New York City's Health + Hospitals unit expects to close fiscal 2017 with a $100 million balance, its chief executive told City Council members.

The department had faced a $779 million gap for that year.

"I am pleased to report that we will remain on track," interim president and chief executive Stanley Brezenoff told a joint meeting of the council's health and finance committees at City Hall on Tuesday.

Brezenoff was president and CEO of the predecessor Health & Hospitals Corp. during the 1980s.

He warned of challenges that include the uncertainty in Washington as Congress debates replacing the Affordable Care Act.

"The stark reality is that we are facing a fiscal cliff," said Brezenoff.

Questioned by finance committee Chairwoman Julissa Ferreras-Copeland about contingency plans should severe federal cuts materialize, Brezenoff said his department hasn't discussed them publicly.

"That doesn't mean we don't think of alternative options," he said. Should President Trump's American Health Care Act pass in this congressional session, the city could begin to feel the pinch in October, Brezenoff added.

Health + Hospitals accounts for $7.6 billion, or nearly 9%, of Mayor Bill de Blasio's $84.9 billion executive budget for fiscal 2018, which the 51-member City Council must approve by June 30. The H+H portion includes includes $829 million, or 11%, in city subsidies.

He said H+H would "aggressively pursue" opportunities to close a projected $1.1 billion shortfall for fiscal 2018, which he attributed to higher costs, system inefficiencies and reimbursement policy changes at the state and federal levels,

The department, he said, hopes to generate $820 million in revenue and cut $387 million in costs under a transformation plan de Blasio announced last year for the beleaguered unit.

H+H, said Brezenoff. aims to generate $483 million by implementing Medicaid waiver programs, $252 million through a health insurance initiative and $85 million by pursuing federal and state charity care funding.

Cost-cutting goals include $250 through restructuring and personnel initiatives, and $137 million through supply chain and care management overhaul.

"While these initiatives and new state funding are promising in bringing much-needed financial and operational relief, there still remains budgetary actions emanating out of Washington that will have a negative impact on the system," said Brezenoff.

The capital budget earmarks about $3 billion in fiscal 2017 to 2021 for H+H, including $1.4 billion to fund Hurricane Sandy-related reconstruction.

"The proposed repeal of the Affordable Care Act would pose a serious threat to Health and Hospitals, and the associated reduction in Federal Medical Assistance Percentage (FMAP) for Medicaid expansion could drive a substantial hole in New York State’s budget," the City Council said in its own report on the executive budget.

H+H, the former Health & Hospitals Corp., is the country's largest municipal health system. It serves nearly 1.2 million people, of which more than 425,000 are uninsured.

The mayor's four-year financial plan called for eliminating a $1.7 billion gap bye city can accomplish that without large-scale state and federal aid, even in a best-case Washington scenario.

Council health committee chairman Corey Johnson said the administration's assumptions about revenue generation might be too rosy. Roughly 78% of the goals, he said, require state and federal action.

"I don't know about whether we should make assumptions with a high degree of confidence that things are going to go well when the standard playbook has been torn up and tossed out the window," said Johnson.

Moody’s Investors Service rates the city’s general obligation bonds Aa2, while S&P Global Ratings and Fitch Ratings rate them AA. All three assign stable outlooks.

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.