Facing $210M Shortfall, New York City Public Hospital System Seeks City Subsidies

After operating "in the black" for five years, the New York City Health and Hospitals Corp., the city's public hospital system, will likely end this fiscal year with a $210 million deficit caused by efforts to shift patients from hospitals to primary care clinics -- the "very strategy adopted in recent years to assure its long term fiscal health," the New York Times reports. The city has considered "substantially subsidizing" the corporation, which serves a large proportion of low-income and uninsured residents, but also may cut costs "in ways that are unpopular with many citizens." According to the Times, the corporation has sought $87 million from the mayor's executive budget to "stave off further losses" at the end of the year, as well as permission to close more than two dozen school and neighborhood health clinics, most in the city's "most densely populated and poor immigrant neighborhoods." The mayor's executive budget would provide a "one-time $20 million payment" to the corporation to help cover the costs of treating uninsured immigrants and would establish a program, called HHC Plus, which would earmark $67 million annually to provide services in clinics to uninsured patients with incomes less than 200% of the federal poverty level. In addition, the mayor's budget would require the city to "pick up" the cost of the corporation's debt service, which will total $174.1 million, while the corporation would have to cover $154 million in medical malpractice payments that the city "now absorbs."

Medicaid 'Paradox'
The corporation, which manages 11 hospitals and 85 community clinics, treats many patients enrolled in Medicaid, which reimburses at a lower rate for primary care than for hospital stays. "People talk about the importance of preventative and primary care," Dr. Luis Marcos, president of the corporation, said, adding, "But the money is still going to hospital services. For us this paradox is huge, because we have approximately four million outpatient visits a year, they are going up and we just don't have enough money to subsidize these clinics." In addition, a "large and growing" percentage of the system's patients -- 10% of hospital patients and 30% of those at clinics -- lack health coverage, including many immigrants who do not qualify for government programs. Since 1994, New York City has "substantially decreased" subsidies for the hospitals, and the corporation has cut 12,898 jobs, "trimmed" costs and reduced the length of patient hospital stays. The efforts "paid off" in past years, but this year, the system has only $350 million in cash, "not enough to cover overall long term expenses," the Times reports.

Tempers Flare
On Tuesday, corporation officials testified at a New York City Council budget hearing, where some members criticized the corporation's plans to "shutter" its clinics and said an increase in enrollment in the state's CHIP program would cover the clinics' operating costs. "[I]t is hypocritical if you say one thing when you enroll children in insurance and then tell people you need to go a mile away because we want to close the clinic," council member Victor Robles (D) said. However, Marcos said that his proposed budget "remained strained," calling the clinic closings the "least painful cuts he could make in services" (Steinhauer, New York Times, 5/23). During the hearing, Robles also "lashed out" at Marcos for "being insensitive to minority communities." Newsday reports that Robles "lost his temper," saying, "I think he should have been more sensitive to the plight that people of color face in health care. Where are the cuts happening? ... [I]t's where the census says there is the greatest need and it happens to be in the communities of color." He added, "I'm tired of people claiming they defend the public health system. I think it's time to stop talking. It's time to put up or shut up" (Ramirez, Newsday, 5/23).