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De Blasio to Propose $2 Billion for New York City’s Hospital System

Lincoln Medical and Mental Health Center in the Bronx, one of 11 hospitals run by the Health & Hospitals public health system.Credit...Nicole Bengiveno/The New York Times

New York City’s public hospital system “is on the edge of a financial cliff,” Mayor Bill de Blasio’s administration is warning in a report to be released on Tuesday as part of his budget, which proposes a restructuring and an infusion of $2 billion in subsidies.

Along with a push for new revenue and new savings for the system, Health & Hospitals, the city subsidy — an increase of $700 million since Mr. de Blasio took office in 2014 — is intended to shrink a gap that is projected to balloon to $1.8 billion by 2020 from the current $600 million shortfall.

Like many health care initiatives nationwide, the plan for Health & Hospitals encourages better primary care and less hospitalization. The budget includes $100 million in capital investments meant to expand or upgrade the system’s community-based health centers and clinics, and it proposes selling vacant land on hospital campuses to create affordable and supportive housing.

The report says there will be no layoffs or closings of hospitals in the system, which was known until last year as the Health and Hospitals Corporation. But it acknowledges that “even with retraining and shifting existing hospital staff to community-based health centers and clinics, there is likely to be a net loss of hospital-based jobs” and some buildings “will be repurposed to house social support and other community-based services.”

“Unlike what has happened in other cities, Health & Hospitals will remain a vibrant public system — it is not for sale and the city will not abandon it,” the report says, promising that the “unparalleled investment” will help turn the 280-year-old network into a community-based model more focused on primary care that can better compete for patients.

The 55-page report is not the first to point to the dire financial future facing the city’s health care and hospital system, which has maintained its mission of treating all patients regardless of their ability to pay or their immigration status. But the new report reflects the impact of the Affordable Care Act, and points to trends that make adaptation daunting.

As previously uninsured low-income New Yorkers have gained insurance, they also have gained new health care options. The city system has been losing those patients to other providers that are seen as more upscale or convenient to patients. At the same time, it remains the major source of care for nearly one million city residents who remain uninsured, many of them unauthorized immigrants who are ineligible for public insurance.

Uninsured patients and those covered by Medicaid, the federal and state program for the poor, now represent nearly 70 percent of Health & Hospitals’ total hospital stays, compared with 40 percent for other hospitals in the city, the report says. Yet federal and state funding that helps cover the cost of caring for the uninsured is projected to decline by almost $1 billion — from $2.2 billion in the 2016 fiscal year to $1.4 billion in the 2020 fiscal year.

As other nonprofit hospitals consolidate, they have begun to compete for the city’s Medicaid patients. While other major systems saw a 5 percent increase in managed Medicaid hospital stays, Health & Hospitals experienced a 3 percent decline between 2012 and 2014. MetroPlus, the city hospitals’ own managed-care plan, grew by 17 percent over a six-year period, to 500,000 members, but still lost out to private competitors as the market grew by 27 percent.

Over all, hospital stays dropped more than 5 percent between 2012 and 2014, reflecting a citywide trend. But while the busiest public hospitals, including Queens Hospital Center and Kings County Hospital Center, have few empty beds, in some, like North Central Bronx Hospital, about half of the beds are empty — which means less patient revenue covering the same fixed operating costs.

The number of independent hospitals in the city has been nearly halved, from 34 to 18 over the past 10 years, a decline likely to continue, the report says. Three out of every four hospital stays are now at hospitals affiliated with one of six major systems — systems that are increasingly competing with one another and with Health & Hospitals for a bigger share of a more diverse pool of patients, not just the sickest.

“Health & Hospitals is quickly losing Medicaid patients to other hospitals as this zero-sum game unfolds,” the report says, referring to sweeping changes in health care financing to a flat-rate or a so-called payment-for-value or pay-for-performance model rather than a payment-for-service one. Historically, the city system has struggled to meet the goals of a pay-for-performance model in part because its patients are generally sicker and poorer and often lack adequate housing.

Each year, Health & Hospitals serves more than 1.2 million New Yorkers. It is the largest publicly financed health system in the country with more than 40,000 employees in 11 hospitals and nearly 5,000 beds; five long-term care facilities with nearly 3,000 beds; and more than 70 community-based health care centers.

“This transformation plan is not a plan to close hospitals, lay off workers, or impair quality or access to Health & Hospitals health care services,” the report says. “We cannot cut our way out of this problem in ways that destabilize quality and access in underserved communities.”

A correction was made on 
April 28, 2016

An article in some editions on Tuesday about Mayor Bill de Blasio’s budget proposal for New York City’s Health & Hospitals, using information from the mayor’s office, described incorrectly the increase in the amount of money in the proposed budget for the city’s public health system. The mayor’s proposed budget, which would bring total city funding for Health & Hospitals to $2 billion annually by fiscal year 2020, would be a $700 million increase in the annual allocation compared with the amount of city funding when Mr. de Blasio took office in 2014. It does not represent a $700 million increase over fiscal year 2016.

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A version of this article appears in print on  , Section A, Page 20 of the New York edition with the headline: Mayor’s Budget Will Include $2 Billion for City’s Struggling Hospital System. Order Reprints | Today’s Paper | Subscribe

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