Good afternoon Chairpersons Rivera and Sears, members of the Health Committee and other distinguished members of the New York City Council. I am Alan D. Aviles, President of the New York City Health and Hospitals Corporation (HHC). Thank you for the opportunity to discuss the Fiscal Year 2008 Preliminary Budget and HHC’s Financial Plan.

Before I discuss the Preliminary Budget and Financial Plan, I would like to share with you some of our achievements and some of what we expect to accomplish in the year ahead.

We can look back on the past year with considerable pride. A great deal has been accomplished on many fronts. As always, each of the HHC facilities can point to its own impressive accomplishments that reflect our long-standing tradition of responsiveness to local community need. I won’t attempt to catalogue those many noteworthy initiatives because that would be a very long list.

WTC Health Center

But let me mention one. Last month, we formally opened the new WTC Environmental Health Center at Bellevue. This new center, which expands upon a joint Bellevue/NYU program established shortly after the events of 9/11, will evaluate and treat any New Yorker who suffers symptoms associated with exposure to the WTC disaster of its aftermath.

The new WTC health center – which has been funded by the City – arises from the collaborative work that Bellevue has done with the Beyond Ground Zero Coalition and other community-based organizations over the last couple of years. That partnership has thus far identified hundreds of patients, especially uninsured lower Manhattan residents and immigrant day laborers, who suffer health consequences from their exposure to the fumes and/or dust of the WTC site, but who were ineligible to receive services from existing WTC-related evaluation and treatment programs funded by the federal government. This coming year, the expanded new Center of Excellence will have more than double its prior capacity.

As this Bellevue initiative demonstrates, and there are many other comparable facility-specific examples from this past year, we often best meet the needs of our patients when we partner with other organizations with a common mission and deep roots in our communities.

Prevention and Screening

As we strive to be fully competitive and become the health care provider of choice for all New Yorkers, our commitment to those without insurance, to limited English speakers, low-income families and children, and to communities in which residents suffer disproportionately from preventable and chronic illnesses remains steadfast.

One example of our commitment to preventive care is our ongoing extensive smoking cessation programs. We have enrolled more than 70,000 smokers over the course of the past four years and have distributed nicotine replacement therapy to greatly increase the odds of success. Last year we helped thousands of our patients to quit smoking, and live healthier and longer lives.

Other prevention, screening and early detection efforts narrow the gap of ethnic and racial healthcare disparities. Cervical, breast and colon cancer are three areas where death rates are higher for low-income patients of color, largely due to access barriers to early detection of these cancers. We continued to step up our cancer screening efforts in each of these areas, performing more than 150,000 cervical cancer screenings and more than 80,000 mammograms. And last year, we performed nearly three times the number of screening colonoscopies that we had provided just four years ago. As a result, we are diagnosing significantly more cancers at an earlier stage when treatment is more effective and prognosis much more hopeful.

This year, we have the new HPV vaccine available to adolescent girls and young women to lower their risk of cervical cancer. And we will launch a broad education and awareness campaign to get more patients vaccinated.

With funding support from the Council, we mounted a campaign to combat the disease with the greatest ethnic and racial disparate impact of all – AIDS and HIV infection. Nearly 85% of the roughly 1670 AIDS-related deaths in NYC during 2005 were among African-American and Hispanic New Yorkers. Many of the communities served by our hospitals and health centers have HIV infection prevalence rates that are more than double the City average.

As you know, each of our hospitals is a Designated AIDS Center with significant expertise in the treatment of HIV infection and AIDS. Last year, we expanded our HIV testing dramatically. Our strategy was to increasingly adopt rapid testing methods and reach patients in a broad range of care settings. By the end of the year, through our facilities’ staffs’ extraordinary and innovative efforts, we tested more than 100,000 patients, a 65% increase above the year before. We identified more than 1500 patients who were HIV positive and did not know it, and we linked those patients to care.

We will continue to normalize testing – making it available to more patients as part of routine care, not just patients perceived to be at a high risk. We will expand our testing efforts even further and expect to test at least 150,000 patients for HIV this year. Our program will reach more outpatient clinics, connect with more adolescents, and focus on the growing population of HIV-infected seniors. By reaching HIV-infected patients who would not otherwise be reached, we will get more individuals into care early when the disease can best be managed, and we will help reduce the transmission rate even as we lessen the stigma of HIV.

Managing Chronic Disease

We continue to focus on the twin epidemics of asthma and diabetes with promising results. Both diseases disproportionately affect African-American and Hispanic communities. In some communities more than 8% of adults and more than 18% of children suffer from asthma. Asthma is the single greatest health-related cause for missed school days among New York City children. The incidence of diabetes city-wide has more than doubled over the past ten years, and roughly 8% of all New Yorkers have diabetes. Diabetes remains the leading cause of kidney failure, adult blindness, and lower extremity amputation, and it is a prime contributor to heart disease and stroke.

This past year, we continued to use our clinical information technology to improve our care of asthmatic and diabetic patients. By embedding asthma action plans in our electronic medical records and ensuring that we are prescribing the most appropriate medications for children with persistent asthma, we again reduced related emergency room visits and hospital admissions. In fact, our asthma-related pediatric emergency visits declined by 24% and our hospital admissions dropped by 30% during the past two years.

Last year, we also leveraged the promising results of the work of the Queens Health Network which piloted an electronic diabetes registry fed from our electronic medical record. Using the e-registry as a tool to focus attention on the diabetic patients who needed it most, both of our hospitals in Queens have demonstrated that over a 30-month period, they were able to more than double the number of their diabetic patients with well-controlled blood sugar levels.

We have now developed an electronic registry that is available over the HHC intranet at every one of our facilities. We are tracking the health status of nearly 50,000 adult diabetics across our system, with the goal of replicating, over the next two years, the success demonstrated by Queens and Elmhurst Hospitals. By the end of 2008 we aim to double the number of our patients whose diabetes is well-controlled. This would effectively mean bringing more than 10,000 diabetics under good control and lessening their risk of life-threatening complications.

We are using our electronic medical record (EMR) to address another chronic disease – one that often impedes our efforts to engage patients in the management of their own care – depression. During the past year, we embedded an evidence-based screening tool for depression into our EMR at every facility to help identify undiagnosed depression in our primary care settings. We screened more than 20,000 patients during the year, and were forced to confront the reality that the prevalence of depression among our patients outstrips the capacity of our outpatient mental health resources.

To better meet the treatment needs of our patients diagnosed with depression, we have undertaken, with the help of the City Department of Health and Mental Hygiene, a system-wide training effort to equip our primary care providers to treat mild and moderate depression in their patients. Over the course of the next year we will treat more patients for depression than ever before, and many of these patients will be treated in our primary care clinics as we continue to take a more holistic clinical approach in that setting.

Increasing Access

Increasing access to needed healthcare services for those who otherwise could not afford it, is central to our mission. Under the new State charity care law that went into effect in January, hospitals are required to offer patients with incomes up to 300% of the federal poverty level the opportunity to pay for services they receive based on a sliding fee scale. Nearly two years ago, through its HHC Options Program, HHC raised its sliding fee scale to 400% of the federal poverty level to broaden affordable access to even more New Yorkers. We have also partnered with community-based organizations to ensure that individuals in the communities we serve understand our reduced fee policies and are aware of our fundamental commitment to never turn a patient away because of inability to pay.

To improve access to health care on Staten Island, collaborating with a myriad of local organizations, Community Planning Board 1, the two hospitals and our elected officials, we provided financial and extensive staff support to establish a new community health center on the Island’s North Shore. The Community Health Center of Richmond (Health Center) opened its doors on July 5th; and we are financing the expansion of its physical space to increase its capacity and range of primary care services for adults and children. We have also funded a legal assistance program and a patient navigator service at the Health Center. We are committed to ensuring the success of the Health Center’s first site, as well as its further expansion into other Staten Island communities. A search is currently underway for the Health Center’s second site.

In addition, we continue to work with Health Center’s Board of Directors and Executive Director toward its designation as a federally-qualified health center (FQHC). The FQHC look-alike application was submitted to the federal Department of Health and Human Services last Friday.

Meanwhile, we continue to support and fund a temporary means of providing additional affordable primary care capacity for uninsured low-income residents on Staten Island through the Staten Island Health Access program (or SIHA). More than 2,500 Staten Island residents have participated in SIHA and participants receive HHC-subsidized care from community-based physicians located on the North Shore.

To better fulfill our traditional role as the primary safety net provider to the new immigrant communities of our City, we are strengthening our ability to provide culturally responsive services to our extraordinarily diverse spectrum of patients. With the funding provided by the City Council, we have expanded remote simultaneous translation service capability beyond its points of origin at Bellevue and Gouverneur to Kings County Hospital. Later this year, we will expand it to the East New York Diagnostic and Treatment Center.

Last year, the raging immigration reform debate raised fears among many undocumented immigrants about their ability to safely access healthcare services. With the help of our City’s Commissioner of Immigrant Affairs, and free promotion from a wide range of ethnic media, we broadly communicated our strong and steadfast commitment to access and confidentiality for new immigrants. We extended the message in eleven languages to let new New Yorkers know that our public hospitals welcomed them, would care for them, and would keep their personal information, including their immigration status, confidential. City Council Speaker Christine Quinn joined us to persuade new immigrant families to secure a primary care home for their children at one of our community-based Child Health Centers, rather than endure the long waits and fragmented care of an emergency room.

Ambulatory Care Redesign

While our focus on cultural responsiveness is one prime example of patient-centered care, another is our ongoing work on ambulatory care redesign.

Our facilities’ ambulatory care redesign teams have dramatically reduced the time required for patients to complete a visit in our primary care clinics from an average of nearly two and one-half hours to a January 2007 average cycle time of 58 minutes. We are now re-engineering our primary care appointment scheduling processes so that we can offer patients more timely appointments while simultaneously keeping the patients linked to their primary care providers.

With scheduled appointment no-show rates averaging 30% or higher and large numbers of unscheduled walk-in patients, our present system is inefficient, stressful for patients and staff, and insufficiently conducive to the continuity of care essential to our efforts to increase patient engagement to achieve more effective management of chronic disease. However, change is possible.

At our Queens Hospital Center Medicine Clinic and the Kings County pediatric clinics, appointment templates have been re-worked; clinics no longer resort to the automatic scheduling of patient re-visits far into the future; patients can now access appointments when they need them; and as a result, no-show rates have declined approximately 50%.

The Choice of More Patients

As we transform our system to be more efficient, effective and patient-centered, more patients are choosing to obtain their care at HHC facilities.

This past year, the total number of patients served by our outpatient clinics was up again for the fifth time in the last six years. And for the first seven months of this fiscal year, the number of inpatient discharges across all of our acute care hospitals is up by more than 4%. Assuming that trend continues, we will provide care to roughly an additional 8,000 inpatients this year. At the present time, even with the addition of some 40 beds over the past two years to meet community need, our total system’s inpatient occupancy rate is above 90%.

The transformation of our public hospitals was strikingly validated by the work of the Berger Commission as it targeted hospitals across the city and state for closing and reconfiguration. The Commission recommended not that our public hospitals shed beds, but rather that the State approve 40 additional beds for Queens Hospital Center.

Rebuilding Our Infrastructure

We are not only transforming the way we are providing care - we are transforming our environments of care. In addition, we are making investments in health information technology and cutting-edge medical equipment to link modern efficient space with the delivery of modern medicine.

Investments in infrastructure ensure that our public hospital system is positioned to serve future generations of New Yorkers. This past year, we completed work on new ambulatory care pavilions at Kings County and Queens Hospital Centers.

We began or continued construction on several other major projects, including the new Harlem Hospital Center, the new Kings County Behavioral Health Care Center, the new Ambulatory Care Pavilion at Jacobi, and the expansion of the Emergency Department at Lincoln.

Our capital dollars have also been invested beyond the acute care hospitals. The planned modernization of the Gouverneur Diagnostic and Treatment Center and skilled nursing facility has been approved and funded and we are in the design phase of this important project. We completed the construction of the impressive new home for our Bedford Stuyvesant Alcoholism Treatment Program, and we have upgraded the physical plants of some of our community-based health centers, including the Junction Boulevard Family Health Center in Queens. We will soon complete the renovations to the new and expanded home for our Mariners Harbor Child Health Clinic in Staten Island.

As part of our commitment to earlier diagnosis and treatment of cardiovascular disease, we have continued to upgrade and increase the number of cardiac catherization centers. New units opened last year at Bellevue and Jacobi; and a Kings County unit will be completed later this year. In all, we will have new or renovated cath labs at six hospitals.

With three new labor, delivery and recovery units completed in 2006 - at Coney Island, Kings County and Lincoln Hospitals, all HHC hospitals can boast state-of-the-art maternity suites. Nearly 22,000 babies were delivered across our system last year. One facility – Woodhull Hospital – has experienced a remarkable 20% increase in deliveries over the last two years.

The cancer care pavilion at Elmhurst Hospital is nearing completion. We are grateful for the Council’s financial support for this project. Another cancer care center is in development at Kings County Hospital for which $5 million was generously provided by the City Council. The design is now complete, and we anticipate awarding the construction contracts for this project later this spring.

In support of our Corporate-wide initiative to improve family planning and other services for women, the Administration allocated $6 million for Women’s Options Centers at Elmhurst Hospital Center, Lincoln Medical & Mental Health Center and Jacobi Medical Center. The Elmhurst facility is anticipated to open this fall. The Lincoln facility will start construction this spring, and the Jacobi facility is in the design phase. Funding is needed for our next phase of Women’s Options Centers, which are planned for Coney Island, Queens and Woodhull Hospitals.

Progress has been made toward the development of senior housing on the campus of the Sea View Hospital and Rehabilitation Center and Home on Staten Island. We are entering into a long-term sublease with the Metropolitan Council on Jewish Poverty. This project is the result of a collective effort among HPD, HHC and Council Member James Oddo.

Patient Safety

As I reported last year, I have made patient safety one of our highest priorities. I have challenged our organization to become one of the safest hospital systems in the nation by the end of this decade. I remain absolutely convinced that we can achieve this daunting goal and our progress over the last year in the area of critical care has moved us toward that goal in a powerful way.

Hospital-acquired infections in critical care units are among the most dangerous preventable events in acute care facilities. Both ventilator-associated pneumonia and central line associated blood stream infections greatly increase the risk of death for fragile ICU patients.

This past year, critical care teams from across our system continued to implement evidenced-based practices that reduce both types of infection and the majority of our hospitals went several months in a row without a case of ventilator-associated pneumonia or a central line infection in their ICUs. For example, there has been only one instance of hospital-acquired pneumonia at Woodhull’s ICU all year. That one case broke a streak of 18 straight months without a single instance of ventilator-associated pneumonia.

And at Bellevue Hospital, which runs 40 ICU beds, the Medical ICU went all year without a single case of ventilator-associated pneumonia and now has gone nine months and counting without a case of a central line blood stream infection.

I can report excellent results on yet another patient safety front -- surgical site infection prevention. Our system as a whole continued to outperform national and state average scores for adherence to the federal quality indicators related to the prevention of surgical site infection. Five of the top six scoring NYC-based hospitals in this category, according to the State Department of Health, are HHC facilities. Therefore, it is no surprise that our clinicians from Lincoln and Bellevue Hospitals were featured in a training film produced by the Healthcare Association of New York State on the prevention of surgical site infection.

All of our efforts to provide safer care, to better manage chronic disease, and to provide care that prevents or diagnoses disease at an early stage, confirm the commitment of HHC’s staff at all levels, to our mission, and to our patients.

I have provided an overview of the past year’s accomplishments and a preview of some of what we expect to do in the coming year. All is not rosy, of course, because we face significant budget challenges, and most dauntingly, on the federal level.

Financial Plan

The January Financial Plan adds more than one billion dollars in Medicaid revenues in recognition of the federal government’s approval of the State’s DSH/UPL Medicaid payments to HHC for fiscal years 2007 and 2008. However, due to proposed changes in federal regulations, these supplemental Medicaid payments are at risk for future years, and accordingly are not reflected in the Plan.

In addition, the President has proposed the elimination of federal financial participation for graduate medical education in State Medicaid programs. If this proposed change to funding for graduate medical education is enacted and the State passes down this loss to providers, this would result in a $200 million per year reduction in revenue to HHC’s Financial Plan beginning in federal fiscal year 2008.

Over the last ten years, as the State implemented mandatory Medicaid managed care, the federal government reduced rates for Medicare while imposing additional complex requirements. During the past fifteen years, the Medicaid clinic rate has remained the same and covers less and less of the costs of outpatient care.

Yet, because of our commitment to provide the services that will help most New Yorkers avoid heart disease, cancer, stroke and other debilitating and deadly conditions, we have continued to provide substantial preventive and primary care, even as the task of supporting operations with patient care revenue has become more difficult.

HHC has been able to do so by relying on supplemental Medicaid funding from the Federal government and continued City support. We will continue to do all we can to advocate against the proposed Federal actions and to articulate a clear picture of how they would damage the health of our communities.

The State Executive Budget includes Governor Spitzer’s Medicaid Reform proposal. From the perspective of our patients, the proposed strategy includes some very positive reforms—it increases eligibility for Child Health Plus from 250 percent of the Federal Poverty Level to 400 percent and makes obtaining and maintaining Medicaid easier. Also no new patient co-pays are proposed.

In the proposed state budget there are cuts to hospitals, nursing homes, and managed care plans that eliminate inflation increases and cut funding for graduate medical education. These cuts, if enacted, would lead to a $94 million reduction in revenues to HHC. While significant, this potential cut is a far cry from previous years’ proposed cuts that have ranged from $140 million to more than $300 million.

In addition, this year the Governor is proposing a change to the distribution methodology for several Medicaid pools that would help HHC and mitigate the proposed cuts to revenue. In a fundamental policy shift, the Governor proposes using Medicaid volume - not overall cost - as the driver for receipt of Medicaid dollars. HHC would receive an additional $62 million from this change in methodology. We support this change as it benefits HHC ‘s hospitals and other hospitals that serve a high proportion of Medicaid and uninsured patients and that do not have a large base of patients with commercial insurance to support their operations. The State has also committed to reforming the Medicaid program in ways that would bolster more effective primary and preventive care and better enable us to continue and expand upon many of the initiatives that I have described to you today.

This Financial Plan also recognizes the scheduled prepayment in FY2007 by the City to HHC of $91 million in FY 2008 general support. Excluding the DSH/UPL payments and the City prepayment, the Corporation’s revenue is actually projected to decline in fiscal year 2008.

In addition, the Plan reflects significant increases in non-discretionary expenses in fiscal year 2008. Most noteworthy, pension costs are scheduled to increase by more than $50 million in fiscal year 2008 and health benefits are scheduled to increase by more than $25 million.

There are no new reductions to City funding to HHC in the Preliminary Budget for fiscal year 2008. However, funding for several programs that were restored to last year’s budget was not baselined. As a result, HHC will receive $21.8 million less in fiscal year 2008 for the operation of the child health and Communicare clinics, behavioral health programs, HIV and TB programs, as well as the pharmacy fee waiver program. Specifically;

• $2.4 million less for the provision of waivers of the $10 outpatient pharmacy fee;
• $6.2 million less for substance abuse, mental health and mental retardation/developmental disabilities programs;
• $12.2 million less for the operation of child health clinics and Family Health/Communicare clinics; and
• $1.0 million less for HIV and TB services.

Funding has been added in fiscal year 2008 for the following:

• The Mayor’s Center for Economic Opportunity endorsed the Nurse Career Ladder program at HHC which will train 60 RNs and 40 LPNs per year—and this program has been funded with $1.1 million in fiscal year 2008;
• Bellevue has expanded its World Trade Center Program—with additional funding of $3.4 million in fiscal year 2008; and
• Medical Malpractice legal defense has been transferred from the Corporation Counsel to HHC—and with it we have received transferred funding of $17.7 million in fiscal year 2008.

HHC’s Financial Plan for fiscal year 2008 anticipates $5.4 billion in expenditures and $5 billion in baseline revenues. Therefore, the Corporation is facing an above-the-line gap of more than $430 million in Fiscal Year 2008.

To address this gap, we must not only work with the City to identify sources of funds needed, but also:

• Make sure we get paid for all of the care we provide. Consequently, our facilities will continue to focus on maximizing legitimate third party payor collections;
• Continue to implement programs to improve supply chain efficiency for pharmaceutical and medical/surgical procedures;
• Improve linkages to community doctors, health centers and other non-HHC providers;
• Increase patient volume;
• Settle outstanding retroactive rate appeals;
• Continue to reduce malpractice costs;
• Further regionalize services within HHC; and
• Seek new revenue and expense reduction opportunities.

I also look forward to working with the Council to overcome these challenges, and to continue moving aggressively toward the safe, efficient, effective and patient-centered health care delivery system that our patients and New York City’s communities need and deserve. I hope you share my pride in what has been accomplished by the hard-working and dedicated women and men who work in New York’s public hospital system and my confidence in the achievements still to come.

This concludes my written testimony. I now look forward to listening to your comments and answering your questions.