NYC Health & Hospitals to slash hiring by half in response to delayed funding

NYC Health & Hospitals is taking drastic measures to account for the delay of a $380 million payment that it expected to receive from the state in return for treating large numbers of Medicaid and uninsured patients.

To cope with that funding gap, the 11-hospital health system will fill just 25% of the 250 to 300 jobs that typically become available each month, interim Chief Executive Stanley Brezenoff wrote in a letter to employees on Thursday. The city had already been rehiring for only half of open positions under its cost-savings plan to avoid a $1.8 billion budget deficit by fiscal 2020.

"I recognize that an even larger number of lost positions across our system will have consequences for patients, for a number of services and for continuity of care, and I deeply regret this," Brezenoff wrote. "But this budget cut leaves us with no choice."

The funding is part of the Disproportionate Share Hospital program, which covers hospitals' losses for uncompensated care. It is funded by federal and local governments and administered by the state. Gov. Andrew Cuomo has not distributed the funding from federal fiscal year 2017, which ended Sept. 30, in response to federal cuts that took effect for the current fiscal year on Oct. 1. New York stands to lose $330 million this year and $1.1 billion in the next 18 months, according to the state.

Cuomo said Tuesday during a news conference in Manhattan that the state was holding onto the money while it determined a fair way to distribute it. Deciding how to do that could require a special session of the state Legislature, he said. The formula for administering the money requires the state to first pay private hospitals, reimbursing them for about 25% of losses, before distributing the rest among public hospitals. Cuomo said the state stopped making any DSH payments on Oct. 1. because it won't have enough money to cover 100% of public hospitals' losses on treating Medicaid and uninsured patients.

Affected local hospitals include NYC Health & Hospitals, SUNY Downstate Medical Center, Westchester Medical Center, Nassau University Medical Center and Stony Brook University Hospital.

"We're paying none of them because we can't pay all of them," Cuomo said at the time.

Brezenoff said the city would work with its labor unions and community advocates to pressure Cuomo to release the funding. But while it waits for the delayed payment, NYC Health & Hospitals executives said they will look for other ways the health system can cut spending.

The system has tried to avoid layoffs, especially of medical staff, and Brezenoff did not invoke layoffs as a possibility during a board meeting last week. NYC Health & Hospitals laid off 396 managerial employees in June, but Brezenoff said last week he did not anticipate further cuts to management staff.

"The harsh truth is that this stricter hiring policy will only partially address the immediate challenge," Brezenoff wrote in the letter Thursday. "The longer this cut is in place, the more drastic action we will have to take to keep our doors open and protect our quality of care."

"City hospitals to slash hiring by half in response to delayed funding" originally appeared in Crain's New York Business.