Correct: Fitch Upgrades New York City Health & Hospitals Corp. to 'A-'; Outlook Positive.

NEW YORK -- [This is a correction to a press release issued on July 11, 2007. It corrects the issuer's operating margin percentage to 10.5%. The figure is located toward the bottom of the second paragraph.]

Fitch has upgraded its rating on approximately $962 million of debt issued on behalf of the New York City Health and Hospitals Corporation (HHC) to 'A-' from 'BBB+'. The Rating Outlook is Positive.

The upgrade and Positive Outlook reflect HHC's improved financial profile, in large part attributed to additional Disproportionate Share (DSH) and Upper Payment Limit (UPL) revenue which resulted from a restructuring of these payments by New York City and New York State. The federal Medicaid DSH and UPL programs are designed to help safety net hospitals that serve large numbers of Medicaid and uninsured patients. HHC received an additional $546.2 million in UPL revenue in 2006, compared to 2005, and an additional $704.2 million in DSH revenue in 2006, compared to 2005. HHC's operating margin (including the additional DSH and UPL revenues but excluding a one-time $2.4 billion other post employment benefit expense) improved to 10.9% in 2006 from negative 2.2% in 2005 and compares very favorably to historical losses. HHC's earnings before interest, taxes, depreciation and amortization (EBITDA) debt service coverage was also a solid 8.7 times (x). Through the first nine months ended March 31, 2007, HHC's operating margin was 10.5%. In addition, HHC's unrestricted cash and investments grew to $1.5 billion at the nine months ended March 31, 2007, equating to 100 days cash on hand and 156% cash to debt.

The rating and Outlook continue to reflect HHC's relationship with New York City and the City's continued indirect and direct support. New York City is currently rated 'AA-' with a Stable Rating Outlook by Fitch.

The ratings are further supported by HHC's essential role in providing care to New York City's Medicaid and indigent care population, the strong security structure governing the bonds, a New York City debt service reserve fund replenishment provision subject to city appropriations, and solid management practices related to expense control, quality and patient safety. The City has reduced some of its direct support to HHC in light of the significant improvement in HHC's revenue in 2006 and 2007. However, the City's indirect support, as evidenced by nearly $1 billion in New York City general obligation (GO) debt issued by New York City to fund HHC major modernization projects over the past five years and a planned $550 million in New York City GO debt to be issued over the next five years as well as the City's role in pursuing the additional DSH and UPL revenue for HHC, continues to be strong. In addition, the City has committed an additional $300 million over the next 10 years for HHC's routine capital projects. The City is no longer reimbursing HHC for its debt service and capital lease payments on outstanding HHC parity debt.

Credit concerns include operating difficulties inherent to running a public hospital system, potential loss of supplemental Medicaid payments, a growing uninsured population, and the political nature of the relationship between HHC and the City. While HHC projects that DSH and UPL revenues will continue to help offset the costs of caring for the uninsured and indigent, there is no assurance that these programs will continue and loss of this funding remains an ongoing concern.

HHC is projecting a budget surplus of $832 million in fiscal 2007, and a funding shortfall in 2008 of $51 million which grows to $1.1 billion a year in fiscal years 2009-2011. While these shortfalls are concerns, management indicated that the plan is conservative and does not account for additional revenues from DSH and UPL nearer to amounts received in fiscal 2006. Fitch's Positive Outlook reflects the belief that HHC will continue to receive DSH and UPL monies at levels that allow HHC to realize profitable operations and continue to grow the balance sheet, with no decrease in the current level of City support.

Serving the five boroughs that comprise New York City, HHC is the largest municipal hospital system in the U.S., consisting of 11 acute care teaching hospitals(4,647 staffed beds), four long-term care facilities (2,831 beds), six diagnostic and treatment centers, more than 80 community health clinics, a managed care organization (253,437 enrollees), and a certified home health care agency. HHC had total revenues of approximately $6.2 billion in fiscal 2006. As per HHC's continuing disclosure agreement, HHC provides quarterly and annual financial information to municipal securities information repositories.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.