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Crains New York

City hospitals tighten their budget by $105M

By By Barbara Benson

Published: March 19, 2009 - 2:42 pm

In yet another sign of how hard New York’s fiscal crisis is hitting the hospital industry, the city’s municipal health system announced Thursday it would shave $105 million from its budget for the fiscal year beginning on July 1. The measure includes cutting the workforce at the New York City Health and Hospitals Corp. by about 400 positions through attrition and layoffs, by that date.

In a statement, the system blamed the move on “unprecedented financial challenges created by a $66 million cut to HHC’s Medicaid reimbursement already imposed by the state this fiscal year.” It also cited growing expenses resulting from a sharp spike in uninsured patients, increased wage and fringe benefits, and the rising costs of drugs and medical supplies.

In the statement issued Thursday, municipal health system officials said the cutbacks are only the first round of reductions that HHC will need to implement to address a $316 million shortfall for the coming fiscal year. HHC also faces proposed state Medicaid cuts that would widen the budget gap for the next fiscal year by as much as $300 million.

Its plan includes savings of $23.3 million from operational and procurement efficiencies; $34.4 million from optimizing revenue collection; $20.3 million from cost reduction measures such as ending consultant contracts, curbing use of per diem staff and cutting the health marketing and advertising budget; and $26 million from service reductions, staff attrition, and layoffs.

The layoff target of 400 jobs will be reached by not filling some 200 expected vacancies over the next three months, and by handing out 200 pink slips between now and the July start of the new fiscal year.

The largest municipal hospital and health care system in the country, HHC is a $5.3 billion public benefit corporation with 11 acute care hospitals, four skilled nursing facilities, six large diagnostic and treatment centers and more than 80 community based clinics. HHC also owns a managed care health plan, MetroPlus, and a home care agency.