Louisville-based Kindred's $1.8 billion acquisition of home health company Gentiva Health Services—which came after the companies fought publicly over Kindred's initial hostile bid—created one of the largest U.S. home health and hospice companies.
With its acquisition of inpatient rehabilitation hospital operator Centerre Healthcare Corp., Kindred added 40,000 new workers and 500 locations last year, CEO Benjamin Breier said on an earnings call with analysts.
That growth and recent investments will position the company to act as a post-acute benefit manager for health plans or hospitals. The industry is facing increasing incentives to more tightly manage care as patients move from hospital to post-acute care to home, Brier said.
In February, Kindred struck a deal with Avalere Health subsidiary Inovalon to develop post-acute benefit management tools and data analytics. Executives believe the company can market that technology and analytics service, combined with Kindred's diverse post-acute network, to hospitals as they develop accountable care organizations.
Kindred has a few shared savings contracts to provide a narrow post-acute network, Brier said. That allows the company to reap some benefit from fewer readmissions, shorter lengths of stay and lower costs.
“All of that value that we have been creating over the years, that quite frankly, has not inured to the value of Kindred shareholders, that we think with new payment methodology, as we partner to be the post-acute benefit manager, that value is, over time, going to finally, inure to us.”
Meanwhile, the company is preparing for the financial squeeze under new Medicare payment rules for long-term acute-care hospitals. The rule went into effect last October and is phased in over three years. Under the rule, Medicare pays less, on average, for patients admitted to an LTAC unless patients spend at least three days in intensive care or need a ventilator for at least 96 hours.
The company analyzed markets for patients who might quality for the higher payment but who currently receive medical care elsewhere, with the hope of capturing more patients, he said.
The company ended the year with revenue of $7.05 billion, an increase of 40% from the prior year's revenue of $5.03 billion. Expenses, however, grew more rapidly, led by fast-growing wage growth of 48%. Overall expenses increased $7.15 billion, up 42% from the prior year's $5.02 billion.
Kindred ended the year with a net loss of $93.4 million, up from the prior year's loss of $79.8 million.