Why Kindred is Not Content Being No. 1 Home Health Provider

Kindred Healthcare (NYSE: KND) currently is a behemoth in the post-acute sector, operating long-term care hospitals, inpatient rehab and skilled nursing centers—not to mention that it is the largest home health provider in the country. But in the future, being a health services provider may be less important than Kindred’s role as a manager of the nation’s post-acute system, the Louisville-based company’s CEO said Thursday on a quarterly earnings call.

Over the next several years, Kindred will pursue a “two-pronged path,” CEO Benjamin Breier said. One prong is to continue to be a provider of post-acute services, particularly in offering a continuum of care, in which patients can move from higher acuity inpatient settings to lower levels of care in the home—all operated by Kindred.

The second prong is being a post-acute benefits manager, and Breier believes that this is “all-important” and over time may be the more crucial element of the company.

Being a post-acute benefits manager would entail taking a risk-bearing role with accountable care organizations (ACOs) and similar systems of providers that are tied together by incentives to cut costs by coordinating care across the health care spectrum.

Kindred could be responsible for managing the post-acute care for these patient populations, ensuring patients go to the most appropriate setting—whether these are run by Kindred or a different provider in the network—and that they receive timely and quality care to avoid hospitalizations and other costly interventions. By taking on risk, Kindred would see a financial upside from being an effective manager but would also be on the hook if costs are not contained and quality is not maintained.

Kindred already has begun to put the pieces in place to become this type of post-acute manager, Breier emphasized.

For example, the company has created contact centers that consumers can reach by dialing 1.866.KINDRED.* They are staffed by registered nurse advocates, who field questions from consumers about their insurance benefits, clinical conditions, and care options, helping them more effectively navigate the post-acute network.

“In addition to helping direct patients to the most appropriate level of care when they require post-acute services, through our aftercare program our registered nurse advocates make follow up calls at prescribed times after a patient is discharged from a Kindred location,” Breier said. “Currently, we have more than 25,000 patients that are contacted each month after their discharge from Kindred at Home Services.”

Furthermore, enhanced abilities to capture and analyze data—for example, through a recently inked partnership with Inovalon—will be important in making Kindred an effective benefits manager, Breier noted.

These efforts not only are critical to Kindred’s long-term strategy, but already are helping to drive positive results for its current home health operations.

“Kindred at Home had another great quarter and is benefiting clearly from the migration of patients to clinically appropriate and more cost effective settings,” he said. “This trend, coupled with our clinical capabilities and specialty programs to care for higher acuity patients, is driving volume and rate growth.”

Specifically, home health revenues increased 6.2% on a quarterly basis, with 2.6% episodic volume growth and 3% growth in revenue per episode.

While the transformation of Kindred to being foremost a post-acute benefits manager is a years-long prospect, the company already is taking on risk with some patient subsets and will continue to take on more risk in the next few years, Breier said.

But the timing is not entirely up to Kindred. While Kindred is building up its own benefits management capabilities, another piece of the puzzle is waiting on the ACOs and other payers to determine how they feel comfortable transferring risk to a post-acute partner.

“At the end of the day—and this is I think something that people on the outside miss—it does take two tango,” Breier said.

*Editor’s Note: This article has been updated from a previous version. Wording has been changed to clarify that there are not 866 contact centers, but that they are reached by dialing 1.866.Kindred.

Written by Tim Mullaney