Mitchell Katz, M.D., President and Chief Executive Officer
NYC HEALTH + HOSPITALS
Tuesday, March 21, 2023
New York City Council Fiscal Year 2024 Preliminary Budget Hearing
Good afternoon Chairperson Narcisse, and members of the Committee on Hospitals. I am Dr. Mitchell Katz, primary care physician and President and CEO of NYC Health + Hospitals (Health + Hospitals). I am joined today by John Ulberg, Senior Vice President and Chief Financial Officer at Health + Hospitals, and Dr. Patsy Yang, Senior Vice President at NYC Health + Hospitals for Correctional Health Services (CHS).
I am happy to be here to report on our finances for Fiscal Year 2024. Health + Hospitals is the largest municipal health care system in the country, serving over 1 million New Yorkers annually in over 70 locations. Our integrated system includes 11 acute care hospitals, 5 post-acute facilities, the Gotham Health network of clinics across the 5 boroughs, and MetroPlus, our subsidiary health plan. Every day, our 40,000 employees live our mission of providing high quality health care services with compassion, dignity, and respect to all, regardless of income, gender identity, race, sexual preference, or immigration status.
Accomplishments
Three years ago, COVID-19 arrived in New York City and required a huge commitment of our energy and resources. Health + Hospitals invested financially, physically, and emotionally to contend with the virus, and continues to do so today. As a result of these efforts, Health + Hospitals emerged from the pandemic stronger and more united in many ways. We solved new challenges, marked major milestones, invested in patient care and responded with excellence to the needs of the diverse communities we serve.
As we move beyond the emergency response to COVID-19, I want to take a moment to recognize the incredible work of our medical frontline at Health + Hospitals, including leading the city’s response to the pandemic via the Test & Treat Corps.
- Testing – Since the beginning of the city’ operations, over 14.5M tests have been administered across testing sites and programs.
- Treating – Our innovative mobile test to treat program has been able to administer over 4,700 Paxlovid prescriptions and Virtual ExpressCare has connected people with Paxlovid prescriptions over 37,000 times.
- Long COVID – the AfterCare program, which provides New Yorkers experiencing Long COVID information and tools related to Long COVID, and connects them to health and social needs resources that support them in their recovery, has proactively reached out to over 500,000 New Yorkers, and referred more than 57,000 people to critical health, social and financial support services.
While we are nearing the end of the COVID-19 emergency, we know COVID-19 is not going away. That is why we are transitioning the services we’ve been offering through Test & Treat into our Health + Hospitals system. In other words, our hospital-based outpatient testing tents and mobile units will shift to offer permanent services inside our hospitals and Gotham clinics. Moving forward, instead of getting a COVID test at a mobile unit, your doctor can do the test for you in clinic. If you have a positive test at home, you’ll still be able to call 212-COVID19 and speak right away with one of our Virtual Express Care clinicians to have Paxlovid prescribed for you.
In addition to our team’s extraordinary work to contend with COVID-19, we have also been able to achieve much more this year.
Among other successes, we have:
- Provided care to over 9,000 asylum seekers, and helped to set up the Humanitarian Emergency Response and Relief Centers
- Launched “Housing for Health” to connect our homeless patients to housing, which has already housed over 400 patients
- Administered over 15,000 mpox vaccinations at our hospitals and mobile sites
- Expanded B-HEARD, the powerful new program where Health + Hospitals social workers and FDNY EMTs respond to 911 mental health calls, to 10 additional police precincts, covering Washington Heights, Inwood, the South Bronx, East New York, and Brownsville
- Expanded our award-winning Street Health Outreach & Wellness (SHOW) vans to include buprenorphine treatment for people with opioid use disorder – a life-saving intervention to broaden the vans’ already sizeable impact
- Completed expansion of our nationally renowned lifestyle medicine service program to all 11 of our hospitals, offering plant-based lunches and dinners as the default choice for our patients
- Launched a Bio Surveillance Program, which tests wastewater for infectious disease, at all 11 of our hospitals
- Grew to over 426,000 unique primary care patients and improved specialty care access with 150,000 e-consults last quarter
- Earned Medicare shared savings for reducing cost and providing high quality care for patients through its Accountable Care Organization (ACO)
- Continued to grow our Virtual ExpressCare which began providing Paxlovid throughout the State, administering the most Paxlovid prescriptions of any provider in New York City
- Made critical system investments, opening a:
- State-of-the-art lab at NYC Health + Hospitals/Bellevue
- Extended Care Unit at NYC Health + Hospitals/Kings County, offering patients with severe mental illness a longer stay, spending up to four months with intensive supports
- Cardiac Rehabilitation Center, the first in within our system, to help hospitalized patients and outpatients who have recently undergone a cardiac procedure, or cardiac event
Additionally:
- Our MetroPlus Health plan membership grew to over 700,000 members
- All 11 of our hospitals received “Baby-Friendly” designation for successfully providing evidence-based maternity care practices to support optimal infant feeding
- NYC Health + Hospitals/ Kings County and NYC Health + Hospitals/South Brooklyn Health received the prestigious Pathway to Excellence Award
- NYC Health + Hospitals/Elmhurst and South Brooklyn Health received Beacon awards for nursing excellence, along with NYC Health + Hospitals/Bellevue Coronary Care Unit
Financial Performance YTD
Health + Hospitals has closed the first half of FY23 with a negative net budget variance of $89M due to higher than anticipated expenses on temporary nurse staffing to keep our facilities running. Our FY24 Preliminary cash plan is largely consistent with our recent performance though we are anticipating a loss of $144M in FY23 (a 1% loss) due in part to the higher expenses and the delay in the receipt of certain federal revenues.
Our Strategic Initiatives associated with revenue cycle improvements, managed care contracting improvements, and value-based payments also remain on track. Through December, they have generated $397 million in revenue and have a projected line of sight of $676 million for the full year, on target with our projections.
FY24 Preliminary Financial Plan
Our February closing cash was approximately $650 million (26 days cash-on-hand), a position largely in line with our average cash position through the fiscal year. We continue to work closely with our State and federal partners to receive prior and current-year payments that we are owed.
As we look at our Preliminary Financial Plan, our overall fiscal picture remains stable thanks to the herculean effort of our staff during these unprecedented and challenging times. In reviewing our long-term outlook, we continue to believe that we are well-positioned, but we remain constantly vigilant of external risks, including expected timing of federal reimbursements, ongoing cost pressures related to inflation and staffing pressures, and potentially devastating federal DSH cuts. We will continue to work closely with our City, State, and federal champions, while we implement our major internal Strategic Initiatives to shore up our financial position. Our Strategic Initiatives — which includes increasing patient care access, growing revenue through improved revenue cycle performance and reimbursement through insurance plan negotiations, and contracting savings — are projected to produce $1.1 billion in FY23, growing to $2.0 billion by FY27.
We are also in the midst of advocating aggressively for equitable access to State funding, particularly funding that is earmarked for essential safety net hospitals like NYC Health + Hospitals. We are thankful to our champions in Albany, including State Senate Health Chair Gustavo Rivera and the Assembly Health Chair Amy Paulin, plus so many of the State Senators and Assembly Members who represent our facilities. We are also fortunate to work closely and productively with the executive branch, particularly the State Department of Health. We are also, of course, grateful to so many of you, our Council Members, who stand with us to serve our system and communities. State funding is critically important to us in our efforts to strengthen NYC Health + Hospitals.
As we look to the out years, we expect to continue to face some federal reimbursement delays in FY24 resulting in a loss of $110M. However, by FY25 we expect to get caught up on our reimbursement and have a positive operating margin in FY25 of $78M. By FY26 and FY27, we will be facing the full brunt of multiple year of DSH cuts, resulting in expected losses of $230M and $288M, respectively. We ask the Council for their continued strong advocacy on our behalf to fight the continued delay or elimination of these harmful cuts, slated to begin October 1, 2023.
Thank you for the opportunity to testify before you today and I look forward to taking your questions.