Kindred CEO: AHCA Passage Would Not Kill Home Health Growth

The trend of more people receiving care at home is going to continue no matter how federal lawmakers might reshape health care policy this year, according to Benjamin Breier, CEO of Kindred Healthcare (NYSE: KND). Louisville-based Kindred is the nation’s largest home health provider.

“It’s hard to … figure out all the moving parts and, really, for anyone to predict what the outcome is ultimately going to be this year,” Breier said Thursday on a quarterly earnings call. “We do know this: that there is going to be continued movement into the home, and nobody is better prepared for that than we are.”

His comments came several hours before the U.S. House of Representatives passed the American Health Care Act (AHCA) by a vote of 217 to 213. The bill was the second attempt by the Trump administration and Republican-led Congress to repeal key parts of the Affordable Care Act (ACA). Among other provisions, it would phase out the Medicaid expansion that some states took under the ACA, and would ultimately change the way the federal government pays for benefits under that program.

The fate of the legislation is uncertain, with many believing it has a slim chance of passing the Senate—a point Breier made on Thursday’s call with analysts and investors. While he is carefully monitoring what happens, he believes Kindred will remain well-positioned for success due to the strategy it has been pursuing over the past several years.

The company has gone big on home health, notably through the $1.8 billion acquisition of Gentiva Health Services in 2015. It has been reducing its number of skilled nursing facilities (SNFs) and is planning to totally exit that business in 2017, while maintaining inpatient rehabilitation facilities and long-term acute care hospitals.

Kindred also is making moves to be a post-acute care manager through initiatives such as its 866-Kindred call center, which Breier called the “air traffic control hub of our care management capabilities.” The contact center now includes more than 125 full-time employees, mostly registered nurses, who are available to provide support around the clock to “hundreds of thousands” of current and prospective patients and families. The company also has developed a proprietary patient placement tool, to help determine the ideal post-acute setting for a person after hospital discharge.

In some markets, such as northern California and Las Vegas, as much as 80% of potential home health discharges are going to Kindred at Home locations, Breier said. However, the home health arm of the company is a vast, $2.6 billion division, and there are relatively few markets where there is substantial overlap with Kindred’s inpatient facilities.

Therefore, the goal is not just to create integrated networks of Kindred operations with internal referral streams, but to partner with other health care providers in those markets and create “high performance virtual networks.”

This year has started out solidly, with Kindred at Home’s revenues up 3.9% year-over-year, and home health same-store admissions up 5.4%. The improvement was due largely to resolving some integration challenges with Gentiva and decreasing labor costs despite an ongoing tough market.

Overall, the company’s earnings per share of $0.04 was in line with analyst expectations, while its revenue of $1.77 billion missed the mark by $10 million. Investors felt good, with KND shares up 6.53% at the end of regular trading on Thursday.

As for recent rumors that the company might be receiving buy-out offers, Breier would not comment on anonymous source reports but said that there’s been “noise” created by the efforts to sell the SNF portfolio. Beyond this, he took the opportunity to tout the value of the company and its home health division in particular:

“Upon completion of our of SNF portfolio exit, what we’re going to be left with here at Kindred … [is] the biggest, I would argue best run, I would argue most valuable home health, hospice and community care business asset probably anywhere in the country.”

Written by Tim Mullaney

Tim Mullaney on Email
Tim Mullaney
If he’s not in the newsroom, Tim likes to be on the tennis court or traveling to a new destination. Recent highlights include Sri Lanka and Iceland.

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