Kindred’s Arkansas Deal Met with Backlash, Skepticism

It has been almost one month since Kindred Healthcare (NYSE: KND) entered into a $39 million agreement to acquire the in-home health care operations from the Arkansas Department of Health, and the dust has far from settled.

The deal between the state and the nation’s largest home health care provider has been met with skepticism from some Arkansans, who worry rural parts of the state may lose access to home health care services and fear for the security of state employees’ jobs, the Arkansas Democrat-Gazette reported.

“The current concern is whether [Kindred’s] delivery [of services] to those patients in very rural parts of Arkansas will be as quality as they have been getting with the Health Department in charge of home health care,” Republican Arkansas state Rep. Charlotte Douglas said in a statement printed in the Democrat-Gazette.

Douglas wants Kindred to confirm that it will serve Arkansas’ underinsured population, that it will commit to serving patients in difficult-to-access parts of the state, that it will have contact points in every county and that it will retain the Health Department personnel as promised, according to the Democrat-Gazette.

“Our Health Department’s worked very hard to accomplish all of these things and, if the new owners of this business cannot perform up to these quality standards held by our Health Department personnel, then we as a state are remiss in selling this program to the private sector,” Douglas said.

Kindred has expressed its commitment to serving the underinsured or patients who do not have insurance, just as the company does in different states, Brandon Ballew, senior vice president and chief operating officer for Kindred at Home, said in a statement.

“Kindred is also committed to serving populations in remote areas,” he added. “We have experience doing so in other states and will utilize that experience in Arkansas.”

Still, the Arkansas government knows the deal has them in murky waters. It’s an unusual circumstance to be selling a program, Robert Brech, chief financial officer for Arkansas’ Health Department, admitted to the Democrat-Gazette.

“If you look at the agreement we have with Kindred, there are a number of reasons that the agreement would be terminated. Should that occur, we would need to go to the next-highest-scoring bidder and begin discussions,” Brech explained. “There is also the potential issue if the bidders would wish their bid information shared and if it could cause them substantial harm if it were to be released.”

Kindred submitted the highest bid of the six bidders—Amedisys Inc. (Nasdaq: AMED), Arkansas Hospice Inc., Arkansas Post Acute Care LLC, Hospice Home Care Inc. and Brandi Melton, president of Home I.V. Specialists and Baker Healthcare—and received the top-most scores in the department’s assessment of those bidders, Brech said.

Two of the evaluators at the Health Department scored Kindred’s bid as the highest, but one of the evaluators scored Amedisys Inc.’s bid the highest, according to Health Department records, the Democrat-Gazette reported. The six different bidders’ scores were calculated on the basis of continuing high-quality, in-home health care services; continuing services to the Health Department’s service area; continuing services to self-insured or indigent patients, pediatric patients and Medicaid patients; continuing employment of the department’s employees; qualifications; and profiles and disclosures.

The decision to sell Arkansas’ in-home health operations will preserve the jobs of approximately 280 state employees and an additional 1,600 contract employees for up to one year. The arrangement also enables 3,380 patients to continue coverage for at least one year, the publication noted.

Written by Mary Kate Nelson