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March 15, 2023

Covenant Health cancels Day Kimball hospital acquisition plan

Photo | Contributed Day Kimball Hospital in Putnam.
By Erica E. Phillips, CT Mirror

A controversial plan that would have seen Day Kimball Healthcare in rural northeast Connecticut become part of Massachusetts-based Catholic health system Covenant Health has been called off.

Representatives from Covenant and Day Kimball confirmed Tuesday that the deal, first announced over a year ago and nearing the end of a regulatory review process, would no longer be proceeding after Covenant decided to end the process.

“Obviously we are incredibly disappointed,” Day Kimball Chief Executive Kyle Kramer said Tuesday. “The reality is that this is a shock to us, and we obviously will be evaluating our next steps carefully, but we remain committed to continuing to serve as a strong employer and serving the health care needs of our region.”

Day Kimball signed an “affiliation agreement” with Covenant Health in November of 2021 and filed an application for Connecticut regulatory approval, known as a “certificate of need,” with the Office of Health Strategy last April.

The deal was billed as a way to maintain the hospital’s financial viability. Day Kimball is one of the few remaining independent hospitals in the state. Like other Connecticut hospitals, Day Kimball has faced steep challenges in recent years. Covenant’s acquisition would have brought the struggling health care system into a larger network, absorbing tens of millions of dollars of its debt. 

But almost immediately, the proposed affiliation faced opposition from a group of local residents who were concerned that Catholic ownership could limit services the health system provides in a part of the state where residents have few alternatives. 

Catholic health providers adhere to what are known as the Ethical and Religious Directives for Catholic Health Care Services, or ERDs, which restrict certain practices related to reproductive health, emergency contraception, fertility, gender-affirming, end-of-life and other care. 

Kramer insisted Tuesday that the canceled deal had nothing to do with the Catholic directives, suggesting instead that Covenant was likely facing the same financial challenges as other health care systems.

“The reality is this was purely a financial decision based on [Covenant’s] likely ability to fulfill the obligations required in the affiliation,” he said.

Over the course of the certificate of need proceeding, in communications with the hospital’s leadership, the Office of Health Strategy had asked in detail how Day Kimball would ensure access to those services that would be terminated as a result of adopting the ERDs. They inquired whether Day Kimball would provide referrals and transportation for patients seeking those services; whether Day Kimball’s home and hospice care operations would be subject to policy changes; and they requested further details on Day Kimball’s financial challenges. 

Hundreds of pages of documentation were submitted by the hospital and regulators. State lawmakers weighed in. And dozens of community members submitted testimony, many with concerns about Catholic ownership and many worried that without that new ownership the hospital could fail. Beyond being one of few health care options in one of the state’s rural regions, Day Kimball is also one of the region’s largest employers.

Earlier this month, the legislature’s Public Health Committee heard testimony on a bill that appeared to address the issues raised in the Covenant-Day Kimball deal, “An Act Concerning Patient Access to Reproductive Health Care.” Members of the group Save Day Kimball Healthcare and the American Civil Liberties Union, which opposed the merger, testified in support of the bill.

“Connecticut must do its part to ensure that everyone seeking an abortion and related services in this state receives the care that they need,” the ACLU’s Jess Zaccagnino wrote.

The Connecticut Catholic Public Affairs Conference opposed the bill. “The pro-abortion advocates who support this type of legislation fail to recognize the vast number of quality services Catholic hospitals provide. This is evident in the current efforts to stop the merger of the Day-Kimball Hospital in Putnam with Covenant Health, a Catholic-based health care system,” lobbyist Deacon David Reynolds wrote in testimony on the group’s behalf. “The bigger concern they should have is what would happen to all the medical services Day Kimball provides if they are no longer able to operate.”

The certificate of need proceeding had been close to an end when Day Kimball received word that Covenant was canceling their deal. The Office of Health Strategy had wrapped up its inquiry and deemed the application complete in November, and a public hearing was slated to take place April 4.

That hearing has been canceled. Covenant Health has withdrawn its certificate of need application.

Karen Sullivan, a spokeswoman for Covenant, said in an emailed statement that the health system’s decision was made ahead of the public hearing, as the organization was conducting further due diligence. “We became aware of new and updated information that resulted in our decision to not move forward,” Sullivan said. “It is also important to note that this had nothing to do with the Ethical and Religious Directives.”

House Bill 6818, meanwhile, will not advance out of committee after legislators decided not to take further action on it.

In a statement, the local group that opposed the deal, Save Day Kimball Healthcare, said, “We are pleased that the common welfare and health of all in the community will be safeguarded. We will continue to work cooperatively to assure that future plans for DKH reflect the entire population of Northeast Connecticut.”

The failed deal comes after Day Kimball has for years unsuccessfully sought partnerships with health systems around the region, including Hartford HealthCare and Yale New Haven Health. Kramer said the hospital would continue to look for a partner, but that it would be “careful and contemplative” about the process, potentially revisiting past suitors.

He also sought to allay staff and community concerns over the Covenant deal falling through.

“Our commitment, our focus and our intention is to not be one of those small rural hospitals looking at closing but to be one that defies the odds, rises to the challenge and meets the needs of its community in helpful and positive way,” Kramer said.

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