New York City Health and Hospitals Corporation History

125 Worth Street
New York, New York 10013

Telephone: (212) 788-3339
Fax: (212) 788-3348

Government-Owned Corporation
Revenues: $4.18 billion (2003)
NAIC: 622110 General Medical and Surgical Hospitals; 622310 Specialty General Medical and Surgical Hospitals; 623110 Nursing Care Facilities

Company Perspectives:

The company's mission is to extend equally to all New Yorkers, regardless of their ability to pay, comprehensive health services of the highest quality in an atmosphere of humane care, dignity and respect; to promote and protect, as both innovator and advocate, the health, welfare and safety of the people of the City of New York; to join with other health workers and with communities in a partnership which will enable each of our institutions to promote and protect health in its fullest sense--the total physical, mental and social well-being of the people.

Key Dates:

A six-bed infirmary is the predecessor of Bellevue, oldest public hospital in the United States.
New York City takes possession of what becomes the grounds of Bellevue Hospital.
Kings County becomes Brooklyn's first public hospital.
The 20,500 beds in the 20 municipal hospitals are fully occupied.
The New York City Health and Hospitals Corporation comes into operation.
Completion of a 25-story building transforms Bellevue's physical plant.
The HHC records a record deficit of $289 million for the fiscal year.
Dr. Bruce Siegel is the 15th HHC president in 25 years.
The HHC finishes in the black for the fifth consecutive fiscal year.

Company History:

The New York City Health and Hospitals Corporation (HHC), a public-benefit corporation, is the largest urban healthcare agency in the United States. It consists of acute-care hospitals, long-term-care facilities, diagnostic and treatment centers, community health clinics, certified home healthcare agencies, and its own managed-care health-maintenance plan. The HHC, frequently financially beleaguered and often the focus of political contention and pressures, is a behemoth whose facilities serve over 1.3 million people a year--one in six New Yorkers--and account for more than one-third of all emergency-room and hospital-based clinic visits in the city.

Origins in the 18th Century

Bellevue Hospital Center, the oldest public hospital in the United States, is also New York City's largest municipal hospital and largest unit within the HHC. Bellevue serves as the medical facility for dignitaries visiting New York City, including presidents of the United States and United Nations diplomats, inmates of its detention and correctional facilities, and injured city police and firefighters. Its emergency department is considered one of the nation's best, and its psychiatric services are world renowned. Bellevue also is a regional center for brain and spinal-cord injuries and a leading center for trauma, microsurgery, and comprehensive pediatric services. It is the principal teaching hospital for its affiliate, the New York University School of Medicine. Once the hospital of sole resort for the city's poor and unwanted, Bellevue was where composer Stephen Foster died in 1864, alone and unrecognized, a half-written lyric scrawled on a piece of envelope at his side.

Bellevue's origins can be traced to a six-bed infirmary for contagious disease on the top floor of a public workhouse and jail erected in 1736. The chief scourge at this time in what was now New York was smallpox, and inoculation was sometimes as dangerous as the disease. The impending threat of yellow fever in 1794 inspired the municipal government to purchase Belle Vue, a five-acre country estate bordering on the East River well beyond the city limits, with a two-story building convertible to a hospital. The adjacent 150-acre farm was subsequently purchased, with possession taken in 1811. On this tract, stretching between the East River and Second Avenue and East 23rd and 28th streets, the city built two six-room brick hospitals along with an almshouse, insane asylum, and jail. Part of the site was later sold at auction despite protests from physicians who wanted to build a medical school there.

Bellevue Hospital, its name adopted in 1825, was sorely tested in this period by typhus and cholera epidemics plus the continuing problems of smallpox and yellow fever. A study found filthy conditions, egregious neglect of patients, and positions filled by political patronage. After a second cholera epidemic in 1847, the hospital was put under the control of the College of Physicians and Surgeons. A medical college opened on the site in 1861 and a school of nursing in 1873. By 1870, Bellevue had 1,200 beds. Among its achievements were the following "firsts" in the United States: the first hospital Caesarian section (1867), the first hospital-based ambulance service (1869), the first children's clinic (1874), the first emergency pavilion (1876), the first pathology and bacteriological laboratory (1884), the first in-hospital appendectomy (1887), and the first ambulatory cardiac clinic (1911).

About 1900, the medical college housed at Bellevue merged with New York Medical College to form what became the New York University College of Medicine, Bellevue's primary source of medical staff. Bellevue's first female doctors were admitted in 1914. A pathology building was completed in 1910, a psychopathic building with 500 beds in 1933, and an administration building in 1938. The Children's Psychiatric Service, founded in 1920, developed into the first center in the nation to study autistic children and to train child psychiatrists. The hospital's psychiatric division was turned over to New York University's medical college in 1942. A department of rehabilitation and physical medicine, under New York University auspices, was established after World War II.

By the mid-1950s, Bellevue Hospital was a complex of 14 or 15 buildings with 2,670 beds and an average daily population of about 9,700. Its grounds included its own post office, a state court for commitment proceedings of psychiatric patients, two public schools--including the first public school for emotionally disturbed children located in a public hospital--a prison, several libraries, three chapels, and a mortuary. It was, however, a complex in a state of decay. A master plan drafted in 1957 called for every existing building to be replaced. A 25-story structure, built at a cost of $160 million, was completed in 1973 on the eastern part of the grounds adjoining the administration building. One improvement resulting from the new structure was the replacement of 26-bed wards with rooms that accommodated one, two, or four patients.

Other Municipal Hospitals Before 1970

As New York spread northward, Metropolitan and Harlem hospitals were established in the 1870s in upper Manhattan as extensions of Bellevue. (Metropolitan was originally a homeopathic municipal institution on Wards Island). Brooklyn was in the process of becoming a city when Kings County Hospital was founded in 1831 as its first municipal hospital. A Manhattan home for elderly African-Americans developed into the Bronx's first city hospital, now Lincoln Medical and Mental Health Center, in 1902. Queens's biggest municipal hospital, Elmhurst Hospital Center, opened in 1832 on Blackwell's Island (later Welfare Island and now Roosevelt Island) as a facility for prisoners. It later became City Hospital, moved to Queens in 1957, and took its present name in 1988.

The municipal hospital system experienced many organizational changes before being united in a new Department of Hospitals in 1929. The system was extensively refurbished in the 1930s with the aid of federal funds, and its budget more than doubled between 1934 and 1946. Queens General Hospital opened in 1935. A new hospital for chronic disease was completed in 1939 on Welfare Island; it later became Coler-Goldwater Memorial Hospital, the largest of the HHC's five facilities for long-term care. Physicians in city-hospital outpatient departments earned salaries for the first time, new laboratory facilities were constructed, a blood bank was organized, and maternity services and equipment were upgraded. At the end of this period, the 20,500 beds (compared to 12,000 in 1934) in the 20 municipal hospitals were fully occupied.

During the 1950s, the city opened four new hospital facilities but existing ones deteriorated as available funds lagged behind new technology, which made hospital care more expensive. Group hospital insurance plans became widespread, providing many workers with an alternative to the municipal hospitals, which also faced a shortage of physicians as younger and better-trained doctors gravitated to the suburbs. This problem was met in the early 1960s by affiliations with private hospitals and medical schools.

The creation of Medicare and Medicaid in 1965 accounted, within a year, for 86 percent of the income received by the municipal hospital system, but many of the elderly migrated for the first time to now-affordable private hospitals. The public system was left to serve the Medicaid and uninsured indigent, and limits on Medicaid eligibility soon raised the proportion of uninsured. As a result, even while experiencing a drop in the number of patients, city hospitals suffered from shortages of funds and understaffing. A 1967 commission concluded that conditions in the hospitals were deplorable and recommended that the city turn over management to private institutions.

The HHC: 1970-2002

The New York City Health and Hospitals Corporation, a new public corporation, was created in 1969 to replace the city's Department of Hospitals as the agency responsible for operating the municipal hospitals and whatever other healthcare facilities the city might assign it. This liberated the new corporation from direct control by the city's budget agency and freed it to make its own purchasing arrangements. Ownership of the facilities as well as responsibility for capital improvements remained with the city, but HHC was responsible for collecting all third-party revenues. The corporation was supposed to be in existence only until each public hospital was placed under private management. The city would then pay the private hospitals a management fee and monitor their performance.

In practice, the HHC became a continuing agency under which administrators hired by the city managed the municipal hospitals in partnership with doctors from private institutions. Critics charged that the medical schools and voluntary (private) hospitals failed to provide first-class medical care or provide the HHC with full value for its money; the medical schools and voluntary hospitals in turn felt they were inadequately appreciated and recompensed. HHC presidents regularly fell victim to the corporation's board, which was dominated by city officials and joint appointees of the mayor and council. Five consecutive presidents resigned during the 1970s, unable to dispel repeated charges that the agency had exacerbated the very mismanagement and waste it was created to eliminate.

There was more stability in the 1980s as the HHC fell under the close control of Mayor Edward Koch. Expenditures more than doubled during the decade but increased reimbursements by Medicare, Medicaid, and Blue Cross allowed the city to reduce the share of the corporation's expenses that it subsidized. However, the fiscal situation worsened in the late 1980s as the system faced increased costs from the AIDS epidemic while city and state spending on healthcare stagnated. In fiscal 1993 (the year ended June 30, 1993), the HHC recorded a net loss of $289 million on revenues of $1.47 billion. To try and make ends meet, the corporation cut 300 beds and 3,500 of its almost 50,000 employees in 1994 and created a health-maintenance organization, MetroPlus Health Plan, offering members a network of hospitals, the ability to choose a family doctor, and a 24-hour emergency number. It also suspended its largest capital project, a reconstruction of Kings County.

Bellevue, always the focus of media attention, had its own problems as the hospital of last resort in the southern half of Manhattan. In 1990, Bellevue doctors estimated that as many as 80 percent of the patients operated on there had AIDS. Homeless patients were estimated to fill at least half of the beds in Bellevue's adult psychiatric wards. Of the 2,100 patients admitted to Bellevue on average in 1995, nearly one-third, including homeless people and undocumented immigrants, were uninsured patients. About 80 percent of its in-patients were entering via the emergency room, which the following year became the second-largest in the nation. The bill for uncompensated care came to $43 million fiscal 1995. In the face of Bellevue's growing deficit, the hospital's executive director outlined a plan to reduce spending that called for 26 services to be restructured or eliminated and a 40 percent staff cut.

A 1995 New York Times article painted an ugly picture of the state of the municipal hospitals. Its authors, Dean Baquet and Jane Fritsch, wrote that the HHC had become "a permanent bureaucracy hampered by political meddling" and that its 11 acute-care hospitals barely met the minimum standards of the national agency that evaluated them. Two of the 11 had even lost their accreditations because of poor care and unsafe conditions. Dr. Bruce Siegel, who became the HHC head in 1994, accused the "barons of American medicine" who ran the city's prestigious private hospitals of using public funds to finance arcane specialties for the teaching programs of their young doctors while ignoring the needs of the communities they were supposed to be serving. He conceded that the HHC had done little to monitor the care being provided in the hospitals. The authors noted in this regard that the HHC had had 14 presidents during its 25 years, many of whom had fallen victim to political pressures before being able to master the "byzantine" system.

One former deputy mayor called the HHC "the last great bastion of patronage in the city." This evaluation came a week after Mayor Rudolph Giuliani offered to sell three of the 11 hospitals--a proposal dismissed by the courts as illegal.

By the following year, the public hospitals were facing another problem in the form of competition from the city's private hospitals. Compensation had once seemed too low to make Medicaid patients desirable, but HMOs (managed-care companies) had reduced their own payments to the point that Medicaid fees were attractive to hospitals in some areas, notably obstetrics. The HHC began a major effort to retain these payments by remodeling its hospitals' maternity wards, even installing private showers and bathrooms. Bellevue built a natural-childbirth center.

Its plan to get the city out of the hospital business thwarted, the Giuliani administration began pressing the HHC to survive on its own, slashing its subsidy to the corporation from $329 million in fiscal 1994 to $123 million in fiscal 1997. The corporation reduced the average time of patient stay by about one third, a considerable savings because its hospitals were paid by the case, not by length of stay. It also shifted many patients from hospitals to community clinics and cut employment by at least 9,000. The HHC earned a $143-million surplus in fiscal 1996 and remained in the black for the next four years. Nevertheless, it continued to lose Medicaid patients to private hospitals and felt so strapped for cash that in 2001 it began charging a fee for prescription drugs at the pharmacies of all its public hospitals and community clinics. In 2001, public-hospital officials unsuccessfully sought the state's permission to shut 27 school and neighborhood health clinics, most of them serving uninsured people in poor immigrant neighborhoods.

The HHC ended fiscal 2001 with a $72-million deficit and was expected to end fiscal 2002 some $200 million in the red. The corporation had found that it did not pay to shift patients from hospitals to clinics, both because Medicaid payments were lower and because the clinics attracted a much higher proportion of uninsured visitors. In the wake of the 2001 twin-towers tragedy, the city was threatening to reduce its subsidy even further. Nevertheless, the corporation could point to some successes. By making a concerted effort to enroll more eligible patients into Medicaid, the number of uninsured patients served by the system fell from 560,000 to 490,000 in fiscal 2000. A new program, Family Health Plus, was intended to insure many families earning too much to qualify for Medicaid. Based on the HHC's favorable financial record in recent years, the corporation's bond ratings were raised in 2001. Dr. Benjamin Chu succeeded Siegel as president of the corporation in that year.

The HHC's facilities remained essential for public health in New York City. The emergency rooms of its hospitals handled nearly a million health emergencies in fiscal 2002. Patients made about five million walk-in visits to the corporation's outpatient and community-based clinics, including nearly two million primary-care visits. The hospitals provided inpatient care for about 200,000 people during the year. The HHC was the single largest provider of psychiatric services in New York City. It provided health services to more than 120,000 prisoners. Mothers gave birth to nearly 23,000 babies in its hospitals. Besides the 11 acute-care hospitals (and their outpatient services), six diagnostic and treatment centers, four long-term-care facilities, and certified home healthcare agency, there were more than 100 community health clinics. Bellevue boasted the largest array of behavioral-health programs in the United States, and its geriatric ambulatory-care program was the largest in the nation. Latinos accounted for about 45 percent of the people served, African-Americans for about 40 percent, and Asians for some 10 percent.

Principal Divisions: Community Health and Intergovernmental Relations; Corporate Planning; Finance and Capital; Medical and Professional Affairs.

Principal Competitors: North Shore-Long Island Jewish Health System; Catholic Healthcare System.

Further Reading:

  • Baquet, Dean, and Jane Fritsch, "In Chaotic City Hospital, a Bureaucracy to Match," New York Times, March 7, 1995, pp. A1, B2-B3.
  • Benson, Barbara, "Bellevue Seeks Independence from the City," Crain's New York Business, September 24, 1995, pp. 1, 35.
  • Brecher, Charles, and Sheila Spiezio, Privatization and Public Hospitals: Evolution of the Health and Hospitals Corporation, New York: Twentieth Century Fund, 1995.
  • Carmody, Deirdre, "Ancient Bellevue Is About to Open New Building," New York Times, October 3, 1973, p. 47.
  • Cooper, Page, The Bellevue Story, New York: Crowell, 1948.
  • Fein, Esther B., "At Bellevue, Luring Back New Mothers with Luxury," New York Times, February 8, 1998, pp. 33, 36.
  • Finkelstein, Katherine Eban, "Bellevue's Emergency," New York Times Magazine, February 11, 1996, pp. 45-49, 50, 52, 60, 65.
  • Flynn, Don, "Ben Chu Molds New public Hospital Image," Medical Herald, October 1, 2003.
  • Gelb, Arthur, and Barbara Gelb, "Plus Side of the Bellevue Story," New York Times Magazine, June 2, 1957, pp. 12, 56, 58, 60.
  • Opdycke, Sandra, and David Rosner, "Hospitals," In Kenneth T. Jackson, ed., The Encyclopedia of New York City, New Haven: Yale University Press, 1995.
  • Rosenthal, Elisabeth, "Hospital Agency Is Striving to Adapt in Competitive Era," New York Times, February 27, 1995, pp. A1, B2.
  • Schwartz, Harry, "A Focus for Urban Pressures," New York Times, April 29, 1973, Sec. 4, p. 7.
  • Shipp, E.R., "For the Sickest Patients, an Ailing Hospital," New York Times, April 7, 1991, pp. 1, 29.
  • Steinhauer, Jennifer, "After 5 Years of Fiscal Success, City Public Hospitals Face Deficit," New York Times, May 23, 2001, pp. A1, B2.
  • ------, "Hospitals Agency Girds Itself for Challenges of Medicare," New York Times, December 8, 1998, pp. B1, B6.
  • ------, "Putting City Hospitals on Firmer Footing," New York Times, March 11, 2002, p. B3.
  • Sullivan, Ronald, "Hospitals New Regimen," New York Times, April 30, 1977, p. 35.

Source: International Directory of Company Histories, Vol.60. St. James Press, 2004.