Hartford Business Journal

12 HARTFORDBUSINESS.COM | AUGUST 5, 2024 Kyle Kramer since 2020 has been the CEO of independent Day Kimball Healthcare. CONTRIBUTED PHOTO At A Crossroads Following Covenant Health deal collapse, independent Day Kimball Healthcare still in search of merger partner Rural hospital designation That has involved a number of initiatives — some aimed simply at righting the financial ship, like moving outstanding defined pension liabili- ties to a new entity. Other moves involved narrowing Day Kimball's focus on care that makes sense within this rural, aging community. "When you're 104 beds, you're not going to be doing complex cardiac surgery, you're not going to do complex craniotomies or things like that," Kramer said. "But you do have a responsibility to be a very strong provider of community health." The hospital has also been looking anywhere it can for financial support. Over the last two years, it has secured $17 million in appropriated funds from the state of Connecticut, and attracted several federal grants that have been used to replace imaging equipment and make upgrades to informatics and telehealth platforms. Even still, the hospital system has faced financial headwinds. In fiscal year 2023, Day Kimball Healthcare reported a $13 million operating loss on $145.5 million in total revenue vs. a $1.9 million loss on $145.6 million in revenue a year earlier, according to its audited financial statements. Kramer says the large swing can be attributed to several factors, including accounting for the final settlement and transition of the pension plan, and high labor costs. Also, the hospital had previously held off on needed capital improvements in anticipation of the Covenant deal – after its collapse, the hospital had no choice but to make the investments on its own. Another key change that Kramer has lobbied for at the federal level is about to become a reality. Despite sitting in a town of just 7,000 people in Connecticut's Quiet Corner, at the moment, Day Kimball is offi- cially classified as an urban facility, because it is just 26 miles from Worcester, Mass. That will change on Oct. 1, when the hospital is reclassified as a rural entity. "We may have the opportunity to gain grant funding that we histori- cally wouldn't have had the ability to access, or programs that are related to rural health organizations that we've not been able to capitalize upon," Kramer said. Other benefits include the ability to recruit staff who may need special visa considerations, and crucially, an improved reimbursement rate for government healthcare services. "Is it going to be something that puts us in a position where now everything is perfect and wonderful? No, but it definitely helps," Kramer said. "Sixty-five to 70 percent of our population is covered by federal or state health plans, Medicare or Medicaid. That doesn't leave a lot of commercial insurance to offset some of those challenges, which makes every single decision, every single effort that we make even more important for this community." By Harriet Jones Hartford Business Journal Contributor "I t's affectionately referred to as the hospital on the hill," Kyle Kramer said. Since 2020, Kramer has been the CEO of Day Kimball Healthcare, the organization that owns and runs Day Kimball Hospital, which is perched on a hill overlooking the old mill town of Putnam, in Connecticut's rural northeast corner. "You drive around this region and you talk to community members — there are many who were born at this hospital, received care at this hospital, or have had family members cared for at this hospital," Kramer said. "There is a very strong affinity towards the organization on a community-wide basis." It's also one of Connecticut's few remaining independent hospitals — something Kramer has spent a lot of time in his post trying to change, seeking strategic partnerships with a larger group. "Our view is still very much that, long-term, we're going to need a partner," he said. "There are things that we can do on our own. But when you look at our size, and you look at the financial performance of an organi- zation this size, we can stay steady- state. What we don't have is the ability to invest in the next level of tech- nology, or the next level of service." Even before Kramer's tenure, Day Kimball explored an affiliation with California-based Prospect Medical Holdings — the financially troubled hospital chain that owns and is now trying to sell Manchester Memorial, Waterbury and Rockville General hospitals — but a deal never materialized. Kramer's own first swing at a deal came as he negotiated a sale to Massachusetts-based Covenant Health, a Catholic system that currently owns facilities in every New England state except Connecticut. The proposal was controversial with some members of the commu- nity because of concerns that Cath- olic Covenant would remove some reproductive, gender-affirming and end-of-life services at Day Kimball. But in March 2023, after months of negotiation, Covenant abruptly pulled out of the deal, something Kramer says caused "shock, anxiety and distress." He attributes the end of the deal not to the local opposi- tion, but to Covenant's internal financial struggles. "Everything seems like it's going to be a perfect union," he remem- bered. "But when the organization that you're assimilating into lost $92 million in operations and lost another $45 million in the market, the board says, 'maybe we need to fix ourselves before we bring somebody else into the family.'" The end of that deal may have hurt, but Kramer says it has led to better things at Day Kimball. "With our board and executive leadership team, we circled the wagons," he said. "We had a plan." DAY KIMBALL HEALTHCARE INC. FINANCIAL SNAPSHOT FISCAL 2023 FISCAL 2022 TOTAL REVENUE $145.5M $145.6M TOTAL EXPENSES $158.5M $147.5M OPERATING LOSS -$13M -$1.9M Source: Audited financial statement

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