NYC's healthcare-for-all collides with hospitals bleeding cash

(Bloomberg) –New York Mayor Bill de Blasio says he’s turning the city into a model for how the nation can provide health care to all, including the poor, the uninsured and undocumented immigrants. In doing so, he says he’s saved the city’s public hospitals from bankruptcy and can provide universal care for just $100 million by steering New Yorkers away from emergency rooms and into managed-care clinics. Yet he may have promised more than he can deliver.

The system of 11 hospitals — which already provide free care to the uninsured — costs taxpayers more than $2 billion a year, while scheduled federal Medicaid cuts threaten another $1 billion or more in the next year.

Those pressures may far outstrip the savings he expects to reap from his proposal, according to private and government analysts familiar with the agency known as NYC Health + Hospitals.

“It may show a positive cash flow compared with last year, but it certainly doesn’t have surplus,” said Stephen Berger, a private equity investor who supervised New York’s budget during its 1970s fiscal crisis and in 2006 led a state health-care commission. “Its underused hospitals should be shut down but that’s not going to happen. Whether it can achieve financial stability remains to be seen.”

National issue

The mayor’s health-care plan is his latest effort to become a leading figure among progressive Democrats. He has made it a goal to influence the 2020 presidential campaign, and he hasn’t ruled out running himself.

Although he cast his program as unprecedented, New York’s hospitals have been open to all for more than a century. What’s new is his proposal to spend $100 million to hire physicians, nurses and assistants and to divert people from emergency rooms to less costly outpatient clinics focused on preventing illness before it requires expensive hospitalization.

De Blasio and other administration officials have declined to discuss the hospital system’s finances ahead of his fiscal 2020 budget proposal next month. Since 2013, when de Blasio took office, the city’s total funding for the hospital system has grown to about $2.1 billion from $1.3 billion, and is projected to reach $2.2 billion by 2020.

Its finances could also be worsened by an economic downturn reducing New York’s tax revenue, said Charles Brecher, research director at the Citizens Budget Commission, a business-supported fiscal watchdog. “Society has a stake in this not just because we are humane, but because this safety net is crucial to our public health,” he said.

Cost cuts

The turnaround effort is led by veteran hospital administrator Mitchell Katz, who arrived a year ago after heading the Los Angeles Health Agency, where he developed a reputation for cutting costs and increased revenue, enrolling 350,000 in a similar primary care program.

Katz’s strategy departs from predecessors who tried to downsize the system with a goal of reducing costs and headcount through attrition. Katz wants to expand it, with more doctors, nurses, diagnostic tests and outpatient therapies more generously reimbursed by private insurance, Medicaid and Medicare than emergency room and in-patient acute care.

Katz told city council members this month that his money-making efforts are beginning to pay off. In the year he’s been president, he said, the agency received $150 million from insurance companies that wouldn’t have been collected in the past. This is the way “to avoid the closure scenario, of having to shrink,” he said. “Instead, let’s grow and increase revenue.”

MetroPlus

Another goal: increasing enrollment in a health insurance plan called MetroPlus owned by the city’s public-hospital system, which de Blasio is seeking to expand to 300,000 uninsured New Yorkers.

Katz’s gambit may fail as the public hospitals operate with insured patients choosing private hospitals. H+H’s North Central Bronx Hospital had a 54 percent average occupancy in 2017. Berger and Brecher say any plan to save the system should include closing such underused hospitals, a proposal that has a history of inciting so much neighborhood and union outrage, mayors, including De Blasio, have ruled out this option.

District 37 executive director Henry Garrido, whose union represents half the 40,000 public hospital workers, says to shut down hospitals would be a foolish giveaway of resources providing social safety nets to poor neighborhoods. He supports transforming their unused space for outpatient diagnostic tests and treatments –colonoscopies, psychotherapy, chemotherapy and physical therapy — services that have helped stabilize finances of private hospitals.

“This should not be about closing hospitals but using resources the best way available,” Garrido says. “A system this big needs time to restructure itself. The uninsured population is not likely to disappear any time soon.”

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