John J. Votto - President and CEODear Friends:

As we all know, the economy both in Connecticut and across the country, has presented many challenges over the past year. The federal government continues to debate the future of Medicare, while state budget officials wrestle with increased Medicaid costs. Deficit mitigation efforts enacted by the legislature in both May and December of 2012, had a crippling effect on the Connecticut hospital industry as a whole. However, thanks to Governor Dannel P. Malloy, his budget team and our local legislators, Hospital for Special Care’s (HSC) Medicaid reimbursement rate remained flat. This is a true testament to the high-quality and cost-efficient care we provide Connecticut residents, and it will allow us to continue to care for some of the state’s most compromised citizens.

These past twelve months have already had, (and will continue to have), a monumental effect on the future of the American healthcare system. In June, the United States Supreme Court affirmed the constitutionality of the Affordable Care Act, and in November, President Barack Obama was re-elected to another term. Those two events have changed the healthcare reform movement from a debatable, “if” into a more certain, “when.” Someone recently said, the healthcare organizations which will survive are not the ones that are the largest, or the most financially fit, but those who can change the fastest. That is why it is important, especially in these times of uncertainty, that HSC remain a nimble organization.

HSC is almost certainly the most diversified Long Term Acute Care Hospital in the nation. That has occurred in thoughtful response to the changing needs of our community, and to the patient populations and people that we serve. We continue to dialogue with stakeholders to determine gaps in the healthcare delivery system, and when possible, we work to fill the void. In doing so, we continue to bring long-term value to the region’s healthcare marketplace.

In order to become an expert in a specialized area, one must treat a critical mass of patients which is what we do particularly in the areas of respiratory disease, complex pediatrics, acquired brain injury, congestive heart failure, neuromuscular disorders such as ALS and muscular dystrophy, spinal cord injury and now Autism.

As many of the core provisions of the Affordable Care Act take effect over the next several years, HSC remains proactive in its response to change. From implementing Electronic Medical Records, to continuing to grow our partnerships with other healthcare systems, HSC is well-positioned to face the new realities of American healthcare.

As I close, I would like to extend my gratitude to our retiring Chairman, Elizabeth “Betty” Fumiatti, for her many years of leadership to our board of directors. Betty has been a longtime friend and advisor to the HSC family. We are fortunate to have had her as our chairman.

I would also like to thank the employees at HSC who work tirelessly each day to make a difference in the lives of those we serve. Every member of our team helps us to achieve our mission every day.

John J. Votto Signature