Fiscal Year 2023: Preliminary Budget Hearing

Mitchell Katz, M.D., President and Chief Executive Officer
NYC HEALTH + HOSPITALS
Monday, March 21, 2022

Good morning Chairperson Narcisse, Chairperson Moya and members of the Committee on Hospitals. I am Dr. Mitchell Katz, 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 2022. Health + Hospitals is the largest public health care system in the country, serving over 1 M New Yorkers annually in over 70 locations. Our integrated system includes 10 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, or immigration status. We are privileged to do this work.

Two 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. I’m very proud of all of the tremendous life-saving work our public health care system has provided to New Yorkers during this horrible pandemic. Now, as we start to turn the page towards a new chapter, we are looking forward to a future in which we can continue to expand access to quality health care for all New Yorkers, without exception.

Accomplishments

Our system has had many extraordinary accomplishments over the past year, even as we have battled a global pandemic. This is all thanks to the commitment of our dedicated and heroic staff. You may be familiar with our COVID-19 response work, which has included:

• Testing – In the last year, the Test & Trace Corps, or T2, team administered over 10 million no-cost COVID-19 tests to New Yorkers, doubled its mobile testing fleet, and launched in-home COVID-19 tests and vaccinations. Through the T2 initiative, we launched Street Homeless Outreach and Wellness (SHOW) vans to meet the medical and behavioral health needs of people experiencing homelessness. Though we began this initiative with an emphasis on COVID-19 tests and vaccinations, we are able to provide an array of critical services, including material necessities such as socks and hygiene kits, basic clinical services, behavioral health support, and harm reduction services to New Yorkers who are unsheltered.
• Vaccinating – As a significant part of the City’s vaccination efforts, Health + Hospitals was able to administer more than 1.7M vaccines across 11 acute care, Gotham Health and Test & Trace Corps sites in just the first year of vaccines.
• Recovering – We successfully opened three new COVID-19 Centers of Excellence in communities hardest hit by the pandemic in Brooklyn, the Bronx, and Queens. These Centers ensure access to the specialized care New Yorkers will need to address long term respiratory, cognitive and cardiac conditions caused by the virus.

While we are rightfully proud of the exceptional work our extraordinary team has done to thwart COVID-19, we have been able to achieve even more this year. Among other successes, we have:

• Enrolled 90 percent of uninsured patients in health insurance or financial assistance, up from 70 percent
• Our MetroPlus Health plan ranked highest quality Medicaid plan in NY and increased membership by over 50,000 members.
• Grew to over 400,000 unique primary care patients with over 70% of our patients enrolled in our patient portal MyChart and improved specialty care access with 100,000 e-consults each quarter.
• Earned Medicare shared savings for reducing cost and providing high quality care for patients through its Accountable Care Organization (ACO)
• We have made critical system investments, opening a:
• New emergency department at NYC Health + Hospitals/Woodhull
• New same day surgery suite at NYC Health + Hospitals/Bellevue
• Established the Maternal Home, which provides case and care management and wrap around services for pregnant people at risk of severe maternal morbidity.
• Reached 100,000 NYC Care members, expanding access to services for all New Yorkers
• Began expanding our nationally renowned lifestyle medicine service program to six health care sites, building towards making it the most comprehensive expansion of lifestyle medicine programming in the U.S.
• Added new diabetes services for Staten Island
• Continued to integrate best practices in LGBTQ affirming care across the System with:
• New Gender Affirming Integrated Services Practice for LGBTQ Patients opening at NYC Health + Hospitals/Lincoln
• Marking a milestone with 100th gender affirming surgery at NYC Health + Hospitals/Metropolitan
• Opening a new Pride Center to care for LGBTQ New Yorkers at NYC Health + Hospitals/Jacobi
• Continued to provide high-quality health services to people in custody while advancing innovative health initiatives through our Correctional Health Services (CHS) team.
• This includes announcing a third site for our pioneering Outposted Therapeutic Housing Unit initiative at NYC Health + Hospitals/North Central Bronx
• Continued to expand our Helping Healers Heal (H3) initiative, the System’s wellness program which offers emotional first aid to health care providers:
• We trained over 100 additional Peer Support Champions, volunteers that comprise the peer led H3 teams at each facility/service line
• Conducted over 25,000 proactive unit-based wellness rounds

Financial Performance YTD

Health + Hospitals has closed the first half of FY22 with a negative net budget variance of $141.6M due to COVID disbursements not yet fully covered with Federal Relief dollars. However, adjusting for COVID spend, the underlying performance is positive. Our FY23 Jan cash plan remains consistent with the FY22 Preliminary cash plan. The most notable changes are T2-related revenue and expense updates and Medicaid Initiatives-related adjustments.

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 $395.9 million in revenue and have a projected line of sight of $679 million for the full year.

FY22 Preliminary Financial Plan

Our system had a closing cash balance of $1 billion (42 days cash-on-hand) at the end of January, historically our highest cash month of the fiscal year. This year, we received both annual federal DSH funds and FEMA reimbursement for our COVID-19 pandemic. Our February closing cash balance was approximately $650 million, more in line with our average.

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 FEMA reimbursement, ongoing cost pressures related to COVID-19, and potentially devastating DSH cuts in the out years. We will continue to seek support from our City, State, and federal champions, while we work to 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 $1.5 billion in FY23, growing to $2.0 billion by FY26.

We are also in the midst of advocating aggressively for equitable access to State funding, particularly funding that is earmarked for distressed 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 Dick Gottfried, plus so many of the State Senators and Assembly Members who represent our facilities. 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.

In terms of our ongoing COVID response, we have now paid out over $2.6 billion in our war against COVID-19, and now is the time for our debts to be repaid. To-date, we have received $620 million in FEMA reimbursement and $1.2 billion in CARES Act Provider Relief Funds. Some of this significant risk has been abated, thanks in large part to the advocacy of Senator Schumer, Congressman Torres, and our colleagues in City and State government. We are continuing to seek additional FEMA funds for any unreimbursed costs and our financial plan assumes that we will ultimately be made whole for any costs associated with our pandemic response.

As a result, the plan projects the system will have a negative operating margin of $80M in FY22 due to the current expected timing of reimbursement. The system projects positive operating margins of $22M and $91M in FY23 and FY24, as we catch up on the receipt of FEMA funds.

Thank you for the opportunity to testify before you today and I look forward to taking your questions.