Black Ex-Mayor Wins N.C. Senate Primary News Article from USA Today

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June 6, 1990

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  • Case Files, Campaign to Save our Public Hospitals v. Giuliani Hardbacks. Notice of Cross-Motion for Summary Judgment; Affidavit of Richard M. Weinberg in Support, 1996. 990be248-6835-f011-8c4e-7c1e5267c7b6. LDF Archives, Thurgood Marshall Institute. https://ldfrecollection.org/archives/archives-search/archives-item/75c31f5e-846f-4588-b707-b36fce938bdd/notice-of-cross-motion-for-summary-judgment-affidavit-of-richard-m-weinberg-in-support. Accessed June 06, 2025.

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SUPREME COURT OF THE STATE OF NEW YORK 
COUNTY OF QUEENS 

Index No.: 004897-96 

THE COUNCIL OF THE CITY OF NEW YORK, 

PETER F. VALLONE, SPEAKER OF THE : 

COUNCIL, and ENOCH H. WILLIAMS, CHAIR OF: 

THE COUNCIL HEALTH COMMITTEE, 

Plaintiffs, 

-against- 

RUDOLPH W. GIULIANI, THE MAYOR OF THE, 

  

CITY OF NEW YORK, NEW YORK CITY HEALTH : NOTICE OF CROSS-MOTION 

AND HOSPITALS CORPORATION, and NEW YORK : FOR SUMMARY JUDGMENT 

CITY ECONOMIC DEVELOPMENT CORPORATION : 

Defendants. : 

et 0 sn mm mt me i! Pe, X 

CROSS-MOTION BY: Plaintiffs Council of the City of 
New York, Peter F. Vallone, and 

Enoch H. Williams 

DATE, TIME & September 20, 1996 

PLACE OF HEARING 9:30. a.m. 

I.A.S. Part to be assigned 
Supreme Court, Queens County 
88-11 Sutphin Boulevard 
Queens, New York 

SUPPORTING PAPERS: Affidavit of Richard M. Weinberg, 

sworn to on August 23, 1996, and 

the exhibits annexed thereto 

RELIEF REQUESTED: An Order, pursuant to CPLR § 3212, 

granting summary judgment in 
plaintiffs’ favor, and granting 
such other and further relief as 
this Court may deem just and 
proper. 

ANSWERING PAPERS DUE: September 11, 1996 (pursuant to 

stipulation) 

DATED: New York, New York 

August 23, 1996 

FROM: TENZER GREENBLATT LLP 

The Chrysler Building 
405 Lexington Avenue 
New York, New York 10174 
(212) 885-5000 

by: Edward L. Sadowsky 
Ira A. Finkelstein 

 



-and- 

RICHARD M. WEINBERG 

General Council 
City Council. of the City 

of New York 
75 Park Place 
New York, New York 10007 
(212) 788-7000 

by: Richard M. Weinberg 
Gail R. Zweig 

PAUL A. CROTTY 

Corporation Counsel of 
the City of New York 

Attention: Daniel Turbow, 
Assistant Corporation Counsel 

Attorney for Defendants 
100 Church Street 
New York, New York 10007 

(212) 788-0412 

COPY TO: KENNETH KIMERLING 

Puerto Rican Legal Defense 
& Education Fund, Inc. 

99 Hudson Street 

New York, New York 10013 

(212) 219-3360 

 



  

0 ‘9 
SUPREME COURT OF THE STATE OF NEW YORK 
COUNTY OF QUEENS 

Index No.: 004897-96 

THE COUNCIL OF THE CITY OF NEW YORK, 

PETER F. VALLONE, SPEAKER OF THE : 

COUNCIL, and ENOCH H. WILLIAMS, CHAIR OF: 

THE COUNCIL HEALTH COMMITTEE, 

Plaintiffs, 

-against- : AFFIDAVIT OF RICHARD 
: M. WEINBERG IN SUPPORT 
: OF CROSS MOTION FOR 

RUDOLPH W. GIULIANI, THE MAYOR OF THE, : SUMMARY JUDGMENT 
CITY OF NEW YORK, NEW YORK CITY HEALTH 
AND HOSPITALS CORPORATION, and NEW YORK 
CITY ECONOMIC DEVELOPMENT CORPORATION, 

  

Defendants. 

STATE OF NEW YORK ) 

COUNTY OF NEW YORK) 

RICHARD M. WEINBERG, being duly sworn, deposes and 
says: 

1. I am an attorney admitted to practice in the State 

of New York, and am General Counsel to the Council of the City of 

New York (the "City Council"). I make this affidavit for the 

purpose of presenting documentary evidence to the Court in 

support of the City Council plaintiffs’ cross-motion for summary 

judgment. 

2. Annexed hereto as Exhibit A is a true copy of a 

letter dated May 8, 1969 from Mayor John V. Lindsay to Governor 

Nelson A. Rockefeller urging approval of the Health and Hospitals 

Corporation Act. 

3. Annexed hereto as Exhibit B is a true copy of the 

lease agreement dated June 16, 1970 between the City of New York 

 



or '® 

  

(the "City") and the New York City Health and Hospitals 

Corporation (the "HHC"), whereby the City leased its public 

hospitals (including Coney Island Hospital) to HHC for a term 

coexistent with the life of the HHC and at an annual rent of $1. 

The lease agreement provides that the HHC is to operate the 

facilities (Section 2.3) and that the services it will render at 

the hospitals "are particularly for those who can least afford 

such services." (Section 2.1) The lease agreement was authorized 

by vote of the Board of Estimate (Page 1), and provides that it 

can only be amended by written consent of the parties and the 

approval of the Board of Estimate (Section 12.1). 

4. Annexed hereto as Exhibit C is a true copy of an 

agreement between the New York City Economic Development Council 

and J.P. Morgan & Co., dated August 1, 1995. 

5 Annexed hereto as Exhibit D is a true copy of the 

Affidavit of David R. Jones, a member of the Board of Directors 

of the New York City Health and Hospitals Corporation, submitted 

in opposition to the defendants’ motion for summary judgment in 

Campaign to Save Our Public Hospitals - Queens Coalition v. Giuliani, Index No. 

10763/96 (Sup. Ct. Queens Co.) (exhibits omitted), upon which the 

City Council plaintiffs herein are also relying. 

6. Annexed hereto as Exhibit E is a true copy of the 

EDC’s Offering Memorandum for Coney Island Hospital, dated 

October: 26, 1995, 

7. Annexed hereto as Exhibit F is a true copy of 

Mayor Giuliani’s June 26, 1996 Press Release announcing that the 

 



LJ 

: : | | ; A 

  

Mayor's office has entered into a letter of intent for the lease 

of Coney Island Hospital to a private corporation. 

8. Annexed hereto as Exhibit G is a true copy of the 

City Council’s Amended Complaint. 

9. Whereupon, it is respectfully submitted that this 

Court should grant the City Council’s cross-motion for summary 

Richard M. Jobe, 

judgment. 

  

Sworn to before me this 

23rd day of August, 1996 

Q Pod" 
_\|Notary Public 
Dat AAV 

©3-R » HES ANY 
Pah Soed ¥ \\~ WR a 

CO \ SSA yes 6x Nour 0 \ "Wa? 

  

253384.1 

 



  Exhibit A  



CAA 
- -. 

ores 

  

LL THE CITY QF ‘NEW YORK 

_. OFFICE OF THE. MAYOR’ 

2 New YORK, N.Y. 10007 . 

CA .. 

  

Rules ..0- 
Wa 

JT 

Na S30h Ty | 
“ANAC In Felat¥on © the éreat ion: : 

fo the New: York city. health?; 

+: “hospitals corpora ion.and 
7. viding forthe pq ra and i) 

_thersof ah ATA 
bs .. -''y 

. Foi ‘ 

  tr   
EN i SR 

Se Trimt iy — 
i i%s 

oraple’ el 

-e   Honor 'N som A. Rocke eller 

governon: of. the State’ of ew 
RS - 0 - Ren Pers b+ "A 

AThadys, New Yor} \% 

» 
-t? *. y, .; g 

ny
 

134,13, Before, youifox exent ive: Ra
d RY 

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ob
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bes 
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“wold be , admint n-W 2 
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B
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ie Néissn A “Rockefell

er 
i tt hl : HERR 

wn. Ld . “on 

. ¢) if AEE A A . 
AN Lov Rh th a nit ; , 40 ; 

MT 9 o. .’ ii 
rd 

cet iL . PRE, Ek 

3 INCE ae # oR . > : 4 Td TE ARE, ME RE 

YN" ak fd - -. vii 
a tse a A 

0 

. . ea Lie es Puig, - . Bre TN 

os * . Sido Lt Se 
a 

Ai : 

;  Tarvectont all id the administrator, the" tii i
 

pans bythe mayor ag chief. administrative off
icer. of  theihéalth: func-:; w=, 

    

   
    

   

    

      

   
    

  

   

    

   

  

‘the.-administwutor of: human “resources 5) 
   
  

    

   

        

   

  

‘xktions of: 4ne\administration, 

37 he:clby, and. the’ deputy .mayqr-city. administrator: Jo
fstheieity; 

a 

or,-thedr suceg '80T3, “all séfving’ ex-pfficio;’ ‘ten. ‘directors: shal; i 
{a 

be: ppointed by\the mayer,. fivesof: whom shall be.designated by. 

the| ¢i%y council) \of tha Cityrof. New. “Yorks. the: remaining;direc ct 

‘shafll. be’ the’ thie ~exgcuti e’ ‘officer’ ‘of sthe corporationdiy 

chides: Rxeaqutive “of Ricér isHELL b Ger ty, oA taforeméritioned: her 

i £1 een: ;directors’/T m. persons othex, thar thems¥lvesi 
and: ‘shall? ai 

sese ve, fat. the Jpleasur of” the board.: ‘The. terms -of.: the ten: 4ditec=" 

“tors: /LATSE’ appointed - ‘tHe fnayor; other than’ ‘thase-’ ‘gerving. exh 

18 ‘will be’ for five years: each. "The. Anitial
itermsy; ofeach; 

      

   

  

    

  

     

     

  

   

   

    

  

   

   

     

  

   

   

  

   
   

                

   

   

      

    
   
   

    

  

     

      

     

      

   

  

   

    

   

  

   

5 b} 

; i signated by dpe. €1ty council “and each of:thosé ap= i" 

dinted: by- the mayor wil be stajsenel to, permits ones of eac to uid 

N i shpesnred annually, > : VI hae, . * : 5. . ror ALES 2 

bi 
ath " atts Yalos, wi 

3 a 3 

A “The ebipiratton’ Would:  suabiieh. ‘a comminity* 1 La i 

oh ard” Tor “each ‘of - its. hospltils’ to’ consider and: ‘advise 
ok 

jgoration ‘concerning the: Gevel ment*: of, any, glans; or 
a 

53 
he-. a nh jo ‘ : : 

hu eR kay 
n would be dyer” ar ha. GR je 

hand medical “mervices forthe         

        

“The oarborati® 
   

  
EET yt on ithe: it. to. provide heal 

A 

4 ub] feE thro gh-and, in’ such’ health. acilitiesss Lialls ACQUATe HTS 

re oe = ents’ with the Citys... 
{he ~hill. pl 

2 oH 

éeméntsiibe.; entered n
to on Sa re: “July sly 1970 BILL 

ation “of the: municipal. ‘h
ospi 5.P%. the: ‘corpora: or

o ese = 

eetient >urider: the. ‘terms of; legisladion: 
coulditakeiith he Lor Re ; 

Se, are cense to operate {OF pale p 
Ya   Tn Rok p SCATRE 

ow 

Pht § A or Fan =op ating? contrat, a’ Teas % 

; 
rn Nash re pt 

ES fis CA Toa | el i EE | 

i, CA ey RCA DE Eth BS 
Le: 

A 

a BENG pha joorpOTAELon, would: have 
;th powers: inecess 37s) 

had SS [sioperatey| Baintain,.and;
 Ampreve Araeili ties: It would gl¥cEhaver ; 

RE co 3) ‘the ipower 8 ‘necessary: 
go.c construe eduini; oricansett 

0 

ER Je Tucted, or; equipped, -health; facil
i £13211 ain. sthe Xn : 

; 
erent ; ext ene Loi; Len Ia fié 

reconstalction; ‘penovation;-: Amprov 
ort 

        
  

    

   
    

53 J LY ‘replacement: or. ‘modif
ication, "0 Lsxisting go ra: d14t1es) 

es 3 ne 
Ese; powersiWith: ‘pes

pecti’ do major, ‘new\donstru
é ons 

: ATHY TOT POT {on Srguld- be; subject 
to; “triet;approvalo rhe] MAY OE; nl 

REV LE Seu rad toi consult Sen, the StatesHealtiiad;M taf Heal 

% EATS aciliyies’ proven Cpr een ELONRWO ULEAD Ed 

i 
 Ehe (app oe (hetreisruliegen: 

aN 
NE EAE eed

 TE EEF IAN 

4 Pil Sa } 

AN TE 

  

Dr
a 
>
w
 

Tae vie od Me TO T7N Co 

 



    

  

5 
“ncliorabie Welson A. Rockefeller FN 

‘May 8, 1969 . 
Page 3. Wh eo oh 

el ye Re 

bonds, tnotes, -or other evidences. of tndobiednse” for the eon-. 

“ ‘struction of ‘4 health facility. The gorporation could not trans-: i 

fer or. dispose: of any health facility or weal property acquired to 9 

“from: or: ‘constrdcted”-for the City without Public. h ing: and. on™ 5s walls 

“gent ah ‘the Board of Estimate, hepa Nn, ol oo AN 

‘ The. géneral, Yorporate.
 ‘power 0) cres 

CS absietary” ‘corporation
s. 4s. made shbject, to t approval’ ‘of: the the 

a -and ;8ky “subsidiary: corp
orations’ sini be éstablis Neds ELAN 

J are precluded ‘under -the legislation 
Irom e% cising: corporates: (A

RES 

Jill powers: with respect tr. capital’ borr
owing.p 

/ 

3 in ‘collective. bargalui
ng However, no sus diary.corporations, may-. Pp 

“be crigated to, ‘operate h ealth: facilitiesy til: wo, years: rl thé. 

Persist ary of; this Bill. o Roy - f.. oN 

‘ i = 
~ - 

PET dK Ol 

dt “fre Gordonation would ive f nidnand: Fe pant” for. the. Gost x 

of; hehith ahd: nedifal services: that/1t proviess, through, fees, : 

Prentals, and -othar? ‘cHarges'; it. 'veckived f 
: 

= party: “fnsurers;-. and. governhent reinburseme 

poration: br directly. collect ‘and. r
eceive; 

":  smbuirs ement. and {payieyc ror: servites’ Fes 

APIO + operated: Py DTA "The :Cty ajrequirgd to a brian i payit 

..the- “éorporatipn: from-tax yd fundsy.: auring he i 

g ©1970-1971 and~1971-1972, an: amount ‘not’ less: than ‘one ndv
asy 5) 

seventy-five million’ -ddl
lars.- “Théreaftec the: C

ity .shallsp 

‘‘cérporation:, an: gmount’ which, isto. be; tgreed -ypon.betwee my 

a oA ‘orporation?and. ithe CAt
y: except thatthe’ ‘amount ; Tan: np 

Z J than’ * one hundred, seventy-five: 
‘million: ddllars: for. 

WEE periods without; approval: ofth
e State:Legislature.y.: 

‘pion. would) spbniit] ahnua ually a -program: ‘budget, to. ‘thé“Cityi
deta 

the. EL expenditure ‘of ‘tax levy Bis famprepritsstihy Ae 

he oiiy. ; i fhe i RgaT +. 2 a A A AS 

ig - The: . corporation. “would Ve
 sgubjoct:. to anaato

 

Eg audits by : the: City Comptroller: The: ‘corparattom!s;
 OWE: 

: NEL provide. and. deliver-
health’ ‘and-! ‘medicals: sexvides

iwo i 

iil eised an, accordance “with: ptsi
th ‘and; aris Ors a 

Services’ Aguintstrabions
 i 4 +4 

: JTniadastick ain i 

sited. to the yor the 0 

Grey: 51, Néw-York, the St is bom 
3 

ations: bork zibe SKSTCIETP stellen settine otis in Pk 

‘1 ons and’ romance 
TIL & details: Tei

 it = « 

; SNL 
£3 - Lash 

’ 25 ene rature. Si nd tas co atic Ld ett 2 

2 SOI | EC Een Ey iE ‘a 

3 

  

  
X 2 ig pe 

oY SS Foy 

NE 0 

  

    

rsonnel. ‘policy and Fig ; Ske 

       



  

‘services, fas: 

deroun’ inoreadingly, L
a 

‘ Ak FL by et” 
- 

AR ‘two “decades; have sdgari
y 

AP thods:of. ‘operating, health: facili 

pe di: ‘to’ ‘cope: with" the increasing 

phe and medionl: care.’ 
> 

ela beet 
: “eed on 

one investigation, Tarté 

existing’ orosedures 
for. purefi 

itilizing: ‘needed ypersonnel ; ap 

: 
aging vital: passe) 

3 Fn ona det 
sical’ plant: 

Ef ars and; inne Dat 
ions. ‘has. i Ted! the sgreats 

des” in the anes of. "resources 'd geveten to ope tioil 

N “Phe ity PY propyeine Tog ‘beridth iF corporation 

: facilitate’ solving, the. provlen. 
of. effective. manage 

oor: 

murdcipal. sie, facilities: ana. prograng; ; 
: 

nw BE lk 
crt of i 

The’ city believes 
ray it can. develop: Lhrol gh. 

£it-corporaticn;’ inte 
systens;jof/manage 

e to the ineeds. of th ospttalsaand’ their 
#: 

¢which: Lo phe cg duot’ of: othe: Cat
s 

he. cre tdon: ots a; ublic ‘benef 
rp 

Apr freedom. ‘from deta
iled’ Youth 

ear i 
.the. capacity 

-internal: systems’ 
ne Tperation 

; i : Luis 

Sor 4 Saeed i evordinate. and 8 

~ocedures “and cried to coorainaLe, Hoty 
many 

hiare: ‘maridated-in: 
laws + These ; administrative, cons

traints: 

have imide. the; ‘operation n,; maintenance; and,e construction ofits 

Crete
 ‘racilities;a 16w;: CumbEraom 

eedlessly- ‘expensive
; pace nes Core HERES 

~sodrdinate’ the:purch 
Bir 35 ment 35 ee 

ocedures.. .that:are
 

: 

eof” CE 

e delay end: infle: 

a ee — — «= 

(re WARES w= 

  

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e
 

r
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o 

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re oH ‘Honorabie! Nelson, A. Rocitetelier: : 

BO EY EK we Mreh a 
y . on ; wh gh, 7 . ] . : * e- i. ih x E : 3 Chi 

whieh 2 i%: Ce brs LN 

m tse procedures and egtslatida. 
x 

The: pbc and private seaiimpi
oghils Srraty. “wh 

de*medical servites with. 4 ‘soutce: of; pay==--.- 

he. costs of: providing ser 1cess -! It" "18.4n- 

maximize Hele nese: 

dimedicals ineeds.r 

- 

   

      

{manher iy 
hy ar 
SL 7.0F the: pegpae. of the" City 1. 

i 
will ‘not "in any: Api the; oa 

EAE 2 ime corporation 

“Services, ‘Adminis
tration . or’ the purposes . 

tion was: formed =, ‘Healfh Services 
Administration.) 

‘to:promote ‘coordinated ‘policy: planning;and;
 oe ean Pn 

‘City's: public: health system. - ‘Exercising the) ;oper
ati OHE1IFespY ca 

SRE TOL BBA for: directly: delivered. City mrviges through apts 15 

Ba corporation’ Arlirio way
. ‘change: 

; he £3: 

responsibility: ., In point.of.: fact, a Health: SM 
' 

ti{ontwere not. now "4n existences. “18 would’ have’; ‘to-'be:; ata:
 stra 

‘supervise ‘the. “cofpora
tion. - ‘In large measure “4. was’ “thie /OVerview: 8 

$758 i nade possible ‘bythe. esta
blishment: of. Hea alth Sree 

fei that convinced} pispo
nszble City officYals f.the: rae NE ol 

i of dmproving | the managemen tof ‘direct! operation
s. 

Ki Tstrengthen; the:
 entire. pubite. i 

a SRE Le 

. Noggnto, 

Refit helt, : Ex . 

i Li yee In” ‘eitablishing. a ‘pub
lic, ‘benefit. de

n 

Citys. “hot getting
 out: of | ‘the Hisipieay bi Ha Adds, 

‘establishing a mechanism: ‘to -ald=1tidn betté
r mandgl CHATTARS 

business for. ‘the benefit: riot only
" “ofthe public: 

ser 

als" it; ‘city: health 

Toots
 ire 

tote the; 

evened by Poor, cand the by: the: Lo
 

f Estimate, ‘the’ Mayor ,.-and ‘the. Health: ‘Servic
esyAdiinl 

215] , of” ai a
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  Exhibit B  



1 : . v | : ' . [] pS H ¢ { | de 

  

AGIULHERT nude this =<d6th ay of June, 

«1970, pursuant to Chapter 1016 of the Jaws of 1969, bobwveon 

THE CITY OF NEW YORR (hercin called "City") and the 

NEW YORK CITY HYFALTH -2RD BOSPITALS CORPORATION (herein callec 

, Thosehorntion”), a public bencfit corporation. 

’ 
{ 
' 

! 
| 

gio, 

v
o
 

WITNESSETH: 

’ i 
I 

WHEREAS, by Chapter 1016 of the Laws of 1969 (here 

called "Act") the Corporation was created to deliver high 

quality and dignified health and medical services and provide 

  

health facilities for comprehensive care and treatment for 

the 111 and infirm, both physical and mental, particularly 

tc those who can least afford such services, and 

» 

WHEREAS, the parties hercto are required by the 

AfCck to enter into an agyeement by July J), 1970 for the 

    

operation of the hospitals then being operated by the City 

a . . 

for the trcatment of acute and chronic discases, and 

' WHERLCAS, pursuant to the Act, the Board of Estimate 
: { s . 

by resolution (Cal. No. 244 - June 18, 1970), has duly 

authorized the execution of this Agreement on behalf of the 

City, and 
Nad 

WHEREAS, Section 2 of said Act entitled, "Declara- 
\Y 

tion of Policy and Statement of Purposes," provides as 

 



  

follows: 

—
—
 

 
—
 

J ; ; & ‘@" 

; "§ 2. Doclaration of policy and stateront 
of purposes Ye : 

It Js hereby found, doclared and deterivined 
that the provision and delivery of comprehoisive 
carc and treatment of the ill and Infivia, boih 
physical and mental, are of vital and paramount 
concern and esscntial to the protection and puo- 
motion of the health, safety and welfare of the 
inhabitants of the state of New York and the 
city of New York. : 

. There arc serious shortages in the number 
of personnel adequately trained and qualified 
to provide the quality care and treatment necdod. 
A myriad of complex and often deleterious con- 
straints and restrictions place a harmful burden 
on the delivery of such care and treatment. 
Technological advanc2s have been such that pcr- 
tions of the health and medical services now 
delivered by the city are not as advanced as 
they should be. A system permitting legal, 
financial and managerial flexibility is required 
for the provision and delivery of high quality, 

- dignified and. comprehensive care and treatment 
for the 11) and infirm, particularly to those 
who can Jcast afford such services. 

: It is further found, declared and deter- 
mined that hospitals and other health facilitics 
of the city are oft vital and paramount concern 
and essential in providing comprehensive care 
and treatment for the ill and infirm, both ot 
physical and mental, and are thus vital to the 
protection and the promotion of the health, 
welfare and safety of the people of the state 
.0f New York» and the city of New York. 

There are inadequate general and specialized 
health care facilities including but not limited 
to nursing homes and related laboratories and. 
ambulatory care clinics and centers and diagnostic 
treatment centers. The inadequacy and shortage 

-0f health facilities derives from such factors 
among others as the rapid technological changes 
and advances taking place in the medical field. 
These changes and advances have created the nced 
for substantial structural and functional changes 
in ‘existing facilities. Many of the health facil- 
ities of the city are overcrowcésd. Buildings are 
deteriorating ‘and many suffer harm as a result g 
of piecemeal and uncoordinatcd additions. The 

 



- N ° 

eT ? ¢ 2 3 ' 
. . ’ . < p 

: . 

<4 . 

  

t 

facilities avallable for cducetion, research 
and developrent arc inadeguate to meet the 
demands of the medical ficld., Procedures in- 

. herent in the administration of health and 
medical scxvices as heretofore cstablished 

". obstruct and impair efficient operation of 
health ang modical resources, 

It is found, declarcd ond determined 
‘that in order to accomplish the purposes . 

; herein recited, to provide the needed health 
; : Lan and medical services and health facilitieg, 
; : : a public beneiit corporation, to be known: as 

the New York City health and hospital cox- 
, poration, should be created to provide such 

t health and medical) services and health facil- 
! ities and to otherwise carry out such purpo- 

: jisest that the creation and opzrztlon of the 
: . New York City health and hospitals corpora- 

: : tion, as hereinafter providad, is in all 
; : respects for the benefit of the people of 
: the state of Rew Yorkand of the city of New 
: York, and is a state, city and public pur- 

pose; and that the exercise by such corpora- 
tion of the functions, powers -and duties 
as hercinafter provided constitutes the 
performance of an ‘essential public and 
governmental function," 

NOW, THEREFORE, if is agreed: 

ARTICLE I 

: LEASE 

bh} 

yin HR Section ¥.1...In RETO with Section 7 of the 

Act, the City leases to the Corporation at an annual rent of 

: | 81 for 3 term co-existent with_the life of the Corporation 

commencing at 12:01 A.M., E.D.S.T.,. July 1, 1970 (herein 

called the "effective date") for use in the execution of the 

: corporate purposes of the Corporation all of the following _ 

| hospitals, including the equipment and property contained 

? thercin or used in connection with the operation thereof, an 

: inéluding any building, structure, unit or any improvement 

ne 

 



  

wwe 

AIL (hin LH 

$ ’ | FH i oi 

A @ 
4 . re 

. . oh [] 

to rcal property, all neceusary and vsual  atrcencant aud 

related covdpnent, facilities and fixtures thereof ox any 
LJ 

* . 
\ . . 

combination ox combinations thereof. The only hospitals 

lcased hereunder are those being operated on the cffccective 
aii 

  

date by the City ang do noi include any building or build- 
  

ings now being constructed a an ~addition to or replacement. 
ea ———C —————— pt 1s 28 Be 

wf mmy of the named hospitals nor any of the areas surround- 
——— 

— pe ———o———— pm
 So eres 

- ' . ! | 
ing Such) building or buildings which are being used by : 

hs contactor during construction, but the City agrees—that 

it vill lea se ‘such riidl ngs and areas to the Corporat Aon 
  

upon their completion in accordance with the feyng of this 
  

agreement. 

" Manhettan 
  

Bellevue Hospital Center 

Harlem Hospital Center 

Sydenham Hospital 

Francis Delafield Hospital 

Goldwater Memorial vesbitnl 

Bird S. Coler Memorial Nospital 

' Metropolitan Hospital 

—
 

a
m
,
 

- 

Brooklyn 
  

Coney Island llospital 

Kings County Hospital Center 

Cumberland Medical Center 

Greenpoint Hospital 

 



  

$a
 

Ouveens 
Bsmt i 

City Houspilal Conter ot Dlhurst 

Ducons Borpital Contor 

Bron 

Bronx Municipal Hospital Center: 

+ Fordham Hospital | | 
{ 

| * . [3 

+ Morxrisenia Hospital | 

Lincoln Hospitel 

  

" Richmond 

Seaview liospital and liome 

In addition, the City hereby transfers to the Corporation as 

of the cffective date all of the supplies and materials con- 
LJ 

tained in the above meéntioned hospitals, 
- _— 

Section 1.2. The City hereby leases space at 125 

Horilt tvedt; Manhattan, and 346 Broadway, Manhattan, to the 

Corporation. Both wyoRlies ave owned by the City. The space 

leased. ls hereby set forth in the attached Schedule "A". 
. i 

. 
Ad 

These leases of the aforementioned space may be terminated 

by either party upon six months' notice. 

Section 1.3. The City hercby assigns its leases 
  a 

to the following property, which property is presontly * 

leased by The City of New York for use by the Department of 

Bospitals in connection with or incidental to the operation P : 

 



    

\ 

¥ . [| ‘ : 1 = ! 

' Sd. ur . Y : I 241 Church Street, Ravhiattan, op! fourih 
; and fish floors : : 

uw Lafayoeite Street, Manhattan, part of the 
i #ifth floor 

Joc dd Vest 1284h Strect, ‘Monhattan, the. entiyc 
building consisting of three floors uscd 
by Harlow liospital as a psychiatric anntd:: 

y 313-15 Vest lz5¢h Sttran, Manhattan, two floors 
used as a laboratory in connection with 

the Colunbia-larlem affiliation contract 

2006 ritkin Avenue, Brooklyn, ambulance garayc 
presently used by the Department of 

+ ~~ llospitals as an ambulance station 

i280 Basi 100th Street, Bronx, two ambulance 

garages presently used by the Department 
of Hospitals for an ambulance station 

1152 Randall Avenue, Bron», motor vehicle 

: -xepair shop 

1165 Morris Park Avenue, Bronx, entire third 

and fourth .floors used as a Piychintese 
clinic 

td 

The Corporation agrecs to be responsible for the rentals of 

the above mentioned properties. Atiabhed hereto and made a 

part of this agreement, marked Schedule ipeids a schedule Tn 

of caid leascd properties and their rentals. 

bo! : 1 

Section 1.4. Fhe Corporation accepts the hospitals, 

the equipment and any other supplies and property incidental 

to or necessary for the operation of said hospitals and all 

Sthet real property, including the real property which is 

presently leased by The City of New York and uscd by the 

Department of Hospitals in connection with or incidenta 

© 

to the operation of such hospitals, in its condition as of 

the effective date without warranty or representation 

 



  

of the City, subject "to existing encumbrances and loses = 

affecting such property. The Corporation agrees to naintein 

211 property vihich is the subject mattor of this sgrociiint 

A) 

as wil) enable its continued use, including the yard:r, areas, 

fences, railings, sidewalks and any and all of the adjacent 

property that may be part of any of its premises and all 
; : 

- connections with the street, sewer, steam, water, electricity 
- 

gas, power and the elevators, boilers, machincry and cach 

and every fixture used in connection with the use or opoera- 

tion of any structure or building on the subject preniccs, 
LJ 

Section J.5. ‘The Corporation shall not acquire 

- by: deed or Jeasc any rcal property without the prior approval 
    — 

of the | Mayor, nor shall the Corpo ra tion acquire by gift any 

real property which will impose an additional burden vpon 

the City without such approval. 
4 \ | ® 

\ : 
4 > : -— 

’ 

 



  

ARTICLE 11 
i. 

t 

CONDIrY0S Or SLnvICE 
  

« a y 3 
Section 2.1. The Corporation acknowledges th.:t 

€hc hospitals under its jurisdiction and the services 

.that it will render are particularly for those who can 

» least afford such services. 

ta Section 2.2. The Corporation agrees that the 

services that it shall render will comply with all applicabla 

‘governmental rules and regulations, and further agrecs to 

conform to the standards implementing Titles XVIII and MIN 

of Public Law 89-97, and further adrees to render services 

in accordance with Section 6, subdivision 7 of the Act. 

Section 2.3. The Corporation shall operate the 

facilities under its jurisdiction consistent with the 
SN . 2 

standards promulgated by the Joint Commission on Accredita- 
| -— 

tion of Hospitals and Council on Medical Education of the 

American Medical Association, where appropriate. 
. 

° 
* 

Section 2.4. The Corporation, recognizing that 

heretofore the municipal hospitals have rendered services 

to vorious agencies of The City of New York, agrees to con- 

tinue these services. Payment for said services has becn in- 

cluded in the Expcnsc Budget for the fiscal year commencing 

July 1, 1970 and will be .included in future expense budgets * » 

 



  

Ts EL Tg la . : i. . . . 
; ' s : { ; Y o het et i 

! : 9 
- to the extent that reimburscnent for said services is not 

v iy I 

provided from any other source. 
.« : g No 

Section 2.5. The Corporation agrees to provide 

any additional scrvices required by the City not hereto- 

fore rendered by the municipal hospitals provided that when- 

.ever the city requires the corporation to provide sich 

health and medical services to persons in the city, ithe 

city shall pay the corporation for the cost of such scrvices 

as. are actually rendered, such cost to be determined by 

agreement between the city and the corporation; provided, 

however, that such payments shall- only be made hy the city 

to the extent that no ye lnburaimt allowances or other 

payments are paid to the corporation from any other govern- 

ment or other sources for the payment of such costs. 
\ 
\ . | 

Section 2.6. In order to assure continued State 
-— U 

reimbursement -of psychiatric and other mental health ser- 

vices, the Corporation agrees to provide said services in 

accordance with Section 8-A of the Mental llygiene Law and 

the regulations promulgated thereunder by the New York State 

Department of Mental Hygiene, or any amendments thereto. 

 



  

- \ . 1 
: ' 

| ARTICLE .LIT | 
' \ “oo : ‘i, 

8 SERVICES TO BE RENDERED BY CITY 
AGENCIES TO THI CORPORATION 
  

\ 

\ " 

Section 3.1. Pursuant to Section 5, paragraph 

19 of the net, City agencies may continue 16 solder: sank 

vices to the Coxporaks on in order for the Corporation to 

carry out 168 purposes. These services will be rendered: 

| by agreaient between various City agencies, including the 

Comptiyoller, and the Corporation, and pursuant to the Act, 

subject to approval of the Mayor. The cost of such 

services ie to be charged to the Corporation and paid 

from funds appropriated to the Corporation for such pur- 

. poses. 

 



ARTICLE 1v 

Ory icy Or ir So Onhcy COUNSEL 
"i 

  

\ . 

| . 
Section 4.1. The Corporation Counsel. shall be the 

attorney 2a ‘the Corporation so leng as the City's budget 

contains an appropriation for the Corporation. In the VAD 

of a en of interest between the City and the Co¥pora- 

ton, however, the Corporation shall retain its own counsel. 

Nothing in this Ariicle shall prevent the Corporation from 

hiding its own ZEtomey. or from ehploying chteide counsel 

"whene voY the Board of Directors of the Corporation deems it 

desirable. |Such appointment will be made only in accordance 

~~ with daw /and after consultation with. the Corporation -Counsel. 

Section 4.2. The Corporation Counscl, in his dis- 

  

cretion, may appear, or direct any of his assistants to 
’ 

Ll} 
id i Ld LJ - eo ’ [J . Ad appear, in any action or proceeding, whether criminal or civil, 

| 

. c— 
— 

vhich may be brought against any officer, subordinate or em- 

ployee in the service of the Corporation, by reason of any 

88 Tories omitted by’ such’ officer, Suboralinats or employee 

while in the performance of his duty, whenever such appearance 

is requested by the President of the ‘Corporation or whenever 

the Snieroshs of the City require his appearance. The Presi- 

dent shall bubmie all pertinent papers with other documents 

to the Corppration Counsel.  



ARTICLL 'V 

! 

COLLECTIVI BARGALIIING AGRVLL: 
    

| 

\ 

"Section Bide IN all instances where collective 

bargaining 3 being conducted with certified cmployee 

organizatiols’ and bargaining units of employees whose titles 

and dutics dio substantially unigue to the Corporation, such 

collective bargaining. negotiations shall be conducted’ by the 

on Labo Relations of The City of New York jointly 

with representatives of the Corporation. Such agreements 

shall he effective upon approval by the City on economic 

matters and by the Corporation on non-econcmic matters. 

| 

Section 5.2. In all other instances where nego- 

tiations are being conducted with certified employce organiza- 

tions aud bargaining units of employees of the Corporation 

whose ‘titles and duties are no substantially unique to the 
« a— 

-—— Corporation, the Office of Labor Relations of The City of 

New York shall bargain for and approve agreements on behalf 

of Lhe Corporation. | The. parties agree that there will be a 

continuing liaison between the Office of Labor Relations and 

the Porrcraras with regard to any’ Special problems of 

hospital operations which may bear on the negotiations then 

in progress. 

Section 5.3. In all cases where a dispute arises 

as to whethel or not the titles and duties of the employees  



  

| 
K ' t br 

con®    
: . as er / 

Colleclive Bargoining of The City ©f Now York whose decision 

30d arc or arc not substantially uid to tho Cor= 
- é 1 

poration, such dispube shall bo submitted to the O7fice of 

of 

jo : ar 
shall be final and binding. . 

i") ha skction 5.4. The method of financing the cost 

r any collective bargaining agreement will be the subject of 

mem pm en : {== bese mri 

[4 b : 

g 

| 

| 

. 

IS [ . 
. 

~ | 

TW pr ST . ¢ — ES . as 

  

. P E—— c— 

negotiations between the City and the Corporation. 

- at = LE



; < . . - 

t . 

ARLICLE Vi . 

  

Se vi INDEYNIFTCLITON 
  

“Section 6.1. The City agrees to keep, save and 

hold hariless the Corporation from any and all liability, 

loss or damage arising’ from-or in connection with the pro- 
. . 

[J 

pi vision and delivery. of health services, including any lia- 
/ \ —— 

/ Ie. 2 i . 7 

frie / bility unex ‘the Workmen's Compensation Law. The City will 
    Sg 5 
als eos) save and hold harmless the Bitoctirs, merhbers, 

otfidery or agents of the Corporation from any act done or 

omitted in good faith and with ordinary discretion pursuant 

- to dis by- lavs, rilice. regulations or statutes governing 

the Corpoiniton. IL is the intent of the parties that, such 

exoneration of liability be consonant with the privileges 

afforded to the aforementioned pursuant to Rew York City 

™N, he Charter Section 1724. 

4 rs ; Section 6.2, The City further agrees {o keep, 

oe save and hold harmless ,the Corporation and its physicians 
{FAN et : : : : : rE 

and dentists, as well as the medical schools and voluntary 

hospitals win whom the Corporation has an affiliation agree- 

ment. by als signment from the City or otherwise to operate the 

hospitals transferred to the jurisdiction of the Corporation, 

from any and all liability, loss or damage for malpractice 

of the Corporation, its Phys sicians and dentists, arising » 
* 

from the operation or supervision of the hospitals transferre 

 



SRR SE Ale : Jd 
C3 : ; | 

9, ‘ 

- * 
[] : 

ys 

to the Coxjporaetion, or the malpractice of the physicians and 

  

dentists of the wadical schools and voluntary hospitals oc- 

3 . 
\ p S 

. 

: curring auring the performance of the affiliation agreements 

existing now or hereafter with medical schools and voluntary 

hospitals for medical services in the hospitals named in 

Article 1. 

The foregoing shall not apply to acts pexformed at 

the medical school or voluntary hospital or apply or inure 

fo tho BERnZLL of any physician or dentist who shall charge 

a fee for his services whether or not payment is made directly 

to him or not. Hotovor. a physician or dentist, who, at the 

direction of the Corporation, exccutes an assignment: of his 

fee for the benefit of the Corporation shall not be decrivd 

to charye a fee. for his services hercunder. It is understood 

that the City shall fot bs liable for or obligated to defend, 

save harmless or indemnify the medical school or voluntary - 

hospital or its physicians or dentists against or from any 

claim arising out of amy act or omission on or at the 
2 LY . : 

premises of the medical school or voluntary hospital. 

| The foregoing is conditioned upon each of the 

following: 

1. ' The Corporation, its physicians and dentists, 

and the medical school or voluntary hospital and its » 

physicians and dentists, shall promptly forward to the City 

 



e 
i B . . x 

i. 

  

i 

t . : Jud 
' 

all swaeaonces or notices of whatuoever nature, pertaining { 

Claims rogeived or sorved upon thom or cach of thom, 
\ 

. : 
1 . 

» 

2+ The. Corporation’ and cach of ‘its physicians 

and dentists, and the medical schools and voluntary hos- 

pitals and their dentists and physicians, shall cooperate 

fully in aiding the City to investigate, adjust, scttle or 

defend cach claim, action or procceding. 

—
—
 
—
—
 

—
 

- 

\ 

: 3. The defense of all claims, actions and pro- 

ctedinys within the purview of this Article shall be con- 

ducted by the City. The Corporation Counsel of the City 

shall Aron and defend such actions and proceedings on be- 

half of the Corporation, -its physieians and dentists, the 

medical. schools and Vol untaxy hospitals and their physiciar 

and dentists. 
® 

No settlement shall be made without the approval 

of the City, including the Comptroller, and in accordance 
  

  

with'procedures previously employed to settle actions invo! 
hb) . 

municipal hospitals. 
L} 

In the event of any appeal from a judgment agains 

Ed the Colborntich its physicians and dentists, or the medic: 

schools or voluntary hospitals and their physicians and der 

tists, ‘the City will promptly satisfy the judgment or stay 

the execution thereof by filing the appropriate bonds or 4r 

struments, so that exccution shall not issue against the 

property of the Corporation, its physicians or dentists, o: 

 



.. Se: cit 7 5 
: 2 » 

  

againct the property of the medical schools or voluntary 
- 

’ 
J j | . . Ud . * 

hospitals and their physicians and dentists. ~~ 

8 i is understood that the City is not obligated 
SS 

£0 save haa 

K
Y
 
Y
N
 nmless or indemnify the medical schools or volun- 

! tary hospitals or their physicians and dentists as well as 

"the physicians and dentists cmploycd or associated with the 

‘ cdrporation as a result of AY act committed by them, 

tortious or otherwise, other than 2B act of malpractice or 
FT 

an act arising out of the treatment of patients. 

| 
Liv, vl The Corporation shall in no vay increase the li- 

* 

~*. ability of ‘The City of New York pursuant to this Article by 

agreement with its employces,. officers, directors or with 

\ 

third parties by increasing the scope of its own liability 

for the actions of its officers, cmployces, dircctors and 

third parties. | | ; i” 

 



CARTICLY VII 

REIMBURSEMENT ALLOVANCES 
  

\ * 

. . 
\ 

» + Section 7.1, The Coxporation shall apply for and 

receive all reimbursement allowances or other moneys avail- 
L 4 

able to iho Corporation froin any sources fox the provision 
LJ 

-of health 2nd medical services for vhich such reindbursenent 

allowan Ces ox other moneys are avaldlable through or in the 

Lio : . ; i 
LJ \ * : » ] 

facild ties of the Corporation and such reimbursement allow- 

\ 

ances o) other moneys shall be collected and rcceived by 

the Corporation directly from any such sources and used by 

the Corporation for its corporate purposcs. 

ARTICLY VIIX 

PROPERTY TO DRE RETAINED BY THE CITY 

AND INTERIM PFI INZNCTIC a Sa 
» 
  

Section 8.1. . All property, including cash or =~ 

choses in action, under the jurisdiction of the Department 

of Hospitals of the City at 12 midnight June 30, 1970, which 

is not part of the leascd property shall be retained by the 

City. except such property as is included in Section 1.1. 

$33 woitvs duc to The City of New York relating to and in 

connection with the operation of the Department of Hospitels 

prior to July 1, 1970 shall be transferred to The City of 

New York, -including but not limited to all unexpended moneys 

repayable to The City of New York under affiliation agree- 

Ha Bs tormi nating on June 30, 1970, moneys derived from 

patient fees, reimbursement from private partice or govoern- 

-  



  

® | : » : 
vs : [4 

: . 
< 

) . he 
. ‘ 

¢ 9 . 

asntal sources, roentels or .fecy charged for concessions ov 

privileges, 
* : \., 

: ) 

++ Section C.2. Interim financing arrangements will 

be made to insure cash flow to the Corporation consistcnt 

with the responsibilities of the City and the Coxporation 
: * 

under this 2greement i 

x 

| | | ki 

J 

: 2 

3 » 

¢ 

“ 

" * 

 



      

Ne 
ot 

{ ARTICLE. I 

. EXPENDITURE OF )'UIIDS BY THE 
CONRPORZLTIQOT 
  

——— 

Section 9.1. The City shull cach ycar provide funds 
    

in its oxpense and capital budgets for the Corporatign, in. 
  we i cm oe nt 

. 

‘consideration whereof the Corporation shall expend funds de- 

‘rived from any bhud¢eted source whatsocover iniconformity with 
: 

the budgets appropriated by the City and in Contant with 
  

- 

the ‘meiroranda of understand 
    
  

  
    

ing agreed upon by the Corporation 

  

    

        

and the Mayor of The City of New York. 
  

*-.- ~~ Secection 9.2. . The Corporation shall not make any 

payment for work done on any capital project unless fiftcen 

(15) days have elapsed after notice of intent to make such 

payment: is reccived by tho Comptroller of The City of Now 

York. The Compiroller shall notify the Corporation of any- . 

objections or reservations that he might have in regard to 

such payment, setting forth the reacons for such objections 
i LY - 

. 

kJ 

or reservations. Said objections or reservations shall be 

binding upon the Corporation, and no payment shall be made 

in excess'of the amount recorwmended by the Comptroller. 

 



  

ARTICLE X 
\ LJ 

DEFINITIONS 
  

Section 10.1. Whenever words defined in Sectien 

3 of the Act are used in this Agreoment, they shall be con- 

strued to have the ‘same meaning described in said section. ’ 

{ 

| ARTICLE XI 

HEADINGS 
  

Al Scction 1).1. The descriptive headings of the 

articles of this Agrcenaznt are inserted for convenience and 

reference only and shall not be construed to amend, modify, 

vary ‘or extend the meaning or construction of any of the 
® 

  

provisions of this Agreement. : i 

greet : ARTICLE XII 
i 3s. 

AMENDMENT 

(} 
‘ 

1} 

Section 12.1. This Agreement will be reviewed 

by the parties after twelve menths and may be amended from 

time to time upon the written consent of the parties and 

the approval of the Board of Estimate. 

 



f [] ' : > 

. {2 
. in . 

IN LESS VIIBTEOr, this hgrecoinent has heen auly 

  

“exccuted by the partics ac of the day and year first above 

    

         

  

  

, : , 2 
written. : : ag) 

. oi : FL AG EI 
toe : ~ fr. < 

[1] IC a >v AS 

xX T11 CITY OF REW YOR 

: A ; pu i ne’ : 
hk? : : ap som [28 Fo 

RA a By \p Naa ad 
vill a = 

gs NEW! YORK CITY HEALTH ARD 

~ , HOSPITALS CORPORATION 

7 # ~wv ois \ Somme SE : 

By ey WZ A ¢ —— > 32 Wikia: 
Inc——— 

ps 

  

| mn — Oo c——— Sees —_ rn — 

ESSE lo wand Presiden 4 i, Tl i 

   ATTEST: 

RE i 

City Clcrk 

Fat i AE A Ein ail 
  

. | ’ 1 

APPROVED AS TO FORM: 

N 2 -— 

  

  

Corporation Counsel 

  

 



® bo | @' 
suai; OF REV YORK 

  

yo. : 
CITY OF REW YORK th 8S. . : ve 
cCouMry OF NEW YORK ) ‘ 

‘ : . : . : . C i 

: «On thig /2C day of July ry 1970, boforo me per- 
| 

sonally canic JOIR V. LINDSAY, to me known, who, being hy ne 

duly sworn, asa depose and say that he resides at Cracic 

Mansion, PRorough of Mana TEen; City of Rew York; that bo iE 

‘the Mayor of The City of New York, the municipal corporation 
: peng : . : 

: : | described) in and which exccuted the totisuing instrument; 
: : \ | 

: that he knows the corporate seal of The City of New York; 
: | 

4 : i . - 2 ° . : ° ° : 

that the seal affixed to. sald instrument is said corporate 

seal; that it was so affixed under and by virtue of the 

authority conferred on deponent by the Board of Estimate 

of ‘She City of Row York, and that he signed his name thereto 

by virtue of like authority. 

L 
4 

  a / ty Vs Sl, rr nll 

: 
YALRY RITA RHEINWALD . : : HOH PinliC, Site of New Yorx i 

fin tem, £28500 | a : Certificeie filed in Kizhmend York Coup ov 
Commission Fxpires arch 30, 1872 

- 
- 

 



    
' + 

Sarl 01 BlEv YORK ) 4 ; 8 - 

CY. OF Kz YOR, 3. 55.3 

COUNYY OF Ri YORR ) 

. A : 

- ps  } 

Ble On this: Joy day of Jey + 1970, bofore 

ne personally caine JOS P11 ENGLISH, to me known, who being 

by me duly sworn, 48id depose and say that he resides at 

157 Last 7st Tiros, Row York City, NHN. Y,. Apt. l-R 

  

: 

that ‘he, is the President of the NEW YORK cry HEALTH AND 
A | j | 

HOSPITALS cor wi 0i, ‘the corporation described in and 

fev : 
which executed the foregoing agreement; that he knows the 

scal of said corporation; that the scal affixed to said 

agrccient is such coxporeaete scal; that it was so affixed 

by order of the Board of Directors of said corporation, 

and that he signed his name thereto by like order. 

[3 

- p) 

sly as i He. 4 ae ZL LON xX 

yi i bo cIVA OF Fis Ai val 1) 

0 . pI FI, Sen el Nr Vers 

. ? a : 4 dr FA | Sah MILE SIDI 

} ° : . ly Cz "tical ta tiled in Richmond 53 Baus 

: Coinmission Crniics Wolk 29, 37 

FS 

. 
» 

* 

4 

 



SCHEDULE 2 
  

  

  
SCEEDULE Or CITY PROPERTY LEZSED TO TEE CORPORATION 

  

  

  

  

: Roons Rooms : ROOMS 

Location : First FloOY Fourth Floor : Fif+*h Floor 

125 Worth Street 3, 2,103, 4, 41), 412, 413, 414, 500 ,: 501, 503 

Borough of Manhattan wD By Ty 8, 9, 415, 416, 417, 418, 504, 505, 505, 

: 10; 11}, 112, 419, 420, 421, 422, 507, 508, 509, 

113,.14,: 16, 423, 424, 430,43) 510, 510A, 3511, "™ 

17, 28 and Large 512,°S13, 5133, 

waiting and cleri- 514, 315, 516, 

cal room -.no num. i | 517, 518, 519, 

ber, two eto-zge ) 830,521, 522," 

rooms, one pnoto : Ei 523,:524, 5259, 

*o0; One fincer~ : : 526, 527.2528, 

print room, mez- : : : ; 529, 530,521, 

zaninc office = : 532,533 "5 

no rocCm NUKDErXsS. 

Ld 

r 

ROOMS = : Rooms 

Location .Fifth floor Eleventh Floor 
  

  

  

345 Droa€vay 5 ; . 

£ Manhattan 5 Entire floox ~ Entire West Wing of ‘Building 
Borovgh ol M 

a or i om Ron @ 

H 
a 
4 

' 

 



  

NY
 

  

  

SCHEDULE OF CITY LEASES ASSIGNED TO THE CORPORATION 

Board of Estimate 

  
  

  

  

Resolution Current 

Borouah Location Date Cal. No. Rent 

Mznhattan " 7341 Chuwch Street 7-28-66  -41) $104,802.45 

mae 2yonxk 

Brooklyn 2006 

© Avenue 

5-22-68 192A 

5-22-68 1928 

7-28-66 445 

4-25-68 - 114 

7-25-68 73 

2-18-70 225° 

10-25-67 ® "429. 

17,056.10 

3,029.65 

85,117.50 

10,350.00 

118,000.00 

. 10,109.00 

11,750. gy 

  

e



  

: MEORANDUYS OF AGRULMENT BEYWLRET NEW 

Yin YOU C19Y UHEALWH RR HOSPLT/1LS COR 

PORETLON AND THE CITY OF BL YOPR } 

ae RELATING 40 CAYITAL EXPERDULURILS 

: BY ‘THE COIPOIATICH ~- 

WHEREXS, purswnt to Chapter 1016 of the lave of." 

1969, an agrcement has been subiitted for the approval oi 

the Board of Estincte between The City of Kew York anc the 

Rew York! City lLicalth and Hospitals Corporation: and ; 
. [1] 

! 

WIEREAS pursuant to Article IX of said agreeicont 

the Corporation and the City agrce that appropriations to 

the” Corporation are to be included in the capital budget 

of Tho Clty of Rew York and that such funds and all fuids 

of the Corporation derived {from any budgetcd source vill 

be spent in conformity with the appropriation and in con- 

formity with the memoranda of agreement between the Corpora- 

£2on and The City of New Yorn, 

i kL 

oy] . . 
P 

ROW, THEREFORE, iL is agreed as follows: 

1. Capital Budget Reqguecst 

- 

Prior to Scptember 15, the Health and Hospitals Corpora- 

  

tion will submit capital budget reguests and supporting 

information &s required by the City Planning Commission, 

the Budget Burcau and the Health Services Administration, 

 



. | ee 

  

<, . 
i t ; od 

Tov: Fort of thy svasinsion will body confovis iyrvith 

capital bhudoetireguiroin ants of Yhe City, 

    

  

. i . 

A 

2. Copitdl budget administration 

a. Current Projects 

; LJ 

i Those projects under Dzpartiment of Public 

ar {ty Works jurisdiction will continue as at n 

| 
present but with the Corporation actiina 

. l bo 

as Clicyni, rather than the laalth Scrvl: 

ces Néninistration, oxcept as othexwizo 

agreed. 

1i ho Coxparationivill bocome theucliont 

for projcois currently ander construc 

tion by lecalih and Mental liygicene 
. ? 

Facilitics 1mprovenent Corporation 

ONIFIC), swhicet {oa protocol to be 

oi agreed vpon by the City, the Corpora- 
: " ; . 

tion, and NIMIPIC, 

b. Multi-Project Lines 
  

- 

Items included in multi-project lines, inclu- 

ding funds for general planning and personnel, 

«will bo administered by the Corporation on 
IN 

the basic of blanket certificates issued py » 

the Budget Bureau, The certificate will 

identify aud cstablish a cost limitation 

 



: '@® ¢ 

ih 
4 "9 

lira vers) Tt eh ocoo I wT A SI Re JErZoproachh ad ton charged against the coril 

  

ficate, subjoch Lo Yh provision that: 

. | Jor ; 

. . ) 

iy WT oh 3 Por por cont of the funds within 

each multi-~projece line will be 

‘reserved for non-delincated items; 
) ’ 

however, no such item with a cost 

| “estimate in excess of $50,000 nay 

be financed from this non- 

- 
ea

m 
S
—
 

—
—
 

ois delincaiod yesorvo \Wwilens it ic 

first approved by the Ludget 

Burcau. 

33 The Corporation lay increase the 2 

cost of any approved item by an 

amount not to exceed 15% without 

prios; approval of the budget 

Burcanu, subjoct to the total a 

: limitation of the certificate. 

re All such Bey ehinus will be ye- 
: hi 

~_._ported to the Budget Bureau, 

Oe New Projects 

  

  

i tate Projcets. Row projects assigned 

to HMIUFIC, will follow the terms sot 

forth in Budget Burcau Circular CS-19. 
. 

"~ 

ii Other New Projects. Al). other new pro- 

jects will rprocuod as follows: 

 



  

t ! : "9 

(a) Prior approval by the Dudget Bureau 

shall be required of the functio:.) 
\ 

&nd space programs and cost esti- 

= EE PR mate for each facility before an 

architectural contract is entered 

! 0 

into by the Corporation. 
. { 

i ° . . 

(b) The Corporation ay utilize exisi-- 
. . { : 

ing City or State architectura 

.~ 
—
—
—
—
—
—
—
—
 

c
w
 

: fce schedules or dcvelor new ones 

subject to the approval of the 

City. Budget Bureau approval of 

the architectural contract is 

not required, as long us the con- 

tract is in accordance with an 

approved fec schedule and within 

the approved space program and 

cost estimate. 

. . : b . : 

(c) After initial Budget Bureau approval of th 

functional and srace program for a project 

only major changes in a program and increec 

in tho basic cost of a project more than °f 

will require Budgct Bureau approval. A 

» major change in a functional or space 

JHE : program is defined as one which chinges th 

nuber of beds, operating rooxs, or tic 

amount of a given health sexvice by 

 



  

(d) 

(c) 

a
y
 

. 

E
>
 

\ 

20% or thie adwrwion of non-progrs mG 

hoalth soyvicon that will Ancyeoono Lic 

gross operating expenses of the . 

facility. ' 

Hhe Corporation shall subuit beth 

schewatic drawings and prelimingiy 

spans Lo %ho budget Duraau for 

sinforretion, -¥nese documents will 

reuuvire Budget rend approval only 

3% the cs timated construction cost 

cxcreas 105% of the previously 

approved concliruction estimate 

or involxes major changes from the 

previously approved functional end - 

space program, 

At the time of review of preo- 

liminary plans by the Dudget 

Burcau, a cost limitation for 

. the project will be established 

basad upon the latest approved 

estimate including appropriate 

escalation and contingency 

 



  

-
 

  

‘® : 

[4] 

\ allowance. If, after final plenn © 

are completed or vhen bids are 
\ . 

taken, the cost limitation is 

exceecqod, Dudget Durcau concur ie: co 

@ - y id i. - ¢ 

will be required pric to kidding 

~ 

or awarding of contracts for eoin- 

struction, | 
\ 

| (£) Change orders during cons tructio: ~- 

i . ‘arisi ‘yor other than field co: : i i rising from otl t) fiel 

) 

ditions or architectural error ox 

omission =~ shall reguire Budget 

Bureau approval if they involve & 
. 

~ : ; 

change of morc than 5% in the 

arount of any construction contract, 

or inwolve addition of health sci 

sm vices not in the approved prograni. ~ 

: 4. 'hdvance of Funds 
Wr ——   

. | . 

a 

(a) Advances. The City will make quarterly advances of 
  

+ funds to the Corporation pursuant to certificates 

issued by the Budget Bureau. The amount of each 

advance will be based on a& spending schedule sub- 

mitted by the Corporation. 

{b) Copies of all capital project contracts will be for 

warded by the Corporation to the Budget Bureau and 

the Comb troller, 

 



  

+ : 3 : 
. 3 

<, 

t 
- 

i Interna) Cos nyy IE _imd liepor 1 

(ny Sp in 5 7 Ne iy “i nN ved ~~ .e SP . . 20) cars 
Te Corntvratio: vill maintain approprialc £0CCol ie ant 

wil oe respunLible for providing monthly infor: tlacn 

on spunding against upproved capital projecls to Uh 

.Budoet Bureau nd the Comptroller. ‘ 

H 

G. Jidniecosasue Informe tion Svsten | 
in 8 eS Si 2 HE San mp 4   

i 
; 

3 

: ine Corporation will establish Ar Sperats a coviinl 

projects mancgeagnt information system which wiil pines 

vide data on capital projects as rcasonably rcjuvirad 

by the Budget Bureau, 

\ 

IN MITINESS WN rEoy, ths vig have Quly cxecuted Lule 

> e 

agreement on the ic Gay of Bi 1970. 

/ 

  

  

New York City lealth and losp 
Corporation 

7 i 
S~ "» 

ka REI . 
. L— 

PPR Te RE 
/ 

N\ 

   



  Exhibit C  



CITY COUNCIL “® rau Jan 9.96 4 “Lelia 

| PHASE TT CorTan oF 

# 773-000 2 

  

   
  

  

FINANCIAL ADVISORY SUPPLEMENTAL AGREEMENT (the "Supplemental Agreement”), dated as of August 1, 1995, between NEW YORK CITY ECONOMIC DEVELOPMENT CORPORATION (the "Corporation”), a local development corporation pursuant to Section 1411 of the Not-for-Profit Corporation Law of the State of New York, having an office at 110 William Street, New York, New York 10038, and J.P. MORGAN SECURITIES INC. (the "Financial Advisor"), a Delaware corporation, having an office at 60 Wall Street, New York, New York 10260. 

The Corporation hereby engages the Financial Advisor to act as the Corporation's exclusive financial advisor with respect to the sale, transfer, conveyance or other disposition of, ia one or a series of transactions (which may include or take the form of the execution of management contracts or leases in respect of) (each, a “Transaction” and, collectively, the “Transactions"), Coney [sland Hospital, Elmhurst Hospital Center and Queens Hospital Center (each a "Hospital" and, collectively, the "Hospitals"). This Supplemental Agreement supplements and, unless 

the Corporation and the Financial Advisor (the "Advisory Agreement”), which shall be deemed a \ part hereof as if fully set forth herein, Certain capitalized terms used and not otherwise defined herein shall have the respective meanings given thereto in the Advisory Agreement. 

The Financial Advisor agrees to undertake certain Transaction Services on behalf of the Corporation, including to the extent requested by the Corporation: 

(i) performing valuation and financial analysis of each Hospital; 

(i) designing appropriate strategies and financing structures for each Transaction; 

(i) identifying buyers, contacting buyers, preparing marketing materials, supervising due diligence reviews and assisting the Corporation in negotiating each Transaction, as directed by the Corporation; 

(iv) assisting the Corporation in its selection of other advisors and business brokers, if appropriate, in respect of each Transaction; 

(v) assisting the Corporation in analyzing financial offers received ig respect of each Transaction; 

(Vi) assisting the Corporation in negotiating the financial terms of each Transaction; 

(vil) assisting the Corporation in reviewing and commenting on the business terms of all documentation to be executed in connection with each Transaction: 

 



    CITY COUNCIL | oh Jan 9,96 '® No .002 P.O9 

«3d 

(vil) assisting the Corporation in finalizing the terms of, and advising the Corporation 
through consununation of, each Transaction; and 

(x) performing such other services and functions as are customary in Transactions of 
this nature. © 

As compensation for the Transaction Services to be provided by the Financial Advisor hereunder, 
the Corporation agrees to pay to the Financial Advisor (i) a retainer fee (tbe "Retainer Fee"), 
payable quarterly in arrears, in an amount equal to (2) $50,000 per month until such time as the 
first Transaction hereunder is consummated, (b) $33,333 per month thereafter until such time as 
the second Transaction hereunder is consummated, and (c) $16,667 per month thereafter until 
such time as the third Transaction hereunder is consummated and (ii) a Transaction Fee for each 
Transaction as described below (the "Transaction Fee"), payable with respect to each Transaction 

in cash upon the consummation of such Transaction. 

The Transaction Fee for each Transaction referred to above shall be in an amount equal to 
$1,000,000 per Transaction, less the pro rata amount of Retainer Fees in respect of such 

Transaction (i.e., $16,667 per month) actually paid by the Corporation during the first year of the 
Financial Advisor's engagement hereunder, 

In the event any Transaction is consummated within 12 months of the date hereof, the Transaction 
Fee for each such Transaction so consummated shall be increased by an amount equal to 
$150,000 (such amount, the "Incentive Fee"), payable with respect to each such Transaction in 
cash upon consummation of such Transaction. 

In the event definitive terms are finalized in respect of any Transaction and memonalized in a 
letter of intent or other comparable document within 12 months of the date hereof, but such 
Transaction is consummated after 12 months from the date hereof, the Transaction Fee for each 

such Transaction so consummated shail be increased by an amount equal to the Incentive Fee; 
provided, that such Incentive Fee shall be reduced (to an amount not less than $0) by an amount 
equal to the pro rata amount of Retainer Fees in respect of such Transaction (i.e., $16,667 per 
month) actually paid by the Corporation during the second year of the Financial Advisor's 
engagement hereunder. 

Each Transaction Fee, together with each Incentive Fee (if any), shall be payable with respect to 
each Transaction in cash upon the consummation of each such Transaction. 

Unless this Supplemental Agreement is earlier terminated or extended by mutual agreement of the 
parties hereto, the Financial Advisor shall render the Transaction Services until August {, 1996. 

The Corporation agrees to provide the Financial Advisor all financial and other information 
requested by it for the purpose of its assignment hereunder. In performing its services hereunder, 
the Financial Advisor shall be entitled to rely upon and assume, without independent verification, 

 



    

CITY 2&2 No .002 P.10 ra an 9.96 17: COUNCIL “® a bY, iia '® 

the accuracy and completeness of all information that is available from public sources and of all information that has been furnished to it by the Corporation or otherwise reviewed by the Finaacial Advisor, and the Financial Advisor shall have no obligation to verify the accuracy or completeness of any such information or to conduct any appraisal of the Hospitals. 

Any financial advice rendered by the Financial Advisor pursuant to this Supplemental Agreement may aot be disclosed publicly in any manner without the Financial Advisor's prior written approval and will be treated by the Corporation as confidential, except to the extent disclosure is required by law. 

In order to coordinate our efforts with respect to possible Transactions relating to the Hospitals, during the period of our engagement hereunder neither the Corporation nor any representative thereof (other than the Financial Advisor) will initiate discussions regarding any Transaction 
except through the Financial Advisor. If the Corporation or its management receives an inquiry regarding any Transaction, it will promptly advise the Financial Advisor of such inquiry in order that the Financial Advisor can evaluate the person making such inquiry and its interest and assist 
the Corporation in any resulting negotiations. 

The Corporation shall pay to the Financial Advisor Out-of-Pocket Expenses incwred in the 
performance of the Transaction Services during the first 12 months of the Financial Advisor's engagement hereunder, in accordance with the procedures set forth in Section 2.01 C. of the Agvisory Agreement, in an amount not to exceed $50,000, unless otherwise agreed in writiog by 
the parties. The Corporation shall pay to the Financial Advisor Out-of-Pocket Expenses incurred 
in the performance of the Transaction Services following the first 12 months of the Financial 
Advisor's engagement hereunder, in accordance with the procedures set forth in Section 2.01 C. of the Advisory Agreement, in an amount to be mutually agreed in writing by the parties. 

The Corporation shall also reimburse the Financial Advisor for Out-of-Pocket Professional 
Expenses to the extent incurred by (and so agreed to be incurred by) the Financial Advisor to 
third party professionals retained by the Financial Advisor in accordance with Section 2.01 D. of 
the Advisory Agreement in an amount not to exceed 350,000, in accordance with the procedures 
set forth below. 

The Corporation shall require each third party professional firm or person retained by the 
Financial Advisor at the Corporation's request to submit to the Corporation and the Financial 
Advisor work-in-process expense statements on not less than a monthly basis during the Term. 
To the extent agreed to by the Financial Advisor, the Financial Advisor shall pay such 
Out-of-Pocket Professional Expenses (in an amount not to exceed $50,000 in the aggregate) 
when incurred. The Corporation shall reimburse the Financial Advisor for all such Out-of-Pocket 
Professional Expenses paid by the Financial Advisor within thirty (30) days of the approval (which approval shall not be unreasonably withheld), by the Director, of payment vouchers to be 
submutted by the Financial Advisor to the Director. Each voucher shall set forth in detail (i) 

 



   
CITY COUNCIL LEGH en

 

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—
 

+ 

itemized Out-of-Pocket Professional Expenses paid by the Financial Advisor, and (ii) the tota] amount of reimbursement requested. 

The Director shall review said vouchers and promptly approve the reimbursement to the F tnancial Advisor of each of the itemized Out-of-Pocket Professional Expenses set forth therein. If the Director disputes any payment of Out-of-Pocket Professional Expenses, the Financial Advisor shall, upon the Directors request, assign to the Corporation all relevant contracts, documents, correspondence and work product relating to the services for which the disputed payment was made. The Director shall be required to act reasonably in making such determinations. 

The Financial Advisor represents and warrants that, as of the date hereof, there is no material pending or, to the best knowledge of the Financial Advisor, threatened litigation, or contractual or other business relationship, involving the Financial Advisor which would prevent or limit the Financial Advisor from providing any of the Transaction Services requested by the Corporation hereunder, or which would. in the judgment of the Financial Advisor, constitute a8 conflict of 
agrees to inform the Corporation promptly if at any time during the term of this Supplemental 

Notwithstanding anything to the contrary contained in this Supplemental Agreement or in any Supplemental Agreement, the Corporation shall retain the absolute right to accept or reject, in its sole discretion, the terms, including financial terms, and conditions of any proposed Transaction. 

The Financial Advisor and the Corporation acknowledge that the consummation of any Transaction may require the consent or approval of third parties including certain Federal, State and local governmental agencies, entities and bodies. 

This Supplemental Agreement shall be governed by the law of the State of New York. 

 



   
- 

CITY 
Tan S.05 172% Nog Q02 P.12 COUNCIL LEGHL 1 A y : ; N t 

TT 

IN WITNESS WHEREOF, the Corporation and the Financial Advisor have executed ths Supplemental Agreement, as of the date and year above written, in triplicate, two counterparts of which are to remain with the Director and one of which is to remain with the Financial Advisor. 

I1.P. MORGAN SECURITIES INC. 

  

NEW YORK CITY ECONOMIC 
DEVELOP CO TION 

  

343 sc 

 



  Exhibit D  



    

$ | 
; » : 

' 1 

SUPREME COURT OF THE STATE OF NEW YORK 
COUNTY OF QUEENS 

CAMPAIGN TO SAVE OUR PUBLIC HOSPITALS - 
QUEENS CCALITION, an unincorporated 
association, by its member WILLIAM 
MALLOY, CAMPAIGN TC SAVE OUR PUBLIC 
HOSPITALS - CONEY ISLAND HOSPITAL 
COALITION, an unincorporated association, INDEX NO. 10763/96 Dy its member PHILIP R. METLING, ANNE 
YELLIN, and MARILYN MOSSOP, 

Plaintiffs, 

- against - 

RUDOLPH W. GIULIANI, THE MAYOR OF THE AFFIDAVIT CITY OF NEW YORK, NEW YORK CITY HEALTH DAVID R. AND HOSPITALS CORBCRATICON, and NEW 
YORK CITY ECONOMIC DEVELOPMENT 
CORPORATION, 

Defendants. 

COUNTY OF NEW YORK 

David R. Jones, being duly sworn, deposes and says: 

1. I am President and Chief Executive Officer of 

Community Service Society and serve on the Board of the 

York City Health and Hospitals Corporation ("HHC"). Purs 

OF 
ONE 

the 

New 

uant 

to the HHC Act,' HHC is administered by the board of 

directors on which I serve. I have served on the HHC Board 

since 1993. I submit this affidavit in support of 

plaintiffs’ opposition to defendants’ motion for an order 

granting summary judgment in their favor. The facts 

forth below are within my personal knowledge or are b 
  

' Unconsolidated Laws § 7384 (McKinneys 1996) . 

3 

set 

ased 

 



  

f " hd 
ij » & 

upon information obtained from officials and employees of the 

City, HHC, and the New York City Economic Development 

Corporation ("EDC"), books and records of these entities, or 

other public documents. 

INTRODUCTION 

2. In this suit, plaintiffs seek to ensure that the 

defendants undertake the legally mandated public comment ard 

review as they proceed with the disposition of the Elmhurst 

Hospital Center, Queens Hospital Center, and Coney Island 

Hospital Center (the "target hospitals"). 

3: The Uniform Land Use Review Procedure ("ULURP") is 

a@ procedure mandated by the New York City Charter for 

ensuring community, borougia, and City Council participation 

in the sale, lease or other disposition of city property. 

New York City Charter § 197-c. 

4. Defendants claim that ULURP is rot applicable to 

the disposition of the target hospitals because HHC, and not 

the City, is subleasing the target hospitals. I submit this 

affidavit to place into the record the facts to show that 

defendants are wrong. 

S., What is at issue in this case is the Mayor’s plan 

Lo lease the target hospitals to a private entity. The Mayor 

of the City of New York -- nct HHC -- decided to privatize 

the public hospitals. The Mayor chose to put the 

privatization plan into the hands of the New York City 

Economic Development Corporation. The Mayor decided that the 

 



  

« F 
" » t . ' I 

first three hospitals to be "sold" are the target hospitals. 

The Board of HHC has never voted upon, reviewed or formally 

discussed whethar to privatize the public hospitals or 
whether to dispose of the target hospitals specifically. 

THE HEALTE AND HOSPITALS CORPORATION 

6. The New York State Constitution mandates the State 

and its political subdivisions to provide aid, care, and 

support for the needy and to provide for the protection of 
the health of the inhabitants of the State and the City of 
New York. New York State Constitution Article XVII, Section 

Od
 

rR
 

oh
 

7: In order to fulfill this constitutional mandate to 
provide health care for the poor, on May 26, 1969, the New 

York State Legislature enacted the HHC Act, Unconsclidated 

Laws §§ 7381 et seq., establishing the Health and Hospitals 
Corporation. 

8. HHC was created at the request of New York City to 

provide comprehensive Physical and mental health care to the 
ill and infirm of the City, and was specifically charged with 
ensuring the provision of "high quality, dignified" care to 
"those who can least afford such geryvices.” U.L, § 7382. 

9. In order to effect the purposes of the Act to 

provide such care, HHC'Ss Creation was intended to overcome 

the "myriad of complex and often deleterious cecnstraints® 
which inhibited the provision of care by the City 
government’s operation of the municipal hospital system. 

 



tL [] x 

| » ‘i 

10. However, many of the powers granted te HHC were 

constrained, and in some instances, subject to direct 

cversight by the City. See U.L. §§ 7385{19); 73881) (a), 

(2) (Bb), (7); 73%90(5)- (8). Among these were the power to 

"dispose of by sale, lease or sublease, real cr personal 

property including but not limited to a health facilicy, or 

Bly ‘interest therein . '. . . '» U.L. § 7385(6). This 

authority was contingent upon approval by the then-existing 

New York City Board of Estimate. U.L., § 7385(6) 

11. On July 1, 1970, the City and HHC entered into an 

agreement ("Operating Agreement") under which HHC agreed to 

assume responsibility for maintaining and operating the 

City’s public hospitals. For its part, the City agreed to 

lease its hospital facilities to HHC for an annual rent of 

»1, for a term coexistent with the life of HEC. A copy of 

the Operating Agreement is annexed hereto as Bxhibit 1. 

12. Among the eleven hospitals operated by HHC, the 

target hospitals are intended for immediate disposition by 

the Mayor as part of his privatization plan. 

13. The public hospitals, including the target 

hospitals, provide a disproportionate amount of care for 

those who are indigent or uninsured. Private hospitals are 

just that -- "private." Under state law, private hospitals 

generally may turn away the uninsured and underinsured except 

in cases of emergency. Public Health Law § 2805-b.  



  

IR wie 
N 

® 

14. Queens and Elmhurst Hospital Centers are the only 

public acute care facilities in Queens. If they are 

privatized, there will be no facility in Queens that is 

required under state law to provide non-emergen:t care to the 

indigent or uninsured. Similarly, Coney Island Hospital is 

the largest facility in South Brooklyn, serving a population 

of 750,000. The privatization of this targeted hospital may 

result in the lack of care for many within its catchment area 

unable to afford private care. 

15. Queens Hospital Center Las existing plans for 

renovation and reconstruction. The "sale" of the hospital to 

a private entity could affect the plans for and completion of 

those much needed rzpairs and modernization. 

THE MAYOR'S PRIVATIZATION PLAN 

A, The Privatization Initiative 

16. As set forth below, in 1994, Mayor decided to 

privatize the public hospitals. The HHC Board was not 

consulted as to this decision. 

17. The Mayor has yet to forward evidence that 

privatizing HHC facilities would save the City money. The 

Mayor, not the HHC Board, requested from J.P, Morgan a 

feasibility study of privatization. Significantly, in its 

report to the City regarding the financial feasibility of 

privatizing the target hospitals, J.P, Morgan specifically 

did not consider the costs or benefits to the delivery of 

services to the indigent. A copy of the Report to The City of New 

 



  

AE ; 3 
NB 

® | | 

York Concerning the Privatization of Coney Island Hospital, Elmhurst Hospital Center, 

Queens Hospital Center (hereinafter J.P. Morgan Report] at 30, 

annexed hereto as Exhibit 2 ("The financial benefits to the 

City of New York, of course, also depend upon factors not 

considered in this analysis, such as conditions of sale 

relating to care of the indigent, provisions of services to 

the City and the like.") 

18. Nor did the Mayor provide evidence that the 

provision of care will be superior if the HHC hospitals are 

privatized. indeed, the medical care at HHC hospitals is 

already provided by private medical centers or medical 

corporations; the Queens Hospital Center and Elmhurst 

Hospital have affiliation contracts with Mount Sinai Medical 

School and Coney Island Hogpital has worked in partnership 

with University Group Medical Associates. D.C. ("UGMA"), a 

medical group that employs more than 300 physicians. 

13. From the inception of his extensive privatization 

program, the Mayor has exercised total control over the 

entire process. While on some cccasions, the Mayor’s office, 

often through Maria Mitchell, Special Advisor to the Mayor 

for Health Policy and Chairperson of the HHC Board, has 

briefed the HHC Board about City policies and plans, the 

Mayor has never consulted the Board. Indeed, the HHC Board 

has never voted to proceed with privatization. This affiant 
asserts that it is the exclusive fiduciary responsibility of 

the HHC Board to determine the fate of the HHC facilities. 

6 

 



  

“r iB 
+ 

3 
i ' 

® 
: 

The Mayor‘s actions to date do not respect this legislatively 

mandated authority. 

20. In 1994, it is my recollection that the Mayor's 

advisors circulated proposals to transfer control of Lincoln, 

North Central Bronx, Elmhurst, and Queens toc their respective 

voluntary affiliates and Coney Island into an independent 

voluntary hospital. The HEC Board was not presented with 

these proposals. 

21. The Mayor chose EDC to manage the privatization 

initiative and, in summer of 1994, EDC engaged J.P. Morgan to 

consider the sale of one or more of the HHC hospitals and to 

issue a report. The HHC Board was neither consulted, nor 

were public discussions held, nor a vote ever taken on these 

actions. 

B. Disposition of the Target Bospitals 

<2. In February of 1995, prior to the issuance of the 

J.P. Morgan Report, the Mayor publicly announced that the 

City would procesd with his plan to privatize the target 

hospitals; again the Board was not consulted regarding this 

decision and did not give its approval. In this connection, 

and without consultation with or approval from the Board, the 

Mayor created and alone appointed an "Advisory Panel" to 

Study the sale of the Target Hospitals. Maria Mitchell, the 

Special Advisor to the Mayor for Health Policy and HHC Chair, 

CO serve as Executive Director of the Mayoral Advisory Panel. 

I question how an Advisory Panel could supplant the vote of 

 



  

» 
r 4 ' . @ p s ; ; 

the HHC Board. Moreover, despite My protestations at HEC 

Board meetings to have the Advisory Panel make a presentation 

LO the HHC Board, no such presentations have taken place. 

23. The J.P. Morgan Report was issued in March of 1995, 

While the Report concluded that the target hospitals have 

desirable assets which will attract buyers, it did rot 

censider the cost of providing care to the indigent. J.P. 

Morgan Report at 30, annexed hereto as Exhibit 2. 

<4. Once again, the EBC Board was not given an 

opportunity to review or authorize the J.P. Morgan Report or 

any recommendations in it prior to its dissemination. The 

HHC Board only received a copy of the report after it was 

made public. 

25. Shortly after the issuance of the J.P. Morgan 

Report, in April of 1995, six members of the HHC Board, 

including myself, sent a letter to the Mayor protesting the 

inadequacy of the J.P. Morgan report as well as the entire 

privatization process. In the letter we also stated: 

We are further disappointed that the Board of Directors 
Of HHC, as the designated governing body under state 
law, was not sought in this decision making. As members 
of the Board of Directors, we would be breaching our 
fiduciary duty to the institution, as well as our 
responsibility to the public, by allowing this decision 
process to move forward without asking that our concerns 
about this report be addressed and that the Board be 
informed, full participants in this process. 

26. At the HHC Board Meeting I attended held April 27, 

1995, Ms. Mitchell announced that "The J.P. Morgan report was 

a logical first step in a multi-tiered process which the City 

 



  

’ 1 ' , 
is s 5 1 

® : 

required in order to determine whether privatization was in 

its financial interest, and if it was, then to determine how 

to prccesed. The report analyzes the financial implications 

Of the City’s ownership of Coney Island, Elmhurst, and Queens 

Hospitals, the anticipated interest by other organizations in 

taking over these facilities, and the financial ramifications 

of transferring those assets. From a strictly financial 

perspective, the report finds that privatization is 

overwhelmingly in the City’s interest." A copy of the April 

27 Meeting Minutes is annexed hereto as Exhibit 3. 

27. At the July 27, 1995 meeting, Ms. Mitchell reported 

that "(tlhe City’s Economic Development Corporation last 

Friday announced the selection of J.P. Morgan as the 

financial advisor for the sale of Coney Island, Blmhurst and 

Queens Hospitals. . . . The EDC Board approved J.P. Morgan 

and selected them over a group of four other firms that had 

responded to the Request for Proposals. The firms were 

identified from a pool of thirty-six firms that responded to 

EDC regarding the City’s privatization and financing 

initiatives." A copy of the July 27, 1995 Meeting Minutes is 

annexed hereto as Exhibit 4. 

28. At this meeting, Ms. Mitchell also notified us of 

the schedule of the sale/lease process for the target 

hospitals. She stated that the City would receive 

indications of interest from potential purchasers and select 

finalists by January 1996, complete due diligence and receive 

 



  

v 1 v 
» ; 1] 

® 

binding offers by March 1996, and complete negotiations and 

finalize the sale by June 1996. IQ. iat 12, 

29. Responding to the objection of a Board Member that 

the Board had never discussed the issue of whether to sell 

any HHC facilities or the criteria to be employed in deciding 

which facilities, if any, to sell, Ms. Mitchell stated that 

the Administration had already made the decision to proceed 

with the sale, and had already selected the three facilities 

LO be 35014 as well. Id at 16-21. At no point in this 

meeting, did Ms. Mitchell request approval by the HEC Board 

of this Mayoral decision. 

30. when Board members raised objections to the fact 

that the Board had never had an opportunity to decide whether 

to dispese of the target hospitals, Ms. Mitchell stated that 

the "intent of the Administration 1o go forward with the sale of those three facilities 

has been clear for sometime and has been discussed previously 

before the Board." (emphasis added) Id. at 28. 

31. On August 1, 1995, EDC on behalf of the City 

entered into a Supplemental Agreement with J.P. Morgan to act 

as the financial advisor "with respect to the sale, transfer, 

conveyance or other disposition of, in one or a series of 

transactions (which may include or take the form of the 

execution of management contracts or leases in respect 

of) (each, a "Transaction" and, collectively, the 

"Transactions"), Coney Island Hospital, Elmhurst Hospital 

Center and Queens Hospital Center (each, a "Hospital" and, 

10 

 



  

. x 
1] 

3 
1 

» ® 

® 

collectively, the "Hospitals"). The Supplemental Agreement 

provides no role for the HEC Board, reserving, instead, for 

EDC the right to accept or reject, in its sole discretion, 

any proposed transaction. A copy of the Supplemental 

Agreement is annexed nereto as Exhibit 5. 

c. Offering Memoranda and Letter of Intent 

32. On October 258, 1995, EDC issued two Offering 

Memoranda prepared by J.P. Morgan for the privatization of 

the target hospitals. According to the Memoranda, the 

privatization will be accomplished through long-term leases 

of the facilities to the health care providers, Neither the 

Offering Memoranda, ner any of the terms incorporated in them 

were submitted to the MHC Board for its advice, comment or 

approval. 

33. They were distributed to a confidential list of 

potential purchasers te allow them to submit bids on the 

hospitals. As an HHC Board member, I never received nor 

approved the bidders list, 

34. EDC has retained counsel to handle the legal 

aspects Of the disposition of the target hospitals. The HHC 

Board was never consulted, neither did we approve this 

decision, 

35. On June 26, 1996, a letter of intent setting forth 

the framework for the sublease of Coney vslend Hospital to 

Primary Health Systems, Inc. and PHS New York, In¢. was 

signed by Peter Powers, First Deputy Mayor of the City of New 

1} 

 



  

t 

1 ¥ 
J i k € 

v y 

York, Luis Marcos, for HEC, and Steven Volla for both PHS New 

York and Primary Health Systems, Inc. ("Letter of Intent") . 

A copy of the letter of intent is annexed hereto as Exhibit 

8, 

36. The HHC Board has not been consulted, neither have 

we approved or delegated the authority to Mr. Marcos to 

approve the Letter of Intent with PHS New York. 

37. The fact that a Letter of Intent was signed with 

PHS-New York, a for-profit entity, represents a significant 

departure from the current method of providing medical care 

in New York City. A for-profit entity has never operated a 

hospital in New York City. The HHC Board was not consulted, 

neither were public discussions held or a vote taken to allow 

a for-profit entity to operate a hospital in New York City. 

 



  

CORCLUSION 

38. In sum, the Board of HHC has never been consulted, nor 

had public discussions about, nor voted upon the issue of the 

privatization of the hospitals in general, the disposition of the 

target hospitals, Of any steps in between. Therefore, it is 

evident chat it is the Mayor, and not HHC, who is undertaking the 

disposition of the target hospitals. 

Dated: New York, New York 

August 22, 1996 

  

| 
Sworn to before me this 

22nd day of August, 1996. 

  

JONATHAN FELDMAN 
Notary Public. State of New York 

No. 02FES035948 

Qualified In New 

: Commission Expires if [ i lide 

13 

 



  Exhibit E  



vr f 

October 26, 1995 

  

  

Coney Island Hospital 

Offering Memorandum 

JPMorgan 

 



   

  

IL 

J PMorgan % Offering Metrorandum » Coney Island Hospital - + 

  

Offering Memorandum 

This Offering Memorandum (the “Memorandum™) is being furnished to parties who have expressed an 

interest in submitting proposals to acquire Coney Island Hospital (“Coney Island” or the “Hospital” or 

“CIH"). currently a hospital of the New York City Health and Hospitals Corporation (“HHC"). New 

York City Economic Development Corporation (*EDC™) has retained J.P. Morgan Securities Inc. (*J.P. 

Morgan”) to act as exclusive financial advisor in evaluating proposals to acquire CIH. This 

Memorandum has been assembled by HHC and Hospital management with the assistance of J.P. 

Morgan. The sole purpose of this Memorandum is to assist the recipient in deciding whether to proceed 

with further analysis of this opportunity in accordance with the procedures described below. 

J.P. Morgan will arrange all contacts for appropriate due diligence by potential purchasers. All inquines 

or requests for additional information should be submitted or directed to J.P. Morgan. Management of 

HHC or CIH should not be contacted directly under any circumstances. and any unauthorized contact 

may result in disqualification. 

While the information provided herein is believed to be accurate and reliable. none of the City of New 

York. HHC. CIH. EDC nor J.P. Morgan or any of their respective agents. advisors or representatives 

make any representations or warranties, express or implied. as to the accuracy or completeness of such 

information. Only those representations and warranties contained in a definitive purchase agreement 

shall have any legal effect. In furnishing this Memorandum. J.P. Morgan reserves the right to amend or 

replace the Memorandum at any time and undertakes no obligation to provide the recipient with access 

to any additional information. Nothing contained within this Memorandum is. or should be relied upon 
as. a Promise Or representation as to the future. Any pro forma or esumated financial information 

contained herein was prepared exclusively for use herein and is based on certain assumptions and 

management's analysis of information available at the time this Memorandum was prepared. 

Prospective purchasers should conduct their own investigation and analysis of the business. data and 

property described herein. 

All inquiries should be directed to either of the individuals at J.P. Morgan listed below. 

J.P. Morgan Securities Inc. 

60 Wall Street 

New York, New York 10260 

Rondy Jennings Thomas Todorow 

Managing Director Vice President 

(212) 648-4564 (212) 648-9449 

Issued to: 

  

MMM dd. YYYY 

 



    

JPMorgan 

tf [3 ? 

= Offering Memorandum e Coney Island Hospital 

  

Contents 

iyo RM IR AN Rea 2 TR Re 

EXCCUNVE SUIIIMIBLY ............ccooovsisissisninmimesiniiriussranvasssrinsasiabinsisisns 

I. Integrated health care network with development potential 

PrIMaIY CATR FOCUS ... occ their ers Catto itn evan ss sesso os sires tices 

Referrals 10 tertiary Care INSHIMLIONS .....c..ccccrrcininiiossrssmmssssseesrss 

Managed:icare INLAYS oi... i. hn hn i iE 

CC OMITIIMENT HO IBACIING oll iii iininsmia ns sims sonssssnnsnss 

II. Underexploited position in large catchment area ................ 

SUAESICROCTHON .ovnr viii sicher ss ii nan bisauvenrisanstersisisntsasras sorties sibs 

Leading market SHAE ....... cc iinnnibis iano so rtansiandoniibnes 

Favorable JemIOBIaADINCS. |... ....coioiieirs chinnennnnss thinarinsensitissnminision. 

Inroads by academic mBGICal COMES ............ co ii iii 

II1. Significant operating leverage .........................c.coccooovveein.. 

Large PRUE VOIUMIE ci ihe inition santos stairs sda 

Broad ranse Of SEIVICES ....../....cmisinrriisasisrmnmisinsitios ssn aitoni 

Bed COMPIEIEII teers hilar ssiiinsincesiotoisimitesnsosss rene imn ils 

Well-maintiNCO FACHHURS ...........ccvivnicrissnmarnnsonsiisisisirvisnabornssidh 

Financial performance Hed 10 PAYOR IX ...ccivciiiiiniiiriinionns 

- Indigent care 

IV. Management and organization ........................................... 

COVEIMIBIICE ....o cctrirosesiisnssirsisssrmnnssions sii sves suassridasbessessbe sisson 

Experienced SERIO MANAGEIMBNAL ..............ccniecrvrnrivorensssnssiosins ioe 

ssesscssscscsosnses 

sscssssscsssssnne 

ecesssscvecscssces 

ceees ere rescscnes 
» 

seessssesessssnses 

 



  

   
v 7 [3 t ; . 

JPMorgan “ Offering Memorandum Coney Island Hospital t 

  

Appendices 

TYanSACHOTI SUMMARY: il. iivs cose snsesresnomrssrarmisisbb ess resets 35 
Property description : | 
Ownership 

Advisor 

. Proposed structure of disposition 

Key investment considerations 

Indigent care 

Labor 

Existing indebtedness 

Future capital commitment 

Malpractice liability 

Community liaison 

 



LI J « T " 

oe 

JPMo rgan » Offering Memorandum e Coney Island Hospital : 

  

   
  

Exhibits 

Executive Summary 

CIH = service area Profile BY 2iP COUR ...c.itvrr iis msiviissisinsinsissmmressesrsvasssnss 4% 

Market share = 1993 Inpatient QISCHArEES ...............cccummumsiiinrsrescsisnsmrmrssensss 5 

Condensed INCOME SIAMBMENLS ...........ccoukeniestinincsnisiiiniriosionsorsnsistrs ins snmnbersaiatin 6 

SUMMAry OF ODETAUINIE SIAUSHCSY..o.cuvecrocnresotsbinssssinridabs sonia: mtorr iinet sn ircaissintads 6 

Sources of net patient service revenue by payor classification ........................ 7 

Inpatient discharges by payor classification .................c.ccoccoeoieioeveeeereeenn 7 

Outpatient visits by payor classification vu. ......coii niin iiiisiinsissadorissa, 8 

Integrated health care network with development potential 

CICA  SBIVICES Li iiss Saisie iid tesa mais cinn ris s rons ni bed 10 

Referrals bY SPROIaltY hii ii bie alas SEAN SEE Nie 11 

Managed Care SMHALIVES in... 00k... clic consoles isitini iro ss sis arsgbeiases 12 

RESIAENCY PIOSIAMIS rl rinse tle onside tein as eis 13 

EAucatioNa ATRIIBHONS ....sciviois hus suvssssvtisibiniesavetiosinsncthss ebsioedte i ea i gd, 14 

Underexploited position in large catchment area 

Cll in SETVICE ATBAS 1.0... es iitthinsiasiumntur an bsston eens di dsl SE 15 

CIH acute inpatient discharges by zipcode .............cccocooveoeeeeooe, 16 

ClH and competitors - 1993 bed complement] .................................. 17 

Comparative summary operating statistics — 1992 and 1993 18 

 



t 4 [} t 

JP Morgan - Offering Memorandum e Coney Island Hospital 

  

Market share analysis - 1993 acute discharges 

Population by zip code 

Per capita income by zip code 

Unemployment rates by zip code 

Map of Brooklyn hospitals 

Significant operating leverage 

CIH - selected operating statistics 

Breakdown of licensed beds by type of service 

Discharges by service - 1995 

Top ten DRGs by inpatient cases - fiscal year 1995 

Existing facilities 

Full-ume equivalents by category — June 30, 1995 

Condensed income statements 

Bad debt and charity care needs and services to indigent 

Bad debt and charity care pool revenues 

Management and organization 

CIH - organization chant 

Appendix A: Transaction Summary 

Outstanding indebtedness  



t ? t + 

JPMo rgan & Offering Memorandum « Coney Island Hospital 

  

Appendix B: Site plan/stack diagram 

Appendix C: Audited financial statements 

 



' FH [ 4 

JP Morgan % Offering Memorandum « Coney Island Hospital 1 

  

  

Preface 

The City of New York has made a major commitment to the physical and mental 
well-being of its citizens as demonstrated by its health care infrastructure — the New 
York City Health and Hospitals Corporation (“HHC") - the largest municipal health 
care system in the United States. The City recognizes that the health care industry is 
undergoing rapid and dramatic change and that the City is poised to take advantage 
of the opportunities presented by these changes. The focus of health care delivery is 
becoming more regionalized. better access to primary care has become a key goal. 
competition for patents has intensified. and providers are assuming more risk from a 
payment standpoint. 

Because of these changes. New York City has been witnessing a transformation of its 
health care delivery system. Managed care is on the rise and hospitals are joining 
forces to form large integrated networks. At the same time. revenue sources for 
providers are shrinking and competition is escalating. Change can mean opportunity 
for those who are able 10 meet the demands of the new health care environment. 
With networks forming at a rapid pace. those institutions who can respond to change 
will likely benefit. while those who are excluded will have limited ability to be 

competitive in the new marketplace. 

As the City continues to strive toward the goal of quality, cost-effective medical care 
for all its citizens, it realizes that HHC 's operating structure limits its ability to 
compete in today’s dynamic health care environment. Given these changes. HHC 
facilities can better serve their communities as part of larger integrated health 
networks. The hospital consolidation now taking place in the metropolitan region 
represents a strategic window of opportunity for the City to ensure the enhanced 
viability of its hospitals. 

Accordingly. the City and HHC are requesting proposals trom health care providers 
to acquire a long-term sublease of Coney Island Hospital. Tremendous benefits can 
be derived from a transfer of the facility. Coney Island Hospital is deeply rooted in 
the community and possesses a dominant market position in southern Brooklyn. The 
Hospital can benefit from the economies-of-scale and scope which accrue to facilities 

that are part of a larger. more cost-effective network. 

Certain issues will be central to any agreement providing tor the transfer of the 
facility. Appendix A sets torth an outline of these issues that is meant to encourage 

prospective purchasers to develop creative solutions to these complex issues. This 

 



‘« * EF 

J PMorgan fa Offering Memorandum e Coney island Hospital y » i, 2 

  

  

summary of the key investment considerations will serve as an initial starting point 

for further discussions with prospective purchasers and will form the basis of any 

final agreement. 

Proposals must be specific in addressing certain key issues which are critical to the 

City and HHC in the selection of a successful purchaser. Paramount among them is 

indigent care. The City will require a concrete plan from all prospective purchasers 

which will ensure continued access to quality care for the indigent. The City and 

HHC will seek innovative strategies which will ensure the continued access to and 

the expansion of primary care, especially through community-based facilities; they 

will expect the prospective purchaser to demonstrate on-going improvements in the 

quality of health care: and it will require public monitoring — including the issuance 

of report cards — so a buyer is held accountable to the City. as well as the public. tor 

achieving and maintaining key performance standards. Further, prospective 

purchasers must address transition of the workforce. development of a capital 

program, arrangements for the repayment of existing indebtedness, assumption of 

future malpractice liability. and methods for addressing community concerns in the 

operation of CIH. Please refer to the Transaction Summary in Appendix A for 

further detail and discussion of these issues. 

 



  

JPMorgan ‘Offering Mefhorandum Coney Island Hospital olf » : | 3 

  

Executive summary 

Coney Island Hospital (“CIH" or the “Hospital ™) offers potential purchasers the 
Opportunity to gain a competitive advantage in southern Brooklyn's dynamic health 
care marketplace. CIH has few comparable direct competitors within its service area. 
and would be a significant addition to an existing health care network. Furthermore. 
with its roots in primary care, it will continue to prosper as managed care penetration 
increases throughout the region. 

CIH. the largest medical tacility in southern Brooklyn. is a 460-bed acute care 
hospital serving a population of approximately 750.000. CIH offers a full range of 
services through the Hospital and its free-standing outpatient facility. the Ida G. 
Israel Community Center. The Hospital's strategic focus is in the areas of managed 
care. ambulatory care, alternate site delivery. and information systems. The Hospital 
has been working to identity off-site ambulatory care facilities and to expand 
expansion of existing on-site outpatient facilities. CIH is also aggressively pursuing 
managed care Contracts as part of a strategy to increase market share. This effort is 
bolstered by the Hospital's strong relationship with MetroPlus, an HHC subsidiary 
which is one of the fastest-growing HMOs in the region. 

Coney Island Hospital offers significant advantages to a potential purchaser: 

« Integrated health care network with development potential and significant 
buyer synergies, 

o Underexploited position in large catchment area with solid demographics; 

» Significant market share potential; and 

e Strong operating and solid financial performance 

Integrated network with development and synergy potential 
Despite its position as the largest facility in southern Brooklyn. the Hospital currently 
experiences a significant migration of cases to facilities outside of its primary service 
area. The Hospital's wide catchment area offers room for significant market share 
gains, if teamed with an appropriate partner. Complementary service lines and 
improved marketing would significantly diminish the outward migration of patients. 
Placed in a larger coordinated health care system. CIH could become a feeder for a 
tertiary institution and could benefit from the economies of scale and operating 
efficiencies that accrue to diversified. integrated health care systems. 

 



t F 3 i ¢ 

JPMo rgan » Offering Memorandum « Coney island Hospital t : 4 

  

  

Underexploited position in large catchment area 
CIH’s strong position within southern Brooklyn, which has very favorable 
demographics, would make it a strategic acquisition for several facilities and existing 
networks that are currently expanding their presence in the Brooklyn market. The 
Hospital attracts patients from a densely populated catchment area of approximately 
750,000 residents. As shown on the map below, the Hospital's primary service area 
covers zip codes 11224 and 11235, which form the Coney Island peninsula. The 
Hospital's secondary and tertiary service areas cast a wide net that extends up to 
central Brooklyn. 

  

CIH - service area profile by zip code 

  

    
   

    

yi 

J) Community Hosprtal of Brooktyn (= Primary: 

©) Kings Highway Hosptal Secondary 

—~ Tertiar 
3 Brookiyn Hospital Center y - 

(Caledonian Campus) 

Coney Island Hospital 

  

CIH offers a potential buyer tremendous reach and instant market share in southern 
Brooklyn. While CIH does not have a direct competitor located in its primary 
service area, it captures only 33 percent of inpatient discharges. ‘The three relatively 
small hospitals located in Coney Island’s tertiary service area, Community Hospital 
of Brooklyn, Kings Highway and Brooklyn Hospital Center (Caledonian Campus), 
do not represent the Hospital's major competition. Instead, the major competition 
comes from the Maimonides Medical Center and the Manhattan academic medical 
centers. As illustrated in the table which follows, CIH has a definite location 

 



  

advantage in its primary and secondary service areas, yet significant opportunity for 
market share growth still exits. 

  

Market share - 1993 inpatient discharges 

CIH Maimonides AMCs! 
  

Market Market Market 
Service area Discharges share. Discharges share Discharges share 
  Primary 6.487 33.0% 1,725 8.9% 1,811 9.2% 
Secondary 3492 13.2 3,901 14.8 2,707 10.3 
Tertiary 2566 4.9 8777 13.0 5015 9.6 
Combined 12.545 12.8 12,403 12.5 9,533 9.7 

Manhattan academic medical centers, including: Beth Israel Medical Center, Mount Sinai Medical Center 
New York Hospital/Comell Medical Center, New York University Medical Center. and Presbyterian Hospital 

Source: FACETS database 

  

Significant operating leverage 
Despite the operating limitations which flow from being a public hospital. CIH has 
displayed a relatively strong financial and operating performance. CIH has 
significant throughput in all its service lines, both on an inpatient and outpatient 
basis. It has also recently made a major effort to control costs. As the following 
table shows. the Hospital's on-going cost-containment program when combined with 
increased volume, resulted in earnings from operations, calculated prior to the HHC 
central office allocation, interest and depreciation, that increased from $311,000 
during fiscal 1994 to approximately $10.400,000 during fiscal 1995. 

 



[ 

JP Morgan Offering Memorandum « Coney Island Hospital 

  

  

Condensed income statements 

$ thousands 

Fiscal year ended June 30, 

1994 1995 

Net patient service revenue $182,250 $220,885 
Tax levy 10,264 181 
Other revenue 1,884 1,541 
Total revenue 194,398 222,607 
Operating expenses 194,087 212,224 
EBIDA? an 10,383 
Interest and depreciation 12,079 12,624 
Central office allocation 9,830 9,034 

Net loss from operations $(21,598) $(11,275) 

  

  

"EBIDA earnings before interest. depreciation and central office allocations 

Source: Audited financial statements 

  

The Hospital has strong patient volumes as demonstrated by its 17,700 inpatient 
discharges. 345.000 clinic visits and 71.000 emergency room visits in fiscal year 
1995. The Hospital's operations are robust. For the past two years, CIH has seen its 
discharges increase while its acute average length of stay has dropped dramatically. 
The volumes in the clinic continue to steadily rise. A summary of the Hospital's 
operating statistics is presented below. 

  

Summary of operating statistics 

Fiscal year ended June 30, 

1991 1992 1993 1994 1995 

Licensed beds’ 498 473 473 498 488 
Inpatient discharges’ 16,011 15,822 15.656 16,463 17.711 
Patient days’ 162,375 157266 155546 157,419 153,599 
Occupancy (acute) 91% 93% 92% 87% 88% 
Average length of stay (acute) 9.4 9.2 9.1 8.8 7.6 
Case mix index 1.20 1.18 1.21 1.24 1.24 
Emergency room visits 65,493 64,390 63,885 61,899 57,731 
Ambulatory surgery 2,828 1,263 1,117 1,688 2,201 
Clinic visits 315,273 321,299 324,826 326,646 334,644 

  

  

Includes bassinets 

“Including newborns 

Source: HHC internal records 

   



JP Morgan = Offering Memorandum e Coney Island Hospital ! > 

  

  

CIH’s financial performance is tied to its payor mix; Medicare and Medicaid patients 
represent about 85 percent of net revenues. As managed care becomes more 
prevalent, the Hospital's ability to negotiate effectively with the various managed 
care entities could be greatly enhanced if it were part of a larger network. In 
addition, a prospective buyer could realize significant operating efficiencies by 
improving the cost structure. The following tables provide a five-year histories of 
payor mix by net patient service revenue. inpatient discharges, and outpatient visits. 

  

Sources of net patient service revenue by payor classification 

  

  

  

Fiscal year ended June 30, 

1991 1992 1993 1994 1995 
Medicare 26.0% 32.1% 27.7% 30.0% 30.8% 
Medicaid 55.1 52.6 56.2 53.6 54.0 
Blue Cross 8.8 7.0 7.6 6.0 5.0 
Self pay 0.9 0.9 1.0 0.8 0.8 
Other 9.2 7.4 7.5 9.6 9.4 

100.0% 100.0% 100.0% 100.0% 100.0% 

Note: Bad debt and charity care revenue included in Medicaid revenue 
Source: HHC internal records 

  

  

Inpatient discharges by payor classification 

Fiscal year ended June 30, 
  

  

    

1991 1992 1993 1994 1995 1995% 
Medicare 3,994 3,771 3,467 3,444 3,803 21.5% 
Medicaid 8,223 8,732 9,444 10,512 11,562 65.3 
Blue Cross 2,992 2,846 2,459 1,392 963 54 
Self-pay N.A. 190 115 187 141 0.8 
Other 802 283 171 928 1,242 7.0 

16,011 15,822 15,656 16,463 17,711 100.0% 
Rt eau TET FEI EL NOET——— Rr iS A re dul 

Source: HHC internal records 

  

 



oy ht J ) v 
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JPMor gan ® Offering Memorandum e Coney Island Hospital 8 

  

  

  

Outpatient visits by payor classification 

Fiscal year ended June 30, 
  

  

1991 1992 1993 1994 1995 1995% 
Medicare 83,530 79,787 69,759 61,765 60,859 15.4% 
Medicaid 149,416 160,534 174,186 195,435 208,948 83.1 
Blue Cross 5172 4111 5,242 5,181 5,305 1.3 
Self-pay 115,701 110,873 105,741 78,321 76,270 19.3 
Other 29,775 31,647 34,900 49,531 43,194 10.9 
  

383,594 386,952 389,828 390,233 394,576 100.0% 

Source: HHC internal records 

  

 



: 2 [} ¢ 

JPMor gan Offering Memorandum e Coney Island Hospital g A " 9 

  

  

I. Integrated health care network with 

development potential 

CIH is a fully integrated health care delivery system that has provided community- 

based medicine for 25 years and has the potential for further network development. 

The Hospital has a proven ability to generate a steady flow of patients. In addition. 
the Hospital generates a significant number of referrals to tertiary institutions. These 
referrals could be further developed as part of a larger health care system. CIH could 

become a major feeder institution for a tertiary institution. CIH has established 

productive relationships with several managed care organizations and continues to 

expand these initiatives. As a leading teaching hospital. CIH also has educational 

affiliations with many other hospitals. 

Primary care focus 
CIH provides primary care on-site through a 3(X)-member primary-care physician 
group and through a satellite clinic, the Ida G. Israel Center. Since 1979, the 

Hospital has worked with and supported University Group Medical Associates, P.C. 

("UGMAY) in a partnership that combines a medical group with a hospital to perform 

community-based medicine. UGMA employs over 300 physicians. many of which 

are currently based at CIH. with internal medicine. gynecology/obstetrics and 

pediatrics comprising a major portion of the physicians within the group. CIH has 

provided UGMA with the support and resources to grow. Despite that fact that 

UGMA's current affiliation agreement with CIH expires on June 30. 1996. the 

Hospital remains committed to the development of an extensive primary care 

network. Compensation from HHC to UGMA for its hospital-based services on the 

CIH campus. totaled $35 million during fiscal 1995. 

 



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JP Morgan Offering Memorandum « Coney Island Hospital 10 

  

  

  

Exhibit I-A: Clinical services 

Ambulatory Care Physician Assistants Service 
Community Health Center Psychiatry 
Office Practice Services Adult In-Patient Services 
Anesthesiology Adult Out-Patient Services 
Emergency Medicine Children's Out-Patient Services 
Medicine Consultation Liaison/Emergency Services 

Allergy Radiology 
Cardiology Rehabilitation Medicine 
Dermatology Respiratory Care 
Endocrinology Surgery 
Gastro-intestinal Breast 
Hematology/Oncology Colorectal 
Infectious Disease Dentistry 
Neurology Head and Neck 
Nephrology Neurosurgery 
Pulmonary Orthopedics 
Rheumatology Otolaryngology 

Nuclear Medicine Opthalmology 
Nursing Pediatric 
Obstetrics/Gynecology Plastic 
Pathology/Laboratories Podiatry 
Pediatrics Thoracic 

Adolescent Medicine Urology 
Cardiology Vascular 
Endocrinology 
Hematology/Oncology 

Neonatology 

Nephrology 

Neurology 

  

Ida G. Israel Community Health Center 

Founded in 1985. the health center, centrally located in Coney Island at 2201 
Neptune Avenue. leases approximately 30,000 sq. ft. and had approximately 21,000 
medical and dental visits in addition to 16.500 psychiatric visits for the year ended 
June 30. 1995. The family practice model offers comprehensive services including: 
AIDS, pediatrics, dental. diabetes, family planning, geriatrics, laboratory, nutrition, 
pharmacy. podiatry, prenatal. psychiatric, social work, and women's health services. 

Referrals to tertiary care institutions : 
The Hospital generates a significant number of referrals to tertiary care institutions. 
Notably. most referrals are of cardiac cases because CIH does not perform coronary 
surgery. 

 



“ 8 ML 

JP Morgan ® Offering Memorandum « Coney Island Hospital » 11 

  

  

  

Exhibit 1-B: Referrals by specialty 

  

    
  

Service 1992 1993 1994 

Coronary 54 67 76 
Medicine 31 41 36 

Pediatrics 16 18 LL 
Psychiatric 26 23 27 
Rehabilitation 26 35 46 
Other 54 53 49 

Total 207 237 255 

Source: HHC internal records 

  

Opportunites exist to expand this system of referrals: CIH unlike many Brooklyn- 

based competitors, has not entered into an alliance with any Manhattan-based 

academic medical center. 

Managed care initiatives 

CIH has been or is negotiating business arrangements with several managed care 

organizations. With a population base that is rapidly migrating to managed care. the 

Hospital realizes that the prudent negotiation of managed care contracts will be 

critical to its tuture success. As an HHC hospital. CIH has a strong relationship with 

MetroPlus Health Plan. a subsidiary of HHC. and one of the fastest-growing HMOs 

in the region. 

The following table summarizes the managed care contracts that are in place or 

currently being negotiated by CIH. 

 



vv t t + 
’ 

JP Morgan & Offering Memorandum e Coney Island Hospital » 12 

  

  

  

Exhibit I-C: Managed care initiatives 

  

Plan Arrangements Payment mechanism 
MetroPlus Health Plan Hospital agreement in place Discounted Blue Cross 
Oxford Health Plans Hospital agreement in place Inpatient per dienmv 

Outpatient fee for service 
CIGNA Health Plan UGMA agreement in place Inpatient per diem 
Managed Healthcare Systems Ongoing negotiations inpatient per dierrv 
(MHS) Outpatient fee for service 
Metlife Health Care Network Ongoing negotiations Negotiated fee for service 
Health Insurance Plan of Ongoing negotiations Negotiated fee for service 
Greater NY (HIP) 

Source: HHC internal records 

  

Commitment to teaching 
CIH is an active teaching institution. providing a wide range of residency programs 

and clinical rotations to students from other hospitals. 

Residency programs 

Through a joint professional affiliation with Maimonides Medical Center. CIH 
maintains residency programs in general surgery. orthopedics. urology. pediatrics. 
obstetrics. gynecology and anesthesiology. CIH has a free-standing program in 
internal medicine and a joint SUNY at Brooklyn/Kings County/Coney Island 
Hospital program in ophthalmology. CIH also has a fully accredited osteopathic 
program with the New York College of Osteopathic Medicine and trains both interns 
and students from that institution. Approximately 140 residents are actively engaged 
in these programs in addition to third-and-fourth year medical students from SUNY 

at Brooklyn and foreign medical schools. 

 



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JP Morgan ; Offering Memorandum « Coney Island Hospital 13 

  

  

  

Exhibit I-D: Residency programs 

Maimonides Medical Center 
General surgery Ophthalmology 
Obstetrics/Gynecology Oral surgery 
Orthopedic surgery : 
Pediatrics 

New York College of Podiatry New York College of Osteopathic Medicine 
Podiatry Rotating internship program 

Internal medicine 

Cardiology 
Pulmonary 

Hematology/Oncology 
Endocrinology 

Source: HHC internal records 

  

Educational programs 

Numerous educational affiliations have enabled CIH to maintain a cadre of allied 
health professionals to care for the southern Brooklyn patient population. For 
example. the Hospital is an on-site extension campus of the Touro College Physician 
Assistant Program and offers clinical rotations to physician assistant candidates from 
Long Island University and the State University of New York; physical therapy 
students from Touro College. State University of New York, and New York 
University: midwifery students from State University of New York. Columbia. 
Fronuer College: and occupational therapy. communication disorders. health 
information management, and biomedical engineering students from Touro College. 
The following exhibit shows CIH's educational affiliations. 

 



JPMorgan - 

  

¢ « 4 

Offering Memorandum e Coney Island Hospital 14 

  

  

Exhibit I1-E: Educational affiliations 

Educational institution Specialty 
  

St. George's University 
New York College of Osteopathic Medicine 
Touro College 

Columbia University 

Long Island University 

New York University 

Brooklyn College 

College of Staten Island 

SUNY/Downstate 

Source: HHC internal records 

Medical students 

Medical students 

Physician assistants, physical therapists 

Midwives, speech pathologists 

Physical therapists 

Physical therapists, occupational therapists 

Speech pathologists 

Physical therapists 

Medical students, midwives, physical 

therapists, occupational therapists 

  

 



  

[3 Wa N ; f 

JPMor gan Offering Memorandum e Comey Island Hospital » ' 15 

  

  

II. Underexploited position in large 

catchment area 

Strategic location 
CIH is the only acute care facility in southern Brooklyn, serving a population of 

approximately 750,000. No other health care provider within its primary service area 

provides a comparable level of services. 

The Hospital's primary service area covers the neighborhoods of Sheepshead Bay 
and Coney Island at the southernmost end of Brooklyn, while the secondary service 
area of the hospital includes Gravesend. Bensonhurst, Homecrest. and Bay Ridge. 

The Hospital's tertiary service area includes Boro Park. Midwood. Flatbush, Mill 

Basin, and Canarsie. 

  

Exhibit II1-A: CIH - service areas 

Tertiary 

service area 

Secondary 

service area 

  
Primary service area 

  

 



v . 

J PMorgan % Offering Memorandum « Coney Island Hospital P 16 

  

  

Leading market share 
CIH is the leading provider of acute inpatient services in its primary service areas 
with about one-third of all the discharges. CIH also has a strong 13 percent share in 
its secondary service area, just north of the Hospital, and approximately five percent 
market share in its tertiary service area. CIH's primary and secondary service areas 
represented approximately 45 percent and 15 percent of total acute discharges in 
1993. respectively. Despite this strategic location advantage, a substantial number of 
patients bypass the Hospital in favor of institutions located outside of the service 
area. 

  

Exhibit 11-B: CIH acute inpatient discharges by zip code 

  

  

1992 1993 

Market Market 
Neighborhood Zip codes Discharges share Discharges share 
Primary service area 

Coney Island/Gravesend 11224 2.829 36 9% 2.917 371% 
Sheepshead Bay/Homecrest 11235 3,303 28 1 3,570 30.3 

6,132 6.487 
Sos mm 

Secondary service area 

Bensonhurst/Bay Ridge 11214 732 81% 751 8.4% 
Coney Island/Gravesend 11223 1.433 17.0 1.551 18.0 
Sheepshead Bay/Homecrest 11229 1,193 134 1,190 13.5 

3,358 3.492 
Ar 

Tertiary service area 

Boro Park 11204 414 56% 357 5.0% 
Midwood 11230 836 86 932 92 

Boro Park 11218 330 43 330 43 
Flatbush 11226 388 31 326 26 
Midwood 11210 296 50 YT 46 
CanarsieMill Basin 11234 284 34 344 4.0 

2,558 2,566 
:t SR) Bs SE NE 

Source: FACETS database 

  

Hospital competitors 

The hospitals closest to CIH are Community Hospital of Brooklyn (“*Community™), 
three miles north: Kings Highway Hospital (“Kings Highway™), 3.5 miles north: and 
Maimonides Medical Center (“Maimonides”). 5.5 miles to the northwest. 

 



' . ' . H . . 

JPMor gan % Offering Memorandum Coney Island Hospital » 17 

  

  

  

Exhibit II-C: CIH and competitors — 1993 bed complement’ 

Community Kings Highway Maimonides Coney Island 
  

Medicine/surgery 134 212 507 321 
Obstetrics/maternity 0 0 145 27 
Pediatrics 0 0 43 26 
Psychiatry 0 0 70 30 
Rehabilitation 0 0 0 33 
Skilled nursing — 0 0 np -_8B 

Total 134 212 765 445 

' Includes bassinets except for Coney Island Hospital 

Source: Institutional cost reports and HHC internal records 

  

Community Hospital and Kings Highway have market shares of approximately four 

percent and seven percent. respectively. based on 1993 inpatient discharges in CIH's 
three service areas. These community hospitals lack significant market share due to 

their relatively small size. Maimonides Medical Center is the Hospital's major 

competitor. Maimonides draws a significant number of inpatient discharges from 

CIH's primary and secondary service areas. Maimonides’ total market share in 

CIH's combined service areas was 13 percent in 1993. the same as CIH. The 
Manhattan academic medical centers also attract a substantial number of patients in 

CIH’s overall service area. with approximately 10 percent market share in 1993". 

With increased marketing of CIH’s position in the catchment area, a potential buyer 

could recapture a significant portion of these patients. 

~ Manhattan academic centers include Beth israel Medical Center. Mount Sinai Medical Center. New York 
Hospital/Cornell Medical Center. New York University Medical Center. and Presbyterian Hospital 
Source: FACETS database 

 



  

JPMo rgan Offering Memorandum e Coney Island Hospital : 18 

  

  

    

  

Exhibit 11-D: Comparative summary operating statistics — 1992 and 1993 ® 

Community Kings Highway Maimonides CH : 
1992 1993 1992 1993 1992 1993 1992 1993 N 

Beds 134 134 212 212 705 765 473 473 

Discharges 4,804 4,666 8,462 8,344 22,405 26,496 15,822 15,656 

Patient days 43,236 39,904 71,927 67,173 224,050 233,559 157,266 155,546 

Occupancy 88% 82% 92% 82% 88% 84% 90% 90% 

ALOS 9.0 8.6 85 8.1 10.0 8.2 9.9 9.9 

Note: Beds include bassinets; discharges and patient days include newborns 
Source: United Hospital Fund and HHC internal records 

  

 



JPMorgan 

  

Offering Memorandum « Coney Island Hospital 

  

  

  

19 

Exhibit 11-E: Market share analysis - 1993 acute discharges . 

Neighborhood Zip codes Community Kings Highway Maimonides CH 

Discharges Mkt. share Discharges Mkt. share Discharges Mkt. share Discharges Mkt. share 
Primary service area 

Coney Island/Gravesend 11224 325 4.6% 280 3.6% 633 13.4% 2917 37.1% 
Sheepshead Bay/Homecrest 11235 925 7.9 1,055 8.6 1,062 25.7 3,570 30.3 
Secondary service area 

i 
Bensonhurst/Bay Ridge 11214 304 3.4% 231 2.6% 1,724 19.2% 751 8.4% 
Coney Island/Gravesend 11223 394 46 430 5.4 1,156 134 1,551 18.0 ; 
Sheepshead Bay/Homecrest 11229 758 8.6 1,234 13.8 1,021 11.6 1,190 13.5 
Tertiary service area 

Boro Park 11204 125 1.8% 204 2.7% 1,864 26.3% 357 5.0% 
Midwood 11230 457 45 806 8.3 1,802 17.8 932 9.2 
Boro Park 11218 [A 0.9 161 2.1 1,654 21.7 330 43 
Flatbush : 11226 33 0.3 83 0.7 269 2.2 326 26 
Midwood 11210 217 36 513 8.7 438 7.3 277 4.6 oe 
Canarsie/Mill Basin 11234 394 4.5 1,628 19.1 750 8.6 344 4.0 Ww 

Source: FACETS database 

  

  

al 

 



    JPMor 4 an Offering Memorandum « Coney Island Hospital 20 

  

Favorable demographics 
CIH's catchment area has a favorable demographic profile, with a steady population 
base, moderate household income and relatively low unemployment. The following 
exhibits which follow provide detail on population, household income, and 

: unemployment rates in CIH's catchment area. 

  

Exhibit II-F: Population by zip code 

  

1990 1994 1999 
Neighborhood Zip codes census estimated projected 
Primary service area . 
Coney Island/Gravesend 11224 52,480 46,336 45,539 
Sheepshead Bay/Homecrest 11235 67,088 71,578 70,439 

Secondary service area 

Bensonhurst/Bay Ridge 11214 73,076 72,300 75,038 
Coney Island/Gravesend 11223 70,904 66,497 65,447 
Sheepshead Bay/Homecrest 11229 72,660 68,940 67,869 

Tertiary service area 

Boro Park 11204 64,780 67,845 67,570 
Midwood 11230 72,733 75,163 74,091 
Boro Park 11218 66,569 64,453 63,578 
Flatbush 11226 111,396 105,298 103,954 
Midwood 11210 62,445 54,765 54,086 
Canarsie/Mill Basin 11234 74,951 77,778 74,078 

  

789,082 770,953 761,689 

Source: HHC internal records 

  

 



    

JPMorgan 

    

[ 

Offering Memorandum « Coney Island Hospital 

  

  

Exhibit 11-G: Per capita income by zip code 
Per capita income 

  

  

1999 
Neighborhood Zip codes 1989 1994 projected 

Primary service area 

Coney Island/Gravesend 11224 $9,884 $11,100 $12,613 
Sheepshead Bay/Homecrest 11235 15,385 17,674 20,565 

Secondary service area 

Bensonhurst/Bay Ridge 11214 $13.277 $15,185 $17,540 
Coney Island/Gravesend 11223 14,294 16,722 19,858 
Sheepshead Bay/Homecrest 11229 16,021 18,487 21,598 

Tertiary service area 

Boro Park 11204 $12,408 $14,239 $16,520 
Midwood 11230 15,276 17,555 20,402 
Boro Park 11218 13,327 15,324 17,817 
Flatbush 11226 10,5789 12,228 14,276 
Midwood 11210 15,302 17,498 20,183 
Canarsie/Mill Basin 11234 17,687 20,779 24.776 

Source: HHC internal records 

  

 



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Offering Memorandum e Coney Island Hospital 22 

  

  

  

Exhibit II-H: Unemployment rates by zip code 

  

Percent 

1990 census 

unemployment 
Neighborhood Zip codes rate (civilian) 
Primary service area 

Coney Island/Gravesend 11224 6.4% 
Sheepshead Bay/Homecrest 11235 4.2 

Secondary service area 

Bensonhurst/Bay Ridge 11214 5.0% 
Coney Island/Gravesend 11223 4.1 
Sheepshead Bay/Homecrest 11229 3.8 

Tertiary service area 

Boro Park 11204 4.8% 
Midwood 11230 4.3 
Boro Park 11218 5.4 
Flatbush 11226 8.1 
Midwood 11210 51 
Canarsie/Mill Basin 11234 3.7 

Source: Bureau of the Census 

  

 



L} 3 1 

J PMorgan » Offering Memorandum « Coney Island Hospital » ; 23 

  

   
  

Inroads by academic medical centers 

Over the past several years, Manhattan-based academic medical centers have 
aggressively pursued alliances with many of Brooklyn's community-based facilities. 

The exhibit below details these strategic relationships. 

  

Exhibit II-1: Map of Brooklyn hospitals 

  Coney Island Hospia! 

Affiliate Hospital 

New York Hospital/Cornell Med Ctr. 
  

  

Community Hospital of Brooklyn 

New York Methodist Hospital 

Victory Memorial 

Brooklyn Hospital Center (Caldonian Campus) 

Brooklyn Hospital Center (Downtown Campus) 

Kings County Hospital 

Woodhull Medical and Mental-Health Center 

Kings Highway Hospital 

Brooklyn Jewish Division - interfaith 

St. John's Episcopal - Interfaith 

Brookdale Hospital Medical Center 

Long Island College Hospital 

St. Mary's Hospital of Brooklyn 

Wyckoff Heights Medical Center 

Maimonides Medical Center 

Lutheran Medical Center 

University Hospital of Brooklyn 

Kingsbrook Jewish Medical Center 

Columbia-Presbyterian Med. Ctr 

New York University 

Health and Hospitals Corp 

Beth Israel Med Ctr 

Interfaith Med. Ctr 

Mount Sinai Med. Ctr 

Catholic Med. Ctr, Brooklyn & Queens 

Preferred Health Network 

Unaffiliated 

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0
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JPMorgan 

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[1 

Offering Memorandum « Coney Island Hospital 

  

III. Significant operating leverage 
CIH has strong patient volumes as evidenced by its 17.711 discharges in 1995. Over 
the past five years the Hospital has witnessed positive trends in nearly all areas of 
operations. 

Large patient volume 
With occupancy near ninety percent, the Hospital has seen an increase of over 1.000 
discharges during the last fiscal year. Over the past five years, length of stay has 
decreased by almost two days. Throughput in the outpatient areas continue to show 
steady gains. with ambulatory surgery showing the largest percentage gain in the past 
five years as shown in the exhibit below. 

  

Exhibit I11-A: CIH - selected operating statistics 

Fiscal year ending June 30, 

1992 1993 
  

  

Licensed beds 

Bassinets 

Total beds 

Inpatient discharges 

Acute 

Psych 

Rehab 

Total 

Average length of stay 

Acute 92 

Psych 27.3 

Rehab 33.2 

Patent days 

Acute 139,715 

Psych . 10,171 

Rehab 

Total 
Occupancy 

Acute 

Psych 

Rehab 

Case mix index 

ER visits 

Ambulatory surgery 

Chnic visits 

Total amb care visits 

"Including newborns 

Source: HHC internal records 
   



   JPMorgan Offering Memorandum « Coney Island Hospital 25 

  

Broad range of services 
CIH provides a wide range of inpatient and outpatient services. The major services 
provided by the Hospital are described below. Opportunities exists to rationalize 
some of these services. particularly if CIH becomes part of a more focused health 

care network. 

Coronary Care Unit 

In CIH’s Coronary Care Unit, a highly trained staff of cardiac nurses and physicians 

treat patients in a semi-private area, with around-the-clock bedside monitoring. 

Women’s Health Center 

The Obstetrics and Gynecology Department formally opened its Women's Health 
Center in 1992. The Center is open five days a week, with morning. afternoon and 
evening hours. Patients are seen by a professional staff of doctors, midwives and 

physician assistants in a private office setting. 

Pediatrics 

The Hospital maintains general pediatric clinics for routine well baby/child care 
visits and immunization and specialty clinics in: allergy immunology; asthma; 
cardiology: developmental pediatrics: diabetes: endocrinology/metabolism: 

hematology: oncology: high risk neonatal: neurology: psychiatry/behavior; and renal. 

Recognizing that the practice of pediatrics is not just for children, CIH also offers a 
wide range of services for adolescents, including: general adolescent medical clinics: 
adolescent gynecology clinics: family planning and contraceptive services: 
individual and family counseling services: social services: and programs for 

adolescent parents and their newborns. 

Psychiatric Services 

The muludisciplinary staff of the Department of Psychiatry Services provides a 
comprehensive range of mental health and chemical dependency services. These 

services are organized into five divisions: 

Inpatient services. A 60-bed Psychiatric Inpatient Program is provided for 

patients sixteen years of age and older who reside in Community Districts 13 and 

18. : 

Adult outpatient services. An Adult Mental Health Clinic provides 
muludisciplinary clinic services to patients between 16 and 60 years of age, 

 



    

JPMorgan 

‘ « 4 
* |) 

= Offering Memorandum s Condy Island Hospital i» : 26 

  

including individual. family, group psychotherapy. medication and crisis 
intervention. 

Child psychiatry. CIH has a Child Psychiatric Clinic which provides a tull range 
of psychiatric services to children and adolescents under age 16 and to their 
families. In addition to its hospital-based site, the Child Psychiatry Clinic treats 

patients at the Ida G. Israel Community Health Center. 

Emergency services. CIH has a Consultation/Liaison and Emergency Services 

division, which offers psychiatric consultation and brief treatment to general 

hospital patients. as well as 24 hour psychiatric emergency services. A Mobile 

Crisis Management Team is also open Monday through Saturday which can 

provide in-home evaluation. triage and linkage for persons in crisis who reside in 
southern Brooklyn. 

Addictive diseases. A Comprehensive Alcoholism Treatment Program offers 

medical. psychiatric and social services to approximately 150 patients ages 18 

and over. A Hospital Intervention Service provides outreach, education and 
prevention services to the general hospital and local providers. Specialized 

program components include the Women's Alcoholism Program and the 

Geriatric Alcoholism Program. 

Trauma unit 

During 1993 CIH began work on a Level One Trauma Unit. Trauma designation is 

expected in the fall of 1995. at which time the Hospital will be able to treat patients 

suffering from any major wound or injury. 

Emergency department 

CIH has a state-of-the ant emergency department outfitted with the latest diagnostic 

imaging equipment, including a CAT scanner. Treatment rooms for minor surgical 

problems and gynecological examinations have been created to ensure patient 
privacy and comfort. In addition. a pneumatic system for transporting specimens to 
the Hospital's clinical laboratories and a computerized system to speed the 

availability of test results have been installed. 

Bed complement 

CIH's 460-bed complement is broken down into a variety of services. CIH is the 

only acute care facility in its primary service area and offers the full range of medical 
specialties. including obstetrical. pediatric. rehabilitation and psychiatric. 

 



   JPMorgan 

13 

1 

1 NM 

. ' » 

Offering Memorandum e Coney Island Hospital 27 

  

The exhibits below provide detail on CIH's breakdown of licensed beds and inpatient 
discharges by service. 

  

Exhibit I11-B: Breakdown of licensed beds by type of service 

  

Type of service Licensed beds 
Medical/Surgical 315 
Obstetrical 27 
Pediatric 26 
Rehabilitation 32 
Psychiatric 60 

Total 460 

Note Not including bassinets 

Source: HHC internal records 

  

The exhibit below shows patient discharges by service. 

  

Exhibit 111-C: Discharges by service — 1995 

  

Service Patient days Discharges % of total 
Medicine 70,594 7,031 39.7% 
Surgery 23,174 2,995 16.9 
MICU 3,759 105 1.0 
SICU 2,558 56 0.2 
CCU 2,657 165 0.6 
CRU 2,330 630 3.6 
GYN 1,882 546 31 
OBS 7,706 1,999 11.3 
Pediatrics 5,535 1,597 8.0 
Rehabilitation 8,082 295 : }.7 
Psychiatry 17,947 676 ’ 3.8 
Newborns 7.375 1.616 9.1 

Total 153,599 1734 100.0% 

Source: HHC internal records 

  

 



    

  

JPMorgan 

» 
4 (1 

 ) ; : Offering Memorandum « Coney Island Hospital 28 

  

  

Exhibit 111-D: Top ten DRGs by inpatient cases - fiscal year 1995 

  

Number of 
DRG Description admissions Average LOS 
629 Newborn BW > 2499 w/o Sig or w/NW BDX 1,508 3.7 
373 Vaginal delivery w/o comp 1,141 3.3 
127 Heart failure and shock 628 10.2 
372 Vaginal delivery w/comp 272 4.4 
140 Angina pectoris 265 5.6 
475 Resp sys — diag 251 20.9 
383 Antepartum 249 4.2 
121 Circ dis w AMI & CV 238 12.1 
381 Abort w D&C 235 1.5 
775 Bronchitis and asthma < 18 w/o CC 234 2.8 

Total $.021 

Source: HHC internal records 

  

Well-maintained facilities 
The Hospital occupies approximately 10 acres of land at the intersection of Ocean 
Parkway and Avenue Z in the southern portion of Brooklyn. The Hospital is located 
immediately oft the Belt Parkway. making it easily accessible by car or ambulance. 
The main hospital building has been renovated and expanded significantly since its 
construcuon over 41 years ago. CIH has been fully accredited by the Joint 
Commission on the Accreditation of Health Care Organizations and is licensed by 

the New York State Depaniment of Health. 

The following exhibit sets forth the principal patient care and ancillary and support 
services buildings at CIH. the year of construction. and if applicable. the approximate 
gross square footage and the principal facilities or services contained therein. Refer 
to Appendix B tor a map of the main campus and a stack diagram of operations 
within the facility. 

 



    

JPMorgan Offering Memorandum e Coney Island Hospital 

  

  

Exhibit III-E: Existing facilities 

  

  

Gross Major facilities 

Yearof square and clinical 

Building construction footage services 

Main hospital building 1954 490,200 Main Hospital/Administration 

North wing 

South wing 

Trailers’ building 1984 20,000 Temporary 

Hammett pavilion 1910 74,500 Psychiatric 

Powerhouse 1917 14,200 Engineering services 

Engineering building (building 5) 1917 6,600 Plant 

CDATP building (building 6) 1834 13,100 Patient care 

Ambulance garage 1954 10,700 Emergency medical service 

Total 628.700 

Source: HHC internal records 

  

Workforce 

UGMA's physicians are augmented by a balanced staff of professionals at the 

Hospital. CIH has a large staft of registered nurses. clerical and environmental 

professionals. As part of its affiliation agreement. UGMA provides a specified 

number of hospital-based physicians, technicians and specialists to augment CIH's 

medical staff. The UGMA agreement expires June 30). 1996 and is not being 

transferred with the Hospital. In fiscal 1995. the Hospital downsized the staff by 

approximately 350. with estimated annual savings of approximately $3 million. The 

table below details the total full time equivalents on the payroll at CIH and the full 

ume equivalents supplied by UGMA. 

 



JP Morgan s Offering Memorandum Coney Island Hospital 

  

  

Exhibit I1I-F: Full-time equivalents by category — June 30, 1995 

CH? 
Management/Supervision 

Technicians/Specialists 

Registered Nurses 

Licensed Practical Nurses 

Aides/Orderlies 

Environmental 

Administrative/Clerical 

Residents 

Physicians Assistant ‘ 0.0 
Physicians : ar 05 

Total : £2.380.0 

Represents “Part A” FTEs as stipulated in the affiliation agreement 
2 Inclusive of UGMA totals 

Source: HHC internal records 

  

Financial performance tied to payor mix 
The Hospital's financial performance is tied to its payor mix: Medicare and Medicaid 
represent about 85 percent of net revenues. As managed care becomes more 
prevalent. the Hospital's ability to effectively negotiate with the various managed 
care entities would be greatly enhanced if it were part of a larger network. In 
addition, a prospective purchaser could realize significant operating efficiencies by 
improving the cost structure. 

Considering its heavy outpatient load, large percentage of Medicaid patients and 
significant charity care burden. CIH has been able to effectively serve the population 
of southern Brooklyn. Through an ongoing cost reduction program, the Hospital has 
been able to increase its earnings before interest. depreciation and HHC Central 
office allocation from approximately ($3.5 million) during fiscal 1993 to 
approximately $10.4 million during fiscal 1995. By diversifying the payor mix and 
increasing throughput, a purchaser could improve operating margins. Below are 
provided condensed income statements for the past five fiscal years. Audited 
financial statements for 1994 and 1995 are included in Appendix C.  



   
JPMorgan 

- * { » ' 1 . 

 B Offering Memorandum e Coney Island Hospital 8 SD ie 31 

  

  

Exhibit 111-G: Condensed income statements 

  

  

  

  

$ thousands 

Fiscal year ended June 30, 

Unaudited Audited 

1991 1992 1993 1894 1995 

Net patient service revenue $159,634 $177,401 $152,523 $182,250 $220,885 
Tax levy 18,514 6,575 7,212 10,264 181 
Other 1,778 1,694 2.683 1.884 . 1.541 
Total revenue 179,926 185,670 162,418 194,398 222,607 

Direct operating expenses 166.874 178.386 165.899 194.087 212.224 

EBIDA 13,052 7,284 (3,481) 311 10.383 
Interest and depreciation 10,618 9.410 10,013 12,079 12,624 
Central office allocation 9,594 8,782 10,659 9,830 9,034 

  
  

Net loss from operations ($7,160) ($10,908) ($24,153) ($21,598) ($11,275) 

EBIDA - earnings before interest depreciation and central office allocations 

Source: HHC internal records (1991 - 1993); Audited financials (1994 and 1995) 

  

Indigent care 

The exhibits which follow outline the Hospital's services to the indigent over the past 
two years and show a five-year history of bad debt and charity care pool funding 

received by the Hospital. The City is a major contributor to the State's bad debt and 
charity care pools. The City is directly responsible for 50 percent of the funds 

received by the HHC facilities from the Supplemental and SLIPA pools. As part of 
the overall negotiation process on all of the key issues, the City will continue to make 
a substanual contribution to indigent care. The City would also work closely with 

the selected purchaser to assist in the maintenance of funding for the indigent from 

all sources. The prospective purchase will be expected to demonstrate ongoing 

improvements in the quality of and access to health care and must be willing to 

illustrate these improvements through the periodic submission of reports to the City 

which will be made publicly available. 

The Hospital attempts to collect payment for all services rendered. Financial 

counseling is provided for patients to determine available payment sources. 

Uninsured patients who do not quality for Medicaid are charged for services using a 

sliding fee schedule. based upon their ability to pay. 

 



   JPMorgan 

  

  

  

  

  

  

  

  

  

Offering Memorandum e Coney Island Hospital 32 

Exhibit 111-H: Bad debt and charity care needs and services to indigent 

Fiscal year ended June 30, 

1993 1994 
BDCC formula’ ($ millions) $48.4 $35.0 
Services to indigent 

Acute discharges 102 175 
Excluded units-days 634 341 
Emergency room visits 26,471 23,578 
Ambulatory surgery cases 279 249 
Clinic visits 78,609 54,029 
Other ambulatory 369 465 

NYPHRM formula 1s scheduled to expire June 30, 1996 

Source: HHC internal records 

Exhibit 111-1: Bad debt and charity care pool revenues 
$ thousands 

Fiscal year ended June 30, 

1991 1992 1993 1994 1995 
Regional $2,217 $2,955 $1,909 $2,938 $1,765 
Supplemental 9,667 12,575 6,615 3,329 8,497 
SLIPA 4,389 2,073 4518 9,058 6,530 

Total $16,273 $17,603 $13,042 $15,325 $16,792 

City contribution $7,028 $7,324 $5,567 $6,194 $7,514 
  

  

Source: HHC internal records 

  

 



    

JPMorgan - Offering Memorandum e Coney Island Hospital “ ) an 

  

IV. Management and organization 

CIH is operated by the New York City Health and Hospitals Corporation, a public 
benefit corporation of the State of New York created in 1969 under the New York 
City Health and Hospitals Corporation Act, New York Unconsolidated Laws 7381 er 
seq. for the purpose of assuming responsibility for the operation of the municipal 
hospital system of the City and providing comprehensive physical and mental health 
care and substance abuse services to the ill and infirm in the City. 

Governance 
The Corporation is governed by a Board of Directors consisting of sixteen members. 
Five of the directors serve ex-officio by virtue of their positions as city officials: an 
additional ten directors are appointed by the Mayor, with five such members 
appointed upon designation of the City Council; and one director chosen by the other 
directors acts as Chief Executive Officer of the Corporation. Members other than the 
Chief Executive Officer and the ex-officio members serve overlapping five-year 
terms. 

Experienced senior management 
CIH is managed by a highly capable management team that has been in place for a 
number of years. These professionals have directed the Hospital through numerous 
physical plant and program additions and have demonstrated an ability to adapt to 
changing market and reimbursement environments. A summary organization char is 
presented herein. 

 



    

JPMorgan % Offering Memorandum « Coney Island Hospital » cA 

  

  

Exhibit IV-A: CIH - organization chart 

  

| NYC HMC raat) 
— 

EEQVAA Officer Medical Director 
| Mignot! Executive Director A Kagan MD 

~ Cohen 
— 

  

  

  

    

     
  

  
Med. Staft President 

H Schaefler MD 

Chairman (Act.) 
M Bromberoer 

Deputy Exec. Ourctof 
J _Genoenning 

    

  

  

  

  

  

    

| P Dwmona 
Engineering & ein 

Risk Manegement] F Detsiop 
P ioannies 

Public Aflsirs 

Medica! Records | K Kernan | 

T Deerin 
Safety Management 

Patents Relatior T Coliins 
8 Paimer 

    I I ] 5 ] J 

Finance | Cap PlanDesion, | tursig | | Pst Care vor | Materials ua | | Long Range PI. | Human Resources 
J Baliow P Mahoney J Kelby C Ruey XK _Fehiy S Kientart J Persauvo 

  

  

  

Howard C. Cohen, Chief Executive Officer Coney Island Hospital 

Mr. Cohen has been the Hospital's Chief Executive Officer since 1982. Mr. Cohen 

presently serves as the Chairperson of the Executive Board of the National 

Association of Public Hospitals (NAPH). During 1995, Mr. Cohen served, while at 

Coney Island Hospital. as Acting Executive Director of Bellevue Hospital and Acting 

Senior Vice President of the South Manhattan-North Brooklyn Network of the New 

York City Health and Hospitals Corporation (HHC). 

Mr. Cohen has been an employee of HHC since 1973. Mr. Cohen received his B.S. 

from New York University School of Commerce in 1958 and has taken numerous 

post-graduate and professional courses in Finance and Hospital Administration from 

New York University School of Public Administration. Mr. Cohen is a Clinical 

Associate Professor of Health Care at Ithaca College and is an Advance Member of 

the Healthcare Financial Management Association and the Public Hospital 

Association. Finally, Mr. Cohen is an accomplished author in the field of health care. 

having authored the following: “Computerized Materials Management System Aids 

Cost Control,” Healthcare Computing and Communications and “Staffing Ratios and 

Hospital Efficiency in Two Public Hospitals,” Graduate School of Public 

Administration. N.Y. U. 

Additonal biographical material is available upon request. 

 



   JPMorgan 

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= Offering Memorandum e Coney Island Hospital ; as 

  

Appendix A: Transaction summary 

Property description 
Coney Island Hospital (“CIH" or “the Hospital”) is a 460-bed facility strategically 

located at the corner of Ocean Parkway and Avenue Z in southern Brooklyn. The 
Hospital campus comprises six buildings on 10 acres. In addition to the main 
campus, the Hospital also operates the Ida G. Israel Community Health Center, which 
is located in the heart of Coney Island at 2201 Neptune Avenue. 

CIH. which provides both primary and tertiary health services to a population of 
approximately 750.000. is located in a growing area of southern Brooklyn known as 
Coney Island/Sheepshead Bay. The main campus consists of six buildings: (1) the 
main building. occupying 490.200 square feet. houses all acute and rehabilitation 
beds. all general hospital clinics. the emergency department and support services, in 
addition to administrative functions: (2) the Hammett Pavilion, which. with 74.500 
square feet, primarily houses the inpatient adult psychiatric units, psychiatric 
administrative functions, selected psychiatric clinics, the MIS unit and the University 
Group Medical Associates. P.C. (“UGMA") administrative unit (the UGMA 
agreement expires June 30. 1996 and is not being transferred with the Hospital) (3) 
the Powerhouse. which occupies 14.200 square feet: (4) the Engineering Building 
(Building 5). with 6.600 square feet: (5) Building 6, which. with 13,100 square feet. 
houses the drug and alcohol abuse programs: and (6) the EMS Garage building. 
which occupies 10,100 square feet. The Hospital's off-site Ida G. Israel Community 
Health Center occupies approximately 30.000 square feet of leased space and offers a 
tull range of primary medical and dental services. in addition to outpatient 
psychiatric services. 

Ownership 
CIH is operated by the New York City Health and Hospitals Corporation (“*HHC" or 
the “Corporation™), a public benefit corporation of the State of New York. The 
Corporation was created in 1969 under the New York City Health and Hospitals 
Corporation Act, New York Unconsolidated Laws § 7381 et seq. for the purpose of 

assuming responsibility for the operation of the municipal hospital system of the City 
and providing comprehensive physical and mental health care and substance abuse 
services to the ill and infirm in the City. The Corporation operates the largest 
municipal hospital system in the United States with over 40,000 employees and an 
annual operating budget of over $3 billion. Nationally. it is second in size to the 
Department of Veterans Affairs as a governmental health care provider. 

 



JPMorgan Offering Memorandum « Coney Island Hospital 

  

The Corporation operates a facility network of over 10,000 beds and comprises 
eleven acute care hospitals. including major teaching and tertiary care facilities. six 
certified home health agencies. five long-term care facilities, six diagnostic and 
treatment centers, a network of over twenty satellite clinics, one prepaid health plan 
and the Emergency Medical Service - a city-wide medical emergency response 
system. HHC leases the Hospital from the City and will enter into a long-term 
sublease with the purchaser. The disposition of the Hospital will take effect upon 

receipt of necessary state regulatory approvals. 

Advisor 
New York City Economic Development Corporation (“EDC™) has retained J.P. 
Morgan Securities Inc. as exclusive financial advisor in the transfer of leasehold 
interest in CIH and its satellite facility. EDC is a local development corporation that 
acts on behalf of the City with respect to certain commercial real estate. economic 

development matters and privatization projects. 

Proposed structure of the disposition 
The City of New York and HHC are seeking proposals from interested and qualified 
parues to enter into a long-term sublease for the property, plant and equipment of 
CIH and the Ida G. Israel Health Center. Qualified parties must be bonafide 

501(c)(3) organizations or other entities which bid with 501(c)(3) organizations, so 
that the facility is transferred to a 501(c)(3) organization. No arrangement involving 
a non-501(c)(3) entity will be considered which would have the effect of 

undermining the tax-exempt status of the existing indebtedness. The Hospital. 

currently operated by HHC, is being offered unencumbered by existing management 
agreements or affiliations. A transfer will be subject to the approval of the HHC 
Board of Directors. and the City pursuant to Section 8 of the HHC Act 

(Unconsolidated Laws 7385). 

New York State law provides that an entity may not operate a hospital without the 
approval of the New York State Public Health Council and the New York State 
Department of Health. Thus, a condition to closing this transaction would be the 
receipt of all necessary State approvals needed to transfer the entire operating license 
of CIH. including any clinics, to the selected purchaser. The City will work with the 
selected purchaser to secure the receipt of all regulatory approvals needed to close 
this transaction. 

Key investment considerations 

The City’s and HHC's interest in the disposition of CIH is to improve the access 10 

and quality of health care being received by the residents of Brooklyn, while  



    

JPMorgan 

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- Offering Memorandum « Coney Island Hospital 0 WB 37 

  

simultaneously improving overall efficiency. Consequently. certain issues must be 
agreed upon with the prospective purchaser, prior to the transfer. The evaluation of 
proposals will depend, in large measure, upon the extent to which prospective 
purchasers demonstrate thorough and thoughtful consideration of the following 

major items: provision of indigent care; transition of the workforce: development and 
implementation of a capital program; arrangements for the repayment of existing 

indebtedness; assumption of future malpractice liability; and methods for addressing 
community concerns in the operation of the Hospital. The selected purchaser will be 

expected to preserve and enhance access to and quality of health care services to the 

residents of Brooklyn while addressing the above mentioned issues. 

The tollowing discussion highlights some of the major concerns in each of these 
areas. Proposals should outline in detail how they would address these issues. 
Serious weight will be given to both the creativity and thoroughness with which each 
of these issues are addressed by prospective purchasers. 

Indigent care 

The City and HHC are committed to preserving and improving the ability of all New 

Yorkers to access quality care, including those who may not have the financial 
resources to pay and who are not covered by third party reimbursement (Medicare. 
Medicaid. Blue Cross. private insurance, or a managed care plan). The City will 
require a concrete plan from all prospective purchasers which will ensure continued 
access to quality care for the indigent. The City and HHC expect any prospective 
purchaser of CIH will develop and maintain clinics, community-based programs. and 
other means of primary care access to care for all residents. including the indigent, at 
levels at least equal to the care already being received. The City and HHC will work 
in conjunction with the selected purchaser to develop a system of performance 
standards to publicly ensure quality and access of care to the indigent. 

The bad debt and charity care need for CIH is funded. in part, by contributions from 
the Federal, State. and City governments. During fiscal 1994. the indigent care 
caseload consisted of 175 acute care discharges and over 75.000 ambulatory cases. 

The Hospital was partially reimbursed for these costs through monies received from 
the Regional, Supplemental. and SLIPA Bad Debt and Charity Care Pools which 
exist under the current state reimbursement program. HHC facilities are currently 
reimbursed for a higher proportion of their bad debt and charity care than most 

voluntary hospitals. However, since. unlike public hospitals. voluntary hospitals can 

participate in the Distress Hospital Pool, many voluntary hospitals receive a higher 

reimbursement of their bad debt and charity care needs than HHC facilities. 

 



    

JPMorgan 
] 

1 
[ f » 

Offering Memorandum e Coney Island Hospital as 

  

Upon transter of CIH, continued access to quality medical care for the indigent is of 
the utmost concern to the City and HHC. The City currently makes a significant 
commitment to the indigent via its contribution to the bad debt and charity care 
pools. As part of the overall negotiation process on all key issues, the City will 
continue 10 make a substantial contribution to indigent care. The City and HHC 
would also work closely with the selected purchaser to assist in the maintenance of 
funding for the indigent from all sources. The prospective purchaser will be expected 
to demonstrate ongoing improvements in the quality of and access to health care and 
must be willing to illustrate these improvements through the periodic submission of 
reports to the City that will be made publicly available. 

Proposals to sublease and operate CIH should include, at minimum. responses to the 
following questions concerning indigent care: 

1. How will the prospective purchaser continue to ensure access to quality health 
care at CIH for all its patients, including the uninsured? What assumptons have 
been made with respect to funding for these plans? 

ro
 

How will the prospective purchaser use CIH's existing outpatient clinics. other 
primary care resources in CIH's service area. and any new clinics to be opened 
by the prospective purchaser to both improve the quality of care and to ensure the 
availability of outpatient services? 

3. How will the prospective purchaser coordinate the provision of health care at 
CIH with services and programs provided elsewhere within the community”? 
What will the prospective purchaser do to assure access to quality health care in 
its current service area, and if applicable. what does the prospective purchaser do 
now? How will this be monitored? 

Labor 

The majority of employees at CIH are members of the following unions: (1) District 
Council 37 of the American Federation of State. County and Municipal Employees 
(AFSCME): (2) Local 237 of the International Brotherhood of Teamsters: (3) the 
New York State Nurses Association: and (4) Licensed Practical Nurses and 
Technicians of New York (SEIU). The City recognizes that the selected purchaser 
must have the flexibility to effectively deploy the workforce if operating efficiencies. 
improved patient care and increased overall competitiveness are to be achieved. The 
prospective purchaser should provide specific proposals which outline how it is 
prepared to address future staffing, retraining of existing workers, pension rights and 
other labor issues. 

 



   JPMorgan Offering Memorandum « Coney Island Hospital 39 

  

Existing indebtedness 

Historically, New York City General Obligation Bonds have not been recorded as 

debt on the balance sheet of HHC. Funding from New York City General Obligation 

Bonds for capital outlays has been reflected as contributed capital to HHC. Interest 

expense derived from New York City General Obligation Bonds attributed to HHC is 

reflected in the Statements of Revenue and Expenses. 

CIH has traditionally raised capital through general obligation borrowings by the 

City and system-wide revenue bonds issued by HHC. The table which follows 

depicts the anticipated outstanding indebtedness related to capital expenditures at the 

facility. as of September 1. 1995. and estimated additional debt through June 30). 

1996. 

  

Exhibit A-1: Outstanding indebtedness 

  

§ thousands 

Cnty of New York General Obligation Bonds 

Tax-exempt fixed rate $21,387 

Taxable variable rate 1,866 

Estimated through June 30, 1996 1,839 

HHC Revenue Bonds 17,048 

Total $42,140 

Source: New York City Office of Management and Budget 

  

As part of the transaction, the City and HHC would expect the prospective purchaser 

to provide for the existing debt service payments. both principal and interest, that are 

associated with the facility. The estimated annual debt service payments for the next 

five years are presented below. 

 



   
JPMorgan 

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= Offering Memorandum e Coney Island Hospital g ' 40 

  

  

Exhibit A-2: Estimated annual debt service payments 

  

$ thousands 

Fiscal year ending 

1996 $4,449 
1997 4,768 

1998 4,605 
1999 4,591 

2000 4,383 

Source: New York City Office of Management and Budget and HHC internal records 

  

The City will work with the prospective purchaser to effectively refinance or defease 
the City/HHC debt or establish a flow of funds to achieve the same economic result. 

Future capital commitments 

While the existing physical plant is in good condition, the City and HHC would 
expect any prospective purchaser of CIH to fund future capital needs for the Hospital. 
Current estimates for on-going capital needs at CIH range from $10 to $15 million 
per year in order to purchase equipment and maintain the physical plant. 

Malpractice liability 

While the City will continue to bear all malpractice liability for events which occur 
prior to the disposition, upon completion of the transaction. the selected purchaser 
will assume full responsibility for any malpractice liability for post-disposition 
events. 

Community liaison 

The City and HHC expect proposals to specifically address how the prospective 
purchaser plans to work in conjunction with the community to enhance medical care 
in the region. The prospective purchaser should explain in detail in the proposal 
what mechanisms it intends to employ to maintain an open dialogue and productive 
working relationship with the local residents. 

 



iagram 

 
 

 
 

 
 

 
 

Site plan/stack d 

  
   
 

  
 
 

  
  

 
 

  
  

 
 

 
 

 
 

  
    

 
 

  
  
 
 

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Appendix B 

  
 
 

 
 

Site plan - ma 

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JPMorgan 

Exhibit B-1 

  
  
 



JPMor gan & Offering Memorandum Coney Island Hospital 

  

  

Exhibit B-2: Stack diagram 

  

Man hospital Dulang Hammett pavibon 
  

  

    
someon | soutwest | Center 1 Norwest | Norhees! South | commons | North               

  

Finance | PH 

  

[Doctor 3 lounge 

  

Peaatnc NU | Biomedical 

26 beds { gl] 

posgxratory ther 

  

Gynecology Otstetncs 

NU amb surg 

36 beds aamin 

  

SICU Surg | Surges! NU | Ambulatory Surgery suppor 

NU 36 beds surgery cystatogy 

34 beds ’ 

  
  

Medca NU 

39 beas 

      
  

Mea:al NU CCU MICU 

34 beos 30 bes 

  

  

Pnmary cave’ | Primary care Outpasent 

specal dincs once psychiatry 

  
  

Occupatonsl 

theapy 30 adult bes 

  

  

  

Central stonie Pharmacy Planning 
sadmnistraton aetary 

  

Emergency Agmimng Meaca! Ambulatory PC 
patent records care sgmirustraton 

accounts soqsl services| regstraton                               

  

Mar hoaprtal Dudding 

  

Southwest Center Nohwes!                               

   



  

   JP Morgan » Offering Memorandum Coney Island Hospital Bh 43 

  

Appendix C: Audited financial 

statements 

 



    

kemG Peat {LB LLP 

CONEY ISLAND HOSPITAL 

Financial Statements 

June 30, 1995 and 1994 

(With Independent Auditors’ Report Thereon) 

 



    

Ki cat Marwick LLP ® 

345 Park Avenue 

New York, NY 10154 

Independent Auditors’ Report 

Economic Development Corporation: 

We have audited the accompanying balance sheets of Coney Island Hospital (the Hospital), a 
facility of the New York City Health and Hospitals Corporation (the Corporation), a public 
benefit corporation of the State of New York, as of June 30, 1995 and 1994, and the related 
statements of revenue and expenses, changes in net assets and cash flows for the years then 
ended. These financial statements are the responsibility of the Hospital's management. Our 
responsibility is to express an opinion on these financial statements based on our audits. 

We conducted our audits in accordance with generally accepted auditing standards. Those 
standards require that we plan and perform the audit to obtain reasonable assurance about 
whether the financial statements are free of material misstatement. An audit includes examining, 
on a test basis, evidence supporting the amounts and disclosures in the financial statements. An 
audit also includes assessing the accounting principles used and significant estimates made by 
management, as well as evaluating the overall financial statement presentation. We believe that 
our audits provide a reasonable basis for our opinion. 

In our opinion, the financial statements referred to above present fairly, in all material respects, 
the financial position of Coney Island Hospital as of June 30, 1995 and 1994, and the results of 
its operations, the changes in its net assets and its cash flows for the years then ended in 
conformity with generally accepted accounting principles. 

September 29, 1995 KPMG PasX Wows + 

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Assets 

Current assets: 
Cash and cash equivalents 
Patient accounts receivable, net (notes 3 and 9) 
Bad debt/charity care pools receivable, net (notes 3 and 9) 
Supplies 
Other current assets 

Total current assets 

Plant and equipment, net (note 4) 

See accompanying notes to financial statements. 

CONEY ISLAND HOSPITAL 

Balance Sheets 

June 30, 1995 and 1994 

(000's omitted) 

Liabilities and Net Assets 

Current liabilities: 

$ 80 89 Current instalment of note payable (note 6) 
28,850 29,327 Accrued salaries, vested benefits and payroll 

300 1,000 taxes 
1.367 1,222 Accounts payable 
1.793 108 Accrued expenses 

Retainage and construction accounts payable 
32390 32,346 Due to the Corporation, net (note 5) 

Estimated third-party payor settlements - 
59,003 55.585 Medicaid, net (notes 3 and 9) 

Estimated third-party payor settlements - Medicare, 
Blue Cross and other, net (notes 3 and 9) 

Total current liabilities 

Accrued pension costs (note 7) 
Due to the Corporation (note 5) 
Note payable, net of current installments (note 6) 

Contingencies (note 9) 

Net assets: 
Unrestricted 
Donor restricted assets 

Total net assets 
  

  

1995 1994 

$ 283 - 

17.263 15.332 
4,736 8.141 
3,745 4312 

218 310 
14,383 5.826 

15,500 15.100 

1.827 _2300 

57955 51,321 

4473 4519 
18,573 12,820 
2,260 - 

8,120 19,260 
12 11 

Sl 1921 

$ 9391 81991 

 



CONEY ISLAND HOSPITAL 

Statements of Revenue and Expenses 

  

Years ended June 30, 1995 and 1994 

(000's omitted) 

Revenue: 
Net patient service revenue 
Funds appropriated by The City of New York 

for operations 
Restricted income transferred from donor 

restricted assets 
Other revenue 

Total revenue 

Expenses: 
Personal services 
Other than personal services 
Fringe benefits and employer payroll taxes 
Affiliation contract expenses 
Services provided by the Corporation (notes 5 and 10) 
Depreciation 
Interest 
Provision for bad debts 

Total expenses 

Loss from operations 

Nonoperating gains - investment income 

Net loss 

See accompanying notes to financial statements. 

  

1] 
“ Ce 
[ 

P 1 

1995 

$ 220,885 

181 

(11,275) 

—s 

$ (11,260) 

1994 

182,250 

10,264 

1,583 
—-—301 

(21,598) 

(21,598) 

 



rd CONEY ISLAND HOSPITAL $ 

  

Statements of Changes in Net Assets 

Years ended June 30, 1995 and 1994 

  

  

(000's omitted) 

Unrestricted Restricted Total 

Net assets at June 30, 1993 $ 40,668 11 40,679 

Net loss (21,598) - (21,598) 
Donations of property and equipment 190 - 190 
Donor restricted activity: 

Grants and other increases - 1,583 1,583 
Transfers to unrestricted assets 

for operations = £1983) | (1333) 

Net assets at June 30, 1994 19,260 11 19,271 

Net loss (11,260) - (11,260) 
Donation of property and equipment 120 - 120 
Donor restricted activity: 

Grants and other increases — 1,274 1,274 
Transfers to unrestricted assets 

for operations - (1.273) £1213) 

Net assets at June 30, 1995 $ 8,120 12 8,132 

See accompanying notes to financial statements. 

    

 



  

% CONEY ISLAND HOSPITAL 

Statements of Cash Flows 

Years ended June 30, 1995 and 1994 

L] M 

r 

% 

  

  

  

  

(000's omitted) 

1995 1994 

Cash flows from operating activities and nonoperating gains: 
Net loss $ (11,260) (21,598) 
Adjustments to reconcile net loss to net cash used in 

operating activities and nonoperating gains: 
Depreciation 8,613 7,979 
Provision for bad debts 23,389 18,138 
Changes in assets and liabilities: 

Patient accounts receivable (22,912) (26,772) 
Estimated third-party payor settlements, net (73) 10,700 
Bad debt/charity care pools receivable/payable 700 (2,700) 
Supplies and other current assets (1,230) 3,726 
Accounts payable and accrued expenses (3.972) (839) 
Accrued salaries, vested benefits and payroll taxes 1,931 873 
Accrued pension costs Lo 46) (31) 

Net cash used in operating activities 
and nonoperating gains _(4860) (10,524) 

Cash flows from investing activities: 
Purchase of plant and equipment, net (9,227) (16,311) 
Donated equipment 190 

Net cash used in investing activities X9.007) (6.12) 

Cash flows from financing activities: 
Advances from the Corporation 14,310 26,630 
Retainage and construction accounts payable (92) 21 
Repayments of note payable {en = 

Net cash provided by financing activities 13.958 26651 

Net (decrease) increase in cash and cash 
equivalents 9) 6 

Cash and cash equivalents at beginning of year 3 —3 

Cash and cash equivalents at end of year $ 80 89 

Supplemental disclosures: . 
Interest paid $ 215 - 

Issuance of note payable $ 2803 - 
  

See accompanying notes to financial statements. 

 



% CONEY ISLAND HOSPITAL ® 

Notes to Financial Statements 

  

June 30, 1995 and 1994 

(000's omitted) 

(1) Summary of Significant Accounting Policies 

Coney Island Hospital (the Hospital) is an acute care hospital which is operated by the New 
York City Health and Hospitals Corporation (the Corporation), a New York State public 
benefit corporation created by Chapter 1016 of the Laws of 1969. On July 1, 1970, the 

* Corporation assumed responsibility for the operation of the municipal hospital system of 
the City of New York, including the Hospital, pursuant to an agreement (the Agreement) 
with the City dated June 16, 1970. 

The Hospital is a 460 bed facility located in Southern Brooklyn which provides services to 
the communities of Brighton Beach and Coney Island. It is included in the Corporation's 
Brooklyn Health Care Network and is dependent upon the Corporation for continued 
financial support. 

The Hospital's significant accounting policies are as follows: 

(a) Donor Restricted Assets 

Donor restricted assets are used to differentiate resources, the use of which is 
restricted by donors or grantors, from resources of unrestricted assets on which 
donors or grantors place no restriction or that arise as a result of the operations of the 
Hospital for its stated purposes. Resources restricted by donors for plant replacement 
and expansion are added to the unrestricted asset balance to the extent expended 
within the period. Resources restricted by donors or grantors for specific operating 
purposes are reported in revenue to the extent used within the period. 

(b) Charity Care 

The Hospital provides care to patients who meet certain criteria under its charity care 
policy without charge or at amounts less than its established rates. Financial 
counseling is provided for patients to determine available payment sources. The 
Hospital does not pursue collection of amounts determined to qualify as charity care, 
and they are not reported as revenue. 

(c) Statements of Revenue and Expenses 

Transactions deemed by management to be ongoing, major or central to the provision 
of health care services are reported as revenue and expenses. Peripheral or incidental 
transactions are reported as gains and losses. 

(Continued) 

 



  

CONEY ISLAND HOSPITAL 

Notes to Financial Statements 

(000's omitted) 

(1), Continued 

(d) Net Patient Accounts Receivable and Revenue 

(e) 

The Hospital reports patient accounts receivable and revenue for services rendered at 
the estimated net realizable amounts from third-party payors, patients and others. Net 
patient service revenue includes estimated third-party payor settlements which are 
accrued on an estimated basis in the period the related services are rendered, and 
adjusted in future periods as required. : 

Funds Appropriated by The City of New York for Operations 

The City funds the Hospital (through the Corporation) for care given to uninsured 
indigent patients, members of the City's uniformed services, prisoners and or other 
services not fully reimbursed by third-party payors. In addition, the City pays the 
Hospital's costs for settlements of claims for medical malpractice, negligence and 
other miscellaneous torts and contracts; as well as other certain Hospital costs 
including utilities (in fiscal year 1995) and City debt which funded Hospital capital 
acquisitions. The Corporation reimburses the City for debt payments. 

Plant and Equipment and Depreciation 

Prior to April 1, 1993, substantially all of the additions to plant and equipment were 
funded by the City. In accordance with the Agreement, the City retains legal title to 
all such Corporation facilities and related equipment, including any additions and 
leases, and subleases such to the Corporation for an annual rental of $1. From April 
1993 through November 1994, the Corporation funded substantially all of the 
Hospital's capital acquisitions through the issuance of its own debt. However, 
effective December 1994, at the request of the City, the funding for additions to plant 
and equipment is again derived from the City. 

Since the Hospital is the sole beneficiary as to use of the plant and equipment and is 
responsible for the control and maintenance of the physical plant and equipment, the 
leased plant and equipment have been capitalized in the accompanying balance sheets 
as follows: ; 

(i) Assets placed in service through June 30, 1972 were recorded at an estimated 

cost as determined by an independent appraisal company's physical inventory 
and valuation of such assets as of June 30, 1972. 

(ii) Assets acquired subsequent to June 30, 1972 are stated at cost. 

(iii) Donated property and equipment is recorded at its fair market value at date of 
donation. 

(Continued) 

 



  

® uci ® 
CONEY ISLAND HOSPITAL 

Notes to Financial Statements 

(000's omitted) 

(1), Continued 

(f), continued 

Construction in progress (CIP) is recorded on all project costs associated with 
facilities under construction which are to be leased or subleased to the Hospital. Such 
CIP costs are depreciated when the related assets are placed in service. 

For financial statement purposes, depreciation is computed on a straight-line basis 
using estimated useful lives based on American Hospital Association guidelines. 

(g) Affiliation Contract Expenses 

(h) 

(i) 

Gg) 

Affiliation contract expenses are incurrec by affiliated medical institutions which 
participate in patient service programs at the Hospital. Under terms of the affiliation 
contracts, the affiliate is required to furnish the Hospital with an independent audit 
report of receipts, expenditures and commitments chargeable to the contract, 
refunding any excess advances at that time. The reported incurred expenditures are 
also subject to subsequent independent audit contracted by the Hospital. 

Supplies 

Supplies are stated at the lower of cost (first-in, first-out method) or market (net 
realizable value). 

Income Taxes 

The Hospital incorporates its tax information with the Corporation, which is a public 
benefit corporation of the State of New York and is exempt from Federal income 
taxes under Section 501(c)(3) of the Internal Revenue Code. Accordingly, no 
provision for income taxes has been made in the accompanying financial statements. 

Cash and Cash Equivalents 

The Hospital considers all highly liquid investments with maturities of three months 
or less to be cash equivalents. 

(Continued) 

 



  

CONEY ISLAND HOSPITAL 

Notes to Financial Statements 

(000's omitted) 

(2) Charity Care 

3) 

The Hospital maintains records to identify and monitor the level of charity care it provides. 
These records include the amount of charges forgone for services furnished under its 
charity care policy and the estimated cost of those services. The following information 
measures the level of charity care provided during the years ended June 30: 

    

1995 1994 

Charges forgone, based on established rates $ 16,813 14,962 
Estimated expenses incurred to 

provide charity care $ 13,824 19,213 

  

  

Patient Accounts Receivable and Revenue 

Substantially all of the Hospital's patient service revenue is derived from services provided 
on behalf of patients under governmental medical assistance programs and private health 
insurance plans. Generally, revenue from these sources are related to cost reimbursement 
principles and are subject to audit by the applicable payors. Certain payors have performed 
audits and have proposed various disallowances which other payors may similarly assert. 

Management provides for the effects of all anticipated prior year settlements and audit 
adjustments by recording estimates based upon existing regulations, past experience and 
discussions with intermediaries. In addition, the Hospital is in varying stages of appeals 
relating to its 1980-1995 reimbursement rates from certain third-party payors. Since the 
ultimate outcome of these appeals is not presently determinable, no provision has been 
made in the accompanying financial statements. 

Net patient service revenue for the years ended June 30 is as follows: 

995 1904 

Medicaid ~~ $ 89.875 72,394 
Medicare 60,732 49,330 
Bad debt/charity care pools 16,793 15,325 
Other payors 28,617 25,743 
Self-pay 1,479 1,320 
Provision for bad debts _ 23389 18.138 

$ 220,885 182,250 
  

  

(Continued) 

 



  

CONEY ISLAND HOSPITAL 

Notes to Financial Statements 

(000's omitted) 

(3), Continued 

4) 

The Hospital provides services to its patients, most of whom are residents of the City and 
are insured under third-party payor agreements. Net accounts receivable were as follows as 
of June 30: 

  
  

1995 1994 
% of % of 

Dollars Total Dollars Total 

Medicaid $ 14,004 485 $ 13,613 46.4 
Medicare 6,124 21.2 7,959 27.1 
Other third-party payors 8,611 29.9 7,643 26.1 
Self-pay oll 4 112 4 

$ 28.850 100.0 $$ 29,327 100.0 
  

  

The allowance for estimated doubtful accounts at June 30, 1995 and 1994 was $15,257 and 
$8,980, respectively. Patient accounts receivable is presented net of Blue Cross advances 
of $1,122 at June 30, 1995 and 1994. 

Plant and Equipment 

Plant and equipment as of June 30 consists of the following: 

1995 1994 

Land improvements $ 1619 1,273 
Building and leasehold improvements 46,615 45,617 
Equipment wd ll 13.114 

127,952 120,004 

Less accumulated depreciation 77.844 _72.768 
50,108 47,236 

Construction in progress | 8.895 8.349 

Plant and equipment, net $ 59,003 55,585 
  

  

"As of June 30, 1995 and 1994, there were $30,974 and $26,263, respectively, of fully 
depreciated assets. 

The Hospital capitalizes interest costs for construction projects. Capitalized interest costs 
were $727 (net of interest income of $230) as of June 30, 1995. Capitalized interest costs 
were $709 (net of interest income of $530) as of June 30, 1994. 

(Continued) 

 



  

CONEY ISLAND HOSP.TAL 

Notes to Financial Statements 

(000's omitted) 

(5) Due to the Corporation 

At June 30, the balances due to the Corporation, net are as follows: 

1995 1994 

Working capital advances, net (a) $ 14,383 5,826 
Capital projects advances - long-term (b) 18.573 12.820 

$ 32,956 18,646 

(a) 

(b) 

    

The Corporation routinely provides essential operations and administrative 
support to the Hospital and allocates a proportion of those costs based on work- 
load statistics which, in management's opinion, represent a reasonable basis of 
allocation (see note 10). In addition, the Corporation provides ongoing daily 
operating cash flow to the Hospital resulting in a non-interest bearing receivable 
or payable to or from the Corporation for working capital. 

On June 15, 1993, the Corporation issued its Health System Bonds, 1993 Series 
A (1993 Series A Bonds) in the amount of $550,000. The 1993 Series A Bonds 
were issued for the purpose of funding a major portion of the Corporation's 
ongoing capital program, funding the Capital Reserve Fund, refunding the 
Corporation's Revenue Bonds, Series A, issued on May 1, 1985 (the 1985 
Bonds) and paying costs of issuance of the 1993 Series A Bonds. The 1993 
Series A Bonds were issued at a discount of $3,154. 

The 1993 Series A Bonds are secured by a pledge of Health Care 
Reimbursement Revenues, as defined in the General Resolution adopted 
November 19, 1992, to HHC Capital. HHC Capital was created by the 
Corporation in 1993 in order to secure the 1993 Series A Bonds. The sole 
purpose of HHC Capital is to accept all payments assigned to it by the 
Corporation or a Corporation Provider, and then monthly remit from such 
assigned payments amounts required for debt service to the Bond Trustee with 
the balance transferred to the Corporation. 

The Hospital has been advanced $18,573 and $12,820 as of June 30, 1995 and 
1994, respectively, relating to its expansion and modernization program. The 
preliminary cost associated with the capital programs for the Hospital initially 
identified in the 1993 Series A Bonds was $23,350. However, at the request of 
the City, effective December 1994, the funding for capital is derived from the 
City. 

(Continued) 

 



  

(6) 

(7) 

* Rl [ 
CONEY ISLAND HOSPITAL 

Notes to Financial Statements 

(000's omitted) 

Installment Note Payable 

The Hospital purchased 460 patient beds at a cost of $2,803. The beds were financed by 
the seller issuing a secured eight year installment note payable, with an 8% rate of interest. 
Principal and interest payments are due the first of every month in the amount of 

. approximately $40. 

Principal payments due on the installment note payable as of June 30, 1995 are as follows: 

Year Amount 

1996 $ 283 
1997 307 
1998 332 
1999 358 
2000 389 
Thereafter 874 

$2,543 

Pension Plan 

The Hospital participates in the New York City Employees Retirement System (NYCERS) 
which is a cost-sharing multiple-employer Public Employees Retirement System, as 
defined by Governmental Accounting Standards Board (GASB) Statement No. 5. Hospital 
employees who receive permanent appointment to a competitive position and have 
completed six months of service are eligible to participate in NYCERS. NYCERS 
provides pay-related retirement benefits, as well as death and disability benefits. The total 
amounts of the Hospital employees’ covered payroll approximated $47,822 and $42,630 for 
the years ended June 30, 1995 and 1994, respectively. 

The frozen entry age actuarial cost method of funding with 20-year amortization of a 
revised unfunded frozen initial accrued liability is used to calculate the contribution from 
the Corporation on behalf of the Hospital. In 1981, the Hospital recorded a liability for 
unfunded pension costs. The Hospital's pension costs for 1995 and 1994 ‘approximated 
$2,030 and $1,876, respectively. 

(Continued) 

 



  

CONEY ISLAND HOSPITAL 

Notes to Financial Statements 

(000's omitted) 

(8) Other Benefits 

(a) 

(b) 

Postemployment 

In accordance with collective bargaining agreements, the Corporation provides other 
postemployment benefits that include basic medical and hospitalization (health care) 
benefits to eligible retirees and dependents at no cost to approximately 62% of the 
participants. Basic health care premium costs that are partially paid by the remaining 
participants vary according to the terms of their elected plans. To qualify, retirees 
must: (i) have worked for the Corporation with at least five years of credited service 
as a member of a pension system approved by the City (requirement does not apply if 
retirement is as a result of accidental disability); (ii) have been employed by the 
Corporation prior to retirement; (iii) have worked regularly for at least 20 hours a 
week prior to retirement; and (iv) be receiving a pension check from a retirement 
system maintained by The City of New York or another system approved by the City. 
The City does not make separate measurements of the cost of retired employees’ 
health care benefits for the individual facilities of the Corporation. 

Severance 

During 1995, the Hospital offered voluntary severance incentive programs. There 
were 241 employees who participated in the programs and the cost charged against 
operations for 1995 in the accompanying financial statements of the Hospital related 
to the incentive payments was approximately $2,100. 

(9) Contingencies 

(a) Reimbursement 

As discussed in note 3, revenue received from third-party payors represents a 
substantial portion of the Hospital's revenue. Effective January 1986, Medicare 
began paying for inpatient services rendered on a per discharge basis, based on 
diagnosis related groups of illnesses. This system is the Prospective Payment System 
(PPS). Effective January 1, 1988, New York State adopted the Case Payment System 
(CPS), which reimburses inpatient care in a manner similar to the PPS system. All 
non-Medicare payors are covered under CPS. Such system has been modified and 
extended through June 30, 1996. 

Inpatient acute services are paid at prospectively determined rates per discharge. 
These rates vary according to a patient classification system that is based on clinical, 
diagnostic and other related factors. Payments for Medicare beneficiaries are 
governed by regulations issued by the Federal government whereas all other third- 
party payors (Medicaid, Blue Cross and commercial insurance carriers) and self-pay 
patients are governed by regulations issued by the New York State Department of 
Health. 

(Continued) 

 



  

CONEY ISLAND HOSPITAL 

Notes to Financial Statements 

(000's omitted) 

(9), Continued 

(a), continued 

(b) 

Inpatient nonacute and outpatient services are paid based upon a fee schedule or a 
cost reimbursement basis. Certain items (e.g., defined capital costs) are reimbursed 
on a cost basis. These items are paid at a tentative rate with final settlement 
determined after submission of annual cost reports by the Hospital and audits thereof 
by the Medicare fiscal intermediary. The Medicare cost reports have been audited by 
the fiscal intermediary through June 30, 1992. 

The Hospital has also entered into payment agreements with certain health 
maintenance organizations and preferred provider organizations. The basis for 
payment to the Hospital under these agreements includes prospectively determined 
rates per discharge, or per day, and discounts from established charges. 

For most payors other than Medicare certain provisions of the New York Prospective 
Hospital Reimbursement Methodology (NYPHRM) legislation and related 
regulations required retroactive rate adjustments for years encompassed by these 
methodologies. Those which can be reasonably estimated have been provided for in 
the accompanying financial statements. However, those which are either (a) without 
current specific regulations to implement them or (b) are dependent upon certain 
future events, cannot be reasonably estimated and, accordingly, have not been 
provided for in the accompanying financial statements. 

In addition, there are various proposals at the Federal and New York State levels to 
reduce future hospital reimbursement. The outcome and effect of these proposals 
cannot be presently determined. 

Legal Matters 

There are a significant number of outstanding legal claims against the Hospital for 
negligence, malpractice and other miscellaneous torts and contracts, Pursuant to the 
Agreement, the Hospital is indemnified by the City through the Corporation for such 
costs. The Hospital reports malpractice claims when settled by the City as other than 
personal services expenses in the accompanying financial statements. Such amounts 
relating to the Hospital approximated $4,199 for 1995 and $2,913 for 1994. 
Accordingly, no provision has been made in the accompanying financial statements 
for unsettled claims, whether asserted or unasserted. 

(Continued) 

 



    

% | 10 

CONEY ISLAND HOSPITAL 

  

Notes to Financial Statements 

(000's omitted) 

(10) Services Provided by the Corporation 

The Corporation provides certain services to the Hospital and charges the Hospital for (1) 
direct costs incurred in providing such services and (2) applicable indirect costs based on 
workload statistics which, in management's opinion, represent a reasonable basis of 
allocating such costs. Costs charged are included in the Hospital's statement of revenue 
and expenses and are composed of the following: 

Personal services : 3,642 
Other than personal services (i.e., legal fees, 

data processing and other administrative 
services) 3,822 4,302 

Fringe benefits and employer payroll taxes 1,139 1,047 
Brooklyn central laundry 838 839 

 



    Exhibit F



  

   
    

    

    

    

    

    
     

    

  

        

     
      

THE CITY OF NEW YORK 

OFFicE oF THE MAYOR 

New York, N.Y. 0007 

PRESS OFFICE 

FOR IMMEDIATE RELEASE: Release #302-96 
Wednesday June 26, 1996 

CONTACT: Colleen Roche 212 - 788 - 2958 
Jack Deacy 212 - 788 - 2969 

MAYOR GIULIANI ANNOUNCES CITY WILL ENTER 
FINAL NEGOTIATIONS FOR LEASE OF CONEY ISLAND HOSPITAL 

Primary Health Systems - New York Would Form Partnership 
With NYU Medical Center And Brooklyn Hospital Center 

Mayor Rudolph W. Giuliani announced today that the City’s Health and Hospitals 
Corporation (HHC) had entered into final negotiations for transferring control and 

Spcrsuon of Coney Island Hospital (CIH) to Primary Health Systems - New York (PHS- 

NY), an affiliate of Primary Health Systems, Inc. (PHS). PHS-NY plans to form a health 
care delivery network with New York University Medical Center and Brooklyn Hospital 

Center to expand and improve health services available to the Coney Island community. 

The City and the other parties signed a Letter of Intent this morning 

regarding the lease of Coney Island Hospital. It contains the following stipulations: 

A guarantee of full access to care for all residents regardless of ability to pay. 

Assumption oy PHS of the full indigent care commitmeri. 
Community involvement in the governance structure of the facility. 
Publicly accountable standards for quality of care. 
Substantial capital improvements, routine capital expenses, and the assumption of 

debt service by PHS. 

« Agreement to deal in good faith with existing unions. 

In addition to meeung the City's criteria, it & 
achieve savings of $100 millicn for taxpayers ¢



  

t . 

» v 
v 

) 

  

Since its formation in 1994, PHS has acquired three health centers in Cleveland, 

Ohio to place more than 1300 beds under common ownership: St. Alexis Hospital Center 

in Cleveland, Ohio, with 220 beds, Deaconness Hospital in Cleveland with 316 beds, and 

Mit. Sinai Health Care System, including Mt. Sinai Medical Center, a 450-bed major 

teaching affiliate of Case Western Reserve Medical School. The company is about to 

assume ownership of the 160-bed Laurelwood Hospital and 220-bed Richmond General 

Hospital there. PHS has announced the intention to acquire and Roxborough Memorial 

Hospital in Philadelphia with 189 beds. 

Mr. Volla was formerly Chairman, President and Chief Executive Officer of 

American Heaithcare Management, where he pioneered a turnaround of its operations. 

His exceptional commitment to community involvement has been central to his strategic 

philosophy. Under his leadership AHM was honored by Senator Art Torres and 

Assemblymember Richard Polanco for creating community partnerships in East and 

Southeast Los Angeles County, including the establishment of a family wellness centers, 

AIDS Education Awareness programs in East Los Angeles, and training of health care 

workers. 

PHS-NY will affiliate with New York University Medical Center to serve as its 

tertiary care affiliate. New York University Medical Center, founded in 1841, is among 

the nation’s leading academic medical center and tertiary care institutions, with a strong 

tradition in medical training, patient care and scientific research. The Medical Center is 

also a major East Coast center for cancer care, cardiology, cardiothoracic and vascular 

surgery, neurosurgery, reconstructive surgery, and transplantation. NYU Medical Center, 

a 726-bed tertiary care facility, includes the NYU School of Medicine, Tisch Hospital, the 

Rusk Institute of Rehabilitative Medicine, and the Hospital for Joint Diseases. 

PHS-NY will affiliate with Brooklyn Hospital Center as its community health 

care affiliate. The Brooklyn Hospital system maintains over 600 beds, and is composed 

of two acute care facilities: Brooklyn Hospital Center (BHC) serving the downtown and 

northern Brooklyn area, and the Brocklyn-Caledonia facility serving central Brooklyn. 

BHC, the oldest healthcare institution in the borough, has a long and distinguished 

history of serving the residents of Brooklyn. In addition to the provider network of over 

200 physicians, BHC maintains several strategically located primary and ambulatory care 

facilities as part of the Brooklyn HealthNet, the hospital's integrated primary care 

delivery network. 

It is anticipated that the process of negotiating a final contract will last up no 

longer than 160 days. Community groups and elected officials will be kept apprised of 

the progress toward a final contract, which will be subject to the approval of the Board of 

Directors of the Health & Hospitals Corporation. 

230- 

TET. DA 

 



  

“The PHS team submitted the best proposal in a competitive process, meeting all 

of the City’s requirements including a commitment to full guaranteed access for the 

indigent, improved quality of care, and involvement of the community in the governance 

structure of the facility,” Mayor Giuliani said. “This is a terrific opportunity not only for 

Coney Island residents but for all New Yorkers because it will provide better health care, 

better facilities, guaranteed access, and more preventive care in the community. We will 

also be saving money for taxpayers and injecting much-needed capital into the City’s 

health care system.” 

PHS is a for-profit company that focuses on reviving and expanding community 

based hospitals in diverse urban communities. Their affiliate, PHS-NY, will run Coney’ 

Island Hospital under the leadership of the principals of PHS, Inc. 

PHS plans to create an integrated health care delivery network in joint partnership 

with Brooklyn Hospital Center and New York University Medical Center to ensure a full 

continuum of care for the Coney Island community and enhance the Hospital's primary 

care delivery system. Brooklyn Hospital Center will participate as a community-based 

primary care affiliate and New York University will offer tertiary care -- high technology, 

trauma, and acute care -- and serve as an academic medical center affiliate. 

The Mayor said that a community-centered monitoring process will be negotiated 

to ensure that the hospital is publicly accountable for providing high quality care and 

meets its commitment to full indigent access. The monitoring process will have ngorous 

regulatory and enforcement procedures with appropriate penalties, and will be more 

involved and public than any monitoring process currently in place in the City for other 

public and voluntary hospitals. The City will design and negotiate the monitoring process 

using recommendations from focus groups that were held in March with residents of the 

Coney Island community. 

Coney Island Hospital, the largest medical facility in southern Brooklyn, is a 460- 

bed acute care hospital serving a population of 750,000. CIH offers a full range of 

services through the Hospital and its free-standing outpatient facility, the Ida G. Israel 

Community Center. It is one of 11 hospitals currently operating in the HHC system and 

has a full time staff of 2,337. 

Maria K. Mitchell, Special Advisor to the Mayor for Health Policy and 

Chairperson of the Health & Hospitals Corporation noted that with this agreement the 

City can benefit from trends in the rapidly changing, competitive environment of today’s 

health care system. 

(MORE) 

 



i 
hi 

RA Ld 

| 
i 

  

“This is an important and innovative agreement that will not only benefit Coney 
Island Hospital but more importantly the men, women, and children who depend on it for 
care. We are going to see major improvements in access to quality care, along with a 
vastly expanded range of services like primary care for the tens of thousands of people in 
this very vital part of Brooklyn,” Ms. Mitchell said. 

Steven L. Volla, chairman of PHS explained that the company submitted a 
proposal because Coney Island Hospital has enormous potential to reach many more 
people in the Coney Island area and provide an expanded range of services. Currently, 
despite the community’s relatively large geographical distance from other hospitals in the 
City, two-thirds of residents do not select Coney Island Hospital, 

“Coney Island Hospital is part of a very vibrant community. We will modernize 
and expand services by upholding a strong commitment to the traditions and the 
constituencies that the hospital serves,” said Mr. Volla, “We look forward to significant 
community involvement in the governance and support systems of the hospital. And with 
the addition of New York University and Brooklyn Hospital affiliations, we will create a 
truly integrated system in which services, programs and staff can be coordinated to 

deliver care of the highest caliber to the people of the Coney Island community.” © eo op — 

The Letter of Intent commits PHS to immediate commencement of talks with the 
unions representing employees of Coney Island Hospital. Ms. Mitchell said that the City 
will ensure that the agreement is fair and equitable to the dedicated people who work at 
Coney Island Hospital. - 

PHS is an integrated health care company with its main mission developing 
community-based primary care systems in urban environments. Members of the 
management team including Mr. Volla have over 20 years of expertise and nationally 
renowned reputations turning around financially distressed health care organizations. Mr. 
Volla said the company has expanded health services and quality in communities with 
economically, culturally, and religiously diverse populations. He said they pioneered 
innovative and effective strategies for imposing quality standards that are cutting edge in 
the hospital industry, and established strong partnerships with physicians, nurses, and 
local communities. 

The management team formerly ran American Healthcare Management, Inc., a 
proprietary hospital company with 16 hospitals in 9 states that merged into OrNda 
HealthCorp in 1994, which now owns 47 hospitals in 17 states with $1.6 billion in 
revenue. 

(OVER) 

 



  

    

City Selects PHS:NV., A For-Profit Corporation, to Leass and Operate Coney Iland Hospital 

  

o PHS NY, Inc, (PHS.NY), a private, for-profit, hospital management corporation has been selected 
as the winning proposer for the lcase of CIH, PHS-NY, an affiliate of Primary Health Systems Ine. 
(PHS), will Icasc and operate CIH under a 49 year sublease with the NYC Health and Hospitals 
Corporations (HHC). A letter of intent has been signed with PHS-NY to serve as a framework for 
negotiations leading toa definitive contract with final terms, 
-- PHS has a proven track record of operating hospitals providing high quality care in urban based, 
multi-ethnic communitics, and preserving commitments to care for the indigent. Before this transaction, 
its system wil! include six hospitals in two states, 
0 PHS-NY will joint venture with Brooklyn Hospital Center as its community-based primary care 
affiliate; and New York University Medical Center as its tertiary care /academic medical center 
affiliate to cnsure a full continuum of care and provide an enhanced primary care delivery system for the 
CIH community. / 

  

0 PHS-NY's ‘propaes] wag or all Ee to ar submitted by other fot- for-profit hospitals 

and met all the City's stated terms and conditions. PHS-NY will commit in the final contract to: 
-- Providing Indigent Care - PHS-NY will guarantee and assume in full, all of the curvent 
indigent care obligations, including providing all of the financing for care. 
- Improving Quality Care « PHS-NY has committed to enhances current services, and to 
demonstrate ongoing improvements in the quality of care. This will be accomplished through 
implementation of a proprietary Quality Outcome Management System and other prov 
quality management techniques; 
-- Maintaining Access to Care « PHS «NY has committed to provide full access to care for the 

CIH community, regardless of the ability to pay; 
-- Preserving Commtuntty Involvement - Continued involvement of tho community in the 

gavemance structure of the hospital will be provided, 
« Minlmizing Labor Transition - PHS-NY has committed to mcot with the unions whilch 
currently represent CIH employees to achieve a smooth and orderly transition, PHS-NY will 

meet its staffing needs substantially through the use of current employezs of CIE. 
ow Assuming Malpractice Costs - Any liability for malpractico occurring after closing of the 
transaction will be assumed by PHS-NY. 
oe Assuming All Debt Service - PHS-NY will provide for payment of all of the outstanding 

CIH debt required to be paid off now with the remainder of debt service payable by PES-NY as 

retital payments under the lease, 
- Requiring Neo Clty Subsidy « PHS.NY has committed to provide full access to care for the 
indigent at current levels without conditioning access on continued City funding through tax 
levy subsidy or contributions to the BDCC pools, 
-« Upgrading the Physical Plant - Much needed capital infusion in the physical plant of CIH 
will be undertaken by PHS-NY through a capital commitment of no less than $25 million, in 
addition to routine maintenance costs 

 



  

  

  

| 

      

YIQ oring andii{orcement Pro ong Wi sure Indipern are CC OmMmitingss 

- 38 8nd ONTY S.A ave Maintained 

o The indigent care commitments made by PHS «NY will be subject to Clty monitoring. 

o Performance clauses will be made a part of the final contract including contractual penaltics for non- 

compliance. The City will make public performance and compliance information. 

o Monitoring of contractual compliance will include community input. A regulatory mechanism 

utilizing governmental and external audits will be developed, 

      
    

BTS VAST HOY 

Ongoing Improvements to the Ouality of Care Will be Achieved 

o PHS-NY will focus on improving quality of care by building & network of primary care and specialty 

physician-linked clinical services in community-based facilities and by establishing direct linkages with 

tertiary care/ academic medical centers affiliates. Quality will be improved by: 

-- preserving and strengthening community health care acecss 

«» developing a continuum of care for the community 

-- undertaking extensive capital investment programs 

— aggressively recruiting high quality physicians and staff 

o Through its proprictary Quality Outcome Management System, PHS has improved quality in the 

hospitals they operate by tracking service and quality indicators on the basis of 23 criteria. 

o A performance-based monitoring system incorporating quality care measures will be implemented 

at CIH. 

o The City's overarching goals of access to care for the indigent and uninsured and improving the 

quality of care for the CTH community will be fully met. 

o The City views privatization as one of many ways to mect the challenges confronting the City's health 

care system. Lease and operation of CIH by an entity with ready access to capital will ensure its 

continuation as & high-quality, community-based hospital, strategically repositioned for success in this 

competitive environment, 

o The transfer will occur upon signing & final contract and obtaining all regulatory approvals, thus 

relieving the City of significant coste and long term liabilities incurred for CIH. 

ARLE A Ee 

o Over flve years, the City will conservatively realize an estimated $100 milifon in cumulative savings 

and avoided costs, resulting largely from operating losses incurred by CIH, the City contribution to 

charity care pools, principal payments on the debt and capital expenditures for CIH. Present value 

savings to the City are estimated to be over $44 million on a cash flow basis, 

This Structure Satisfies Requirements of State Law for Ownership of 2 Hospital 

o State law allows a for-profit corporation to own and operate hospitals in New York provided that 

such ownership is by individuals. 

o PHS-NY is a privately-held corporation, owned by individual shareholders, and will be structured 2s a 

Sub-$ Carporation. 
0 PHS-NY will lcase the CIH and expects to contract with PHS to serve as manager of the hospital, 

o All State regulatory approvals, including securing 8 “Certificate of Need" and “establishment 

pproval” from the State, will bo obtained prior to transfer and receipt of & new operating certificate by 

PHS-NY. : 

 



    
  

  

  

  

1 t : Ld 
. 

i | a 

1 ‘ 

o PHS-NY is an affiliate of PHS, Inc. an integrated hospital management company formed in 1994 by a 

team of seasoned health care management executives, PHS-NY will lease CIH and expects to cetitract 

with PHS for the management of the hospital. 

o PHS has a proven track record of operating hospitals providing high quality care in urban-based, 

multi-ethnic environments and a reputation for: 
-- preserving the community-based focus and traditions of each hospital in their system while 
continuing its commitment to providing access to the indigent and uninsured, 

— improving the financial soundness and operation of the hospitals they own, 
- strengthening the service delivery with capital investment programs, service enhanccracnts 

and physician recruitment. 

o Current PHS Operations - PHS operates health care facilities in urban markets such as Cleveland, 
OH and Philadelphia, PA. PHS recently acquired Mt. Sinal Health Systems of Ohio, Inc. and also 

operates 220-bed St. Alexis Medical Center and 316-bed Deaconess Hospital in Cleveland. In sddition, 

PHS recently agreed to acquire Roxborough Memorial Hospital in Philadelphia, and plans additional 

acquisitions in that arca. : 

o Prior History and Experience of Senior Management Team - PHS was established by the former 

senior management team of American Healthcare Management, Inc. (AHM) and Universal Health 

Services, Inc. 

 



    

Exhibit G  



   



  

    
SUPREME COURT OF THE STATE OF NEW YORK 
COUNTY OF QUEENS 

THE COUNCIL OF THE CITY OF NEW YORK, 
PETER F. VALLONE, SPEAKER OF THE 
COUNCIL, and ENOCH H. WILLIAMS, CHAIR OF THE 
COUNCIL HEALTH COMMITTEE, 

Plaintiffs, Index No. 004897-96 

- against - 

RUDOLPH W. GIULIANI, THE MAYOR OF THE CITY AMENDED COMPLAINT 
OF NEW YORK, NEW YORK CITY HEALTH AND 
HOSPITALS CORPORATION, and NEW YORK CITY 
ECONOMIC DEVELOPMENT CORPORATION, 

  

Defendants. 

Plaintiffs, The Council of the City of New York (the “City Council”), Peter F. 

Vallone. Speaker of the City Council and Enoch H. Williams, Chair of the City Council 

Health Committee. by their attorneys, Tenzer Greenblatt LLP and Richard M. Weinberg, for 

their complaint allege as follows: 

NATURE OF THE CASE 
  

l. This is an action to declare and mandate that the defendants Rudolph W. Giuliani, 

Mayor of the City of New York (the “Mayor™), the New York City Health and 

Hospitals Corporation (the “HHC™), and the New York City Economic Development 

Corporation (“EDC”) must 

87000/0006'ELS/247312. 

 



a. submit to the City Council for approval any and all proposed transfers, sales, 

    

  

and/or subleases by the HHC to private lessees of the HHC hospitals including 

Coney Island Hospital, Queens Hospital Center and Elmhurst Hospital 

pursuant to the Health and Hospitals Corporation Act, Unconsolidated Laws § 

7381, et seq. (the “HHC Act”); and 

b. comply witn the Uniform Land Use Review Procedures (“ULURP™) of Section 

197-c and 197-d of the New York City Charter (the “City Charter”), which 

require City Planning Commission and City Council approval of any transfers 

or dispositions of HHC hospitals. 

to
 Such a declaration is necessary because the Mayor and the other defendants have 

acted and are continuing to act in furtherance of their wrongful Coonan that 

a. only the Mayor's approval is required for the proposed subleases under the 

HHC Act and not the City Council's: and 

pb. the transfer or disposition into private hands of these City-owned properties is 

not subject to ULURP. 

3. The Mayor's position described in the previous paragraph contravenes and subverts 

the intention of the HHC Act, which authorized the disposition of HHC facilities 

subject to the Board of Estimate’s local legislative power. a power which now, 

pursuant to the City Charter currently in effect. vests wholly in the City Council. 

4. The Mayor's calculated and unlawful effort to preclude City Council review of any 

87000/0006 ELS 247312. 

 



    1 . . 
1 

[ 

. . . 

plan to dispose of HHC hospitals and property represents not only a radical departure 

  

from the system of checks and balances provided for in both the HHC Act and the 

City Charter, but also an attempt to curtail public debate about a plan which would 

impose a dramatic change in the health care policy of the City having its greatest 

impact upon the indigent. 

1HE PARTIES 

S, The City Council is the independent legislative branch of the government of the City 

of New York (the “City”). City Charter § 21. Plaintiff Peter F. Vallone is Speaker 

of the City Council and plaintiff Enoch H. Williams is Chair of the City Council 

Health Committee. 

6. The Mayor is the chief executive officer of the City. City Charter, § 3. 

id The HHC is a public benefit corporation which was created in 1970 under the HHC 

Act for the purpose of assuming responsibility for the operation of the municipal 

hospital system of the City. Unconsolidated Laws § 7381. er seq, 

8. The EDC was established pursuant to State not-for-profit corporation law and is a 

local development corporation that acts on behalf of the City. pursuant to a contract 

funded by the City budget. with respect to certain commercial real estate, economic 

development matters and privatization projects. The majority of the EDC Board is 

appointed by the Mayor, and the President of EDC Board of Directors Sirves at the 

pleasure of the Mayor. 

87000/0006/ELS/247312. 

 



    

STATEMENT OF FACTS 
  

Creation of the HHC 
  

9. Prior to July 1, 1970, the City constructed, maintained and operated hospital facilities 

in all five boroughs providing general chronic, ambulatory and skilled nursing care to 

residents of the City and particularly those who could not otherwise afford hospital 

Services. 

10. On July 1, 1970, New York State enacted the HHC Act, Unconsolidated Laws § 

7381, er seq, creating the HHC and authorizing the City to transfer the municipal 

“hospital facilities to HHC for the purpose of maintaining and operating them. 

11. The statutory mission of HHC is to provide comprehensive physical, mental health, 

and substance abuse to the ill and infirm of the City, “particularly to those who can 

least afford such services,” U.L. § 7382. consistent with the State’s mandate 

contained in Article XVII of the New York State Constitution which provides that 

§ 3 The protection and promotion of the health of the inhabitants of 

the state are matters of public concern and provision therefor 

shall be made by the state . . . as the legislature shall from time 

to time determine. 

§ 4 The care and treatment of persons suffering from mental 

disorder or defect and the protection of the mental health of the 

inhabitants of the state may be provided by state and local 

authorities and in such manner as the legislature may from time 

to time determine. 

Upon information and belief, the HHC operates the largest municipal hospital system 

87000/0006/ELS/247312. 

 



    : . 

® ! | rR 

[ 

in the United States and, as a governmental health provider, is second in size to the 

  

U.S. Department of Veteran Affairs. 

12, The HHC was created at the request of the City in part to permit independent 

financing of municipal hospital construction and improvements and to facilitate 

professional management of the hospital system. At the same time, the City’s 

intention was tC 11Su.¢ ix aorninion and control over the HHC. Since iis cieation, 

the City’s dominion and control of HHC has been achieved by the following 

provisions of the Act: 

a. The HHC’s funding has been derived from inclusion in the City budget, 

commencing with its submission of its program budget to the City in time for 

inclusion in the Mayor's executive budget. HHC Act. U.L. § 7386(1)(a), and 

culminating with its inclusion in the City budget which the City Council has 

the sole authority to adopt. | 

b. The City has the right to acquire any health facility held by the Corporation. 

Id.. § 7386(2)(b). 

g. The HHC must exercise its powers in accordance with policies and plans 

determined by the City. Id.. § 7386(7). 

d. Employee grievances are conducted in accordance with the New York City 

Administrative Code. Id., § 7390(5)-(8). 

e. The HHC is dependent upon agents, employees and facilities of the City, 

87000/0006/ELS. 247312. 

 



  

13. 

14. 

IS, 

    

A Hn KJ 

whose availability is at the pleasure of the Mayor. Id., § 7385(19). 

The HHC, therefore. unlike other public benefit corporations such as the 

Metropolitan Transportation Authority or the Urban Development Corporation, 

is and was intended to be an instrumentality of the City. 

In addition, the HHC Act gives the Mayor personal appointive domination over the 

Board of Directors of HHC, which: consists of 16 persons. The Chair is designated 

by the Mayor. Four other members who serve ex officio are heads of City agencies 

also appointed by the Mayor. Five additional members are appointed by the Mayor. 

Five members are designated by the City Council. The remaining director is the 

Chief Executive Officer of the Corporation chosen by the other 15 directors. HHC 

Act, U.L. § 7384. 

As a check on the Mayor's appointive power over the HHC Board of Directors 

and his power to propose changes in ownership of HHC facilities. the HHC 

Act further provides that no health facility or other real property acquired from 

the City or constructed by the Corporation may be sold or leased or otherwise 

transferred without the consent of the Board of Estimate of the City. Id., §§ 

7385(6): 7387(4). 

In 1970. at the time of the passage of the HHC Act. the Board of Estimate 

consisted of three members who were elected Citywide (the Mayor, the 

President of the City Council and the Comptroller), plus the elected presidents 

87000/0006/ELS 247312. 

 



    { hj 
’ 

L] 

of each of the City’s five boroughs. It had both executive and legislative 

  

functions. The Mayor, President of the City Council and the Comptroller 

were each entitled to cast four votes on the Board of Estimate; each of the 

borough presidents had two votes for a total of 22 votes. Therefore, although 

the Mayor had four votes, any combination of 12 votes could, after a public 

hearing, defeat any proposal the Mayor put forth before the Board of Estimate. 

City Charter, § 62(a) (1968). 

. 16. In response to the determination by the United States Supreme Court in Morris 

v. Board of Estimate, 647 F. Supp. 1463 (E.D.N.Y. 1986), aff'd, 831 F.2d 

384 (2d Cir. 1987), aff'd, 489 U.S. 688 (1989) that the Board of Estimate’s 

voting scheme was unconstitutional. the 1989 Charter Revision process 

abolished the Board of Estimate and restructured the City’s government. 

17. The current City Charter, which became effective on January 1. 1990, vests 

exclusive local legislative power in the City Council, City Charter, § 21, and 

oversight authority in it and its committees. City Charter. § 29. 

18. It is clear that the City Council has succeeded to the role of the Board of 

Estimate under the HHC Act, because the Act contemplates that there will be a 

local legislative restraint on certain HHC-related decisions proposed by the 

Mayor. The Board of Estimates approval power under the HHC Act, | 

accordingly, devolved to the only local legislative body of the City, the City 

87000/00"6/ELS/247312. 

 



Council. See City Charter, § 1152(c). 

HHC'’s Role Since Its Creation 
  

19. The State Constitutional mandate to provide health care for the indigent is 

reflected in Section 1 of the HHC Act and, moreover, in the operating lease 

between the City and the HHC. 

On or about July 10, 1970, the Ciiy :casea ali of its hospital facilities to HHC, 

for an annual rent of $ 1. The lease extends for as long as the HHC has a 

corporate existence. At all times since July 10, 1970, the HHC has operated 

the hospitals under the lease. There are eleven such HHC hospitals City-wide, 

but as of the filing of this complaint. there are three hospitals. Coney Island 

Hospital. Queens Hospital Center and Elmhurst Hospital Center (the “Target 

Hospitals ™), which the Mayor proposes to dispose of in this first round of 

privatization. 

The Target Hospitals form a significant part of the HHC system. Coney 

Island Hospital is the largest medical facility in South Brooklyn. serving a 

population of 750,000. Queens Hospital Center and Elmhurst Hospital Center 

are the only acute care municipal hospitals in the Borough of Queens. 

Moreover, the three Target Hospitals are the primary sources of health care 

for low income and indigent residents of the areas which they serve, including 

Medicaid and Medicare recipients and indigent patients with special needs such 

87000/0006/'ELS/247312.  



  

22. 

23. 

    

pe | 

AJ 

as AIDs. TB, mental illness and homelessness. The Target Hospitals operate 

extensive ambulatory programs, outpatient departments, emergency rooms, 

alcoholism and drug treatment programs, methadone maintenance clinics, 

neighborhood psychiatric facilities and alternative care. 

The Target Hospitals also treat and admit many uninsured and underinsured 

patients. Hospitals outside the nC sysiem are only required by State law to 

treat uninsured patients when there is an emergency need for immediate 

hospitalization. Public Health Law § 2805-b. 

Medical services provided to the City’s uniformed services (the Police and 

Fire Departments) are provided by HHC hospitals including the Target 

Hospitals. 

The Mavor’s Privatization Plan 
  

24. 

26. 

In 1994. the Mayor publicly announced his intention to privatize the leased 

hospitals by transferring them from HHC to private voluntary (i.e.. non-HHC 

hospitals) hospitals in order to relieve the City of some or all of the expense 

necessary for their operation. 

The HHC hospitals targeted for the first stage of this massive privatization 

program (the Mayor's “Asset Disposition Program™) are the aforementioned 

Coney Island Hospital, Queens Hospital Center and Elmhurst Hospital Gener. 

In this first wave of privatization of City hospitals. the Mayor initially 

87000/0006/ELS 247312. 

 



  

27 

29. 

30. 

  

i) EET ® 
proposed the sale of the Target Hospitals. But, apparently. because of the 

perpetual lease between the City and HHC, he unilaterally restructured the 

form of the transactions so as to provide for long-term (99 year) subleases 

from the HHC to the selected sublessees. The transactions are, however, in 

purpose and effect sales, and are referred to as such in the City’s privatization 

Offering Memoranda which also refer to the potential lessees as “purchasers.” 

The Mayor has made clear that he views the HHC as a vehicle which he can 

control, and that he alone has the authority to transform the health care system 

of the City without the scrutiny, much less the approval. of the HHC Board, 

the City Council and other public officials. 

The Mayor has exercised his dominion and control over the HHC and the 

Asset Disposition Program from its very inception. The Mayor announced the 

proposed transfers of the Target Hospitals without consulting with, much less 

obtaining approval from the HHC Board. in violation of U.L. § 7384 which 

vests the powers of the HHC in the Board. 

The Mayor has imposed a veil of secrecy on the privatization process such that 

essential. material information has been routinely withheld from HHC's Board 

of Directors and others legally entitled to such information. 

Indeed. management of the disposition of the Target Hospitals has been 

withheld from HHC and put instead into the hands of the EDC, an agency 

-10- 

87000/0006 ELS/247312. 

   



  

31. 

32. 

33. 

      

controlled by the Mayor. The HHC Board was not consulted nor did it 

® 

|] 

. 

approve of such management. 

In August 1994, without consulting with or obtaining the approval of the HHC 

Board, the EDC directly retained J.P. Morgan Securities, Inc. (“J.P. 

Morgan”) to act as the financial advisor with respect to the plan to privatize 

the Target Hospitals. 

In 1995, J.P. Morgan rendered a report to the Mayor concluding that the 

current milieu in health care provided an excellent opportunity for the City to 

privatize the Target Hospitals. The HHC Board did not review or authorize 

this report or its recommendations and did not receive it until after it was 

made public. 

On February 23, 1995, in a press release, without consulting with or obtaining 

the approval of the HHC Board. the Mayor announced that the City would 

move forward in its effort to privatize the Target Hospitals. In this 

connection. and without consulting with or obtaining the approval of the HHC 

Board. the Mayor created and alone appointed an “Advisory Panel” to study 

the sale of the Target Hospitals. 

The HHC Board of Directors has never approved the Mayor's decision to 

privatize the Target Hospitals. To the contrary, in April 1995, five members 

of the HHC Board wrote to the Mayor complaining that the HHC Board had 

11- 

87000/0006/ELS/247312. 

 



  

35. 

36. 

38. 

  

eo -. ® 

not been consulted with respect to the proposal and, upon information and 

belief, they received no response to their letter. 

Thereafter, on August 1, 1995, without consulting with or obtaining the 

approval of the HHC Board, EDC, acting on behalf of the Mayor, entered into 

an agreement with J.P. Morgan as financial advisor for the purpose of 

unplementing the Mayor’s plan to privatize the Target fospitals. The J.P. 

Morgan agreement provided no role for the HHC Board, reserving, instead, 

for EDC the right to accept or reject, in its sole discretion, any proposed 

transaction. 

On or about October 26, 1995. the EDC issued two Offering Memoranda 

prepared by J.P. Morgan for the privatization of the Target Hospitals. The 

Offering Memoranda were never submitted to the HHC Board for its advice, 

comment or approval. 

EDC retained counsel to handle the legal aspects of the transfer of the Target 

Hospitals. The HHC Board was never consulted about nor did it approve of 

such retention of counsel. 

Following the issuance of the Offering Memoranda. the Mayor and EDC have 

ignored the efforts of the City Council to exercise its State-and City Charter- 

given authority regarding the disposition of the Target Hospitals. On October 

30. 1995, City Council Speaker Peter F. Vallone wrote to the Mayor. In that 

87000/000¢/E£31.S/247312. 

 



letter, Mr. Vallone stated, in part: 

I request that, notwithstanding statements by your office to the contrary, you 

recognize the vital legal role the City Council must play in any effort to lease 

the aforementioned hospitals. We can and should work together, in the spirit 

of cooperation, to develop a plan that provides quality health care in a cost- 

effective manner to all of the citizens of our City. 

The Council, pursuant to State Law and the City Charter, has an obligation to 

~lav » cignificant role in any effort by the Fivv ta sell transfer or lease the 

inn) facilities]. Specifically, pursuant 10 visu..suinuaiea Laws Sections 7385 

and 7387(4), the City Council, as the successor in interest to the Board of 

Estimate in this connection, has an obligation to approve of any such sale, 

transfer, lease or sub-lease. Moreover, under Section 197-c of the New York 

City Charter, the City Council must approve of any change or contract 

respecting the use, development or improvement of real property of the City. 

The real property underlying the three aforementioned hospitals is such City 

property. 

* %* % 

I respectfully urge you to recognize the City Council's legal role in this 

process, so that it will not become necessary to transform this matter into a 

legal battleground where the City Council or concerned citizens must seek - 

court intervention to vindicate their rights. I emphasize that the preferable 

course is to work together to develop a cost-efficient solution that safeguards 

the health care of the citizens of the City of New York. 

I look forward to your reply. 

The Mavor never answered Speaker Vallone's letter of October 30, 1995. 

The City Council's concerns, expressed by Speaker Vallone. are not the only 

ones that have been ignored by the Mayor. City Comptroller Alan G. Hevesi 

has written two letters, in September and November 1995, both of which, 

upon information and belief, have gone unanswered. The subject of 

Comptroller Hevesi's letters was, like that of Speaker Vallone's, the fact that 

87000/0006/ELS 247312.  



    ' 5 

“ : 

  

the City has done little or no analysis with regard to maintaining health care 

for the indigent. 

41. Indeed. conspicuously absent from all J.P. Morgan reports and from the 

Offering Memoranda, and still unaddressed by the Mayor's Advisory Panel, is 

any meaningful plan, consistent with Article XVII of the New York State 

Cousitiuiion, regarding the provision of and funding for medica: care aud 

facilities for the indigent after a sale of the Target Hospitals. Since the 

disposition of the Target Hospitals is only the first phase in a much larger 

privatization plan involving many more HHC facilities, there is a critical need 

for a concrete program to address, at the outset. continuation of 

comprehensive health care for the indigent. how medical services will be 

provided to the City's uniformed services. and how funding will be handled 

for all of the foregoing needs. The City Council's role in developing such a 

plan is not only vital from a policy standpoint. but legally certain and 

necessary. 

On information and belief. the Mayor is on the verge of consummating deals FN
 = 

for the disposition of the Target Hospitals. The Mayor has continued to keep 

the hospital privatization process secret. He has refused to inform the City 

Council. the Comptroller and even the HHC Board itself of the identities of 

the parties whose bids for the Target Hospitals were received in February. 

-14- 

87000/0006/ELS/247312. 

 



    

4 . 

» 

Deputy Mayor Peter Powers, asked recently why no details of privatization or 

  

of the bids received by the City were being given to the City Council, told 

Newsday in February 1996: “They don’t have a right to have a say in this.” 

FIRST CAUSE OF ACTION 
  

43.  Plamiffs repeat and reallege the allegations of paragraphs 1 through 4Z as 

though fully set forth herein. 

44. In the HHC Act, the State Legislature imposed the requirement that HHC 

could not sell, transfer or lease any of its facilities to any other agency, entity 

or group without the approval and consent of the City's Board of Estimate. 

U.L. § 7385(6) and 7387(4). In so authorizing the Board of Estimate, the 

State Legislature imposed a local legislative check to restrain the Mayor from 

making certain critical decisions respecting health care services in the City 

without the input of a City legislative force. 

45. The devolution of that power to the City Council is certain since the State’s 

unchanged statutory scheme contemplates that the Mayor could initiate 

proposals and control the HHC's decision-making through his appointive 

powers, but that a local legislative body would scrutinize and ultimately 

approve or disapprove certain important actions by the HHC. 

46. Despite the intent of the HHC Act to require local legislative approval, the 

-15- 

87000/0006/ ELS/247312. 

 



    
Mayor and his counsel contend that under the new City Charter. the power to 

  

dispose of the property of the City has devolved solely upon the Mayor. In 

the Mayor's view, therefore, he alone could propose the sale. transfer or lease 

of any HHC facility and thereafter, he alone would have the power to approve 

the terms of such disposition on behalf of the City. In the Mayor’s view, he 

may act unilateiaily and unchecked by any local legislative boay in 

contravention of the HHC Act’s legislative intent. 

47. The Mayor's position described above subverts the intent of the HHC Act that 

any disposition of the HHC facilities be subject to local legislative approval, a 

role which the new City Charter vests wholly in the City Council. The 

Mayor's unilateral abrogation of power is designed to shut the City Council 

and even the HHC Board out of the privatization process and to prevent them 

from exercising their rightful roles under the HHC Act and the City Charter. 

Such action by the Mayor is especially egregious given that privatization of the 

HHC facilities will bring about an unprecedented transformation in the 

delivery of health care to the indigent and to the City, particularly to the City’s 

uniformed services. 

SECOND CAUSE OF ACTION 
  

48. Plaintiffs repeat and reallege the allegations of paragraphs 1 through 47 as 

though fully set forth herein. 

+16- 

87000/0006/ELS/247312. 

 



    ’ 1 
x “ 

) ¥ 

The new City Charter, in addition to abolishing the Board of Estimate, 

  

instituted ULURP as a means to insuring community, borough and City 

Council participation in any sale or lease of City property. In pertinent part, 

ULURP is required whenever there is a sale, lease . . . exchange or other 

disposition of the real property of the city. . . .° City Charter § 197-d(e). 

50. The Mayor contends that the privatization of the Target Hospitals does not 

require ULURP because the transactions consist of subleases by the HHC to 

private institutions. 

51. This contention ignores the fact that the HHC is an instrumentality of and 

under the dominion and control of the City and that even if it were not under 

the City's dominion and control, the subleases constitute, in form and 

substance. a disposition of real property of the City which requires the 

application of ULURP. 

THIRD CAUSE OF ACTION 
  

32: Plaintiff repeats and realleges the allegations of paragraphs 1 through 51 as though 

fully set forth herein. 

53. Pursuant to General City Law, §23 and the City Charter § 384 real property of the 

City may not be leased except for the highest marketable rental at public ion or 

by sealed bids, in the absence of a local law otherwise so providing. 

37. 

87000/0006/ELS/247312. 

 



      

. 
' : 

> + 

L ¥ 

The proposed subleases of the Target Hospital by negotiated subleases made without 

the approval of the city council is in violation of said provisions. 

WHEREFORE. plaintiffs demand judgment 

A. 

87000/0006/ELS/247312. 

declaring that the privatization of the Target Hospitals by means of a 

sublease (or other device) to private institutions requires the approval of 

the City Councu, 

declaring that any sale, transfer or lease of any other HHC facilities 

likewise be subjected to City Council approval: 

declaring that such disposition also requires the application of New 

York City's Uniform Land Use Review Procedures: 

permanently enjoining defendants from selling, leasing or otherwise 

disposing of any HHC hospital or real property prior to submitting and 

obtaining the necessary approvals of the City Council: 

mandating that the Mayor and EDC. as an agency funded by the 

City and expending City funds in connection with its conduct in 

relation to the HHC. provide the City Council with all requisite 

information pursuant to Section 29 of the City Charter: and 

-18- 

 



  

Dated: 

87000/00u,/TLS/247312. 

  

granting plaintiffs such other and further relief as the Court may deem 

just and proper. 

New York, New York 

July 18, 1996 

-19- 

  

TENZER GREENBLATT LLP 
Attorneys for Plaintiffs 

The Chrysler Building 

405 Lexington Avenue 

New York, New York 10174 

(212) 573-4300 

-and- 

RICHARD M. WEINBERG, ESQ. 

General Counsel 

The Council of the City of New York 

Gail R. Zweig 
Of Counsel 

75 Park Place 

5th Floor 

New York, New York 10007 

(212) 788-7000 

 



    

r 5 ES) 
STATE OF NEW YORK .° 7 ey me 
COUNTY OF NY yo oon, 4 

, being duly sworn, 

deposes and says: 

[] AFFIDAVIT OF SERVICE BY MAIL 
  

That I am over 18 years of age, not a party to this action and reside 

That on the day of , 19 , I served the 

within 
upon the following attorney(s), for the part(y) (ies) and, at the address(es), indicated below and designated by 

said attorney(s) for that purpose: 

Party Attorney Address   

by depositing a true copy or copies, of the enclosed in a properly addressed wrapper in an official depository 

under the exclusive care and custody of the United States Postal Service within the State of New York. 

© © 8 6 8 © 5 8 8 8 8 8 8 8 8 8 8 6 8 SS 6 GS 6 8 SP GG GS SSS OL LES Ge ee ees soe 

[] AFFIDAVIT OF PERSONAL SERVICE 
  

That I am over 18 years of age, not a party to this action and reside 

That on the day of , 19 , I served the 

within 

upon 

the 
herein, by delivering a true copy thereof to 

personally. Deponent knew the person so served to be the person mentioned and described in said papers as 

the therein. 

© © © 6 8 5 9 8 8 5 8 5 8 8 8 8 8 8 8 8 6 8 8 SS 8 8S 8 ST GE SOG eG 0 Es ee es eee 

© © 8 5 © ® 8 8 8 8 8 8 8 8 8 8 SSS 8 SG EG 8 8 GS 6 6 8 OG 0 0 6 0 5 GO 6 Gs es ee eo 

Notary Public 

[1 CERTIFICATION BY ATTORNEY 
  

certifies that the within has been compared 

by the undersigned with the original and found to be a true and complete copy. 

Dated: rR Seles vi seals a wer Seat n I AT Wie Tee aw io 0a 4 wins  



    

  

  

INDEX NO. 004897-96 

SUPREME COURT: STATE OF NEW YOR 

COUNTY OF QUEENS 

i 

  

  

THE COUNCIL OF THE CITY OF NEW 

YORK, et al., 

Plaintiffs, 

-against- 

RUDOLPH W. GIULIANI, et al., 

Defendants. 

  

  

NOTICE OF CROSS-MOTION FOR 

SUMMARY JUDGMENT WITH 

SUPPORTING AFFIDAVIT 
  

  

TENZER GREENBLATT LLP 

Attorneys for Plaintiffs. 

405 Lexington Avenue, New York, N.Y. 10174 

(212) 885-5000 

  

      Due and timely service of a copy of the within 

is hereby admitted. 

Dated, N.Y,, 

Attorney For

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