De Blasio unveils plan to stabilize Health + Hospitals alongside budget proposal

For the second time since January, New York City Mayor Bill de Blasio announced he was sending an immediate infusion of cash to the municipal hospital system while unveiling a budget proposal – this time, embedding a $160 million payment in a larger plan to stabilize the Health + Hospitals system.

De Blasio detailed the Health + Hospitals’ plan Tuesday from the the Blue Room at City Hall, where municipal leaders established a six-bed infirmary – and the beginnings of its public health system – in 1736. The mayor said this tradition of treating New Yorkers regardless of their immigration status or ability to pay for care is jeopardized by a budget shortfall that, without intervention, is forecast to reach $1.8 billion by fiscal year 2020. Because most of Health + Hospitals’ patients are on Medicaid or uninsured, de Blasio said it has struggled to absorb cuts to federal funding for treating the uninsured and declining reimbursements for care under Medicaid. Additionally, he said more private hospitals are successfully attracting patients on Medicaid – and seizing the reimbursement revenue stream that comes with them.

At his preliminary budget briefing in January, de Blasio announced the city would make an emergency payment of $337 million to keep Health + Hospitals afloat while the public health system mapped out a reorganization plan. Today, alongside his executive budget proposal for fiscal year 2017, his administration released the plan for transforming Health + Hospitals, which operates 11 hospital centers, five long-term care facilities, more than 70 ambulatory care centers and the MetroPlus health plan. The mayor and his officials did not give a firm timeline for implementing all aspects of the plan, but said they were hoping to “benchmark” against and prevent the $1.8 billion gap forecast for fiscal year 2020.

“But that challenge of providing that service to so many people, against the background of declining support over the years has really stretched Health + Hospitals to the breaking point,” de Blasio said. “It’s going to take a very substantial series of simultaneous moves to get this right.”

Beyond the two infusions collectively amounting to nearly $500 million this fiscal year, city officials said its total commitment to Health + Hospitals will reach $2 billion by fiscal year 2020. The mayor also said he’d invest $100 million in capital projects meant to shift the system’s emphasis from hospitals to outpatient care. Still, the city will need to cut $700 million in expenses and come up with $1.1 billion in revenue to address the anticipated $1.8 billion budget gap.

De Blasio said the reorganization would not involve closing hospitals or laying off any of the system’s roughly 42,000 employees, but trimming the ranks through attrition and trying to train and transfer personnel from hospitals to community health centers. Currently, 70 percent of Health + Hospitals’ expenses are staffing-related. The plan notes the restructuring should save $444 million annually by 2020.

Among several revenue-generating tactics mentioned in the plan, the city aims to get federal approval by the end of 2016 for a new program for uninsured New Yorkers. De Blasio’s administration hopes to work with the federal and state governments to secure Medicaid waiver funds for this program. The mayor’s team said it will also urge Albany to recalibrate its formula for distributing safety-net funding to prevent Health + Hospitals from bearing the brunt of federal cuts to this funding stream.

City Council Speaker Melissa Mark-Viverito and Finance Committee Chairwoman Julissa Ferreras-Copeland said lawmakers were concerned the strategy for closing the Health + Hospitals’ gap is contingent on “substantial” state and federal cooperation that has not been assured, but administration officials expressed confidence in their strategy.

“Obviously, we’re going to be pressing hard, and there’s already been discussions at the highest level on all of those issues,” First Deputy Mayor Anthony Shorris said. “But they’re not unusual in many respects. … These aren’t unprecedented things.”

Internally, the city said it will look to enroll more eligible patients in subsidized insurance and explore developing vacant and underused parcels on Health + Hospitals’ campuses, potentially through land sales and ground leases.

Other investments de Blasio highlighted in his $82.2 billion executive budget included $70 million for a new police precinct in southeast Queens, $5.5 million for an initiative to curb and treat opioid addiction, nearly $15 million over the next two years for increasing the number of ambulance tours, some $66 million in homeless services and $170 million for a facility where the city could transfer adolescents currently detained on Rikers Island.

De Blasio highlighted $2.3 billion in savings, saying, it was the largest spending reduction program in the last five years and a prudent move given a forecasted decline in tax revenue growth. In the wake of some City Council members calling for a program to eliminate the gap – where agencies are tasked with identifying potential savings – administration officials said $500 million in agency savings were identified over the next two fiscal years. These saving measures include having the Department of Environmental Protection switch from diesel fuel to natural gas, beginning to use LED lights at the Department of Transportation and consolidating purchases and legal services among some departments.

“We have to budget knowing that we don’t know what could unfold,” the mayor said, referring to the outcome of upcoming federal elections. “We have to decide, therefore, where are we going to find savings? How much to put in reserves? How much are we comfortable spending? ... So now I want to talk to you about some of the investments that we did decide – after a rigorous process – made sense to focus on.”

He also noted some initiatives that the Council identified as priorities, including $5.6 million for Beacon Centers that provide after-school programs and community services, $10 million for one new animal shelter in Queens and another in the Bronx as well as $12 million for 500 more seasonal employees at the Parks Department.

But after the budget briefing, Mark-Viverito, Ferreras-Copeland and City Council Deputy Leader Jumaane Williams sent out statements highlighting their desire for funding to increase the number of year-round and summer youth jobs available. “Given that the Council has made its importance clear, it is disappointing to see that no additional funding was included,” Williams said in a statement. “This means that the budget dance begins with a lower amount of job slots than was available last year. This dynamic risks giving the false impression that achieving the same number of jobs as last year would be a victory.”

The mayor and City Council must negotiate and approve the fiscal year 2017 budget by the end of June.