Starve and Sever

Is the Mayor Trying To Get Out of the Hospital Business?

A few short weeks ago, labor leaders warned of the bloodbath that would ensue if the city went through with layoffs of more than 900 public hospital workers. Jim Butler, head of Local 420--the union that stood to lose the most jobs--made dire predictions: ''People will end up in the street,'' promised Butler. ''It's going to be ugly.'' With the 11th-hour agreement recently struck by Mayor Giuliani and District Council 37's Stanley Hill, workers now have an additional month's pay and the hope of redeployment to new positions within city agencies. Yet, while Butler and Hill are busy making sure the workers they represent stay employed, the public hospitals that serve millions of poor New Yorkers are still in jeopardy, facing a cost-cutting agenda that flies in the face of the public hospitals' mission to provide health care for all who need it.

The Health and Hospitals Corporation, which oversees the city's 11 public hospitals, explains the latest rounds of cuts (whether they end up coming from buyouts, early retirement, or redeployment) as a response to declining numbers of patients. The logic is simple: because fewer patients are checking into city hospitals, there should be fewer workers to care for them. But defenders of the system say the issue is not whether there are fewer patients--most hospitals, public and private alike, report lower numbers--but why. Their answer turns HHC's explanation on its head: it's not that the public hospital system is shrinking for lack of patients, but that patients aren't using the hospitals because the city hasn't provided enough money to keep them competitive.

''Giuliani's approach now is to starve the [hospitals] internally, to make sure that the future of the system is bleak, so they begin to close on their own,'' says Howard Berliner, professor of health policy at the New School. Such neglect could be masked by private hospitals' increased interest in medicaid recipients, according to Berliner: ''It doesn't look like the mayor is closing the hospitals. It's the market. It's not that we're not giving money to, say, Harlem Hospital, it's that Presbyterian is doing a better job.''

Under Giuliani's direction HHC has gotten smaller, even as the number of uninsured in the city who rely on it has grown (more on this next week). Staff has been reduced some 22 per cent, and the annual city subsidy to HHC--a source of much contention between health advocates and the city--has also gone down considerably. The Community Service Society says the city contributed only $51 million in this fiscal year, compared to $332 million in 1994.

HHC's spokesperson, Dr. Jane Zimmerman, says the city paid the hospitals some $169 million for various projects this year, including running the morgues and caring for uniformed officers and prisoners. But regardless of how it's calculated, the city is clearly giving less money than it once did. Based on the city's subsidy to HHC when it was first established in 1970, advocates, who have filed a lawsuit that is now pending, argue that the city owes the hospitals more than $791 million in unpaid subsidies over the past four years.

The organizing principle for the system is to keep the public hospitals fiscally sound while continuing to adhere to its mission of providing care for the needy, Dr. Luis Marcos, the Giuliani-appointed HHC president, told the Voice. Indeed, HHC unofficially boasts a surplus of $46 million, and Moody's has upgraded its bond rating. But while Marcos sees the corporation's financial stability as essential to its mission, critics argue that some of the corporation's cost-cutting measures are at odds with public health. Since 1995, HHC has begun charging copayments for certain services and prescriptions, as well as raising fees and using collection agencies to track down patients. ''That sets up tremendous barriers to needed services,'' says Judy Wessler, of the Commission on the Public Health System, a health care advocacy group. ''And that drive to stay within their budget muddies their mission.''

Such a backdoor approach to getting out of the hospital business would seem uncharacteristic for the mayor, if it weren't for the fact that he had already been barred from the front door. Giuliani ran a successful campaign on privatization, and the hospitals seemed to make the perfect test case. According to the mayor, New York's public hospital system--by far the largest in the country--was an ''anachronism.'' Historically tainted by Democratic patronage, the hospitals themselves became ''job centers,'' a charge he invoked again in the most recent battle over layoffs. HHC was to be eliminated. And by privatizing, Giuliani said, he would save money and improve the system.

So far, no hospitals have been sold. After the administration offered Queens General, Elmhurst, and Coney Island hospitals, only one even got a bid: Coney Island, which held special appeal because of the hefty revenue from its elderly medicare patients. Technically the arrangement, which Giuliani predicted would have saved the city $100 million right off the bat, wasn't a sale but a 99-year lease, with the option to renew for another 99 years. Labor was opposed to the deal, and for good reason. The Pennsylvania-based, for-profit company that was going to acquire Coney Island--Primary Health Systems--announced plans to lay off a quarter of the hospital's workforce before the lease was ever finalized.

Ultimately, what stopped the deal was concern that under new management the hospital would abandon care for the poor. Advocacy groups successfully sued the city, arguing that, because the for-profit company would not have been subject to the same requirements to treat all patients, the city was sidestepping its responsibility to the poor. The Coney Island plan was ''putting health on the stock market,'' says Marshall England, president of the Commission on the Public Health System, which opposed the deal. England is not necessarily opposed to all forms of privatization, but sees the Coney Island deal, like the more recent ''starve and sever'' approach, as attempts to back away from the hospitals' mission. ''We have a mayor that's still committed to eliminating the public system,'' says England. ''Once you do that, there is no system in this city that is mandated to provide services for everyone.''

While the Giuliani administration seems to have lost interest--or perhaps hope--for the outright sale of city hospitals, the idea of privatization on some level is still very much in favor at City Hall. HHC has appealed the Coney Island ruling and Marcos says that having a private entity run a public hospital can be ''a creative way to make significant changes in very competitive times.''

But creativity may not be enough to turn treatment of the city's poor into a money-making proposition. Because of increased rates, many medicaid recipients--currently the public system's main source of revenue--are being wooed away by private hospitals. Marcos estimates that city hospitals see about 1400 fewer patients each day than they did five years ago, and are expected to lose more patients when managed care becomes mandatory for all medicaid recipients within a year. Meanwhile, the city's uninsured population has soared to 1.8 million. And, while hospitals provide the bulk of care to the uninsured, they only get about a quarter for each dollar they spend on them. The effect that financial strain has had on hospitals and patients is unclear, even to those close to the system.

David Jones, a Dinkins-appointee who served on the HHC board until he was replaced by a Giuliani appointee in March, said even board members don't have information about the true state of HHC. ''The board hasn't been privy to any in-depth data for two to three years,'' says Jones. There are anecdotal reports that waiting times in outpatient facilities are high; at Morrisania's dental clinic, for instance, 2500 patients wait up to 18 months for an appointment. And residents at Lincoln Hospital say patients sometimes wait for more than three hours for scheduled outpatient visits. But while HHC promises a comprehensive survey of the hospitals is underway, no such information is available now.

At one time, hospital accreditation reports might have been a good way to gauge conditions. But recently, the accreditation process itself has been privatized, with the inspections now being carried out by a hospital-funded organization instead of the Department of Health. Critics charge that the new private accreditation process, which almost every hospital passes with ease, is less meaningful and tainted by conflict of interest because it is the hospitals themselves that fund the accreditation organization. This year, Public Advocate Mark Green issued a report charging, among other things, that hospitals hire additional staff just to prepare for the new inspections. HHC's Marcos dismisses Green's report as ''a piece of junk,'' but doesn't deny the charge. Even though the hospitals prepare for the inspections (''Don't you prepare for an exam?'' asks Marcos), they pass, which he says shows that the hospitals are in good shape.

Research: Sam Bruchey

This is the first of three articles on the status of public health care in the city.

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