The nation’s largest home health care provider has entered an agreement to acquire the in-home health care operations from the Arkanas Department of Health (ADH) for approximately $39 million.
Kindred Healthcare (NYSE: KND) will acquire the licenses to provide home health, hospice and personal care services throughout the state of Arkansas in the deal, which was agreed upon following a state bidding process. Kindred will acquire ADH’s 74 home health locations that currently serve 69 counties in the state, seven offices that provide hospice services to 42 counties and the agency’s personal care services business that provides assistance for activities of daily living.
Kindred’s total presence in the state will expand from its current six offices that provide home health and hospice services in four counties to provide home health, hospice and personal care services to 70 of the 75 counties in the state. The deal is expected to close in the third quarter of 2016, pending regulatory approvals.
“This transaction provides a tremendous opportunity to expand our Kindred at Home operations in Arkansas,” Benjamin A. Brier, Kindred’s president and CEO, said in a statement. “As the national leader in home health and hospice, we are excited to bring in our care and clinical protocols to these operations to improve the ability of patients to safely return home or to remain in their home. We look forward to the Agency’s caregivers joining our team and believe we can provide our new colleagues with enhanced opportunities for professional growth and development.”
As part of the transaction, Kindred has agreed to retain all current employees and serve all current patients upon consent. The program currently employs approximately 280 regular state employees and 1,500 contract employees. Roughly 3,380 patients are served by ADH’s program, according to ADH.
The state decided to sell the In-Home Services business as a result of a decline in patients, revenue and employees over the last five years, Meg Mirivel, public information officer with the Office of Health Communications at the Arkansas Department of Health, told Home Health Care News in an email. Revenue continued to decline as health care costs rose, an independent analysis revealed.
“The In-Home Services program staff have done an exemplary job of providing services, despite the challenges presented,” Mirivel told HHCN. “Had this difficult decision not been made, an immediate reduction of employees would have been necessary.”
The state also decided to sell the operations due to an increasing presence of private companies offering these services throughout the state.
“The state began these operations at a time when this service was not available in many rural counties,” Mirivel said. “Now, these services are more available from private companies. The state does not want to compete with private companies, and instead has reached an agreement that will allow Kindred to take over what ADH has started.”
The bidding process for the operations had a total of six bidders, according to Mirivel. Three ADH employees reviewed the proposals to make the final decision.
“This is a success for the state of Arkansas,” Asa Hutchinson, Governor of Arkansas, said in a statement. “We are not in the business of competing with the private sector. The Arkansas Department of Health provided an important service while it was necessary, and now private sector companies can fill this need. I am pleased that Kindred Healthcare will continue the excellent work of the ADH In-Home Services program.”
Kindred Healthcare did not respond to requests for comment from Home Health Care News as of press time.
Written by Amy Baxter