Joint Commission (TJC) multi-facility survey of HHC concluded on December 13th when the Survey Team Leader, Ellen R. Rhodes, MHA, RN, returned to HHC to share the survey results with members of the Board of Directors and Senior Leadership. Ms. Rhodes also shared comparative data based on surveys conducted across the nation, many of the leading practices identified across the five HHC facilities that were surveyed, and some opportunities for improvement. This year, Jacobi Medical Center, Metropolitan Hospital Center, Elmhurst Hospital Center, Gouverneur Skilled Nursing Facility, Dr. Susan Smith McKinney Nursing and Rehabilitation Center and the Elmhurst Hospital Center Methadone Treatment Program were surveyed.

We were pleased with the very positive corporate report which included the Survey Team's validation of HHC's commitment to our mission, to the communities we serve and to continuously improving safety and quality across the system. Congratulations, once again, to William Walsh, Meryl Weinberg, Chris Constantino, Peola Small, Mendel Hagler, Dr. Ann Sullivan, Antonio Martin, Lynda Curtis and their staff on their excellent survey performance.

Bellevue, Harlem, North Central Bronx, Queens, Woodhull and Coler Goldwater are scheduled to be surveyed in 2011.

BELLEVUE PARTNERS WITH POLICE AND FIRE DEPARTMENTS TO PILOT INNOVATIVE ORGAN DONOR PRESERVATION PROGRAM

On December 1st Mayor Bloomberg and the New York Organ Donor Network announced the launch of a partnership of Bellevue Hospital and the City's Police and Fire Departments to test the feasibility of recovering organs from the 400-plus eligible people who die of cardiac arrest each year in Manhattan, outside of hospitals. The pilot program, the first of its kind in the country, provides the opportunity for preservation and recovery of kidneys from individuals who have died from a heart attack outside of a hospital setting and have documented their wishes to be a donor. During the pilot, which runs through May 2011, Manhattan's Emergency Medical Services (EMS) calls will be monitored by a specially trained Organ Preservation team that will respond in instances where all resuscitation efforts have failed. Organ donation will not occur without prior written consent of the donor, and consent from the family or next-of-kin. While this program is designed to honor donor wishes and save more lives, extensive checks and balances have been integrated at every stage of the process to ensure the rights of everyone impacted by this new program are protected. Funded with a $1.5 million grant from the U. S. Department of Health Resources and Services Administration (HRSA), the pilot program will initially cover the borough of Manhattan, with Bellevue Hospital acting exclusively as the donor hospital. Once completed, officials will review the program results and discuss the program's potential to be expanded to other parts of the City.

QUEENS HOSPITAL OPENS 40-BED ADDITION

This week, Queens Hospital Center announced the completion of 40 new inpatient medical/surgical beds to help meet the growing needs for healthcare services posed by recent hospital closures in the borough. The expansion follows the recommendation of the New York State Commission on Health Care Facilities in the 21st Century -- known as the Berger Commission -- which in 2006 mandated restructuring, consolidation and closing of numerous health facilities. The 40-bed expansion at Queens Hospital was the only hospital expansion recommended by the Commission. The 40 new inpatient beds, which are expected to be fully operational by December 22, are part of a larger four-phase $22 million construction and renovation project funded by a New York State HEAL grant and Capital funds. Other components of the renovation and expansion project include a renovated 35-bed Psychiatric Unit, and expansion of both the medical and psychiatric Emergency Departments. Between Fiscal Year 2007 and Fiscal Year 2010, demand for services at Queens Hospital has increased dramatically, with adult emergency visits growing by 50 percent. The Queens Health Network as a whole and the Queens Hospital Center in particular, have struggled to manage the surge in patient demand related to hospital closures in Queens, and the 40 additional beds are a welcome addition.

CONEY ISLAND HOSPITAL BEGINS CONSTRUCTION FOR LARGER ED

Last week, Coney Island Hospital started construction for a new, expanded Emergency Department (ED) that will increase the existing ED space by 60 percent. The new $10 million, 7,500-square-foot addition to the existing 10,500-square-foot Emergency Department will provide additional treatment space to accommodate the nearly 6,000 adult and pediatric patients who visit the hospital each month. It will also help to improve the efficiency of admissions and patient flow within the hospital. The ED will remain open 24-hours a day during construction and continue to provide emergency medical, surgical, trauma, and psychiatric assessment, evaluation and treatment for acutely ill adult and pediatric patients.

CUMBERLAND RIBBON-CUTTING FOR RENOVATED MEDICAL & DENTAL FACILITIES

Last week, Cumberland Diagnostic and Treatment Center introduced their newly renovated space to expand primary care services to the communities of North Brooklyn. The new space consists of an upgraded Dental Clinic and enhanced Adult Medicine service. The enhancements include advanced medical equipment, renovated patient registration and reception areas for patient privacy, patient seating that is specially developed for older adults and patients with limited mobility, additional patient care space, dedicated space for education and counseling for chronic disease issues, and new clinical work stations for nurses. The renovations were made possible through a HEAL (Health Care Efficiency and Affordability Law for New Yorkers) grant of approximately $1 million from the New York State Department of Health, and funding assistance from the Cumberland Auxiliary.

HHC MEDICAL SIMULATION CENTER UPDATE

While HHC's Institute for Medical Simulation and Advanced Learning (IMSAL) is putting the finishing touches on installation of the medical simulation equipment in its newly built training center on the Jacobi campus, the IMSAL staff has also been active in several areas outside the training arena. They participated again this year in the annual Mentoring in Medicine event that was held in late November at the Frederick Douglass Academy in Harlem. More than 1,250 students, parents and educators, and another 135 healthcare professionals attended the event. Mentoring in Medicine is a nonprofit organization whose mission is to diversify the healthcare workforce by mentoring and exposing students in socio-economically disadvantaged communities to careers in healthcare.

In early January the new Center will host a medical simulation instructor course taught by faculty from the Center for Medical Simulation (CMS), a global leader in the field of medical simulation. Titled "Simulation as a Teaching Tool," this course is a four-day intensive immersion in healthcare simulation for educators seeking to create high-quality healthcare simulation programs. Drawing on the disciplines of aviation, healthcare, psychology, experiential learning and organizational behavior, participants will learn how to teach clinical, behavioral and cognitive skills through simulation.

Finally, in late January, the IMSAL team will again take a leading role in the 10th annual International Meeting on Simulation in Healthcare, the world's largest conference dedicated to healthcare simulation learning, research and scholarship. Dr. Haru Okuda, Director of IMSAL and a nationally-recognized leader in medical simulation, will once again lead his ever-popular "Sim Wars," the team-based interdisciplinary simulation competition that he co-created four years ago and has facilitated at multiple national meetings. He will also moderate an expert panel. He and other IMSAL team members will be conducting or serving as faculty on courses on topics such as patient safety, mobile course delivery, and teaching clinical skills and team communication in the medical simulation experience.

CITY DIRECTS FURTHER REDUCTIONS TO HHC'S CAPITAL PLAN

Earlier this week HHC, together with other City agencies, received notification from the Mayor's Office of Management and Budget directing a 20% reduction to every agency's 10-year capital plan. This is on top of the 30% reduction to capital plans that was implemented previously. For the balance of fiscal year 2011, HHC has been requested to reduce its capital expenditures by approximately $44.5 million. For fiscal years 2011 through 2015, the targeted reduction is approximately $98.7 million. While these targets represent a preliminary estimate, and may be subject to some level of modification, reductions of anything close to the proposed magnitude will be extremely challenging to accomplish. I will keep the Board informed as we move toward final resolution of this issue with OMB and the City.

FEDERAL ACTION ON 9/11 LEGISLATION

Congress is currently in a lame duck session, which could end as early as tomorrow, or possibly extend to the days just prior to Christmas. New York City's and HHC's priority for the session is Senate passage of the September 11 health bill, H.R. 847, which has already been approved by the House of Representatives. All Senate Republicans have agreed in writing to make this bill -- and all other pending business in the Senate -- hostage to passage of tax legislation to extend the expiring Bush era tax cuts. Sixty votes are necessary to avoid another filibuster and it is not clear if that number can be met, though a few Republicans have indicated they would be supportive. HHC and the City have been intensely involved in lobbying efforts on behalf of the legislation and are appreciative of our state's Senators, Kirsten Gillibrand, the prime sponsor, and Charles Schumer, the third ranking Senator in the chamber's leadership, for shepherding the bill in the Senate . If the Senate changes the bill in any way, the House would then have to pass the entire legislation again. House Speaker Pelosi has said she would make the bill a "must do" before adjournment, if another vote was necessary. Attempts to attach 9/11 Health to other larger bills, most notably the tax bill, have failed. This strategy may be tried again with the Omnibus Extender bill, but if that fails, the 9/11 health bill may be resubmitted as a stand-alone bill, if the Senate is still in session next week.

PHYSICIAN MEDICARE PAYMENT SCHEDULE EXTENDED FOR ONE YEAR

Last week, both Houses of Congress passed a one year “fix” to the Physician Medicare payment schedule. This extended until December 31, 2011 the 2.2% physician payment update approved by Congress in June. If Congress failed to act on such a measure, physicians would have faced a payment cut of 25% under Medicare beginning January 1, 2011. This one year "fix" costs $14.9 billion. A long term solution could cost $300 billion over 10 years.

RECENT COURT DECISION REGARDING HEALTH REFORM

On Monday this week, District Court Judge Henry Hudson in Virginia issued a decision concluding that the mandate that individuals buy health insurance was not within the powers of Congress. This challenge to an important aspect of federal health reform will not have any immediate impact, since it does not include a stay of the law pending appeals, and the mandate does not take effect until 2014. Roughly 20 pending cases question the new law's individual responsibility provision, which says that Americans who can afford it, must maintain basic health coverage. Two of these federal constitutional challenges have already ended with District Court rulings upholding the constitutionality of the individual mandate, and the remainder will wind their way through the courts. If the individual responsibility provision were stricken, it would undermine the fiscal viability of many of the important insurance reforms including ending discrimination against people with preexisting conditions. Ultimately, it is expected that the Supreme Court will decide these cases on appeal.

NEW MEDICAID CUTS REJECTED BY STATE LEGISLATURE

As you have probably read, the State Legislature rejected additional cuts to Medicaid rates during their special session last month. Governor Paterson called the Legislature back to address several issues including proposals to close the estimated $315 million gap for the current state fiscal year. As part of the gap closing plan, a 6.7% Medicaid rate cut for the period December 15th, 2010 to March 31st, 2011 was initially proposed. The Legislature balked at this cut and the proposal was subsequently reduced to 5.3% - but received the same response. HHC estimated that the 6.7% rate reduction would have resulted in a $46 million cut to the reimbursement we receive for providing care at our hospitals, nursing homes, clinics and by MetroPlus during this period.

Typically, when cuts have been proposed to close a late fiscal-year gap, the Legislature has preferred to review those cuts in the context of what has been proposed to close the gap for the upcoming State Fiscal Year. In this case, proposals to close the estimated $315 million (and growing) gap for this Fiscal Year (2010-2011) will essentially be "rolled" into the negotiations on ways to close the $9 to $10 billion gap for State Fiscal Year 2011-12.

HIGH QUALITY PHYSICIAN SERVICES AT HARLEM HOSPITAL AND RENAISSANCE D&TC SUPPORTED BY PROPOSED AGREEMENT

On today's agenda, for your review and approval, is an affiliation agreement with the Physician Affiliate Group of New York, P.C. (PAGNY) for the provision of general care and behavioral health services at Harlem Hospital Center and at Renaissance Health Care Network Diagnostic and Treatment Center. This new affiliate is expected to strengthen the delivery of clinical services, working with physicians to drive HHC's quality and safety agenda, and to assist our physicians with optimizing their own billing under the existing faculty practice plan. Columbia University, under a new academic affiliate agreement, will continue to support clinical teaching and supervision of medical residents at Harlem Hospital and will continue to facilitate access to research and related grant activities at the hospital.

The proposed agreement is for a term of eighteen (18) months and will commence on January 1, 2011 and terminate on June 30, 2012 consistent with the general terms and conditions outlined in the Resolution. Contract costs for the eighteen-month agreement total approximately $102.8 million, a level of funding sufficient to ensure that all physicians can be compensated at the current salary levels with fringe benefit package that confers a comparable economic benefit to the physician workforce in the aggregate.

The details of the physicians' fringe benefit package are still being negotiated between PAGNY and Doctor's Council and we remain hopeful that a final agreement is imminent.

HHC TO APPEAL INJUNCTION BARRING PROPOSED LAYOFFS

On November 24th, Justice Alice Schlesinger issued a decision granting a permanent injunction against HHC's laying off of approximately 140 HHC employees. These employees include carpenters, electricians and laborers. As you know, HHC had implemented these layoffs as part of our system-wide cost containment plan. We believe that the judge's ruling misstates the relevant facts and is erroneous as a matter of law. The Corporation is appealing the decision and requesting an expedited review of the case. We believe that this ruling will be reversed on appeal.

JULIUS WOOL NAMED EXECUTIVE DIRECTOR OF QUEENS HOSPITAL

Julius Wool, MPA, has been named the Executive Director of Queens Hospital Center. Since Julius joined HHC in 1985, he has assumed increasingly demanding leadership positions that qualify him well to assume this new role. He has been the Queens Health Network Chief Financial Officer since 1998. He has also been responsible for the Network Managed Care Department and Health Information Management Department at Elmhurst Hospital Center. From 1989 to 1998 he was the Budget Director and Chief Financial Officer at Queens Hospital Center. He has been a major contributor to network strategic planning and has recently led several network breakthrough initiatives, including the Inpatient Documentation and Coding Improvement Project. In all these positions he has demonstrated outstanding leadership, been a strong advocate for quality services for our patients and worked to ensure the financial viability of our hospitals. Julius has also served on the HealthFirst Board of Directors and the GNYHA Finance Committee. A true native son, Julius grew up in Queens, received his BA from Queens College and his MPA from Baruch College. We are very fortunate to have him assume this important leadership role at a critical time and congratulate him warmly.

HHC IN THE NEWS HIGHLIGHTS

• In Trial, the City Will Deploy Ambulances to Save Organs, NY1- TV, 12/01/10 (Also covered in NY Times, The Wall Street Journal, NY Daily News, Crain's Health Pulse, Reuters, ABC News Radio Crain's New York Business, DNAinfo.com,WND.com, CNN, Ch 2, 4, 5, 7)
• Alzheimer Patient Reunion at Lincoln Hospital, News 12 Bronx - TV, 12/13/10
• Joe Schick talks about STAT! BronxNet - TV, 11/22/10
• Healthy Holiday Eating Program at North Central Bronx Hospital, News 12 Bronx - TV, 11/23/10
• City to Deploy Ambulances to Save Organs, The New York Times, 12/01/10
• Music and arts festival for city hospitals, HHC STAT! Events, The Queens Courier, 12/07/10 (Also covered by The Epoch Times, NY Daily News, Staten Island Advance, El Diario, Wireimage.com, QueensLatino.com)
• MetroPlus's HealthCare Plan, Black Star News, 11/22/10 (Also covered in Crain's Health Pulse)
• NYC Hospitals Consolidate Disparate Data Centers, Healthcare Informatics, 11/18/10
• Marlene Zurack on Healthcare Reform, Healthcare Financial Management Association, 12/02/10
• Honoring Excellence, Modern Healthcare, 12/13/10
• Palliative care for poor patients works for HHC, Crain's Health Pulse, 12/06/10
• New Inpatient Unit Opens at QHC, Crain's Health Pulse, 12/13/10
• Telehealth provides real time intervention, decreases service costs for home care agencies, Nursing Spectrum, 11/22/10
• Med/Psych Clinic Meets Unique Needs of Psychiatric Patients, Nursing Spectrum, 11/22/10
• HHC, Bellevue Program Addresses Children's Psychiatric Crises, Nursing Spectrum, 11/22/10
• Singing for Your Colonoscopy, Bloomberg Businessweek, 11/22/10
• Dromm Secures Funding For Elmhurst's Chest Pain Facility, The Queens Gazette, 11/24/10
• Ms. Jimenez-Hernandez appointment, Lincoln Hospital, New York Daily News, 11/24/10
• Study: Doses on measuring cups in children's meds flawed, Newsday, 12/01/10
• Upper East Side Dental Clinic Joins Front Lines of Rapid HIV Screening, DNAinfo.com, 12/01/10
• Kings County Hospital Opens Cancer Care Center, Hospital Newspaper, 12/06/10
• Elmhurst Hospital Center Spreads Holiday Cheer, The Queens Gazette, 12/01/10