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Covenant Health scraps health system acquisition

Tewksbury, Mass.-based Covenant Health has called off its plan to acquire Day Kimball Healthcare, a health system based in Putnam, Conn., The Connecticut News Project reported March 14.

Day Kimball, an independent system that includes a hospital, medical group, home care, hospice and palliative care, saw the proposed transaction as a way to maintain its financial viability, but is now forced to revisit the drawing board.

"Obviously we are incredibly disappointed," Day Kimball CEO Kyle Kramer told the publication. "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."

The proposed deal faced opposition from a group of local residents concerned that Covenant, a Catholic health system, would limit services provided at Day Kimball, particularly reproductive services.

Catholic healthcare providers follow the Ethical and Religious Directives for Catholic Health Care Services, which restrict certain practices related to reproductive health, emergency contraception, fertility, and gender-affirming and end-of-life care, according to the report. 

However, Mr. Kramer told the News Project that Covenant called off the transaction for financial reasons and a potential inability to "fulfill the obligations required in the affiliation."

Day Kimball previously sought partnerships with Hartford HealthCare and Yale New Haven Health, but nothing came to fruition. Mr. Kramer said the system will continue to look for a partner but will be "careful and contemplative" about the process, according to the report.

"This action comes following nearly two years of negotiation and active participation in the regulatory process and is based on new information that came to light as part of our ongoing due diligence as we prepared for public hearings. As we assessed this new data, it became clear that the affiliation was no longer financially viable," Covenant said in a statement shared with Becker's. "While this was a difficult decision, it is fiscally responsible and reflects our commitment to be good stewards of our organization’s resources. Certainly, this is not the ending we hoped for, but we are confident that this is in the best interest of our healthcare system."

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