"Severe and unexpected cuts" to Medicaid payments in the Connecticut budget have stalled talks of a joint venture between Hartford HealthCare and Day Kimball Healthcare, according to Hartford HealthCare.
Hartford HealthCare stands to lose $55 million in Medicaid payments as part of emergency spending cuts in Democratic Gov. Dannel P. Malloy's budget.
Malloy's administration contends Hartford HealthCare should not be supported by taxpayer funding when it has millions in surplus, according to the Hartford Courant.
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Hartford HealthCare, which has five acute-care hospitals, reported $2.4 billion in net revenue in 2014. It reported a 4.2 percent profit margin and said a 4 percent margin is needed to support investments.
Senior Vice President James Blazer called the Medicaid cuts "reckless slashing."
"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 Blazar, who is also 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."
The financially-troubled Day Kimball stands to lose $5.6 million in state funding.
The lost affiliation with Hartford HealthCare represents a missed opportunity for Day Kimball to reduce costs.
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The two organizations had announced a proposed affiliation in July. Hartford HealthCare was to have provided management support for select operations determined by Day Kimball.
"Partnering with HHC represented a real opportunity for us to benefit patients and strengthen our finances," said Robert Smanik, president and CEO.
Blazar said the providers could still affiliate if funding be restored.
Twitter: @SusanJMorse