New York City Health and Hospitals Corp. plans to eliminate 8,000 of its 38,000 jobs later this year as part of a cost-cutting effort to combat a projected 1997 budget deficit of $550 million.
"There will be a lot of resistance, but it is a job that must be done for (HHC) to survive," said Luis Marcos, M.D., a longtime HHC employee who has been the system's president for nine months.
Marcos spoke to MODERN HEALTHCARE at length last week about the public hospital system's attempt to remake itself.
For more than 10 years, HHC has been an overbedded, overstaffed and inefficient 11-hospital public system, Marcos said. During that period, HHC has rung up losses of more than $2.4 billion, including a $704 million deficit in 1989. Last year, HHC lost $151 million on revenues of $3.6 billion. Its fiscal year begins July 1.
But Marcos said it has been the steady increase in charity care, the movement to outpatient services and the decrease in Medicaid admissions-HHC's main source of revenues-that has forced the public system to seek major cuts.
To address a 21% census decline since 1994, HHC already has eliminated 2,000 of its 7,100 beds. Several private studies have concluded HHC needs to eliminate another 2,000 beds or possibly close some of its hospitals.
Marcos said HHC will address excess beds by seeking to lease three of its hospitals: 587-bed Elmhurst Hospital, 507-bed Queens Hospital and 445-bed Coney Island Hospital.
Over the next seven months, Marcos said HHC plans to do the following to balance its $3.7 billion budget:
Reduce its workforce by 8,000 employees. HHC would save $280 million to $350 million a year. Like previous downsizing, the job cuts would be accomplished through early retirement, resignations and attrition, Marcos said. HHC employed 48,000 in 1994, he said.
Renegotiate its occupational contracts with physicians and six affiliated medical schools. HHC could save $81.5 million, or 15%, of the $543 million it currently spends annually on the contracts.
Cut consulting fees. HHC could save as much as $15 million, or 7.5%, of its $200 million annual consulting budget. HHC hires consultants to conduct strategic planning, review information systems and defend itself against lawsuits.
Improve revenue collection in its outpatient clinics. HHC could increase annual revenues by $30 million.
Hire a construction management company to coordinate capital building projects. HHC could save $50 million annually.
Continue consolidating and regionalizing clinical, management and support services between its hospitals and outpatient clinics. No annual savings were estimated.
"The expectation here is we will be able to address this problem," Marcos said. "We may need help from the state or federal government on our reimbursement rates, which have been shrinking and is one reason for our deficit."