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2011 Year in Review

HHC Board of Directors

Selective Outsourcing Has Staved Off More Cost-cutting Drastic Measures

In confronting our gaping budget deficit, we have explored – and devised plans to implement – every possible means to responsibly contain costs without closing or curtailing essential services and programs. This has led us to analyze whether certain of our services could be managed more efficiently through outside entities with deep expertise in these service areas. Where the analysis reflects that such efficiencies are attainable through this approach, we have elected to outsource these services (or the management of these services).

Indeed, much of the hospital industry across the country has increasingly contracted for select services to reduce unnecessary costs and our own recent experience confirms that such savings can be substantial. Our outsourcing of the management of our dietary services has saved HHC more than $40 million in the past eight years and is projected to save even more in the coming years now that the original capital investments in our centralized cook chill plant have been amortized.

This past year we completed the outsourcing of our laundry and housekeeping services, and we anticipate savings of $242 million over the next nine years. Although these initiatives have displaced incumbent managers, we have worked to ensure that these employees are offered comparable managerial positions with the new external management entities. Similarly, not a single unionized worker has lost his or her job as a result of these outsourced services, as we have retrained and reassigned displaced workers to other comparable (and, at times, higher paying) positions.

Selective "Insourcing" Can Also Cut Costs

We also are committed to "insourcing" services currently performed by outside vendors where our analysis reflects that this will be more cost-efficient. As a result, during the past year we have recruited 54 new employees in our information technology operations to do the work formerly done by consultants. To date, this has saved HHC $3.2 million on an annualized basis. We have targeted the insourcing of another 40 positions during the coming year.