New York City's largest public health system needs considerable federal- and state-level financial help as well as union cooperation to make its proposed turnaround plan succeed, according to a city watchdog.
Although the city itself directs $2.4 billion into NYC Health & Hospital's $7 billion budget—including an extra $558 million influx this year—Mayor Bill de Blasio's transformation plan for the system is still hampered by government policy changes that could impact the budget deficit.
According to the New York City Independent Budget Office, NYC Health & Hospital's plan anticipates that it will receive supplemental state and federal funding to offset declining revenue from lower disproportionate share hospital payments, upper payment limit funds and other governmental funding. But that plan paints a rosy picture during “the steepest fiscal challenge [the system] has faced in memory,” as some of the federal reimbursement plans have yet to be approved.
NYC Health & Hospitals anticipates that it will lose $1 billion in supplemental Medicaid receipts from 2016 to 2020—from $2.4 billion to $1.4 billion—but it plans to recoup some of those losses through Medicaid waiver agreements and additional amendments to further boost federal and state support.
So far, just over half of the plan's proposed $3 billion in increased revenue and reduced costs has been approved, while $1.6 billion is contingent on future actions.
“H&H must quickly create a specific plan for downsizing its inpatient care and expanding its provision of outpatient care to achieve its projected expense reductions,” the watchdog report said.
The independent budget office said that NYC Health & Hospitals has not figured out how it will meet its goal of saving $444 million by 2020 by transitioning to provide more outpatient than inpatient care.
The health system said in a statement that its efforts to stabilize funding and expand access to care are already well underway.
“We are committed to doing all we can to bring additional efficiencies and reforms to preserve our mission and deliver equitable health services to all New Yorkers,” NYC Health & Hospitals said in a statement.
The independent budget office also warned that labor unions will need to cooperate with NYC Health & Hospitals in order to meet the system's goals of cutting operational costs without closing facilities or laying off employees.
NYC Health & Hospitals' operating expenses rose by 5.9% to nearly $4.5 billion in the latter half of 2015, according to financial documents. But its revenues declined by 2.7% to $4.1 billion.