For rural CT hospital, mired in financial challenges, UConn merger may be a lifeline

Hartford Courant – Sunday, September 21, 2025
By Christopher Keating

In an era of hospital mega-mergers, Day Kimball Hospital is an anomaly.

The small, independent, rural, community hospital has only 104 beds in Connecticut’s northeastern corner in Putnam, just three miles from the Rhode Island border.

Now, after a failed merger in recent years, Day Kimball is seeking to partner with the UConn Health Center in a broader coalition with two other smaller hospitals in Waterbury and Bristol. Health care officials nationwide say the only way for survival in 2025 and beyond is for tiny hospitals to join up with much larger networks.

Gov. Ned Lamont said negotiations are ongoing as Prospect Medical Holding’s three Connecticut hospitals, including Waterbury, have been tied up in court following numerous financial problems with a private-equity owner that filed for bankruptcy. Two of those three hospitals would be sold separately.

In the meantime, Day Kimball continues operating as a standalone entity, struggling to balance its budget. The hospital’s financial problems were highlighted in public records released in July by the state tax department, which showed that the hospital owes more than $40 million in back taxes.

Asked by The Courant if he fears that Day Kimball might eventually be forced to close if financial problems continue, Lamont responded, “They’re at some stress. There is no question about it. Some of these smaller, independent hospitals are in an awful lot of stress.”

A court filing showed Friday that Hartford HealthCare has offered a bid in bankruptcy court in Texas of $86 million for the Manchester and Rockville hospitals in an auction that would take place on Oct. 22.

Lamont had predicted before the court filing that Manchester and Rockville hospitals would have “a strong bidder” separately. “They’re not going to be left alone.”

In addition to its ongoing financial problems, Day Kimball will now be facing a new challenge as Medicaid cuts under President Donald J. Trump are expected to disproportionately impact small, rural hospitals.

The hospital, however, is eligible to compete for a national pool of $50 billion that was set aside recently by Congress for rural hospitals and clinics as part of Trump’s gigantic tax and spending bill. The hospital’s chief executive officer for the past five years, Kyle Kramer, has joined with top state budget officials in writing an upcoming application in the hopes of obtaining critically needed funds to keep the hospital running.

Despite the obstacles, Kramer expressed optimism about the future.

“We’ve been here 131 years, and our intention is to be here for another 131 years,” Kramer told The Courant in an interview.

Founded in 1894, the hospital is based on Route 44 in rural Putnam, which has a population of fewer than 10,000 residents as the hospital covers a broader area of 125,000 residents. Two of the closest major hospitals are in Hartford at 45 miles away and Springfield, Mass., at 54 miles away. Patients also head to hospitals in Worcester, Southbridge, Willimantic, and Norwich. If Day Kimball closed, its departure would create a gigantic hole in the health care system in the state’s quiet corner, affecting small towns that stretch to the Massachusetts and Rhode Island borders.

While Connecticut has other small hospitals, Day Kimball is the only independent, rural facility.

The hospital’s financial problems spilled into the public eye with the disclosure of more than $40 million in back taxes. The money is owed for the hospital user fee that is collected by the state on a quarterly basis, officials said. The hospital appears on the list 13 different times for quarterly amounts ranging from $1.5 million to $3.5 million that total more than $40 million overall, according to public records.

The hospital, Kramer said, has been holding “regular meetings” with state officials in recent years in an effort to reduce the tax debt as part of a long-term resolution.

“We have a plan we are actively working on,” Kramer said in an interview. “We are actively working towards a full resolution over time. … We don’t dismiss this in any way, which is why we have had the ongoing discussions that we’ve had with state officials, and we continue to do that.”

While there are no immediate concerns about closure, Kramer said that any potential shutdown of Day Kimball would have a massive impact on the region because the hospital is the largest employer by far in an area with many elderly patients with lower incomes.

A closure would prompt numerous well-paid doctors and nurses to move out of the area with their families, hurting the local tax base and reducing the number of students in the schools.

“When a hospital closes, it creates a crumbling of the economic stability of the region,” Kramer said. “Quite frankly, I think it would be tragic in terms of health care outcomes in a state that actually has a very strong reputation for producing health quality. … If this hospital were to — for whatever reason— disappear, there would definitely be a corresponding cataclysmic effect.”

Help from elected officials

For years, both state and federal officials have been working with Day Kimball as it has defied the odds with only 104 beds and 22 infant bassinets at a time when the largest hospitals around the country can have more than 1,000 beds.

U.S. Sen. Richard Blumenthal said that Day Kimball is clearly on the radar screen regarding needed assistance.

“Day Kimball was on the list of hospitals severely in danger because of the Medicaid cutbacks in the so-called great Big Beautiful Bill,” Blumenthal told The Courant. “I call it the great Big Blatant Betrayal. People said rural hospitals will be affected, and we had a list — and Day Kimball was on the list. … These hospitals are hanging on, some of them, by a piece of thread.”

In a previous speech on the U.S. Senate floor, Blumenthal said the Republican-written bill would harm hospitals.

“Their budget decimates Medicaid benefits,” he said. “It threatens rural and pediatric hospitals. It increases health insurance premiums for the majority of Americans. Let me repeat. It increases premiums paid by everyday Americans, the majority of our fellow citizens.”

Blumenthal added, “Just to be clear, these cuts are going to have an impact on everyone because the Medicaid program is a huge source of funding for all hospitals. All hospitals depend on Medicaid, even if you’re not there with Medicaid coverage. The quality of care that you’ll receive will suffer as a result of these cuts.”

U.S. Sen. Chris Murphy, a Democrat who has clashed sharply with Trump on multiple issues, says the tax bill that was passed by the Republican-controlled Congress will cut $800 billion overall from Medicaid over 10 years, including $150 billion from rural hospitals. At the same time, the law adds $50 billion in a special fund to help the rural facilities, but some lawmakers say that total is not enough to cover hospitals nationwide.

“We know the truth – over 330 hospitals are at immediate risk of closing or cutting services and 750 hospitals are at risk of closing in the years to come,” Murphy said. “Republicans won’t get away with these lies and tools like the Hospital Crisis Watch are helping hold them accountable. When a rural hospital closes in your community, it will be because Donald Trump and Republicans chose to give billionaires a bigger tax cut at the expense of your health care.”

But the nation’s top health official, Robert F. Kennedy, Jr., told a Senate committee recently that the bill would not force the closure of small hospitals.

“It’s going to be the biggest infusion of federal dollars into rural health care in American history,” Kennedy said.

The hospital has received millions of dollars through the years from the efforts of U.S. Rep. Joe Courtney, state Rep. Patrick Boyd, and state Sen. Mae Flexer, in addition to the U.S. senators.

UConn Health Center

The move by UConn to expand its reach in Connecticut was outlined in a key report by a respected health care consulting firm, Cain Brothers, that provided a series of financial options. The options included forming partnerships to attract more patients beyond its relatively small hospital in Farmington. At the time it had 234 beds before an additional 23 beds were authorized earlier this year.

The detailed, 104-page report said that UConn needed to generate more money from patient care in order to compete in the health care world of the future after a long period of financial problems. John Dempsey Hospital, outpatient offices in suburbs like Simsbury, and the related faculty physician group have “generated cash flow losses averaging $140 million annually over the past four years before any state transfers,” the report said. “Recent accounting changes beginning in 2024, however, will result in materially reduced fringe benefit expenses for UConn Health because those costs are being absorbed by the state.”

The Cain report said UConn lacks “scale,” meaning it could merge with other hospitals in order to have greater purchasing power.

“UConn Health is 20% of the size, in terms of revenue, of the average of select public university academic health systems,” the report said. “UConn Health has no leverage in the marketplace. It lacks scale to support fixed costs — IT, revenue cycle, supply chain, etc.”

Merger history

Seeing the trend for rural hospitals, Day Kimball had tried to merge at times in the past, but the latest deal fell apart in March 2023.

The hospital had been seeking to affiliate with Covenant Health, a Catholic-run health care system that is based in Massachusetts. Advocates of abortion rights and other services had raised concerns about the proposed merger for more than a year, but officials said later that the decision to call off the merger was based on financial issues.

Day Kimball has also tried to partner in the past with Yale New Haven and Hartford HealthCare, but no agreements were reached.

As Day Kimball is looking at its future, Lamont is also examining the needs of Prospect’s three hospitals. Hartford Healthcare is the “stalking horse” bidder for Rockville and Manchester that essentially sets the lowest price for various bidders in the auction to buy the hospitals.

“I don’t want to get ahead of the whole stalking horse issue,” Lamont said outside the state Capitol last week before the latest court filings in Texas. “But we’re going to have strong bidders for those three Prospect hospitals, plus a couple of others that maybe need a little help.”

Patient mix and revenues

As a small hospital in a rural area with an aging population, Day Kimball generates about 70% of its revenues from Medicare and Medicaid, Kramer said. While the hospital breaks even on Medicare, it loses 40 cents on the dollar on Medicaid because the reimbursement rates are lower, he said. The two largest contributors to the Medicaid losses are obstetrics and behavioral health, he said.

Based on its size, the hospital is essentially limited in what it can do.

“Small hospitals like ours probably should not be performing every service under the sun,” Kramer said in an interview. “So partnering with larger institutions is a necessity for certain types of activities. … You can’t paint all hospitals with the same brush. Rural hospitals like ours are indeed very different from New Haven or Hartford or lower Fairfield County.”

Before arriving at Day Kimball, Kramer served for eight years on the executive team at Yale New Haven Hospital. As a result, he has seen health care from many angles.

Day Kimball, he says, is just as rural “as any of the farm communities in the central part of the country” or other areas of the nation.

“As part of our journey to be classified as a rural institution, we had to prove to the feds that we were indeed rural,” Kramer said. “For a large proportion of our population, you can’t cross a state border and have your insurance work for you. In fact, I live on a farm as a working farm. We are very much a rural area, and it took about four years before we could be classified as a rural organization. We’ve worked hard to position ourselves for these types of opportunities.”

He added, “As a small and rural hospital that doesn’t have scale, and has limited negotiating capabilities for commercial insurance contracts or even supply contracts, we have challenges that a lot of your larger systems simply don’t have. As a consequence, it makes the ability to produce a favorable financial outcome at the end of the year even more daunting.”

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