Hartford Business Journal

January 31, 2022

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20 HARTFORDBUSINESS.COM | JANUARY 31, 2022 FOCUS: Health Care By Robert Storace rstorace@hartfordbusiness.com I t's no secret that Connecticut's roster of independent hospitals has been shrinking over the past decade. While some unaffiliated hospital CEOs still foresee an independent future, at least one said joining a larger healthcare group is inevitable due to financial constraints and pressures to keep up with modern- day technology, including electronic health records. The pandemic created even more uncertainty for smaller healthcare systems, particularly in 2020 when hospitals were forced to cancel key revenue-generating elective procedures, which led to lay offs and other cost-cutting measures just as many care providers were seeing an influx of COVID-19 patients. Subsequent state and federal support helped shore up many hospital budgets, but that didn't change the longer-term trajectory for some organizations. Case in point: Putnam-based Day Kimball Healthcare is in the process of moving toward an affiliation with Covenant Health Inc., a Catholic, not-for-profit health network based in Massachusetts. Day Kimball CEO Kyle Kramer said his hospital group began looking into affiliation options more than five years ago. It considered joining Hartford HealthCare, which operates several hospitals in the state including Hartford Hospital, and Yale New Haven Health, before pursuing an affiliation with Covenant Health. "We explored a partnership with several entities including Hartford HealthCare and Yale New Haven Health, but it was ultimately not a good fit for us, from a corporate standpoint and from a clinical alignment standpoint," Kramer said. If the Day Kimball deal is approved by state and federal regulators, it would be the first major Connecticut hospital affiliation or merger since 2019, when Hartford HealthCare completed its purchase of Bridgeport-based St. Vincent's Medical Center. While such consolidation has become commonplace, some have raised concerns about how the trend will impact competition in the marketplace and the overall cost and quality of health care. That issue came to a head earlier this month when St. Francis Hospital and Medical Center filed a federal lawsuit against its crosstown rival Hartford HealthCare, which, besides the St. Vincent's deal, has been active in buying up smaller medical groups. In its lawsuit, St. Francis Hospital accused Hartford HealthCare and its subsidiaries of trying to create a monopoly on hospital services by acquiring physician networks, particularly cardiologists, and demanding that they refer their patients only to Hartford HealthCare. Hartford HealthCare has said the lawsuit is without merit. Regardless of how that legal drama plays out, Hartford HealthCare and Yale New Haven Health are the dominant health systems in Connecticut. In fiscal year 2020, they collectively earned nearly 60% (or $9.5 billion) of the $15.9 billion in operating revenues reported by the state's 12 remaining hospital systems. By comparison, Day Kimball Healthcare reported $126.6 million in operating revenue in fiscal year 2020, and a $11.2 million operating loss, according to data compiled by Economies Of Scale Here's why one of CT's few remaining independent hospitals is seeking a larger affiliation partner Angela Mattie Day Kimball CEO Kyle Kramer said a key reason his hospital is seeking an affiliation with a larger partner is because of a significant investment needed in electronic health records. HBJ PHOTO | STEVE LASCHEVER

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