Louisville, Kentucky-based Kindred Healthcare Inc. is the largest diversified provider of post-acute care in the United States. The company has four operating divisions: Hospitals (transitional care), Nursing Centers, Rehabilitation Hospitals and Care Management.

Kindred has pursued an aggressive growth-by-acquisition strategy for several years. But none of its moves was as bold as the company’s bid for Gentiva Health Services Inc., a $2 billion home health and hospice company with a national footprint larger than any other provider. In May 2014, Kindred launched a hostile takeover of Gentiva for $533 million. In July it raised the stakes to $1.6 billion. By October,  after Gentiva consistently called offers “coercive” and undervalued, the companies reached a deal for $1.8 billion in cash and stock. The deal closed in February.

Anyone observing Kindred in recent years knows that it has been transparent about its strategy, which is to provide post-acute care along the continuum of needs in the markets it dominates. A reading of their 2014 annual report reveals management’s thinking about its future:

We are one of the largest diversified post-acute healthcare providers in the United States, and accordingly, we believe that we are well-positioned to grow and succeed in what will be an increasingly integrated healthcare delivery system. Our core strategy is to provide superior clinical outcomes and quality care with an approach that is patient-centered and focused on lowering costs by reducing lengths of stay in short-term acute care hospitals and transitioning patients to their homes at the highest possible level of function, thereby preventing avoidable re-hospitalizations.

On August 1, 2013, Kindred announced the formation of its Care Management division, formerly known as Kindred Home Health and Hospice. The company reported that the division was established to increase its focus on this facet of post-acute care, as well as “to test and develop new service delivery and payment models.” Specifically, Kindred said it intends to use the Care Management division to develop:

 

  • Physician coverage across sites of service

  • Care manager roles to smooth care transitions

  • Information sharing and technology connectivity

  • Patient placement tools

  • Condition-specific clinical programs and outcome measures

Also in 2013, Kindred launched its “integrated care” initiative in 12 markets, designed to provide  a seamless transition across a variety of post-acute care settings. With their integrated care approach, patients referred by hospitals to Kindred facilities are assigned a transitional care nurse who monitors their care throughout the experience. The client hospital and Kindred share the patient’s electronic health record in real time. The company intends to double the number of markets over the next several years.

Kindred has a substantial physician house call unit, with 70 physicians and nurse practitioners seeing patients in the home, assisted living and independent living facilities treating about 10,000 patients. It launched its home-based primary care business in 2013 following the acquisition of a private primary care practice in Cleveland, Ohio. The founder of that practice, Dr. William Mills, became president of the newly formed Kindred House Calls. Earlier this year the company integrated two Gentiva practices in Spokane, Washington and Austin, Texas; it also acquired practices with coverage in Austin, Houston, Dallas and San Antonio, Texas and in Denver, Colorado.

“This strategic growth supports our goal to manage and coordinate care across the continuum and builds upon our ability to deliver integrated care and population health solutions that support recovery and wellness,” said William M. Altman, Kindred’s executive vice president for strategy, policy and integrated care.

 

The company is part of CMS’ Bundled Payment for Care Improvement initiative, with three participating units in Ohio. Since 2000, Kindred has worked with the Cleveland Clinic to coordinate post-acute care and in January 2014, the partnership received approval by CMS for a 3-year Bundled Payments for Care Improvement Initiative. Under this program, Kindred is responsible for the cost and health outcomes for Medicare patients with COPD and Congestive heart failure.

All indications from company press releases, analyst reports and investor conference calls indicate that Kindred will continue to grow by acquisition and pursue value-based contracting wherever it makes good business sense to do so.

As of Dec. 31, 2014, Kindred’s hospital division operated 97 transitional care hospitals certified as long-term acute care (LTAC) under Medicare and five inpatient rehabilitation facilities in 22 states. Its nursing center division operated 90 nursing centers and seven assisted living facilities in 22 states. Prior to Kindred’s acquisition of Gentiva, its Kindred At Home division provided home health, hospice and private duty services from 143 locations in 13 states. Today, its Kindred at Home division has more than 600 locations in 35 states.

Kindred projects $1 billion in earnings on $7.2 billion in revenues for 2015. As of the close of trading on Friday, its market cap was $1.73 billion.

Leave a comment