The Brooklyn Hospital Center : 121 DeKalb Avenue Brooklyn New York 11201

A Letter From Mr. Jonathan M. Weld, Chairman of the Board,
and Mr. Samuel Lehrfeld, President & Chief Executive Officer

The Brooklyn Hospital Center's (TBHC) "new beginning" is proceeding on track. On September 30, 2005, TBHC announced that, in order to strengthen its financial position and its ability to serve its patients and community, it has filed voluntary petitions for reorganization under Chapter 11 of the United States Bankruptcy Code. We intend to use the reorganization process to address balance sheet and cash flow issues, and to further improve our operations.

On behalf of TBHC, we would like to assure our staff and our community that we are remaining focused on our commitment to our key constituencies throughout this process, and that the quality services that we provide will not be interrupted. The hospital and the Caledonian Health Center sites are continuing their normal operations.

TBHC has received approval from the Bankruptcy Court on several "first day motions," enabling us to continue to manage our operations in the ordinary course. Importantly, these approvals provide for TBHC to continue wage and salary payments and other benefits to our employees, and to pay our suppliers and vendors for supplies and services received after September 30.
To fund our continuing operations during the restructuring, TBHC has secured a $6 million debtor-in-possession (DIP) financing from the Dormitory Authority of the State of New York (DASNY). This financing also has been approved by the court, and is being used to supplement TBHC's cash from operations. We also are arranging a working capital/DIP financing of approximately $20 million from a commercial lender. This loan should be finalized within days and will be approved by the court in early November.
We have received an official letter stating that we have been granted full accreditation from the Joint Commission on Accreditation of Healthcare Organizations (JCAHO). Follow-up reports demonstrating compliance with the submitted plans for improvements are due to JCAHO in January 2006. It is this sort of accreditation that reiterates the high standards for which TBHC is best known.

These positive steps are tangible examples that we are heading in the right direction. As we stated in our earlier communications to you, we are confident that we are taking the logical steps in building a stronger future. Over the past several years, our services have been enhanced and expanded, and our operating cost structure is under control. TBHC's day-to-day business is very good. This filing strengthens our ability to continue in that direction.

Many of you are aware of our extensive "legacy" liabilities - including previous indebtedness and litigation, and insurance issues - that adversely affect our cash flow. We also have been very open in discussing these issues in telling you about our decision to file for Chapter 11 protection. The disciplined approach of Chapter 11 provides a process through which we can address these issues, as clearly demonstrated by the events since September 30.

We continue to be very busy throughout the hospital. Patient care is our main focus, and with that in mind, many quality improvements and educational projects have been introduced. Additionally, we have recruited Ms. Opal Sinclair-Chung, RN, as Senior Vice President for Nursing and Patient Care Services. Ms. Chung is a seasoned healthcare executive with more than twenty years of experience in clinical, operational and administrative leadership.

As we move through this important process, we look forward to continuing to provide our community with the best in medical care and the latest advancements in technology. We are confident that the TBHC will remain a leader in the healthcare industry and would like to thank all of our staff and employees for your continued hard work and dedication to The Brooklyn Hospital Center.