Federal aid, Medicaid cuts, coronavirus loom over NY City Health + Hospitals

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The level of COVID-19-related aid it receives from the federal government is but one yardstick for the fiscal soundness of New York City Health + Hospitals, according to the watchdog Independent Budget Office.

Whether the city suffers a resurgence of the virus and whether the state — which is wrestling with its own budget shortfalls — continues to defer planned cuts to Medicaid are also variables, IBO said. Medicaid is a primary revenue source for public hospitals that serve many uninsured and underinsured patients.

New York City's Health + Hospitals president Mitchell Katz faces myriad challenges.

H+H, the largest municipal healthcare system in the U.S. and the city’s safety-net system, operates 11 acute-care hospitals, five skilled nursing facilities and dozens of community-based health clinics.

“After years on fiscal life-support, NYC Health + Hospitals was starting to see its budget stabilize,” said IBO budget and policy analyst Melinda Elias. “Then the COVID-19 pandemic arrived, straining the public hospital system’s ability to meet patient needs and cutting off revenue from elective surgery and other care.”

In May, two months after the pandemic escalated, Mayor Bill de Blasio awarded the city’s contact tracing program to Health + Hospitals instead of his health department.

Under Mitchell Katz, president since January 2018, H+H had generated more revenue through more efficient billing of insurance companies; improving its outpatient coding and physician billing practices; and signing more patients for insurance.

“We’re negotiating with insurance companies for fair fates for the services they provide, as well as settling for back payments they owe us,” senior vice president Matthew Siegler told City Council members in March.

Katz, a Brooklyn native, is a former director of the Los Angeles County Health Agency.

To date, four separate federal relief bills and other funding sources could reimburse Health+Hospitals for pandemic-related costs and help offset the revenue lost when the public hospitals had to turn away other patients to focus on the crisis.

According to IBO, federal coronavirus emergency funding and relief aid enacted so far will likely provide Health+Hospitals with at least $2.8 billion.

“This amount may increase as Washington issues more guidance on how to allocate already-enacted funding and if Congress passes new relief bills,” Elias said.

H+Hs expects to receive at least $856 million from the Provider Relief Fund, created to help hospitals cover COVID expenses and compensate for lost revenue. It is receiving more than $807 million for testing and contact tracing, and stands to get at least $532 million in disaster relief funding from the Federal Emergency Management Agency.

While this is the amount approved so far, the public hospital system has recently updated its reimbursement request to $1.1 billion.

“While this federal aid may be sufficient to help Health + Hospitals through the fiscal hurdles created by the pandemic in the near term, uncertainty remains longer term as the system is now losing about $25 million a week as admissions have declined and inpatient and outpatient services have not rebounded to pre-pandemic levels,” Elias said.

A second surge of coronavirus and/or a prolonged slowdown of the city’s economy could further deplete city and state tax collections and spark cuts to major revenue sources for H+H, according to Elias.

“Whether Washington would then provide additional relief remains highly speculative,” she said.

The pandemic has magnified the troubles of the city’s public hospital system — long a problem unit — city Comptroller Scott Stringer said in a letter last month to Gov. Andrew Cuomo.

Stringer highlighted the need for improved coordination across all parts of the healthcare system and better planning and preparedness.

As of Monday afternoon, the city reported nearly 18,998 virus-related deaths — confirmed with a positive laboratory test — and a further 4,636 deaths as “probable,” where the cause is reported as COVID-19 or equivalent, but no positive laboratory test.

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Healthcare industry Coronavirus City of New York, NY New York City Health + Hospitals Bill de Blasio New York
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