Hospital finance in New York encompasses the funding mechanisms, operational costs, and fiscal management strategies that support the state’s public and private health care systems. This page covers CBC’s work on NYC Health + Hospitals’ operating deficits, Medicaid supplemental payments, the Health Care Reform Act (HCRA) tax structure, Medicaid redesign initiatives, and strategies for expanding health insurance coverage.
This page was created with AICBC Insights uses AI to group, analyze and present data and recommendations from CBC's publications. Always reference the cited sources to verify important details..
New York could consider implementing a mandate to protect against individuals relinquishing insurance in the future and causing instability in the individual market.
New York could provide additional subsidies to reduce the cost of individual market plans for more people.
New York could procure and offer a plan through the State Marketplace with lower premiums and less cost-sharing than plans currently available.
New York could use a similar strategy to create a State-only funded Essential Plan for immigrants who are prohibited from federally-funded coverage.
New York could provide additional funding for the State Navigator program to target areas where fewer people are insured than average.
Key Data
As of January 2022, New York's uninsured rate dropped from 11.9 percent in 2010 to 5.2 percent in 2019, though 1 million New Yorkers remained uninsured as of 2019.
As of March 2020, HCRA taxes, which yield more than $4.3 billion annually, increase health insurance premiums by at least 4.3 percent, or about $1,000 annually for a family plan.
In the period from fiscal years 2015 to 2017, NYC Health + Hospitals (H+H) had an average operating deficit of nearly $3 billion, representing 46 percent of its operating expenses.
As of November 2018, the estimated average cost of a fire engine response to a medical incident was $1,970, compared to $486 for an ambulance run, highlighting the high cost of using fire engines for medical calls.
New York's health insurance coverage gap, which leaves over 1 million residents uninsured, creates significant financial burdens for health care providers through uncompensated care. Implementing strategies like expanded premium subsidies, a state-sponsored public option, and broader immigrant coverage could reduce these uncompensated care costs by millions of dollars annually while improving access to care.
Recommendations related to Hospital Finance
New York could consider implementing a mandate to protect against individuals relinquishing insurance in the future and causing instability in the individual market.
New York could provide additional subsidies to reduce the cost of individual market plans for more people.
New York could procure and offer a plan through the State Marketplace with lower premiums and less cost-sharing than plans currently available.
New York could use a similar strategy to create a State-only funded Essential Plan for immigrants who are prohibited from federally-funded coverage.
New York could provide additional funding for the State Navigator program to target areas where fewer people are insured than average.
Key Data
$42 billion
— Estimated annual loss for health care providers caring for uninsured patients.
$803 million
— Annual State cost for deep premium subsidies.
$345 million
— Annual net State cost for State-funded Essential Plan for immigrants.
$108 million
— Provider uncompensated care savings from deep premium subsidies.
$19 million
— Hospital uncompensated care savings from the proposed immigrant coverage program.
$20 million
— Total cost for expanded Navigator program.
New York City's Health + Hospitals system requires improved fiscal stability and sustainability, as annual city subsidies have reached $2 billion and threaten long-term financial health. To address this, the city should benchmark unit costs and revenue recovery ratios against nonprofit providers and work with the state to implement more equitable Medicaid reforms.
Recommendations related to Hospital Finance
The City should benchmark H+H’s unit costs and revenue recovery ratios against nonprofit safety net providers in the city to improve H+H’s efficiency and guide the City subsidy level.
The City should work with the State to implement Medicaid reforms that would more equitably distribute State Medicaid support.
The incoming Administration should continue efforts to improve H+H’s quality and efficiency, but also improve its fiscal stability and sustainability.
H+H’s scope of services should be examined in the context of its share of citywide services, given other safety net and academic medical centers.
Key Data
$2 billion
— Annual City subsidies provided to the Health + Hospitals system.
CBC hosted a special panel discussion of prominent fiscal experts who helped New York overcome some of the most dire crises of the past. They provided insights and lessons from past experiences to help us understand and navigate the looming crisis. Stephen Berger Chairman, Odyssey Investment Partners; Former Executive Director,…
New York must continue its Medicaid redesign efforts to address structural fiscal gaps, despite challenges posed by the COVID-19 pandemic and federal funding restrictions. The state should prioritize implementing cost-saving measures, enhancing program transparency, and rejecting proposals to shift Medicaid costs onto local governments to ensure long-term fiscal sustainability.
Recommendations related to Hospital Finance
The State should include the Medicaid Redesign Team (MRT) recommendations in the budget, implementing those that do not risk federal funding immediately.
New York should lobby federal lawmakers to clarify and revise the COVID-19 response law to allow the state to implement planned cost savings.
The state should include transparency improvements to the Medicaid program, such as reporting and public data improvements, to help prevent future budget blunders.
The state should omit the provision for local share growth, as its inclusion would reverse an important achievement in state Medicaid finance policy.
The state should continue collaborative redesign and reform of the health care system to address persistent delivery challenges and ensure fiscal sustainability.
Key Data
$4 billion
— Gap in the Medicaid program in fiscal year 2020.
$3 billion
— Gap in the Medicaid program in fiscal year 2021 and beyond.
$1.6 billion
— Savings in fiscal year 2021 recommended by the Medicaid Redesign Team.
$647 million
— Savings related to long-term care, the largest part of the MRT package.
$399 million
— Savings related to hospital payments.
$4.5 billion
— Annualized value of enhanced federal funding to the State.
New York's Health Care Reform Act (HCRA) taxes, which fund public health programs and a significant portion of the state's Medicaid budget, impose a substantial financial burden on privately insured residents by increasing annual premiums by approximately $1,000 for family plans. While originally intended to support specific public health initiatives, the majority of HCRA revenue is now used to offset state Medicaid costs, necessitating a review of the program's impact and a halt to further tax increases.
Recommendations related to Hospital Finance
HCRA tax increases should be avoided as a strategy for balancing the Medicaid budget because that action increases the cost of health insurance premiums and likely depresses wage growth for a majority of New Yorkers.
Lawmakers should review HCRA’s role in health care funding and its impact upon privately insured New Yorkers as they evaluate the State’s five-year financial plan.
HCRA taxes should not be increased as part of the state's budget negotiations.
Key Data
$6 billion
— HCRA receipts grew 2.2 percent annually on average from fiscal year 2010 to fiscal year 2019 to reach nearly $6 billion.
4.3 percent
— The combined impact of the Surcharge and Covered Lives Assessment increases health insurance premiums by approximately 4.3 percent.
$1,000
— The statewide average annual cost of HCRA taxes is approximately $350 for individual coverage and $1,000 for family coverage.
80 percent
— In recent years, about 80 percent of HCRA revenue has been used to pay for the State’s share of Medicaid.
$1 billion
— Nearly $1 billion annually finances the Disproportionate Share Hospital (DSH) Indigent Care Pool, which provides supplemental Medicaid payments to hospitals.
$4 billion
— Another $4 billion in HCRA revenue pays for other Medicaid services that otherwise would be paid from the General Fund.
New York's Medicaid program faces significant fiscal challenges due to unsustainable spending growth, necessitating a restructuring of the Medicaid Global Cap and more transparent financial reporting. To ensure long-term sustainability, the state should prioritize targeted savings in high-growth areas like long-term care and supplemental hospital payments rather than raising health care taxes that increase insurance premiums for families.
Recommendations related to Hospital Finance
Make the Global Cap global by including all spending, ensuring all Medicaid costs are accounted for and managed within the cap.
Make the Global Cap a cap by following accounting principles, specifically using a modified accrual basis to prevent payment deferrals.
Choose the right cap by indexing Medicaid spending to the rolling average of medical inflation and adjusting for enrollment changes.
Adhere to and improve the law requiring Medicaid spending transparency, including the publication of monthly reports and detailed statistical data.
Target supplemental payments based on need, particularly for hospitals, to promote equity and reduce total costs.
Do not raise health care taxes, as these costs are passed on to New Yorkers as higher health insurance premiums.
Key Data
$2.5 billion
— The amount of State-share Medicaid savings the Medicaid Redesign Team aims to identify.
$1.7 billion
— The amount of payments deferred by the State in fiscal year 2019 to adhere to the Medicaid Global Cap.
$500 million
— The cost for the health home care coordination model in its first five years.
$100 million
— The annual cost threshold for claim types requiring unit cost reporting.
$1,000
— The annual increase in health insurance premiums paid by the average commercially insured family in New York due to healthcare taxes.
50 percent
— The amount by which daily nursing home costs in New York are higher than the national average.
New York City's public hospital system, Health + Hospitals, faces a persistent annual operating deficit of nearly $3 billion, driven largely by outpatient service losses and Medicaid reimbursement rates that fall short of actual costs. To address this, the system should adopt a new benchmarking-based financial planning model while the State reforms Medicaid supplemental payments and redistributes commercial insurance surpluses to more equitably support indigent care.
Recommendations related to Hospital Finance
The City Office of Management and Budget and H+H leadership should develop a new approach to financial planning and budgeting with multiyear goals for increasing efficiency and revenue.
Progress toward performance benchmarks should be publicly monitored, and H+H leadership held accountable through compensation incentives.
The State should better target Medicaid supplemental payments to H+H and other facilities with the greatest need.
The State should finance the nonfederal portion of Medicaid supplemental payments with State revenues rather than local intergovernmental transfers.
The State should use surplus operating revenue earned by large networks from commercial insurers to cross-subsidize indigent care.
The State should better align Medicaid hospital payment rates to reasonable unit costs of services.
Key Data
$3 billion
— Average annual operating deficit for H+H in fiscal years 2015 to 2017.
46 percent
— Operating deficit as a percentage of H+H's operating expenses.
61 percent
— Portion of the H+H operating deficit attributed to outpatient services.
56 percent
— Portion of the H+H operating deficit caused by Medicaid payments below cost.
$1.7 billion
— Estimated City support to H+H in fiscal year 2019.
$490 million to $1.8 billion
— Potential reduction in the H+H operating deficit through a benchmarking approach.
New York State's $5.3 billion in Medicaid supplemental payments are critical for hospital financial viability, yet they face significant threats from looming federal funding cuts and criticism regarding inequitable distribution methods. State leaders must develop a comprehensive strategy to mitigate these federal reductions and reform the allocation formulas to ensure funds are better targeted to hospitals with the greatest financial need.
Recommendations related to Hospital Finance
The State should create a plan for mitigating and equitably distributing scheduled federal DSH cuts in advance of their implementation.
Any reforms to the Indigent Care Pool should be a part of a consideration of the full menu of supplemental payment programs.
New allocation methods and contingency plans for federal cuts should take into account the role and magnitude of all of the supplemental payments and the interactions among them.
The source of the nonfederal share of payments should also be reconsidered.
Key Data
$78 billion
— Total size of New York State’s Medicaid program.
$5.3 billion
— Total amount of Medicaid supplemental payments not directly associated with the provision of medical services.
$2.9 billion
— Annual cut to New York State's Medicaid supplemental payments phased in beginning October 1, 2019.
$3.7 billion
— Total funding distributed through the Disproportionate Share Hospital (DSH) Program.
$1.1 billion
— Funding amount for the Indigent Care Pool, which provides base payments to 175 hospitals.
$350 million
— Funding directed to 22 hospitals in severe financial distress through the Value Based Payment Quality Improvement Program (VBP QIP).
New York State faces significant challenges in its health care system, including high costs, inadequate access, and inequitable outcomes, necessitating a strategic transformation of insurance and delivery models. Rather than a complete overhaul, the state should pursue targeted improvements such as an individual mandate, value-based payment acceleration, and bundled payments to restrain costs and improve care quality.
Recommendations related to Hospital Finance
Establish a state mandate that individuals must have insurance to increase insurance coverage and reduce the number of uninsured residents.
Extend and expand NYS Value Based Payment (VBP) roadmap targets to shift provider payments toward value-based models.
Require selected bundled payments for Medicaid and state employee coverage to standardize costs for specific services.
Implement selected maximum covered ('reference') pricing for state employees to lower costs for covered services through consumer selection and provider price reductions.
Allocate a hospital or multi-provider organization a fixed annual amount to care for its population to create incentives for efficiency, volume reduction, and cost control.
Key Data
22%
— NYS per capita health care cost is higher than the national average.
5.7%
— Percentage of New York State residents who were uninsured in 2017.
$411 million
— Estimated decline in public cost to care for the uninsured under an individual mandate.
156%
— Tax increase required to shift $139 billion from individual and firm premium payments to tax revenue under a single-payer system.
$70 million to $215 million
— Estimated cost range per 25,000 people covered for expanded insurance subsidies.
New York's Health Home initiative, which aims to coordinate care for Medicaid enrollees with complex needs, has seen annual spending grow from $87 million in 2012 to $558 million in 2017. Despite this growth, the program faces challenges in enrollment and performance measurement, prompting calls for better targeting of priority populations, improved payment structures, and enhanced data interoperability between providers and managed care organizations.
Recommendations related to Hospital Finance
The state should implement better targeting of priority subpopulations to ensure the program reaches those who can receive the greatest benefits and cost savings.
There should be greater reliance on specialized Health Home entities to improve enrollment efforts by leveraging staff from existing specialized providers.
The state should foster stronger ties between Health Homes and Managed Care Organizations to improve information flow and mutual accountability.
Policymakers should consider alternative payment rates for Health Homes, including options with reduced payment for adults reaching a duration of enrollment after which greater self-management should be practical.
The state should support the centralized development of marketing and training materials to be used by multiple Health Homes, Managed Care Organizations, and other referral agencies.
New initiatives should be launched to encourage and speed interoperability of Health Home electronic record systems and Managed Care Organization and provider electronic health records.
Key Data
$72 billion
— Annual cost of New York State's Medicaid program.
$250 million
— Federal grant program from 2011 to 2014 to support transformation of hospital clinics to Patient Centered Medical Homes.
$14.8 million
— Grant spanning a three-year period (2012-2015) for the Health Home at Maimonides Medical Center.
$87 million
— Annual spending on Health Homes in 2012.
$558 million
— Annual spending on Health Homes in 2017.
New York's current system for distributing federal Disproportionate Share Hospital (DSH) payments is inequitable, prioritizing certain hospital systems over the city's public safety net, New York City Health + Hospitals. With federal funding cuts looming, state leaders must reform these distribution formulas to ensure funds are directed to the hospitals with the greatest need rather than allowing the financial burden to fall disproportionately on public facilities.
Recommendations related to Hospital Finance
The State should follow through on the recommendation to convene a workgroup to evaluate revisions to the methodologies for distributing DSH payments.
Reforms to the State’s DSH program should be enacted in the current legislative session.
The distribution formulas, particularly that for the Indigent Care Pool, should be revised to direct DSH payments to the hospitals with the greatest need.
State priorities for distributing DSH payments should be adjusted so that they do not leave New York City Health + Hospitals to suffer DSH cuts alone.
The State should disburse DSH funds without delay after they have been earned and cash is available.
Key Data
$3.6 billion
— Annual DSH payments distributed to hospitals across New York State.
$1.8 billion
— Federal DSH funding received by New York, the largest amount of any state.
$724 million
— Loss of federal funding for New York hospitals in federal fiscal year 2020.
$1.4 billion
— Annual loss of federal funding for New York hospitals after federal fiscal year 2020.
73 percent
— Share of New York City Health + Hospitals inpatients that are Medicaid patients.
$2 billion
— Projected deficits for New York City Health + Hospitals in coming years.
NYC Health + Hospitals faces significant financial strain, with city subsidies ballooning from $607 million in 2011 to over $1.8 billion in 2016, necessitating aggressive cost containment and revenue-raising strategies. To achieve fiscal stability, the system must address its high operational costs, which exceed those of private facilities, and potentially shift uninsured outpatient services to the private sector.
Recommendations related to Hospital Finance
A strategy for improving H+H finances may require shifting selected services, notably uninsured outpatient visits, from the public to the private sector.
Decreasing the concentration of psychiatric patients in H+H would potentially improve their care and enable H+H to improve its operations.
H+H likely will have to do more cost containment than was evident in Los Angeles.
Attention can be given to improving the outpatient payor mix.
New State policies with respect to Medicaid payments for outpatient services may be needed to aid H+H’s bottom line.
Key Data
$607 million
— City subsidy to H+H in fiscal year 2011.
$1.8 billion
— City subsidy to H+H in fiscal year 2016.
$748 million
— Expenditure reductions targeted for fiscal year 2021.
$1.1 billion
— Revenue raising initiatives targeted for fiscal year 2021.
$20,170
— Average cost per discharge at a H+H facility in 2015.
22.6%
— Amount by which the average cost per discharge at a H+H facility exceeded the average at New York City voluntary facilities in 2015.
New York's Medicaid redesign, specifically the creation of hospital-led Performing Provider Systems, faces significant challenges in effectively integrating community-based organizations due to limited financial support and unclear roles. To improve these partnerships, the state must prioritize replicating successful engagement models, fostering realistic financial expectations, and planning for sustainable funding beyond the current federal waiver period.
Recommendations related to Hospital Finance
The state should pursue intensified action to promote adoption of arrangements with CBOs that have demonstrated success in specific arenas and can feasibly be replicated.
Both CBOs and lead organizations should reach a mutual acceptance of more modest expectations for financial arrangements in areas where clear roles are not yet apparent.
Stakeholders must provide early and explicit attention to planning future arrangements for effective CBO engagement after the DSRIP waiver terminates.
Strategic attention should be given to identifying future funding streams for CBO participation in health care delivery.
Better coordination with current categorical, non-Medicaid funding streams supporting CBOs could make arrangements more cost-effective.
Key Data
$8.0 billion
— Initial federal funds provided over five years for the New York DSRIP program.
$6.4 billion
— Portion of federal funds allocated to plan and implement the Performing Provider Systems.
$1.8 billion
— Combined state and federal funding added to support Performing Provider Systems within months of initial approval.
$184,235,967
— Total revenue budgeted for Community Based Organizations across all Performing Provider Systems.
$4,866,866,784
— Total revenue for all Performing Provider Systems in the New York City region.
$11,753,731
— Total disbursements made to Community Based Organizations through March 31, 2017.
New York State provides $5 billion annually in Medicaid supplemental payments to support hospitals, but these funds are expected to shrink due to federal policy changes, disproportionately impacting municipal hospitals. To ensure equity, the state should reconsider its distribution priorities and potentially reduce payments to voluntary hospitals that rely less on this funding.
Recommendations related to Hospital Finance
The State should reconsider its priorities in distributing Medicaid supplemental payments.
Pending cuts should not fall only on H+H, and adjustments, such as reduced payments to voluntary hospitals with limited reliance on supplementary payments, may be needed.
Key Data
$5 billion
— Total annual supplemental payments provided through four separate programs.
$370 million
— Net annual cuts in 2018 that New York City municipal hospitals are slated to bear.
$659 million
— Projected impact of federal DSH payment cuts on New York.
$697 million
— Total projected reduction in supplemental payments based on steady funding for programs, a 5 percent reduction in UPL payments, and a $659 million DSH cut.
$2.2 billion
— H+H receipts from supplemental payments in fiscal year 2016.
$1.4 billion
— Projected H+H receipts from supplemental payments in fiscal year 2020.
New York's Health Care Reform Act (HCRA) taxes, which generate over $4.3 billion annually, rely on regressive levies on health insurance premiums and hospital revenues that disproportionately burden lower-wage workers. The state should replace these outdated, inequitable funding mechanisms with broader-based taxes and re-evaluate its significant financial commitment to graduate medical education.
Recommendations related to Hospital Finance
The Legislature should think creatively about how to replace the HCRA taxes in future budgets rather than continuing to renew them.
Shifting the financing to broader based taxes such as the income tax or sales tax would lower health insurance premiums and ease the burden on lower wage workers with insurance.
Alternative waivers or other special provisions should be explored to retain the federal funding while shifting to a more progressive revenue stream.
Whatever money the State decides to allocate to graduate medical education should be raised from a tax levied uniformly across the State.
The Governor and the Legislature should develop a new strategy for raising equivalent revenue in the future that is less burdensome for those who pay for health insurance.
Key Data
$4.3 billion
— Annual yield from the two taxes authorized by the Health Care Reform Act of 1996.
$3.2 billion
— Annual yield from the hospital revenue surcharge.
$1.1 billion
— Annual yield from the Covered Lives Assessment tax on commercial health insurance.
$500 million
— Annual federal funding generated through the Medicaid portion of the hospital revenue surcharge.
$1 billion
— New York State's annual commitment to funding graduate medical education.
$2.1 billion
— Annual federal Medicare support for graduate medical education provided to hospitals in New York.
This presentation, from the CBC panel discussion "The Berger Commission: 10 Years On," reviews how health care services in New York City have evolved since the New York State Commission on Health Care Facilities in the 21st Century, known as "The Berger Commission" issued its recommendations in 2006.
New York City Health + Hospitals has faced declining patient volume, with a 2.4 percent decrease in the first four months of fiscal year 2016 compared to the same period in the previous year. While MetroPlus enrollment grew by one-third between fiscal years 2009 and 2015 to reach 472,251 enrollees, the municipal health system continues to struggle with maintaining patient volume and financial viability.
Key Data
1.2 million
— Total number of unique patients served by New York City Health + Hospitals in fiscal year 2014.
0.6 percent
— Increase in unique patients served by New York City Health + Hospitals in fiscal year 2014 compared to 2013.
2.4 percent
— Decrease in patients served by New York City Health + Hospitals in the first four months of fiscal year 2016 compared to the same period in fiscal year 2015.
472,251
— Total MetroPlus enrollees reached by fiscal year 2015, representing a one-third increase since fiscal year 2009.
New York City's public hospital system faces a deepening fiscal crisis with projected deficits reaching $1.8 billion by 2020, despite receiving $497 million in emergency support. To maintain a balanced city budget, the administration must urgently implement a viable financial plan to stop the system's ongoing cash losses.
Recommendations related to Hospital Finance
The city must move quickly to stop the bleeding of cash at Health + Hospitals to ensure the city's budget remains balanced.
The administration must prioritize identifying and implementing a solution to Health + Hospitals’ current fiscal crisis.
The city must implement a viable financial plan for Health + Hospitals to address projected deficits.
Key Data
$497 million
— emergency support provided to the hospital system in the current fiscal year
$180 million
— annual commitment to the hospital system in future years
$1.8 billion
— projected deficits for the hospital system in 2020
$160 million
— additional funding allocated to New York Health + Hospitals in fiscal year 2017
New York City's Health and Hospitals Corporation faces a severe fiscal crisis, with deficits projected to reach $1.7 billion by fiscal year 2018 and cash reserves nearing exhaustion. To ensure long-term sustainability, the organization must modernize operations, improve service efficiency, and establish a more stable funding relationship with the city.
Recommendations related to Hospital Finance
To realize savings of that magnitude, HHC will need to intensify its efforts to make service delivery more efficient and reduce unneeded hospital capacity.
MetroPlus also should seek to retain more of its members' utilization at HHC facilities, primarily by attracting patients to in-house providers because of their high quality relative to others and their proximity to member residences.
HHC should advocate for available state tax exemptions and funding sources conditioned on greater participation by voluntary hospitals in caring for the uninsured.
HHC and municipal leaders should develop more rational and stable guidelines for funding HHC.
Possibilities include capitated payments for the uninsured that reflect the cost of providing care and incentive payments for implementing state-of-the-art care management models.
Key Data
$668 million
— HHC deficit in fiscal year 2013.
$645 million
— Estimated HHC deficit for fiscal year 2014.
$1.7 billion
— Projected HHC deficit in fiscal year 2018.
$300 million
— Anticipated annual savings from 39 restructuring initiatives.
$230 million
— Savings achieved from restructuring initiatives in fiscal year 2013.
$2.2 billion
— Annual revenues of the MetroPlus managed care plan.
The New York City Health and Hospitals Corporation faces a growing financial crisis, with projected budget gaps reaching $1.7 billion by fiscal year 2018 and cash reserves expected to be exhausted by fiscal year 2017. To ensure long-term sustainability, the city must establish more stable funding guidelines, incentivize efficient care management, and ensure voluntary hospitals share the burden of caring for the uninsured.
Recommendations related to Hospital Finance
Municipal leaders should develop more rational and stable guidelines for funding HHC in its efforts to meet its mandates.
City leaders should begin a dialogue with HHC and other national health care experts about the best way to rationalize the financial relationship.
HHC leaders can advocate for conditioning available tax exemptions and funding sources on greater participation by all voluntary hospitals in sharing the burden of caring for the uninsured.
To increase the share of MetroPlus services provided by HHC, patients should be attracted to in-house providers because of their high quality relative to others and their proximity to member residences.
In order to expand future enrollment HHC will need to take steps to improve the quality of the MetroPlus plan.
Possibilities include capitated payments for the uninsured that reflect the actuarially-based cost of providing care to them.
Possibilities include incentive payments for state-of-the-art care management models that improve quality and reduce costs.
Key Data
$1.7 billion
— Projected budget gap for the New York City Health and Hospitals Corporation in fiscal year 2018.
$702 million
— Projected budget gap for the New York City Health and Hospitals Corporation in fiscal year 2015.
$3.2 billion
— Projected accumulated cash shortfall for the New York City Health and Hospitals Corporation by fiscal year 2018.
$4.8 billion
— Projected accumulated GAAP deficit for the New York City Health and Hospitals Corporation by fiscal year 2018.
$668 million
— Deficit run by the New York City Health and Hospitals Corporation in fiscal year 2013.
$323 million
— Cash reserves held by the New York City Health and Hospitals Corporation at the close of fiscal year 2013.
The New York City Health and Hospitals Corporation faces ongoing fiscal challenges that are detailed in a budget profile produced in partnership with City & State. This publication serves as an introductory overview, directing readers to further analysis of the hospital system's financial situation.
The New York City Health and Hospitals Corporation faces significant fiscal challenges as expenses for pensions and benefits outpace revenues, while critical Medicaid supplementary payments are increasingly in jeopardy. To address projected operating deficits exceeding $1.7 billion by 2016, the corporation must either identify new funding sources or implement more aggressive efficiency measures to avoid dramatic service reductions.
Recommendations related to Hospital Finance
HHC must redouble its efforts at delivering services more efficiently to avoid a dramatic reduction in the services it can provide to New York City’s needy residents.
HHC and the City must identify sources for these funds to replace any lost supplemental Medicaid payments.
HHC leaders must develop a plan to close projected gaps because expenses, notably for pensions and fringe benefits, have been growing more rapidly than revenues.
Key Data
$1.6 billion
— Annual revenues HHC expects from special Medicaid supplementary payments.
$1.7 billion
— Projected operating deficit for HHC by fiscal year 2016.
$218 million
— Amount by which HHC reduced personal service expenditures between 2009 and early 2012.
2,500
— Number of full-time employees HHC trimmed between 2009 and early 2012.
$1.7 billion
— Capital commitments made by the City for HHC in fiscal years 2002 through 2011.
30%
— Share of Medicaid and uninsured patients admitted to acute care facilities cared for by HHC hospitals.
New York's Medicaid Redesign Team has introduced a package of reforms aimed at reducing program spending through provider rate cuts, utilization controls, and eligibility limits, including a new cap on annual expenditure growth. While these measures target significant budget gaps, long-term sustainability will require further structural changes to provider payment methods and continued efforts to manage service utilization.
Recommendations related to Hospital Finance
The state should implement the effective savings measures regarding Medicaid provider payments speedily.
The state should test the new Medicaid spending cap carefully in the coming year to ensure it effectively controls program expenditures.
Future efforts should be pursued to reverse the new assessments on health care providers that increase the cost of care.
Future savings strategies will require broad changes in the way providers are paid to align with the innovative spending cap.
The state must undertake greater efforts to limit excessive utilization of services through managed care and other new controls.
Key Data
$440 million
— Combined savings in the next fiscal year from eliminating inflation-based increases and cutting base rates 2 percent for institutional providers.
$209 million
— Savings from capping non-economic damages in medical malpractice suits.
$178 million
— Combined savings from two proposals that reduce premium rates for managed care organizations.
$100 million
— Savings in fiscal year 2011-12 by limiting payments to Certified Home Health Agencies.
$64 million
— Combined annual savings from two proposals relating to nursing homes.
$57 million
— Estimated annual savings from restricting personal care services in New York City.
New York's Medicaid program faces high costs driven by inefficient payment systems for institutional providers and excessive personal care hours, particularly in New York City. To achieve savings, the state should reform nursing home payment rates, tighten long-term care eligibility rules, and implement mandatory managed care for dual-eligible populations.
Recommendations related to Hospital Finance
The state should adjust nursing home payments to bring them more in line with national norms, pairing this with a significant rate reduction.
The state should move more quickly to takeover Medicaid administration from counties and New York City to improve efficiency.
The state should create more uniform and tougher rules and practices for determining long-term care eligibility, particularly with respect to “spousal refusal” and transfer of assets.
The state should reform authorization procedures to reduce the number of personal care hours provided to enrollees.
The Department of Health should immediately begin coordinating with the federal government to create a mandatory managed care option for “dual eligibles” that would cover acute and long-term care.
New York State's Medicaid program is the most expensive in the nation, with total spending reaching approximately $50 billion and projected to grow to $53 billion in fiscal year 2010-11. While the state has implemented reforms to hospital reimbursement and prescription drug programs to contain costs, spending on long-term care and other services continues to rise, necessitating further analysis of cost-containment opportunities.
Key Data
$50 billion
— Total Medicaid spending in New York State.
$53 billion
— Projected Medicaid spending in New York State for State Fiscal Year 2010-11.
$2,283
— NYS Medicaid spending per capita in Federal Fiscal Year 2007, which was more than twice the national average.
$225 million
— Expected annual spending reduction from 2009 inpatient hospital reimbursement modifications.
$1.02 billion
— Annual reported cost savings (State share) from Medicaid fraud, waste, and abuse control activities in State Fiscal Year 2009-10.
$6,430.3 million
— Total NYS Medicaid spending on inpatient hospital services in calendar year 2008.
New York City's capital budget fails to adequately fund necessary repairs for public infrastructure, with a significant 30 percent funding gap specifically affecting hospital facilities. This neglect of routine maintenance and capital investment risks escalating long-term costs, necessitating a more strategic approach to asset management and funding.
Recommendations related to Hospital Finance
The city should make full funding of maintenance requirements for hospitals and other public infrastructure an explicit priority.
The city should use the AIMS condition assessments as the starting point for developing the next 10-year capital plan to address the 30 percent funding gap for hospital repairs.
The city should develop a strategy for upgrading all assets, including hospital facilities, to a state of good repair.
The city should consider a reasonable time-horizon for upgrading each class of assets, such as hospital infrastructure, and identify specific steps to make progress against those goals.
Key Data
30 percent
— The funding gap for hospital capital repairs.
$5.6 billion
— The total estimated cost of state of good repair work needed for existing city facilities.
$2.9 billion
— The funding allocated for AIMS capital work in fiscal year 2011.
36 percent
— The increase in the estimated cost of needed repairs since 2000.
New York's fiscal crisis requires structural reforms to Medicaid, including linking payments for hospital inpatient care to patient needs rather than historical costs. Additionally, the state should replace proposed tax increases on healthcare services and insurance companies with more effective spending reductions to ensure long-term economic competitiveness.
Recommendations related to Hospital Finance
The Executive Budget includes reforms that deserve passage, notably linking payment for hospital inpatient care, nursing homes and home care to patient needs rather than historical institutional costs.
The Legislature should replace the $679 million of health care savings that stems from 'assessments' (meaning taxes) on insurance companies that will be passed on to consumers across the State.
Key Data
$679 million
— Health care savings from assessments on insurance companies that will be passed on to consumers.
$126.0 million
— Proposed increase in hospital surcharge.
$63.1 million
— Proposed establishment of a third party healthcare processing fee.
$29.0 million
— Proposed shift of public health costs to insurance companies.
$16.4 million
— Proposed increase in physician fees.
$16.0 million
— Proposed modification of family contribution to the Childrens Health Program.
New York's Medicaid program spends significantly more on nursing home care than the national average, yet fails to provide superior quality of care due to an outdated, inefficient payment system based on historic costs. Reforming this system to align with competitive national standards, while implementing rigorous staffing requirements and performance-based incentives, could generate approximately $1.2 billion in annual savings.
Recommendations related to Hospital Finance
New York State should set base rates linked to competitive national standards rather than historic costs.
The state should enforce staffing and other quality standards to ensure that the level of care paid for in the rates is actually provided.
New York should provide financial incentives for high quality by implementing "pay-for-performance" initiatives to reward homes that meet quality measures.
The state should adjust base rates for case-mix and regional labor costs to ensure fair and accurate reimbursement.
An accountability system should be developed to detail whether the level of staffing assigned to a patient meets the criteria required according to the patient’s RUG category.
Key Data
$1.2 billion
— Annual savings achievable by changing the way the Medicaid program pays nursing homes.
$187
— Average daily Medicaid payment to nursing homes in New York.
$130
— Average daily Medicaid payment to nursing homes in the rest of the nation.
4.1 hours
— Federally recommended level of total nursing care per patient per day.
$1.6 billion
— Projected savings from reducing New York State's Medicaid nursing home spending by an average of 22%.
$45 billion
— Projected cost of New York's Medicaid program in fiscal year 2008-09.
New York's Medicaid program spends significantly more on hospital and nursing home care than national averages, with hospital costs per admission 13 percent higher than the adjusted national benchmark. To address these inefficiencies, the state should implement more competitive payment rates for providers and expand managed care enrollment to reduce unnecessary hospitalizations.
Recommendations related to Hospital Finance
Limiting Medicaid provider payments to rates based on competitive costs would save about $2.5 billion annually.
The State should more vigorously attempt to find creative solutions, either through capitated arrangements with private insurers or through payments directly to physicians to manage the care of those with more complex health care needs.
The policy objective to which hospital leaders should adjust is a smaller role for New York hospitals in graduate medical education, rather than continued extra financial support in order to play the bigger educational role.
Spousal refusal should be permitted only under limited circumstances, and the three-year look-back provision relating to asset transfers should be applied to home care, be enforced more vigorously, and the financial penalties should be greater.
A suitable goal would be to enroll about one-third of the elderly and disabled eligibles, or about 350,000 individuals, in a managed care plan.
Key Data
$9,364
— The mean cost for a hospital admission in New York State in 2001.
$6,980
— The nationwide mean cost for a hospital admission in 2001.
13%
— The percentage by which New York hospital costs exceed the adjusted national average.
$2.5 Billion
— The estimated annual savings from limiting Medicaid provider payments to rates based on competitive costs.
29%
— The percentage by which nursing home costs in New York exceed the adjusted national average.
$620 Million
— The estimated annual savings from lower hospital rates.
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