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NYC Health and Hospitals Corp. $550 Mil. Bonds Rated 'BBB' By Fitch -- FITCH FINANCIAL WIRE --

 NEW YORK, May 19 /PRNewswire/ -- New York City Health and Hospitals Corporation's (HHC) $550 million Health System Bonds, 1993 series A are rated 'BBB'. The credit trend is stable. Bond proceeds will be used primarily to fund capital construction projects. The issue is expected to be sold through negotiation by a syndicate headed by Dillon, Read & Co. Inc. and PaineWebber Inc. during the week of May 24, 1993.
 Continued state and city support of HHC -- by direct financial means, regulation, legislation, and debt service reserve fund replenishment provisions subject to City of New York appropriation -- is critical to bondholder protection and HHC's future vitality. Enhancing this governmental support is the issue's strong and above-average security structure, which creates a lock-box mechanism that traps substantially all HHC revenues for debt service payments before they are released to HHC for operational needs. The governmental support and lock-box mechanism ensure that debt service on this issue should be serviced adequately.
 As an essential provider of health services in the city, HHC's management is poised to react favorably to the expected radical changes in its health-care delivery system. As a result of strategic planning decisions outlined in an agreement with the City of New York, HHC is now more autonomous. While the necessary cash subsidies from the city are expected to continue, dependence on such subsidies is playing an important but diminishing role. This will allow management the freedom to accomplish self-directed capital and operating budget accountability. Management at the local provider level will be rewarded for meeting and beating target financial goals.
 As envisioned in HHC's master capital plan, many outmoded physical structures will be replaced, providing for the efficient delivery of health-care services into the next century. With improved facilities, management incentives, and the city's ultimate financial support, HHC should be able to adequately address the increasingly citywide competitive health-care environment.
 Despite management's strategy and goals, substantial operating challenges remain. The enormous size, scope, and financing needs of the city-recognized $2.6 billion worth of capital construction projects through 2003 will require management's very best performance. The constant struggle to keep medical services at acceptable quality levels, given an unfavorable payor mix, will tax management abilities. Local, state, and national initiatives to implement managed care-type service delivery methods are evolving and add some uncertainty.
 -0- 5/19/93
 /CONTACT: Edward Merrigan of Fitch, 212-908-0513/


CO: New York City Health and Hospitals Corporation ST: New York IN: HEA SU: RTG

TM -- NY094 -- 0489 05/19/93 17:21 EDT
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Date:May 19, 1993
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