NYC Health & Hospitals are consolidating six locations housing its administrative staff into a new campus at 50 Water St., the organization announced Monday.
The largest public health system in the country will relocate about 2,600 employees to 14 floors of the revamped Lower Manhattan building over a five-year period. The 20% cut to its office footprint will reduce its real estate rental costs by $16.5 million in five years, executives said. NYC H&H will net $203.1 million in savings over the 25-year, $758 million lease agreement.
"By eliminating the inefficiencies of having staff in multiple sites, we will reduce travel time and expenses, strengthen the work environment, and build a stronger operation to provide better support to our frontline staff throughout the five boroughs," Dr. Mitchell Katz, president and CEO of NYC H&H, said in prepared remarks. "And the more we save in rent, the more doctors, nurses, social workers and pharmacists we can make available to our patients, which is our priority."
This is just one of NYC H&H's strategies to reduce costs. The public health system has gone through rounds of staffing cuts as the traditionally fragmented organization copes with fewer inpatient admissions, endures waning reimbursement levels, and manages changes in state and federal policy. Delayed Medicaid disproportionate-share payments set the organization even further back.
NYC H&H will have a projected $1.8 billion deficit by fiscal 2020, according to a report from New York City Mayor Bill de Blasio. The organization saw a 6.5% decline in primary-care visits from 2016 to 2018. It is rolling out a new scheduling and communication system to cut wait times as well as recruiting 75 additional primary-care doctors.
GFP Real Estate and the Northwind Group purchased the property formerly known as 7 Hanover Square from Guardian Life in December 2017.
They will spend an estimated $250 million to split it into two distinct Class A offices—50 Water St. at the base and 100 Pearl St. in the tower, each of which will have its own entrance. NYC H&H's lease agreement includes nearly 530,000 square feet.
Employees from 125 Worth St., 160 Water St., 199 Water St., 33 Maiden Lane in Manhattan, 1 MetroTech in Brooklyn, and The Factory/Long Island City in Queens will incrementally relocate.
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