Fiscal Year 2020: Executive Budget Hearing

Mitchell Katz, M.D., President and Chief Executive Officer
NYC HEALTH + HOSPITALS
Thursday, May 9, 2019

Good afternoon Chairpersons Dromm and Rivera and members of the Committees on Finance and Hospitals. I am Mitch Katz, M.D., President and Chief Executive Officer of the New York City Health + Hospitals (“Health + Hospitals”). Thank you for the opportunity to review the FY2020 Executive Budget for Health + Hospitals.

As I mentioned in our preliminary budget hearing in March, Health + Hospitals has made great progress executing on the Mayor’s transformation plan. We have invested in expanding primary care to keep our patients healthier. We are reducing specialty wait times and improving access to care so more New Yorkers can experience our great clinical care. And we are improving the patient experience while improving the fiscal solvency of Health + Hospitals.

In my first year at Health + Hospitals, we set ambitious targets for revenue growth and we are now on the path to achieve our goals. Some of our efforts were slower to get off the ground than projected and we’ve delayed some initiatives to produce a bigger return in future years. We now project we will finish off the year with $712 million in revenue generating initiatives, short of our of target by about .5% of our budget. We continue to expect we will achieve our future revenue targets as our revenue growth initiatives gain momentum in the years ahead.

Specifically, our revenue cycle efforts – the steps we are taking to bill insurance companies properly and collect the revenue we are owed – are expected to meet or exceed our $190 million target. We are enrolling thousands more New Yorkers in health insurance coverage when they visit our hospitals and expect to hit our $40 million revenue target. We are negotiating hard with managed care plans, winning double digit rate increases from multiple insurers who have underpaid Health + Hospitals for years. We are fighting to make sure insurance companies pay us back when they have underpaid us in the past. We haven’t been paid everything we are owed yet and our negotiations and fights in the courts will bring in millions in revenue this year and next.

While we’ve been making great progress on our efforts to keep more patients inside our system, select projects are taking longer than expected which has pushed some of our patient growth revenue into FY20. We successfully launched a new transportation contract to help patients get the care they need within our system. However, our decision to make this a broader, more ambitious transport system delayed finalizing the contract and pushed some of our expected revenue growth into FY20. Overall, while some efforts have been slower to get started than we hoped, our key growth initiatives are moving in the right direction and we are on track to meet our future year goals.

On the expense side, we made an important strategic decision to invest in growing revenue generating positions and in supporting safe patient care. To that end, I am proud to say that we hired 340 net new nurses in the past year, while reducing our administrative and managerial staff at central office, reducing our temp workforce, and eliminating consulting contracts. We’re proud of the improvements in service and care we’ve made but these changes do mean we will end the year with $395 million in expense reducing initiatives compared to our initial target of $430 million.

We expect to close the year with a cash balance of $781 million and we project positive cash balances through the length of the plan. It is important to remember that our plan assumes the Federal Disproportionate Share Hospital payments will take effect in federal FY 20. These potentially devastating cuts would fall especially heavily on Health + Hospitals and we are advocating forcefully in Washington DC to prevent them. The cuts have been delayed before, most recently in 2018 when Republicans controlled both houses of Congress. We believe that with the Mayor, the Council, Senator Schumer, Speaker Pelosi, Representative Engel and the entire New York delegation’s efforts in Washington the most likely outcome is that these cuts will be delayed again. If the cuts are delayed, the revenue and cash balances in our plan will be significantly higher and the personnel reductions we are presenting in the out years would hopefully not be necessary.

With the Trump Administration in Washington there will always be risks to our financial plan. The continued effort to undermine or eliminate the ACA is a threat to all New Yorkers and especially to Health + Hospitals patients. The threat of public charge and dangerous immigration policy changes harms our efforts to reach new patients and provide them the care they need.

These risks will not deter us from serving our patients and innovating across our health system. We are proud to play a key role in the Mayor’s Guaranteed Care Initiative. On Tuesday, the Mayor unveiled the NYC Care card, and announced the launch of the program in the Bronx on August 1. Bronx residents will be able to use their NYC Care card to access their own doctor, preventative screenings and tests, and 24/7 customer service to assist with appointments and clear co-pays that are affordable to each member. We are building new ambulatory care locations in Queens, the Bronx and Brooklyn. We are successfully rolling out a single electronic health record and financial system across all our hospitals and community health centers. And we are investing in front line providers and staff to make our system and the patient experience as great as any in the city. My mother and father recently moved back to New York City and my daughter is moving from Los Angeles this summer. I am proud to say that we all receive our care in Health + Hospitals. In the years ahead, I hope to welcome members of the committee and many more New Yorkers to experience the great care we have received at one of our 70 locations across the city.

Thank you to these Committees for your tremendous support of Health + Hospitals and I look forward to taking your questions.