Budget

cuts stop

partnership

deal with

DKH

PUTNAM — Severe and unexpected cuts by the state of Connecticut to Medicaid payments have affected progress Day Kimball Healthcare (DKH) and Hartford HealthCare (HHC) were making toward a strategic partnership.

In July, the two organizations announced that they had agreed to work together to outline the terms of a proposed affiliation. The immediate goal was to allow HHC to provide management support for select operations determined by DKH. These agreements would have offered economies of scale to help DKH reduce its cost structure.

“Given the magnitude of the state’s cuts, it would be imprudent for us to consider moving forward with such a partnership at this time,” said James Blazar, Hartford HealthCare’s senior vice president and chief strategy transformation officer. “This reckless slashing of Medicaid funding makes it difficult for HHC to create a path forward with Day Kimball Healthcare right now. Both our organizations have just taken a gut punch.”

According to state estimates, HHC would stand to lose $55 million in the cuts and, as a result, needs to curtail major capital expenditures at this time. DKH expects these cuts to result in a $5.6-million loss in state funding to its revenue in this fiscal year.

 “Partnering with HHC represented a real opportunity for us to benefit patients and strengthen our finances. We are disappointed that these budget cuts affected HHC’s ability to work towards this opportunity at this time,” said Robert Smanik, FACHE, DKH’s president and chief executive officer. “In addition to this lost opportunity, the budget cuts also caused DKH to lose the small hospital funding that our legislators were successful in restoring just months ago. Despite these challenges, DKH is working diligently to mitigate these revenue losses, and will continue to explore all strategic opportunities for continued growth and expansion.”

Blazar praised DKH’s administration and board for their collaboration in the partnership exploration, and held out the possibility that — with restored funding or under calmer financial circumstances — an affiliation is still desirable.