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New York hospitals must restructure finances, comptroller says

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(Bloomberg) — New York’s public hospital system, the largest in the United States, projects it will end the fiscal year with its lowest cash level in at least 15 years, and it’s “imperative” that city officials come up with a plan to stabilize it, according to the state comptroller’s office.

The Health and Hospitals Corp. (HHC), which serves 1.4 million patients annually, projects a closing cash balance of $104 million for the fiscal year ending June 30, enough to meet obligations for six days. The estimate was included in a report on New York City’s finance issued by the state comptroller’s office Monday.

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“It’s time for them to sit down and see how to restructure the operation,” said Ken Bleiwas, deputy comptroller for the state of New York. “It’s not sustainable.”

HHC, which historically has taken care of the city’s poorest and sickest patients, is straining under the weight of the costs of treating undocumented immigrants and competition from non-profit hospitals for Medicaid patients. Meanwhile, the federal government is cutting payments to hospitals that care for a disproportionate number of poor patients, as part of the Patient Protection and Affordable Care Act (PPACA).

HHC estimates cuts to federal Disproportionate Share Hospital funding will grow from $180 million in fiscal year 2017 to more than $508 million in 2018. The system’s projected losses will grow to $2 billion in 2019 from $1.1 billion in the current fiscal year, according to the state comptroller.

HHC may need bigger subsidies from the city, posing a risk to the city’s finances, Bleiwas said.

About 80 percent of HHC’s patients are on Medicaid, the federal-state health insurance program for the poor, or are uninsured, according to HHC.

“It’s not a structurally balanced operation when a large segment of your customer base can’t pay,” Bleiwas said.

Last year, HHC president and chief executive officer, Dr. Ram Raju released a ‘Vision 2020’ plan that proposes making up for the loss of government aid by growing its patient base. Raju wants to boost membership in MetroPlus, HHC’s low-cost health care plan, to 1 million and increase the number of New Yorkers served by city hospitals to 2 million annually. MetroPlus had about 476,000 patients as of Dec. 1, about 87 percent of them Medicaid patients.

“They were counting on very ambitious growth in MetroPlus and it’s not necessarily happening,” said Charles Brecher, co-director of research for the Citizens Budget Commission, a business-backed watchdog, and long-time observer of the municipal hospital system.

To narrow projected operating losses in the current fiscal year, HHC planned on cutting 1,000 positions, a $100 million savings. Instead, staffing has risen to 49,313 employees in December, an increase of 907 from June, according to the comptroller’s office.

“NYC Health + Hospitals is the largest provider of uninsured care in the city,” Ian Michaels, an HHC spokesman, said in an e-mail. “We are working with the city, state and federal governments to ensure that we are adequately compensated for that care.”

To bolster HHC’s cash, the city has allowed the corporation to delay or forgo reimbursing the city for the cost of medical malpractice and debt service. Mayor Bill de Blasio’s budget proposal calls for increasing the city’s aid by $337 million and working with HHC on a restructuring plan.

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