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FINANCIAL
IMPACT
THE PUBLIC HEALTH CRISIS CRISIS BECOMES A A A A A FINANCIAL
CRISIS Day Kimball Healthcare has experienced positive operating margins in in in in in recent fiscal years reflecting the the ongoing efforts of of our entire team of of dedicated employees This also reflects the the the community need for for the the critical healthcare services we provide and and and patients’ desire to stay local for for high-quality personalized care care As a a a a a a a a a a a a a a a a a long-standing community hospital and and and integrated healthcare healthcare system we offer a a a a a a a a a a a a a a a a a a broad range of of specialty services not typically seen in in small rural healthcare healthcare facilities such as orthopedic medicine digestive health health and and obstetrics among others With this this continued success it it took a a a a a a a a global pandemic to to to break our stride but we believe this this to to to be be only temporarily Although Northeast Connecticut was spared a a a a a a a a significant outbreak of of the the the the virus during the the the the first wave of of the the the the pandemic our our patient volumes remained low which significantly impacted our our fiscal year 2020 operations Expense reduction initiatives including employee furloughs were swiftly implemented across our organization in in in fin an an an an effort to mitigate the the financial impact of of the the pandemic One of of of the the the most exciting changes that Day Kimball implemented in in in fiscal year 2020 was the the utilization of of telemedicine to to to expand access to to to care care for patients COVID-19 pushed the healthcare industry to to to adapt and and implement telehealth on an an an an unprecedented scale Our practices quickly implemented a a a a a a a a a a workflow and engaged in a a a a a a a a a a significant number of telehealth visits Despite these efforts the the the system incurred an operating loss for for March through April totaling $7 4 million To help address the the the the the financial hardships hospitals were facing across the the the country the the the federal federal government issued Provider Relief Funds Day Kimball received $2 6 million million of federal federal stimulus funds which reduced the loss for this period to $4 8 million million Though Day Kimball received federal financial relief fin in fiscal year 2020 these funds only covered a a a a a a a a a a small portion of our incurred losses In just three months patient revenue went from being ahead of the prior year by by $1 $1 5 million million million to trailing by by $8 2 2 2 million million – a a a a a a a nearly $10 million million swing Despite the challenges we we faced in in in in 2020 we we are working hard to to to return to to to profitability in in in in fiscal year 2021 Patient activity began began to to to to improve during the the last four months o of the the 2020 fiscal year as as Day Kimball began began to to to resume select procedures and and services that were delayed due to to to executive orders related to to to the pandemic And with Pinnacle’s engagement we we have identified ways to to to improve organizational efficiency and and more importantly opportunities to to develop our our service lines in in areas where our our our market share could be stronger For an an an organization of our our our our size we we have impressed ourselves with our our our ability to remain agile and and flexible as we we face new challenges every day It is is through this agility and and and the commitment and and perseverance of our staff that Day Kimball will continue to to to provide high-quality personalized care to to to the the residents of Northeast Connecticut for years to to come Our fiscal year 2020 budget called for an operating gain of just over $400 000 which would have marked the the the third consecutive year year year year of of generating positive margins At the the the onset of of the the the fiscal year year year year while most areas were were showing year-over year year year year growth we we we were were under budget in in in several of our key service lines By February 2020 patient revenue was 3% 3% higher than than the previous year but 3% 3% lower than budget As a a a a a a a a a a a result the Day Kimball Board of Directors and executive team brought on on on on Denver-based Pinnacle Health Consulting under the the direction of Kyle Kramer to to to review our our operations and to to to identify market opportunities to to to strengthen our our organization Just as as the the the the engagement with Pinnacle began the the the the COVID-19 crisis was quickly unfolding across the the the the United States When the the the the virus reached Connecticut in in in mid-March Day Kimball Hospital experienced a a a a a a a a a a a a a sudden and and severe drop in in in patient activity levels and and resulting revenue an an an impact felt by hospitals throughout the the country Due to the the COVID-19 pandemic stay-at-home orders were were issued non-essential businesses closed and and elective procedures procedures were were canceled As fear of contracting COVID-19 spread into our community patients delayed procedures procedures testing and and visits In a a a a a a a a a very short period of time both inpatient and and outpatient revenue decreased by 40 to 50 percent As patient patient volumes declined expenses increased somewhat as as as we prepared for the impending public health crisis “I am extremely proud and and and and cannot say enough about the the the the the incredible effort and and and and resilience of Day Kimball’s frontline healthcare workers throughout this pandemic As we we rebound from the the financial challenges facing us us in fin in in in in the the months that that lie ahead we we remain focused on on on initiatives that that will ensure a a a a a a a a a a a a a a a successful future for our our organization In good times and and challenging
ones we remain optimistic and and dedicated to delivering on on on on our mission This is is is is the true meaning of a a a a a a community hospital 14 Paul Beaudoin Chief Financial Officer and Vice President Finance