Kindred President, CEO and Director Ben Breier elevated employees to partners in his recent earnings call with Wall Street analysts.
Good morning, everyone. I'd like to start my comments, as I usually do, by extending my deep appreciation on behalf of our entire leadership team to our teammates across the country. Each day, our partners at Kindred work incredibly hard to improve the lives of the more than a million patients we care for annually. The excellent care and clinical outcomes we generate are the direct results of their efforts. Their responses in the face of Hurricane Harvey and Irma, which significantly disrupted our Florida and Houston operations, highlighted our caregivers' commitment to our patients. The stories of personal sacrifice and dedication among our team members in these markets are a source of motivation and great pride for our team.
The call transcript's only mention of motivation was an individual employee's intrinsic motivation to help others during a disaster.
Neither Breier or his fellow executives made mention in the call of competitive pay or wages for Kindred's employee partners generating excellent clinical outcomes. This is important as executives gave guidance to analysts about 2018 and what to expect from the company.
Coworkers at our hospice site have gone three years or more without wage increases. Stagnant pay becomes a demotivator, which can be magnified by eroding benefits. Kindred cut retirement and health insurance for legacy Gentiva employees, acquired in February 2015.
Breier did talk about labor costs, controlling and reducing them.
I also want to highlight, in the quarter, we made significant progress on our labor cost for our home health business despite a challenging labor market. Our direct labor cost per visit for this business was down 3.7% from prior year. If you recall, this is an area that had been a significant challenge for us, particularly over the end of 2016 and into early 2017, and we're very pleased to have made this meaningful progress.
Breier was "very pleased" to decrease labor costs per visit, not to reward employee partners for the direct results of their efforts. He spoke of benefits in a similar light.
So you have some tail benefits of cost rationalization relative to SNF and our business in general as those mature into 2018.
A November analyst call would be the perfect time to speak to employee wages and benefits, given open enrollment for 2018 benefits was underway. Breier and his fellow chiefs completely avoided the issue.
Breier did highlight Kindred's pulling $242 million in cash from an offshore insurance arm to use to delever the company, i.e. not give raises.
The new item is "a significant initiative for which we recently achieved important success to restructuring certain aspects of our insurance programs and processes to liberate trapped cash and use that cash to deleverage Kindred."
Kindred executives planned to sell its nursing home division and turn all the proceeds over to Ventas. That left no funds to reduce the company's massive amount of debt. So Kindred executives flew to the Cayman Islands to purloin nearly $250 million from its insurance subsidiary. In its place they left letters of credit, more commonly known as IOUs. There is historical precedence for such a move.
Butch Cassidy (Born Robert Leroy Parker) started out stealing horses and stealing small things (sometimes even leaving an IOU.)
Kindred wiped out worker's comp and professional liability reserves to "simply pay claims as they become due" for both programs.
Ironically, Ventas birthed Kindred in May 1998. That makes Kindred 19 and a half years old. That explains the company's strategic lurching around and robbing the offshore cash bank. It also explains why proverbial executive teens are focused on their needs and not those of employee partners, formerly teammates. Actions speak loudly and Kindred executives are yelling.