Home Health Focus Starts Paying Off for Kindred

Kindred Healthcare last week announced strong earnings from its home health operations, and leaders at the large post-acute provider championed home health as a vitally important part of the evolving U.S. health care system.

The Kindred at Home division posted 31% revenue growth in the fourth quarter of 2014, compared with the same period a year prior, the company stated in a press release. Home health revenues grew 55% and core operating income doubled for the year, President Ben Breier announced during a call with analysts Friday.

The earnings report came out one month after Kindred finalized its acquisition of home health provider Gentiva Health Services — a deal that Kindred says made it the nation’s largest home health and hospice company nationally.

Gentiva’s consolidated revenues for the fourth quarter increased 5%, reaching $509 million. Consolidated revenues for the year increased 15%, hitting $1.99 billion.

The Gentiva results are “outstanding,” said Breier during the earnings call. He credited the Gentiva leadership team with focusing on results even in the midst of integration efforts with Kindred. Paul J. Diaz, Kindred’s CEO, echoed that praise.

“There are some systems integration around payroll and benefits and some things that we’ll have to work on into 2016,” Diaz said. “But … our goal is really to do our best to stay out of the way of what is really a great group and a great team with some really sophisticated systems, a great sales pipeline and sales process, a group that’s executing extremely well. They have good processes in place and we’re just trying to let them continue to be who they are.”

Diaz described the Gentiva acquisition as a “critically important strategic milestone” for Kindred, as the company positions itself in a dynamic business environment. Affordable Care Act reforms and other policy shifts have created incentives for providers to be able to support efficient transitions across the whole spectrum of care, from hospital to home. The addition of Gentiva should help Kindred thrive as the government continues to push for this system in which patients are receiving high-quality care in the lowest acuity setting possible, Diaz stated.

Kindred’s acquisition of Gentiva is representative of a larger trend, as reforms are driving consolidation in the home health sector overall, Breier noted. Kindred’s long-standing focus on integrated care and the “systems and processes” it has in place should give the company a competitive edge as other providers also seek to scale up operations, he stated.

Breier also predicted that wages and other workforce issues would come to the fore more in the second half of this year, but he said they have been a major source of pressure on the company yet. Home care workers have been pushing for higher wages and recently launched a coordinated effort with the support of U.S. Secretary of Labor Thomas Perez and other prominent allies.

In its overall fiscal year results, Kindred reported a loss from continuing operations of $14 million in 2014, compared with $44.5 million a year prior.

Written by Tim Mullaney