ALAN D. AVILES
HHC PRESIDENT AND CHIEF EXECUTIVE
REPORT TO THE BOARD OF DIRECTORS
October 19, 2011

PATIENT SAFETY EVENT FOCUSES ON PATIENT ADVOCACY

Yesterday I attended a patient safety forum at Draper Hall focused on the importance of communicating and partnering with our patients and their families as we work to render the safest possible care. Mrs. Patricia J. Skolnik, Founder and Director of Citizens for Patient Safety, shared the powerful and tragic story of her son Michael’s untimely death in 2004 due to a medical error. She demonstrated, through her own moving experience, how an open, honest conversation between a provider and a patient (or patient’s family) related to informed consent can change an outcome and how such a conversation can save a life.

The forum ultimately challenged providers to adapt their patient/family interactions to a more patient-centered, fully informed partnership model; covered tactics for more effectively informing patients about the risks, benefits, and alternatives of proposed treatments or procedures; and outlined strategies for presenting information in ways that consumers can more readily relate to and understand. The workshop was attended by more than 200 HHC healthcare professionals from across our system. Another successful session with Mrs. Skolnik, attended by nearly the same number, including 180 doctors, was also held this morning at Lincoln Hospital.

COLLABORATION TO IMPROVE EFFECTIVE REGIONAL HEALTH DATA
EXCHANGE AND REDUCE COSTS

Several NYS regional health information organizations (RHIOs), including the Interboro RHIO of which HHC is a member, are collaborating with the New York eHealth Collaborative (NYeC) and New York State Department of Health on the development and implementation of statewide health information exchange (HIE) services. To facilitate this development, NYeC has provided the opportunity for RHIOs to transfer their existing HIE software infrastructure to NYeC which will absorb the cost of further standardized development of the software applications. The standardization and consolidation of the technical infrastructure for the existing downstate RHIOs offers an opportunity to eliminate redundant technology and reduce the total cost of supporting a common HIE infrastructure. The health information exchange goals of the Interboro RHIO and NYeC are well aligned with HHC's goals of building robust care management/care coordination capabilities across care settings both within the HHC network and with external partners. Currently, Interboro RHIO and the other downstate RHIOs are in discussions with NYeC towards this shared technology model.

FEDERAL ACTIVITY UPDATE

As I mentioned last month, on September 19th, President Obama unveiled his proposed deficit reduction plan. The President proposes to save $320 billion in healthcare spending over ten years; $248 billion would be in cuts to Medicare and another $72 billion in cuts to Medicaid. The President's plan crystallizes the administration's priorities for the Congressional Super Committee which was created under the provisions of the Budget Control Act of 2011.

As discussed last month, this Committee is tasked with identifying $1.5 trillion in deficit reductions from both entitlement and tax reforms over the next ten years. As the committee is evenly divided between the parties, it is possible that an agreement will not be reached by the statutory deadline of November 23, 2011. If no agreement is reached, there is an automatic mechanism for budget reductions -- called a sequester -- with Medicaid being exempt and Medicare cuts capped at 2 percent. A sequester may be the least harmful option for HHC and other safety net providers.

The President's proposed deficit reduction plan was outlined in some detail in my report last month. Two of the President's Medicaid proposals seem to be getting attention by the super committee: the "provider tax" reductions and the blended FMAP. There is not enough information or data on either of these provisions to produce a state-by-state impact chart, therefore Members have no hard numbers on how much their state or district would be hurt. However, as New York State has the largest Medicaid program in the country -- about 14 percent of total -- it is likely that the state could lose at a minimum about $2 billion over ten years from the blended FMAP proposal. In addition, the provider tax proposal could cost New York State a total of $2.4 billion from 2015-17 and a staggering $11.4 billion over 10 years.

Two weeks ago, in conjunction with the National Association of Public Hospitals (NAPH) annual fall conference, a delegation from HHC met with the offices of Senators Charles Schumer and Kirsten Gillibrand and staffers from key members of the New York City House delegation to express our concerns about these proposed reductions. In addition, HHC participated in AHA's Washington Advocacy Day on October 4th, meeting with NY Senate staff and many staff for NY House Members.

On a related front, Congress adopted a Continuing Resolution on October 4th to fund the federal government until November 18. The federal fiscal year began October 1. Another bill will have to be enacted before the November 18 to continue government funding after that date.

NEW YORK STATE MEDICAID REDESIGN TEAM ACTIVITY

The Medicaid Redesign Team (MRT) met on October 5th. Members received an update on the progress of the Workgroups, which are actively meeting and developing recommendations. Exceptions are the recently appointed workgroup on Affordable Housing, which is scheduled to meet on October 26th, and the Medical Malpractice Workgroup, which has held two organizational meetings but has not yet been formally constituted. HHC Senior Vice President LaRay Brown, already serving on the Health Disparities Workgroup, was also named to the Affordable Housing Workgroup.

The Workgroups are delivering their recommendations to the full MRT in four phases, beginning on October 15th. The recommendations will be voted on by the full MRT at meetings in New York City on November 1st and in Albany on December 13th. The MRT will deliver a final report to Governor Cuomo by December 31st, so that he may consider the recommendations in formulating his proposed 2012-13 State Budget.

The MRT also received an update on the implementation of the 78 MRT recommendations included in the final 2011-12 State Budget. Of those, 16 have been completed, 10 are substantially complete and 48 are in progress. Additionally one was cancelled due to failure to secure necessary federal approval, and three were merged with other recommendations. The state reports that these initiatives have saved $596.4 million thus far, and appear to be on track to save $1.23 billion by the end of the state fiscal year.

Overall Medicaid spending remains on track to stay within the $15.3 billion cap established for 2011-12. August spending was 2.5 percent below target. However, enrollment continues to rise, with an increase of 72,300 (1.5 percent) enrollees since April.

CITY BUDGET PEGS FOR FISCAL YEARS 2012 AND 2013
NECESSITATES FURTHER EMPLOYMENT REDUCTION

Citing an economic outlook that remains extremely uncertain and a projected $4.6 billion deficit for FY 2013, the City's Office of Management and Budget (OMB) issued new PEG (Program to Eliminate the Gap) targets to City agencies for FY 2012 and FY 2013. OMB directed all City agencies to submit PEG proposals of 2 percent for the balance of FY 2012 and 6 percent for FY 2013. For HHC, this equates to a $1.57 million reduction for FY 2012 and a $4.265 million reduction for FY 2013. HHC's PEG proposal is to reduce general support funding from the City by these amounts. Part of HHC's actions to meet such a significant funding decrease will unfortunately include the reduction of our employee base by another 50 full time positions by the end of this fiscal year. This will bring the workforce reduction target for this fiscal year to 650 FTEs. PEG proposals were due back to OMB yesterday. The proposals will be reviewed by the City over the next two weeks.

EXTENSION OF CONTRACT TO ASSURE CONTINUATION OF
BREAKTHROUGH PROGRAM ACHIEVEMENTS

Today you will consider a resolution to amend an existing contract with Simpler North America, LP, to fund the coming year of this contract in the amount of $4,879,650. We have partnered with Simpler since late 2007 for Lean consultation and training to support HHC’s Breakthrough efforts. This resolution will enable us to continue to work with Simpler during the 12-month period which begins next month. The board has previously authorized me to exercise up to three optional renewal years; your approval of this resolution today will provide the funding for the upcoming second optional renewal year. With Simpler’s support, we have generated a cumulative $211.5 million in new revenue and cost savings. We expect that this return on investment will continue over the next year as we develop the necessary expertise to ensure sustainability of our improvement infrastructure. We face, as you know, a daunting and growing budget gap in the immediate years ahead, unprecedented changes in how we are paid for services, as well as how we provide them, and a still rising tide of uninsured patients who need our services. Breakthrough has proven itself successful as a primary means to engage our workforce to help root out waste, identify and solve problems and permanently change the culture of our organization to better enable us to navigate the very difficult years ahead.

In the almost four years that HHC has been implementing Breakthrough with Simpler’s support, $211.5 million in new revenues and cost savings has been realized. During this time, 4,139 HHC employees have participated in at least one Breakthrough event, including 75 percent of our senior leadership, and 1,077 employees have attended formal Breakthrough training. In the upcoming year, HHC will implement Breakthrough in five new facilities and increase the capability of our sites to manage projects and utilize more advanced Breakthrough tools for increased efficiency.

CONTRACT TO PROVIDE MANAGEMENT OF ENVIRONMENTAL SERVICES

On today's agenda for your review is a proposed nine-year contract with Crothall Healthcare, Inc. to provide expert management of housekeeping services in all HHC facilities. The contract -- which implements part of HHC’s cost containment and restructuring plan – is projected to yield net savings of at least $180 million over nine years, and includes an agreement for Crothall to provide an additional $3.9 million to purchase and maintain equipment for HHC's Environmental Services Operation. The proposed contract also contains penalties and incentives related to mandated improvements in aspects of our corporate-wide patient satisfaction (HCAHP) scores within 24 months of contract execution and annually thereafter. No union employee will be terminated as a consequence of the contract with Crothall and current management employees will be given the opportunity to become employees of Crothall without a decrease in current salary. I urge your support for the contract.

HHC COMPLETES TRANSITION OF LAUNDRY SERVICES

We have completed all four phases of the transition of HHC laundry services. The Sodexo/Unitex consortium now manages the processing of laundry and facility distribution at all 16 HHC facilities. The transition has occurred on schedule and without any disruption to patient care or facility operations.

The Brooklyn Central Laundry (BCL) plant effectively ceased operations on October 14. Sixty-one workers have been reassigned from BCL to comparable positions at other HHC facilities. Four workers will be reassigned by October 21st, and two others will stay to complete administrative work related to the transition of staff and plant closure. The plant will be officially shut down on October 28.

In our facilities we had 97 workers doing distribution of laundry. Forty-one of them were dedicated exclusively to laundry operations and they have been reassigned to other comparable duties within their respective facilities. The remaining 56 employees performing laundry distribution duties part-time were retained and will now devote their entire time to non laundry duties within their respective facilities.

No laundry worker has been terminated and none has experienced any diminution of compensation; some experienced a modest salary increase as a result of their new roles.

I want to acknowledge our network and facility leadership for their hard work in helping us to complete this implementation on schedule and seamlessly within their facilities. I also want to thank all of the BCL workers and the facility distribution workers that have been transitioned for their continued dedication to serving HHC and its patients in their new roles.

HHC URGES EMPLOYEES AND COMMUNITY TO BE IMMUNIZED
AGAINST THE FLU

This month we are launching our annual campaign to encourage our employees to be immunized against influenza. The theme "The FLU Ends with U" emphasizes 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. As before, we provide flu vaccinations to all employees at no cost, and offer them on nearly every shift.

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. As of October 15th, we have immunized more than 65,000 patients.

HHC'S MEDIA PARTNERS DISTRIBUTE THE "TAKE CARE NY" MESSAGE
WIDELY DURING OCTOBER

Last month, I mentioned that HHC and MetroPlus are partnering to encourage employees and New York City residents to attend events at our facilities to get health screenings for many chronic conditions and diseases that plague our communities. We have had great success in leveraging media relationships with various newspaper and radio outlets citywide. Some of our print media partners include El Diario, Harlem News, Epoch Times and the Downtown Express. Radio partners, including WBLS-FM, WLIB-FM, WPAT-FM, WADO-AM, WQBU-FM and LaMega-FM, have provided PSAs to support our message. Univision Radio will provide van appearances to Lincoln, Queens, Cumberland and Metropolitan to support our TCNY events. Today, Dr. Abdul Mondul from Lincoln was interviewed on the WQBU 92.7 show "La Que Buena" with on-air personality, Jesus Sanchez. Dr. Nora Bergasa from Metropolitan will discuss flu shots and TCNY screenings on WADO 1280-AM with on-air personality, Ino Gomez this Friday, October 21st on the morning show "Buen dia Nueva York" at 8:20 AM. Our total TCNY pro-bono value is expected to exceed $125,000, generating over 13 million media impressions.

HHC HOLDS ANNUAL CORPORATE-WIDE DEPRESSION SCREENING EVENT

Fourteen HHC sites participated in the 2011 National Depression Screening Day campaign on October 6, 2011. National Depression Screening Day raises awareness and screens people for depression and related mood disorders. HHC has been a participating in the yearly event almost since it began in 1991. This year 2,090 participants receiving educational materials. Anonymous screenings by mental health professionals for depression were given to 892 participants. Of those screened, 196 received some kind of crisis intervention or a follow-up appointment with an HHC mental health service. This year kudos to Metropolitan Hospital for having the most participants to whom materials were provided -- 332 -- and Elmhurst for providing the largest number of screenings -- 210.

SYDENHAM FAMILY HEALTH CENTER MOVING TO NEW LOCATION

On November 1, the Sydenham Family Health Center will relocate from 215 West 125th Street to 264 West 118th Street in Manhattan. The Center provides primary care and selected specialty services five to six days per week including evening and weekend hours. It currently provides more than 54,000 visits a year and expects the enhanced new facility to increase patient volume. The new site will have state-of-the art medical equipment, including new digital dental radiography along with new exam rooms and reception areas. Services will include Adult Medicine, Pediatrics, Obstetrics/Gynecology, HIV, Podiatry, Dental, Social Work and Financial Counseling.

GALA RECEPTION FOR STAT! 2011 AT BELLEVUE

The STAT! Gala Reception last night in the Atrium of Bellevue successfully launched the 2011 series of STAT! events to build awareness and support for HHC. More than 500 members of the community of HHC family and friends attended, including Mayor Michael R. Bloomberg, Deputy Mayor for Health and Human Services Linda Gibbs, HHC Board members Josephine Bolus, Robert Nolan, Vice Chair Diane Lacey, and Chairman Dr. Michael Stocker.

The evening featured the second annual STAT! Response Awards, which were presented to Dr. Bruce Siegel, President and CEO of National Association of Public Hospitals and Health Systems; the Big Apple Circus Clown Care Unit; and Kasseem "Swizz Beatz" Dean. Meredith Vieira and Todd Krinsky, Vice President, Lifestyle and Entertainment Divisions of Reebok, were presenters, and performances by Tony-winner Melba Moore, acclaimed flutist Bobbi Humphrey, the M-27 Latin All-Stars featuring Grammy and Latin Grammy-winner Dave Valentin, the Big Apple Circus Clown Care Unit kept the evening lively. Dr. Bob Lee from WBLS Radio and Lynda Baquero from NBC News hosted.

As he has done previously, the Mayor referred to HHC as "the best healthcare system in the United States," and presented a New York City Proclamation officially declaring October 23 to 30 STAT! Week. The evening included the premiere of HHC’s anti-gun violence public service announcement, Guns Down, Life Up, created in collaboration with the Hip-Hop community.

Representatives from upcoming STAT! events were on hand, including Doug E. Fresh, Marley Marl, Kangol Kid, Ray Chew, Full Force, Valerie Boyd, the Broadway Boys, Paulie Litt, and award-winning singer and actress Dylan Collins. Tickets and information about STAT! are available at www.stathhc.org.

STRONG HHC PARTICIPATION IN AMERICAN CANCER SOCIETY
MAKING STRIDES WALK

On Sunday, October 16, HHC staff once again contributed to the fight against breast cancer by serving as a Flagship Sponsor for the ninth year in the American Cancer Society's fundraising walk "Making Strides Against Breast Cancer." Beautiful fall weather helped to boost participation to more than 1,200 and although final numbers are yet to be tabulated, it appears that HHC teams are poised to challenge last year's fundraising achievement of $217,000. I was able to greet many of our HHC team members at the Brooklyn walk in Prospect Park, and -- as always -- was impressed by the spirit and dedication of our staff. I know that staff is motivated by our cadre of team leaders across the facilities, so I offer them our thanks, and thanks as well to corporate leadership from Ann Frisch, Denise Soares, and Joe Schick.

ACS has worked with HHC to support many active programs to help women in our communities -- especially those ages 40 and older -- to educate women about breast cancer, to help them to get mammography screenings, and to promote early diagnosis and treatment. Outside of our support of the walk, HHC patients benefit all year long from our strong partnership, especially from ACS's support for research, education, and advocacy, and from their community programs, which are available to our patients at any time. There is still time to contribute to our HHC team fundraising totals until the end of October. At any time employees can also donate to the American Cancer Society at its web site www.cancer.org.

HHC IN THE NEWS HIGHLIGHTS

• City Council Recognizes Efforts of Libertas Center, Dr. Dinali Fernando, Elmhurst, NY1-TV, 10/01/11
• Patient at Lincoln Hospital thanks doctors for care, Dr. Abdul Mondul, Lincoln Hospital, Telemundo Ch. 47-TV, 09/30/11
• Ribbon cutting marks new era for Gouverneur Hospital, Downtown Express, 09/21/11 (Also covered in Crain’s Health Pulse)
• Gouverneur Opens New Ambulatory Care Pavilion and Penthouse, Downtown Magazine, 09/20/11
• Morrisania Diagnostic, Treatment Center gets a redesign, The Bronx Times, Sept. 29-Oct. 5, 2011 (Also covered in YourNabe and El Diario)
• Gouverneur celebrated 126th anniversary, Downtown Express, 09/21/11
• Staten Islanders are urged to take a closer look at their health, Staten Island Advance, 10/10/11
• 'Take Care, New York', Staten Island Advance, 10/13/11
• Llegó la temporada de la gripe, Flu season has arrived, HHC, Alan Aviles, El Diario, 10/18/11
• Improving the Patient Experience -Quality Leaders can contribute to improved HCAPS scores, HHC, Lauren Johnston, Bellevue, Elmhurst, Coney Island, Health Leaders Media, Sept. 2011
• Torture victims land at Elmhurst, YourNabe.com, 10/06/11
• Trading Art for Healthcare, Woodhull Medical and Mental Health Center, The Wall Street Journal, 10/07/11
• Federal government funds expansion of HHC school-based health centers, Nurse.com, 09/27/11
• Wanda Sykes' DCIS Breast Cancer Diagnosis: What Is It?, Dr. Kathie-Ann Joseph, Director Breast Services, HHC, NYU Medical Center, HuffingtonPost.com, 09/28/11
• Medicaid Redesign Team for Affordable Housing, Laray Brown, HHC, New York Nonprofit Press, 09/29/11
• What made people sick? Dust and aerosols at Ground Zero, Dr. Joan Reibman, HHC WTC Environmental Health Center, Sienceblogs.com, 09/28/11
• Largest Group Practices, HHC, Modern Healthcare, 09/26/11
• Much Progress in Palliative Care, HHC, Crain's Health Pulse, 10/05/11
• Predictive modeling being tested in data-driven effort to strike out hospital readmissions, Dr. Maria Raven, Bellevue, HHC, Modern Healthcare, 10/10/11
• Niños marcados por la violencia doméstica, Children scarred by domestic violence, Dr. Aaron Miller, Director of Lincoln Hospital's Child Advocacy Center, El Diario, 09/26/11
• Deshauciado por cáncer se recupera repentinamente, Diagnosed with terminal cancer, he recovers, Dr. Nyati Bagwhati, Lincoln Hospital, El Diario, 10/04/11
• Scene Last Night: James Staley, Ken Langone, Julianne Moore, Ana Gasteyer, Bellevue Reach-Out-and-Read, Bloomberg.com,10/04/11