BUFFALO, N.Y. (Friday, May 7, 2004) - Kaleida Health continues to improve its financial outlook, announcing that the health system has successfully worked with the New York State Dormitory Authority, the federal Department of Housing and Urban Development, and the federal department of Health and Human Services to refinance approximately $100 million of debt securities.

The move will save Kaleida Health approximately $7 million in annual debt service costs.

"We will use the savings to invest in quality by making needed capital improvements", said William D. McGuire, chief executive officer of Kaleida Health. "We will also invest a portion in our employee pension fund."

On March 24, 2004 the Board of the New York State Dormitory Authority voted to approve Kaleida's refinancing of tax-exempt bonds. Bears, Stearns & Co. was the lead manager for the negotiated sale and Shattuck Hammond was Kaleida Health's financial advisor. The actual bond sale transaction was completed April 28, 2004.

The move is key to Kaleida's business plan to consolidate services, improve technology and complete renovations in the system. Kaleida Health financial officials have been working as early as 2002 with state and federal sources to restructure debt and approve new loans.

The $97.9 million bond sale comes on the heels of the 2003 year-end budget announcement that Kaleida realized a surplus of $2,035,000.

Since its inception in 1998, Kaleida had been saddled with major deficits while operating within its nearly $1 billion budget. In 2001, the health system lost over $62 million. In 2002, net losses came in at just over $13 million. Thus, the $2 million surplus in 2003 marked a huge turnaround for the health system.

"I am very confident in Kaleida Health's future and our ability to meet the health care needs of people in Western New York," said McGuire. "This was an important step."