FOR IMMEDIATE RELEASE
June 19, 2002
STANDARD & POOR'S ASSIGNS BBB RATING
TO NEW HHC BOND SERIES
Stable Outlook Given to Municipal Hospital System
Standard & Poor's announced today that it is assigning a BBB rating, with a stable outlook, to approximately $600 million of Series 2002 bonds being issued by New York City Health and Hospitals Corporation (HHC). At the same time, Standard & Poor's affirmed its triple-"B" rating and its triple-"B" underlying rating on HHC's outstanding debt.
Standard & Poor's rating of the new HHC bond series follows favorable bond ratings from Moody's Investor Services and Fitch Ratings, who assigned ratings of A3 and BBB+, respectively. HHC is issuing approximately $300 million as tax-exempt new money bonds, as well as another $300 million in bonds to refinance HHC's Series 1997 bonds, which are being insured by Finance Security Assurance Inc. (FSA). The Series 2002 bonds will close during the week of July 22nd. New money bond proceeds will be used to finance ongoing capital needs, such as general upgrades of building infrastructure systems, general improvements to patient care areas, enhanced information systems and new equipment.
Standard and Poor's indicated that their rating was based on multiple factors, including the recognition that the health care infrastructure of New York City depends heavily on HHC, whose facilities treat approximately 1.3 million New Yorkers each year, including 545,000 uninsured patients. The City has a long history of support for HHC, and recently obligated itself directly to support certain debt issued by the Dormitory Authority of the State of New York (DASNY) for the benefit of HHC. Statutory provisions also mandate the City to maintain support for HHC at pre-defined levels. Another factor in HHC's rating is a strong legal structure, which funnels HHC revenues through a lock-box arrangement that allocates funds to bond principal and interest payments each month before payment of operating expenses.
HHC's newly appointed President, Dr. Benjamin Chu is focusing on generating revenue growth by attracting more patients with improved clinical services, upgrading physical plants and expanding enrollment of uninsured patients in Child Health Plus, Family Health Plus and Medicaid.
In recent years, HHC hospitals have been repeatedly recognized for providing outstanding patient care, as demonstrated by HHC's average accreditation scores of 94 from the Joint Commission on Accreditation of Healthcare Organizations (JCAHO), which exceed the national average of 91. Most recently, in May 2002, Queens Hospital received a preliminary JCAHO score of 96.
Serving the five boroughs of New York City, HHC is the largest municipal health system in the U.S., with an annual budget of $4.1 billion. The public benefit corporation operates 11 acute care teaching hospitals, four long term care facilities, six diagnostic and treatment centers, a certified home health agency, and more than 100 community health clinics.