By Stephen Tweed
Last week we posted an article about Louisville based Kindred Healthcare making a hostile takeover bid for Gentiva Health Services, the largest home health company in the country. We’ve continued to monitor the events surrounding the bid and this week I came across a very interesting article by a Washington DC Journalist. Howard Gleckman wrote a blog post “Want to Know Where Senior Care is Headed? Keep An Eye on Kindred Healthcare”.
The post has been picked up by a number of media outlets including Forbes and Business First. Take a moment and read the original article.
Before Kindred moved into the nursing home business they were primarily in the business of running Long Term Acute Care hospitals (LTAC). They were then known as Vencor. In 1995 the company shifted it’s base by acquiring Tacoma, WA based nursing home company Hillhaven Corp. Entering 1996, the company’s 38-state network encompassed 35 long-term acute care hospitals, 311 nursing centers with 42,000 beds, 23 retirement communities, and a chain of 55 retail and institutional pharmacies. Vencor more than tripled in size when it acquired Hillhaven.
Gleckman says, “As recently as 2010, half of Kindred’s business was generated by its skilled nursing facilities. This year, only one-fifth of its revenues will come from its nursing and rehab centers. In a major strategic shift, Kindred is betting the company on in-home care, hospice, care management, and fully integrated care services.”
CEO Paul Diaz said his aim is to provide “services consumers want and payers will be willing to pay for.” And that is not in-patient care in hospitals or nursing facilities. And it is certainly not long-stay nursing homes.
In the past couple of years, Kindred has jettisoned or announced plans to ditch more than 130 nursing facilities and three dozen hospitals. At the same time, it now provides home care and hospice services at 159 locations in 13 states. Late last year, Kindred bought Senior Home Care, which operated home-based services in Florida and Louisiana.
What Does This Mean for You?
As a leader in home health care, hospice, or private duty home care, what does this transformation at Kindred mean to you? How will this move affect your future?
Here are a couple of things to consider:
- Increased competition – A Gentiva/Senior Home Care / Kindred combination could create a strong force to be dealt with in local markets where they have critical mass.
- Continued Industry Consolidation – This may be another sign of a trend to reduce the number of agencies through consolidation
- Bundling of Post Acute Care – There are already demonstration projects going on as a result of the Affordable Care Act exploring the potential of bundling payments for post acute care services.
- Staffing Power – one of the growing trends we are seeing in home care and hospice is increasing staff shortages. This move may give Kindred more leverage in recruiting, selecting, training, and retaining top talent in their home care community based service lines.
What do you think? Tell us what you see happening in your local market that affirms or contradicts these trends.