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THE NEW YORK STATE SENATE
FINANCE AND ASSEMBLY
WAYS AND MEANS COMMITTEES
JOINT LEGISLATIVE HEARING

In the Matter of the 2015-2016 EXECUTIVE BUDGET ON HEALTH AND MEDICAID

Hearing Room B 8 Legislative Office Building Albany, New York

February 2, 2015 10 10:01 a.m.

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February 2, 2015 - The MVHS $300 is mentioned in this meeting of THE NEW YORK STATE SENATE FINANCE AND ASSEMBLY WAYS AND MEANS COMMITTEES...

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See page 186…

CHAIRMAN DeFRANCISCO: Senator Hannon has a question.

SENATOR HANNON: What would the speed be that you would see us adopting value-based purchasing?

MR. WHALEN: Well, I think it's underway already. Now, the waiver talks about within five years making progress toward value-based purchasing [Redacted].

SENATOR HANNON: Let me get a little more pointed. The budget proposes we give blanket authority to the administration to determine it.

MR. WHALEN: You know, we've asked some questions about that to try and understand what's behind that request. And obviously the concern would be is that related to SHIP [Ref.] , is that related to this other process where we're underway with discussions amongst stakeholders now with the department to try and come up with the right approach? Under the waiver, the department is required to provide a roadmap for approval to CMS sometime within the next several months where they lay out what their approach will be over the five-year period to reach, you know, toward moving to that 90 percent target of value-based purchasing. So I think, you know, we [Redacted] and I'm sure you as well [Redacted] want to sort of understand how does all this fit in in terms of the need for the authority. That's just a question we've asked.

SENATOR HANNON: Well, we're going to be looking for input. But in the old days, some parts of roadmaps used to have an area marked as "Terra Incognita." (Laughter.)

CHAIRMAN DeFRANCISCO: All right, I'll close very quickly. You mentioned the examples of Brooklyn getting $700 million and Utica 400, I think [Redacted]

SENATOR HANNON: Three hundred.

CHAIRMAN DeFRANCISCO: [Redacted] 300, and then this rural undefined area. It almost seems like healthcare is becoming a competition. If you can get somebody's attention with a unique program, you can even get under the wire before the wire is taken down. And the whole DSRIP situation, it seems like people are going around trying to come up with what they believe the state is looking for. Sometimes they're right, sometimes they're wrong, sometimes they have to jump from one group to another group to be more [Redacted] I mean, and it's almost like you go through all your consultants and they can do their weighing, but it's a competition. And somebody, usually one person, is the one who's going to make the decision. Now, when you were in the state government, how were these type of operations [Redacted] you know, what was the scenario when things like this money had to be distributed for capital or whatever, how was it determined who gets what without competition? Or maybe there was then, too. I was here, but I didn't know what I was doing then.

MR. WHALEN: Yeah. I mean, there were a number of approaches over the years. I can remember programs that established a set of criteria, and then there was a process by which institutions that met that criteria could come in and file a simple application. And if you met the criteria, you received an award. Others were competitive. And the usual process of trying to figure out, okay, what was the more deserving or worthy. Some were regionally based. And so I think there was a wide variety of approaches. You know, the need [Redacted] the need for capital is intense because, you know, as I say, we have aging facilities. They are asked to reinvent themselves and to innovate and to change the way services are delivered from inpatient to start to focus on outpatient. But, you know, if you have a facility you have an overhead. That's part of your obligation. And if you're not able to get to the capital market, then that's a problem. So Senator Hannon I think may have made points earlier about what's the right use of capital. Is it just [Redacted] if it's just hard capital dollars, you're pretty constrained in how you can use those. But, you know, in the past the state used innovative means to maybe find insurance for capital deals to work through SONYMA and DASNY to try to figure out how to leverage a dollar so that the private capital market became more attracted to healthcare deals. Also, you know, balance-sheet relief. So if a smaller, weaker institution in fact wants a partner, oftentimes the rate-limiting step is a poor balance sheet. And the stronger institution is worried about their own balance sheet and doesn't want to, you know, mess that up. So, you know, solving some of those balance-sheet problems so it's a more equitable sort of partnership I think would also be a good way to think about using some of these dollars.

CHAIRMAN DeFRANCISCO: Thank you.

MR. WHALEN: Thank you.

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