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Montefiore and Our Lady of Mercy Form Common Parent Entity

Montefiore Health System, Inc., Intends to Expand Services,
Enhance Healthcare Delivery

New York City, NY (January 26, 2006) — Montefiore and Our Lady of Mercy Medical Centers today announced they have closed the transaction establishing a multi-functional, integrated healthcare delivery system — called the Montefiore Health System (MHS) — through the creation of a common parent of Montefiore Medical Center, Our Lady of Mercy Medical Center and Our Lady of Mercy Ambulatory Care Center, Inc.

The parties initially agreed to negotiate this affiliation in a letter of intent signed in July 2004. The definitive agreement, signed January 5, 2006, describes the intent to realize economies of scale, share services, leverage medical information technology and facilitate closer working relationships between physicians at the two medical centers through the common parent.

"Under a common parent, our two medical centers, which are just a few miles apart, can have advantages that neither medical center could have alone," said Montefiore Health System President Spencer Foreman, MD, who also serves as president of Montefiore Medical Center. "We can leverage purchasing power, better manage expenses and take advantage of many synergies in services, notably in ambulatory care, geriatrics and oncology. In so doing, we will be enhancing the quality of healthcare delivery for patients in the communities we serve."

"Like many hospitals in New York State, Our Lady of Mercy has faced some financially challenging times in recent years, which has resulted in net losses for our medical center," said Richard Celiberti, who became Chief Executive Officer of Our Lady of Mercy Medical Center in January 2004.

"We have undergone financial restructuring and, now through this agreement, we are hopeful we can further strengthen our ability to provide quality health services to the community," said Celiberti. "We are very excited about being affiliated with a world class medical center such as Montefiore through the Montefiore Health System."

"We would like to acknowledge the many people and organizations that have provided support for this move, including the Governor's office, State Hospital Review and Planning Council, Public Health Council, Department of Health, Dormitory Authority of the State of New York, 1199/SEIU, Greater New York Hospital Association and HUD," said Celiberti.

The definitive agreement provides for the following:

- Montefiore Medical Center and Our Lady of Mercy will remain separate corporations.

- The new parent entity (MHS) will replace Catholic Health Care System (CHCS) as Our Lady of Mercy's member. CHCS will have representation on the Board of Trustees of Montefiore Health System, Inc., for a period of time.

- For a period of at least three years (subject to certain conditions), Our Lady of Mercy will continue to operate in a manner that preserves its Catholic identity and adheres to the Church's ethical and religious directives. The Our Lady of Mercy name will be retained.

- For a period of at least five years (subject to certain conditions), Our Lady of Mercy's affiliation with New York Medical College will continue.

"It is critical that employees and the community at large understand that the formation of the Montefiore Health System is not predicated on closing facilities, curtailing services or reducing the employee base," said Dr. Foreman. "Our vision is to expand services, reduce costs and enhance an already high standard of healthcare delivery for patients in all the communities we serve."

About Our Lady of Mercy

Founded in 1887 by the Misericorde Sisters of Montreal, Our Lady of Mercy Medical Center is a non-profit teaching community hospital comprised of an acute care medical campus, medical villages and ambulatory care centers. Our Lady of Mercy serves the Bronx and Westchester counties of New York, caring for more than 120,000 patients each year. The medical center is known for its excellence in the areas of geriatrics, cardiology, oncology, maternal and child health, gastroenterology and psychiatry.

About Montefiore

Montefiore Medical Center, The University Hospital and Academic Medical Center for the Albert Einstein College of Medicine, ranks among the top one percent of all US hospitals based on its investments in medical innovation and cutting-edge technology. Montefiore believes these investments enable compassionate, personalized care and the most positive outcomes for patients and their families in New York, the tri-state area and beyond.
Montefiore's unique combination of 'state-of-the-art' technology with 'state-of-the-heart' medical and nursing care in a teaching and research environment provides patients with access to world-class medical experts, the newest and most innovative treatments and the best medical center experience anywhere.

This 1,062 bed medical center includes the Henry and Lucy Moses Division, the Jack D. Weiler Hospital and The Children's Hospital at Montefiore, a large home healthcare agency and a 21-site medical group practice located throughout the Bronx and nearby Westchester.
Montefiore treats all major illnesses and has distinguished centers of excellence in cardiology and cardiac surgery, cancer care, tissue and organ transplantation, children's health, women's health, surgery and the surgical subspecialties. Montefiore Medical Center focuses on providing family-centered healthcare in a nurturing environment that extends well beyond hospital and clinic walls.