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A Note to Our Partners

By Kindred Rehabilitation Services tags:

Recently, Kindred announced its strategic exit from the Skilled Nursing Facility business as an owner and an operator. This difficult decision represents an important step forward for the Kindred enterprise. The company is confident the right home can be found for all patients, employees and facilities, and believes these and other nursing centers will continue to be an important part of the Kindred continuum of care for years to come.

The announcement does not pertain to our RehabCare business. The overall strategy is to develop robust networks, including nursing facilities, through preferred relationships in our key markets. RehabCare’s partnership model will contribute to the positive relationships with nursing centers that are not owned or operated by Kindred well into the future.

It is important to understand the unique factors that contributed to the decision to exit the operation of freestanding skilled facilities. Since 2012 Kindred has been strategically paring down its portfolio of nursing centers that once was 300-strong due to the burdensome nature of existing lease agreements, the utilization and operating headwinds facing the sector, and the company’s focus on higher-growth, higher-margin and less capital-intensive businesses. Today’s reimbursement and regulatory challenges make it difficult to operate nursing facilities, and Kindred’s current portfolio of nursing centers alone are not sufficient to support its goal of providing integrated care coast to coast, across the continuum. This is where the company’s ability to partner with high-quality skilled nursing facilities in any given market is much more important to care coordination than ownership.

We also wanted to take this opportunity to clear up some misconceptions regarding Kindred’s financial performance in Q3. Despite the claims in some confusing headlines, Kindred’s core results were in line with the company’s guidance, with revenues of nearly $1.8 billion and core operating income of $220 million. Over the past 12 months, Kindred has generated more than $7 billion in revenues and nearly $1 billion of core operating income. The disparate, GAAP accounting-based loss reported at the end of the third quarter was solely related to non-recurring, non-cash charges such as the write-downs of nursing home and hospital assets divested during the period. Kindred’s continued strong core cash flows support ongoing, strategic growth initiatives and quality programs.

Earlier in the year, we introduced RehabCare’s comprehensive Quality Assurance Program (QAP). We developed the program to best serve our partners and patients with quality procedures and systems in place to validate medical necessity, ensure appropriate documentation, provide the highest level of billing integrity, and most importantly, deliver the strongest patient outcomes. We are more committed to our QAP than ever before, and we stand behind the quality rehabilitation services provided to your patients.