The Republican bill to replace the Affordable Care Act poses a "severe threat" to Mayor Bill de Blasio's transformation plan for the city's struggling public health system, according to an analysis by the nonpartisan Independent Budget Office published Tuesday.
City Hall is keeping NYC Health + Hospitals afloat with $1.82 billion in funding this year. The city is also taking on the health system's debt service and medical malpractice, the report said. That financial support is projected to rise 4% to $1.9 billion by fiscal 2020.
De Blasio last April released a plan to boost revenue and cut costs at the public health system in order to avoid a projected $1.8 billion budget gap in fiscal 2020. Much of the mayor's plan hinged upon negotiating payments from the federal and state government that acknowledge that the system takes care of a disproportionate share of the city's uninsured and Medicaid beneficiaries.
But a year later just 49% of the planned $2.5 billion de Blasio hoped to receive from federal and state programs between 2017 and 2020 has been approved, the IBO said. The health system expects much of the rest of those payments to be approved by fiscal 2018—"an expectation that remains uncertain," according to the IBO.
The 11-hospital public network, the country's largest, has had a rocky year since de Blasio's announcement. It sparred with the New York Post over quality concerns at Coney Island Hospital. There were shakeups in leadership in at least two of its hospitals and a challenging correctional health system at Rikers Island to reform. Then, to cap it all off, its spirited leader, Dr. Ram Raju, left in November.
The system's interim chief executive, Stanley Brezenoff, who called the Republican health plan a "brutal attack" on health systems like his, was scheduled to testify March 20 before the City Council's health committee. But the hearing was deferred because of the birth of committee chair Corey Johnson's nephew in Boston, which kept Johnson out of New York, he said.
The health system lost $776 million in the first half of fiscal 2017, according to financial statements. A spokesman attributed the loss to delayed government payments, the timing of a $200 million advance the city paid to it last fiscal year as well as accounting rules that require noncash costs, such as depreciation, to count as operating expenses.
The system's largest expense is staff salaries, which represented 38.5% of costs last year. The budget calls for salaries to rise just 1.7% from fiscal 2017 to fiscal 2020. During the preceding four years, wages surged 11.8%, leading the IBO to call the savings plan "overly optimistic." The IBO said the system had 47,589 full-time-equivalent employees in November, down 3.6% from 2015, signaling that the goal to trim through attrition rather than layoffs is "achievable."
The system's strategy to increase revenue through greater enrollment in MetroPlus, its health insurance arm, and a surge in outpatient volume to replace declining inpatient occupancy appears within reach. It is on track to reach its target of 53,000 new MetroPlus sign-ups in fiscal 2017. While outpatient volume has waned, outpatient revenue increased 10.9% from 2011 to 2016 as the health system has attracted more patients with private insurance.
Still, federal cuts to Medicaid and more stringent eligibility checks of immigration status could increase the share of uninsured New Yorkers using public hospitals, further straining the already cash-strapped health system.
A spokesman for the public health system said in response to the IBO report that "there's no question that repealing the Affordable Care Act will compound our financial challenges and put in jeopardy our ability to provide quality healthcare for the people who need it most. That is unacceptable.”
"How 'Trumpcare' could derail de Blasio's healthcare plan" originally appeared in Crain's New York Business.