ALAN D. AVILES
HHC PRESIDENT AND CHIEF EXECUTIVE
REPORT TO THE BOARD OF DIRECTORS
February 24, 2011

U.S. ARMY REPRESENTATIVES VISIT HHC AND HHC FACILITIES TO OBSERVE PATIENT SAFETY PROGRAM

On February 9th and 10th, three representatives of the United States Army's Quality Management Division, Patient Safety Program visited HHC to learn about our patient safety and risk management programs, our TeamSTEPPS implementation strategies, patient safety best practices, and how we collaborate as a system to improve performance.

The two days included an introductory meeting at Central Office and tours of Elmhurst Hospital Center, Lincoln Hospital, and HHC's Center for Medical Simulation and Advanced Learning, where the representative had an opportunity to participate in a simulation. At each hospital, the team met with senior leadership and visited select services such as labor and delivery, critical care, and the emergency department. They were keen to learn how we have worked to improve teamwork and communication amongst caregivers, our processes for reporting and responding to errors, and how we have leveraged our mistakes to make improvements in processes of care. At both sites they were particularly struck by our capacity to effect positive change across our very large, complex and diverse system. The visit ended with a meeting with HHC's Council of Patient Safety Officers and Patient Safety Associates where they learned about HHC's 2011 patient safety action plan.

HHC OBSERVES PATIENT SAFETY WEEK WITH CORPORATE-WIDE EXPO AND ACTIVITIES THROUGHOUT THE CITY

In recognition of Patient Safety Awareness Week, on Wednesday March 9th we will hold our annual Patient Safety Expo and Patient Safety Champions Award Ceremony. The Expo provides an opportunity for each HHC facility to showcase a patient safety best practice that demonstrates reductions in risk of harm or improvements in processes of care. Twenty-nine project abstracts have been submitted this year.

The submissions will be evaluated by a panel of judges that includes: Dr. Christina Jenkins, a member of HHC Board of Directors; Ms. Mary Therriault, Senior Director for Quality and Research Initiatives, Healthcare Association of New York State; and Dr. Arnold Saperstein, Executive Director of MetroPlus. First prize awards will be given for the highest ranking project in acute care, long-term care, and community-based services. There will also be one grand prize winner and a "People's Choice Award" will be given for the project that most impressed all Expo attendees.

At the Expo, we will also recognize HHC's Patient Safety Champions, individuals or teams selected by their facility leadership, who have served as catalysts or change agents to transform the culture of safety within their organization. All clinical and non-clinical HHC staff, from housekeepers to trauma surgeons, are eligible for this award.

We hope that you will join us for this celebration of Patient Safety Awareness Week and HHC's commitment to patient safety.

HHC HOSPITALS COLLABORATE WITH COMMUNITY PROVIDERS TO IMPROVE INTEGRATION OF BEHAVIORAL HEALTH AND MEDICAL SERVICES

Five HHC facilities in Queens, North Brooklyn and South Manhattan have begun to participate with several large community-based behavioral health organizations in the New York State Department of Health funded HEAL 17 grant. The project aims to improve the care for patients with chronic mental illness through clinical collaboration and the integration of medical and behavioral health service delivery. This is the first time HHC's primary care practices have partnered with the larger behavioral health provider community on such a venture.

Participating HHC facilities include Elmhurst, Queens and Woodhull Hospitals, Gouverneur Healthcare Services, and Cumberland Diagnostic & Treatment Center. Participating community-based providers include Creedmoor Psychiatric Center, NYC DOHMH Correctional Health Services and seven members of the Urban Institute for Behavioral Health -- The Bridge, Comunilife Inc., FEGS, PSCH, The Institute for Community Living, Services for the Underserved and the William F. Ryan Community Health Center.

In this project, a health information system infrastructure that can be accessed by all of the participating healthcare delivery sites will be built in support of HHC's primary care clinics serving as patient-centered medical homes. This will mean that HHC will advance its health information technology through development of an outpatient behavioral health electronic record, psychiatric e-prescribing, promotion of a personal health record, data exchange through the Interboro regional health information organization, electronic care alerts and web-based clinical decision support. Patients with mental illness often suffer from other chronic medical illnesses, and have numerous interactions with the healthcare system. This complex patient population will benefit from the broad availability of information provided by multiple service providers who can work together to coordinate their care and to improve health outcomes over time.

FEDERAL FOCUS ON BUDGET CUTS

The main theme in Washington is deficit reduction, which ultimately will include reduced spending in health care, especially Medicaid and Medicare which, along with Social Security and Defense, form the vast bulk of federal expenditures.

The FY 2011 continuing resolution (CR) funding this year's government operations will expire Friday, March 4. The likelihood of a federal government shutdown is high as the Senate is unlikely to pass the recently adopted House CR which cuts this year's spending in the seven months remaining in FY 2011 by over $60 billion.

The CR adopted by the House includes a $1 billion cut in the next six months to the Community Health Centers which, if enacted, may have an indirect impact on HHC, if patients are not able to access healthcare at Community Health Centers and turn to HHC facilities as an alternative. The CR would also eliminate unobligated "stimulus" funds to save $2 billion. Health Information Technology stimulus funds, which HHC hopes to receive, do not appear to be cut in the CR.

On Monday February 14th, President Obama released his federal fiscal year 2012 budget, which included cuts of $4.2 billion to federal Medicaid Disproportionate Share Hospital funding in 2021. The budget also seeks to phase in reductions in permissible state Medicaid provider taxes, which would limit New York State's flexibility to increase such levies to enhance the amount of federal Medicaid matching funds received. In addition, President Obama's budget seeks to provide a two-year fix to the perennial issue of the physician Medicare reimbursement rates at a cost of $54.4 billion.

On February 16th, the House Judiciary Committee approved medical malpractice legislation that is likely to reach the House floor in the next few weeks. Among its provisions, the bill would set a $250,000 cap on non-economic damages. The House has passed medical malpractice legislation previously, but the Senate did not take up those bills, and it is uncertain what the Senate would do this time.

The federal Dept. of Health and Human Services awarded the New York State Department of Health an "Early Innovator" grant of $27 million, which can be used to design and implement the information technology infrastructure to operate the health insurance exchanges needed for implementing healthcare reform. New York will be one of several "Early Innovator" states, whose exchange IT models can then be adopted and tailored by other states.

On February 17th, CMS issued a proposed rule prohibiting federal matching Medicaid payments to states for any amount paid toward medical assistance for preventable healthcare acquired conditions. In the past, CMS has provided guidance to states about incorporating nonpayment for preventable conditions into their Medicaid programs, in a manner parallel to what is done in Medicare, but has not required that they do so. If finalized, the rule would have a limited impact, saving $35 million nationwide from 2011 through 2015.

RECENT COURT DECISIONS REGARDING HEALTH REFORM

Five Federal District Court decisions have now been issued in response to legal challenges to the health reform law. Three decisions have found the legislation constitutional while two have not. The most negative decision was issued by a Judge in Florida who ruled that the entire bill was unconstitutional as the "individual mandate" to buy health insurance violated the constitution and was tied to the entirety of the bill. These challenges to federal health reform will not have any immediate impact, since they do not include a stay of the law pending appeals and such a mandate would not take effect until 2014. Ultimately, the Supreme Court will decide these cases on appeal.

GOVERNOR CUOMO RELEASES EXECUTIVE BUDGET PROPOSAL

Governor Andrew Cuomo released his first Executive Budget with proposals to eliminate an estimated $10 billion deficit, redesign Medicaid and overhaul state government operations through a myriad of task forces and initiatives. There were few details contained within the budget on how they expect to derive the savings in the Medicaid program other than to say that this is the charge of the Medicaid Redesign Team (MRT). The MRT is required to issue recommendations by March 1st.

The Executive Budget did contain a target number of $2.85 billion in Medicaid state share savings for the 2011-2012 fiscal year and $4.6 billion in Medicaid state share savings in the 2012-2013 state fiscal year. As you know, Medicaid has a 50% federal matching rate so the total impact this year would be roughly $5.5 billion and $9.2 billion next year as proposed. Also, there was a proposal to limit the year-to-year growth of the Medicaid program to no more than the 10 year rolling average of the medical Consumer Price Index. This “cap” is estimated at approximately 4% a year. Additional reductions of more than $200 million were proposed that would affect certain public health and aging programs as well as State Health Department operations.

At this moment it is difficult to determine what the impact to HHC would be since the budget did not contain the usual list of cuts that we normally use to calculate the potential reduction. We will know more after the MRT recommendations are issued on March 1st. As you may know, Deputy Mayor Linda Gibbs is the City of New York representative on the MRT. Over the past several weeks Deputy Mayor Gibbs has been convening a city agency workgroup that includes HHC to develop recommendations for the MRT.

It is clear, however, that the intent of the MRT is to try to flatten spending, take a more aggressive approach to controlling growth, better manage high-cost populations and utilization, reduce long term care, home care and pharmacy costs, and design a “managed care” system for behavioral health patients.

It is also evident from the way that the Executive Budget is designed, that the Governor is seeking to minimize the role of the Legislature in this process. There was language contained in the budget that grants decision making authority to the State Health Department Commissioner, and other relevant agency heads, to implement the recommendations of the MRT as they deem appropriate. It also grants budget cutting authority to these agency heads to make up the difference in savings if the MRT recommendations fall short of the $2.85 billion target.

In New York, the Legislature has always played a central role on Medicaid rate making and programmatic decisions. There have been attempts and recommendations in the past to limit the Legislature's power in this area. The prior attempts have produced little and only succeeded in raising the ire of the Legislature. Now, however, Governor Cuomo has taken this one step further by embedding this language into the budget. Since the Legislature can not change the language of the budget, they are at a great disadvantage in the negotiating process. Several members of the Legislature have complained about this step. There is a fair amount of speculation whether this was merely designed as a negotiating tactic to be stricken from the budget by the Governor later as part of a compromise deal or it is indeed his intent to keep it in. We should have a better understanding of all the issues in the next few weeks.

CITY BUDGET PRESERVES FUNDING FOR MAJOR CAPITAL PROJECTS

We are completing our assessment of the impact of the final City budget, which was announced by the Mayor earlier this month. Preliminarily speaking, HHC fared well, in that the Office of Management and Budget (OMB) provided funding for the new North General project, the building and renovation required to relocate long-term acute hospital beds from the Goldwater campus of Coler-Goldwater Specialty Hospital to the site of the former North General Hospital. There was also new funding provided for the Harlem Modernization project that will permit completion of the New Patient Pavilion and garage. This will protect federal funding for the garage construction, and funding to complete the Gouverneur Modernization. OMB also restored all City Council funded projects to September plan, pre-target reduction levels, and synchronized funding for the Modernizations to correspond to spending requirements.

COLON CANCER AWARENESS CAMPAIGN

During March, HHC will observe National Colorectal Cancer Awareness Month by launching Take Care HHC, an internal wellness crusade that focuses on reaching HHC's employees and patients. The 2011 Colon Cancer Campaign will be the first campaign launched under the Take Care HHC umbrella. Other Take Care HHC internal wellness campaigns later this year will include breast cancer, diabetes, obesity and flu shots.

The 2011 Colon Cancer Campaign encourages employees and patients to get a colonoscopy if they are 50 or older. Colon cancer is one of the most preventable cancers and studies indicate that a timely colonoscopy could prevent between 76 percent and 90 percent of all cases. The campaign focuses on screening, prevention and early detection and this year's theme is Preventable, Treatable, Beatable. The campaign includes a diverse group of HHC's employees and patients sharing powerful testimonials about personal experiences and providing direct appeals to colleagues, friends and family members. It features video messages that will be posted on HHC's website, YouTube and Facebook, as well as brochures, posters and ad panels placed in strategic locations within HHC facilities.

BELVIS NURSE PRACTITIONER ELVA RODRIGUEZ WINS SLOAN AWARD FOR PUBLIC SERVICE

Elva Rodriguez, a nurse practitioner in the Women's Health Service at the Segundo Ruiz Belvis Diagnostic and Treatment Center, has been named by the Fund for the City of New York as a recipient of the Sloan Award for Public Service. A dedicated, collaborative, and innovative individual, Ms. Rodriguez has been an inspiration and mentor to her colleagues and a compassionate and caring nurse to her patients for more than 23 years.

Ms. Rodriguez's recognition is especially gratifying for Belvis, which is a resourced-challenged neighborhood health center serving the Mott Haven and Hunts Point communities. Employees like Elva help facilities like Belvis by thinking outside the box, motivating and leading teams, and creating miracles on the tightest of budgets.

The Sloan award citation recognizes Elva's special relationship with her patients, but also applauds her drive to innovate and improve the quality of care, including her work in developing a database that allows tracking of all Pap tests and sexually transmitted infection tests performed at Belvis. She also created a supplemental tracking and monitoring tool for abnormal results to facilitate appropriate follow-up and case management, ensuring that every patient who requires care receives it.

In light of the budget challenges we face, it is especially heartening to know that we remain the kind of system that nurtures the caring, clinical excellence, and spirit of community that Elva Rodriguez represents. My congratulations to her and our thanks to the Sloan Committee for this important recognition.

YEAR IN REVIEW REPORT ATTACHED

As is customary, my spoken remarks today will include a brief summary of the annual Year In Review report. The full printed report is included as part of your packet.

HHC IN THE NEWS HIGHLIGHTS

• Diabetes Program at Kings County Hospital, News 12 Brooklyn-TV, 01/28/11
• Lincoln Hospital's Diabetes Class, News 12 Bronx-TV, 01/28/11
• Teen Pregnancy Help at Coney Island Hospital, News 12 Brooklyn-TV, 02/16/11
• Cold Weather, Dr. Luis Rodriguez, Woodhull News 12 Bronx-TV, 01/25/11
• Snake Bite Victim Hospitalized at Jacobi Medical Center, WABC -TV, 02/01/11 (Also covered in The Record, NY Daily News, WCBS AM Radio, NTNJ New York, WPIX 10)
• Hospitals Explore Benefits of Music Therapy, Nursing Spectrum, 02/21/21
• New York Initiative Aims to Reduce Pressure Ulcers, Nursing Spectrum, 01/25/11
• Top Medical Doctors, The Network Journal, February 2011
• Gals gonna be swearing by red, New York Daily News, 02/04/11 (Also covered by WFUV Radio)
• New Executive Director at Queens Hospital Center, The Courier Sun, 02/03/11 (Also covered in NY Daily News)
• Patient Safety Conference Stresses Teamwork in Fight to Stop Hospital-Acquired Infections CIR News, Winter 2010
• Lincoln Hospital's Autoclave Technology, MD News, January 2011
• Queens Hospital Offer Superb Care, Queens Gazette, 01/26/11
• Woodhull Hospital Senior Staff Meet With Brooklyn Unidos , The Bushwick Observer, 02/22/11
• Subway is super, and now up and running in Sea View, Staten Island Advance, 02/03/11