Monday, September 4, 2017

Labor Day Calling


Retirement has been a relief.  I no longer experience the tension of fulfilling my hospice calling within a for-profit enterprise.  Before our fledgling hospice company went public this tension seemed manageable.  Executives showed support by showing up and their words and actions had a heartfelt component.  That changed when our company went public and Wall Street's quarterly pressures impacted leadership.  Pressure came to meet or beat the numbers.

When the company disappointed Wall Street expectations executives sold out to a new group, each more charlatan than the last.  Executives rewarded themselves at greater levels with each buyout.  That's been the arc in the material, earthly hemisphere of corporate business.  That's not everything.

There's the realm of spirit.  Christ operated within persecution of the Romans, Pontius Pilate and local religious leaders.  Hospice workers are present day saints trying to navigate the hostile aspects of their job in order to serve, be with, minister, love, support, and care for the dying.

Saints did not go with the flow.  They did not pray for census or for stock prices to rise.  They had a unique calling which required persevering, even challenging others in its achievement.

With each buyout our voice diminished.  With each name change hospice leaders became more intolerant of anyone standing up on principle.  Dialogue did not occur in order to find a better way forward.  The principled simply got branded as negative, not a team player.  Official leaders prioritized image and surface contact over depth and real relationship.

Executives cared for themselves.  Their pay increased with each buyout.  Ours did not.  Their visits became more infrequent and their words increasingly insincere.  They tried to bear hug the best of us, hoping it would somehow rub off on them.  But executives could not hide their desire to shower away real contact with Christ's least of these.  Our management was limited, so we looked to one another for leadership, inspiration, support and relationship.  When co-workers sought favor with ignorant and divisive managers this too became difficult to maintain.

Support one another.  Resist the call from above to label and divide.  That's my encouragement to you and other hospice workers this Labor Day.

You are a spiritual person navigating a material world.  Do so with presence, awareness, courage and faith.  It's your calling.  Live it!

Strange Tony

Saturday, September 2, 2017

Causby's $1 Million Bonus Arrives Just Before Labor Day

Strange Tony,

Kindred at Home President David Causby won the employment lottery this week.  He received a $1 million bonus simply for showing up to work on August 31st.   That's quite an attendance reward.  I know Kindred employees with years of perfect attendance awards.  Those come with a simple certificate.

The timing of Causby's $1 million bonus is ironic.  You recall the time when Labor Day once celebrated workers. I'll venture Causby's having quite a celebration with his lottery like paycheck

Labor Day 2017 arrived with no raises at our hospice site.  It coincides with having no voice.  Kindred stopped the PwC employee survey earlier this year.  It took two years for Kindred to adopt the Gentiva way of completely ignoring employees.  I suspect Mr. Causby drove that decision. 

In a way it's more honest not to ask.  In 2016 Kindred asked and completely ignored our feedback.  It was a different way of marginalizing the employee voice.  Kindred employs a Manager of Online Reputation to respond to employees attempting to be heard online. 

We’d love to learn more about your experience. We know your input is critical to any potential improvements we need to make. Please reach out to me at  Or would you be willing to

Saturday, August 12, 2017

Nursing Home Sale Comes with Huge Costs and Charges

Strange Tony,

Kindred executives revealed the financial bath the company will take to dump its nursing home division.

The Company now confirms that (1) the Company expects to incur $315 million to $350 million in costs and charges related to this transaction, all of which have been or will be booked in discontinued operations, consisting of $30 million to $40 million of transaction costs, $30 million to $40 million of severance costs, and $255 million to $270 million of lease termination charges (calculated primarily as the difference between the aggregate consideration of $700 million payable to Ventas and that portion of the Purchase Price allocable to the fair value of the real estate and operations for the Ventas facilities, less certain Ventas rent credits on the balance sheet), and (2) during the second quarter of 2017, the Company recorded asset impairment charges of $134.6 million in continuing operations related to the previously acquired RehabCare trade name ($97.4 million) and customer relationship intangible asset ($37.2 million) due to the expected loss of affiliated contracts related to the SNF divestiture and cancellation of non-affiliated contracts.

When Kindred purchased Gentiva it sought to reduce the borrowing load on the combined company.

Kindred expects pro forma adjusted net leverage will be roughly 5.5x Adjusted Debt to Acquisition Adjusted EBITDAR at closing, and to reduce its outstanding indebtedness to below 5.0x Adjusted Debt to Acquisition Adjusted EBITDAR by the end of the second full year following closing. Kindred reiterates its commitment to a steady-state target leverage profile of 4.5x to 5.0x 

Wall Street analysts estimated leverage to go much higher with the nursing home sale. Kindred CEO Ben Brier tried to paint a brighter picture on the company's debt load.

"The primary part of the deal is we will get paid $700 million for the assets. And then we will use that $700 million to essentially pay for the real estate and buy our way out of the leases with Ventas that are being conveyed as part of the deal.

I would focus on the lease buyouts because, remember, as part of the deal, we will be eliminating $88 million worth of lease expense. So if you combine that with the hospital closures and sort of other tweaks around minor leases that we've been making, we have -- or we expect by the end of the year to have eliminated $100 million of lease expense, which, Sheryl, I know you and your cohorts put an 8x multiple on in terms of our leverage. So getting rid of that lease expense is a very significant item in terms of our overall capitalization. 

Our view is as we approach the end of the year and we clean up all this stuff, our leverage should get down to right around the sort of 6.0, 6.1 level on an adjusted debt-to-adjusted EBITDAR basis. And as we get into next year and based on the guidance we provided, we expect to sort of punch through 6.0 and continue to deleverage from there. Now look, I mean, this is not where any of us had hoped that our leverage would be, but it is a natural result not of an increase of debt but in terms of the EBITDAR challenges that we've had as a result of LTAC criteria and, to some extent, all of the sort of constructive transformation that we've been making with the overall business. So we do expect to get back into the high-5s over the course of next year, and we are extremely focused on making progress from there."

I recall Gentiva CEO Tony Strange trying to explain how the company repeatedly failed to meet both its profit and de-leveraging goals.  Kindred's Ben Breier has a similar challenge, promising something and having to explain management's failure to achieve. 

We appreciate everybody working hard to continue to follow what we know can sometimes be a complicated story.

Kindred missed their $1 billion EBITDAR target and its goal to de-lever by 1 - 1.5x.  How much performance pay will the Board give executives for driving up leverage 1 - 1.1x?

Kindred bought Gentiva's equity for $720 million.  As of Friday's stock market close Kindred's equity stood at $629 million, nearly $100 million less than the equity value for what became Kindred at Home. 

KND stock had a bad run recently.  Shrinking a company is a delicate operation.  Delicate is a word I do not associate with Kindred management, which can be extremely self serving

Anonymous (one of 100,000 deeply appreciated Kindred teammates)

Sunday, August 6, 2017

Bad News: Kindred Executives to Focus on Hospice

Kindred President Ben Brier and CFO Stephen Farber talked to Wall Street analysts on Friday about the company's second quarter performance.  I searched the earnings call transcript and found their statements mentioning hospice. 

"Our primary objective was to exit the skilled nursing facility business and grow our Home Health, Hospice and hospital rehab businesses."

Kindred was founded to operate skilled nursing homes.  Breier and company ditched Kindred's original mission because profit margins shrank.  They sold the division at a time of low valuations and highlight deal losses (which generate tax breaks that improve cash flow in the future).

The stock market did not buy their bragging about the deal.   Kindred's stock went down 30%.  It dropped from $11.70 to $8.20, a decline of $3.50 per share. 

"Kindred at Home, the nation's largest home health, hospice and community care platform, delivered a solid quarter with revenues up 3.2% over prior year. With $109 million of core EBITDAR, the second quarter represents a record earnings quarter for Kindred at Home. The near 17% core EBITDAR margin for the quarter reflects a 230 basis point margin improvement over the first quarter of 2017 as we got back on track after the integration challenges we overcame late last year.

Our Hospice business delivered a solid quarter as well. Hospice core EBITDAR was up 4.6% compared to last year on roughly flat revenues as we delivered significantly improved margins. Our Hospice teammates did an outstanding job managing costs against flat same-store census. Labor costs per patient day were down 1.8% from the first quarter of 2017, a continued improvement in this measure."

Hospice admissions declined 4.5% from second quarter 2016.  Admissions dropped 5% for hospices Kindred did not sell or close. 

Gentiva executives could never figure out why hospice did not conform to home health's hard sales model.  Their OneGentiva initiative had sales people doing both, home health and hospice.  Kindred's call centers operate under the same philosophy. 

"Importantly, the growth prospects for Hospice, in our view, have not changed. We believe the volume contraction in the quarter was a slight and temporary bump in the overall steady-growth Hospice trend line. We attribute this temporary volume softness to the restructuring activities among the ranks of our clinical liaisons in Kindred at Home. These restructuring activities, which we completed in the quarter, were related to the separation of the Hospice sales force from the Home Health sales force, given the inherent specialization of those 2 lines of business. With this process largely complete, our clinical liaisons remain poised to capture our share of the hospice industry tailwinds."

Like Gentiva before it Kindred believes the solution lies on the sales side.  Our hospice census goes up when we have good nurses, chaplains, social workers, nurse aides and bereavement staff.  Census rises when they feel valued and supported by our branch manager and the company.   

Kindred benefits have been a kick in the teeth for our employees.  Kindred's health insurance eliminated the doctor co-pay benefit, so any visit outside the mandated annual wellness visit is the employee's responsibility.  The pharmacy benefit has employees not using insurance at all, claiming to have no coverage to get affordable medication.  Gentiva reduced the paid time off accrual before the Kindred buyout but rumors suggest further cuts could be coming.

Kindred has taken a how little can we provide stance on employee benefits almost on every front.   Gentiva showed the value of employer provided benefits on our paycheck.  Kindred ditched it. 

People feel valued when they have a voice.  It didn't take long for Kindred at Home President David Causby to eliminate the employee survey.  While our site took the survey in 2016 we never heard anything back from our efforts.  When asked why the results were not shared our branch manager said the company de-emphasized it, i.e. executives don't care what we think.  We pretty much knew that but thought someone would have the decency to share results from a survey management asked us to take.  Our feedback meant nothing.

Hospice employees can expect more of the same.  Increased management attention is never good in Kindred. 

"For the most part, I would say that in Kindred at Home, in our Home Health and Hospice business particularly, we think we're very much back on track in that business. And I think we'd like to see, obviously, more top line growth, and I expect that we will see it, having come off of some of the integration challenges we talked about last year at the end of 2016 and now a little bit of a rejigger on our sales force, which is mostly complete. Obviously, we're very pleased with what the results look like, and we know that we can manage costs when we have to in a volume environment that can be tough. But I think that for all of us, as health care provider or service investors, we got to keep our eye on volumes and think about how do we feel about volumes going forward. And there'll be peaks and valleys with that. I think one of the things that we're doing really well, A.J., is that we continue to attract growth on the managed care and commercial side of our business. And there's no question that if you just look around at how the payers across the country are performing this quarter, they're knocking it out on all cylinders, and the more that we can continue to generate referral sources from them and be a part of their solution, I think, the better off our enterprise will be. So that, I think, in broad strokes, is kind of how we built into 2018.

We're going to keep trying to grow organically. We're going to ke,ep trying to drive efficiency and productivity and keep managing cost per visit down the way we have, and we're going to keep trying to be the best home health and hospice operators that we can be in the country."

It's hard to believe executives want us to be the best hospice given they stopped many distinctive services our site once offered.  Working for Kindred has been a walk back in time for efficiency and productivity.  Before Kindred our hospice was far and away the best in our community.  People lined up to work at our site.  That's no longer the case.

"We, quite frankly, like to look for undervalued assets that we can -- maybe even be dilutive in the short term that we can help grow, and so we're always looking for those kinds of opportunities. We continue to look at the hospice and the community care side of the world. But I don't know that it changes anything really about how we were thinking about home health in terms of M&A. We've been in pretty good shape with what our platform looks like for a while and just want to continue to run our business efficiently."

We prefer Kindred executives be occupied by big deals.  Any time executives showed up at our site they made things worse.  I pray they stay away.

"I'd like to start my comments, as I usually do, by expanding -- extending my deep appreciation, on behalf of our entire leadership team, to our more than 100,000 teammates across the country. Each day, our partners at Kindred work incredibly hard to improve the lives of the more than 1 million patients we care for annually. The excellent care delivery and clinical outcomes we generate are the direct result of their efforts."

When Kindred bought Gentiva the combined company had more than  109,000 teammates.  There are 9,000 less of us.  For those remaining do you feel respected and rewarded for working incredibly hard to improve the lives of your patients?   I hesitate to speak for everyone at our hospice but the majority don't feel Kindred is a good, caring employer.

We love the work, our patients, our coworkers and set aside Kindred's bad management.  We rise above to serve.  Hospice truly is a calling, something you wouldn't sense from this quarterly earnings call.

Hospice length of stay went up from 91 to 94 days.  For the quarter company wide hospice census fell 1.9%.

These are not numbers to us.  They are people, families, and friends dealing with harder aspects of life, it's ending.  There is only one way.  That's through, not around.  It's hard to hear some things.  One can be richer (non-monetary), wiser and more peaceful from the simple act of listening and honoring one person.

Kindred executives want to give hospice more attention.  That's historically been a very bad thing at our hospice.  Every time they chose to go around, not through. Management misdiagnosis leads to mistreatment, which carries additional complications.  From that we suffer.

Saturday, July 29, 2017

Line Formed to Influence Toad

Strange Tony,

Kindred Vice President Toad visited our hospice site recently.  He set up in a conference room and invited staff to meet with him in one on one sessions.  The line formed on the sign up sheet with its half hour increments, which our office manager guarded as if it were gold bars from Fort Knox.  Management added a special partition to enable confidential entry and egress for staff.

Years ago Toad would have had no takers.  Back then staff knew better than to give bad leaders any information that could be used, twisted, or distorted to harm fellow employees.  That wisdom is long gone, replaced by an egotistic, self serving sickness which likely will be terminal for our hospice if it persists long enough.

One does not rise by stepping on the heads of co-workers.  Fellow employees sink under the feet of those under the illusion they benefit from divisive and unproductive behavior.  The tragedy is corporate management who listens to one side of any story and decides to act.   In such cases the race is to be the first one heard.  That race unfolded with Toad's open door sessions (which always occurred behind a closed door).

It is such a management basic to hear multiple sides of a story to learn what happened and develop strategies to address the issue.  Kindred, and Gentiva before it, ignore this simple dictum.

Executive Toad will do something with the myriad of misinformation made available to him by those who pretend to be victims in their perpetration.  If he's like the executive line before him Toad will support the lazy and unethical who point fingers elsewhere so they won't be found out.  He might even hit on our attractive staff as did a former HR VP, who professed to being happily married.

It is astounding how much incompetence, silliness and unprofessional behavior they willingly overlook.  Yet, management writes up the smallest transgression from hard working, patient focused staff who purposely protect themselves from untrustworthy management.

Kindred executives do not have eyes to see and ears to hear.  They have partial stories, often distorted beyond recognition.  These fictions stimulate executive adrenaline and vengeance as those coming up short under the micromanagement microscope must be punished.

Will Toad overlook the burning forest of conflict at our hospice site, doing the bidding of those who ignited and continually stoke the fires?  I'll wager he's at the head of the fire hose following instructions from the crew that ran to him first.  It's been the Kindred way to burn the innocent at the bidding of the arsonist. I expect Toad to follow this deeply entrenched pattern.

Anonymous (from Kindredwarts)

Sunday, July 2, 2017

Kindred Dumps Nursing Homes for Huge Loss

Strange Tony,

Kindred announced the sale of their nursing home division late Friday.  Kindred's press release revealed details of the deal:

Kindred Healthcare, Inc. (“Kindred” or the “Company”) (KND) today announced that it has signed a definitive agreement with BM Eagle Holdings, LLC, a joint venture led by affiliates of BlueMountain Capital Management, LLC (“BlueMountain”), under which it will sell the Company’s skilled nursing facility business for $700 million in cash. The sale includes 89 nursing centers with 11,308 licensed beds and seven assisted living facilities with 380 licensed beds, which collectively have approximately 11,500 employees in 18 states. 

Kindred is closing the door on it's initial mission by selling its nursing homes.  Ventas spun off its nursing home operating division into Kindred via an initial public offering in 1998.  Kindred already agreed to pay Ventas $700 million for 36 leased nursing homes.  Ventas press release clarified:

The sale price of $700 million represents a seven percent cash yield on current annual cash rent of $50 million and an eight percent GAAP yield. The difference in yield represents the annual portion of the amortization of $23 million in cash fees Ventas previously received from Kindred. Upon the sale of the SNFs, Ventas is expected to record a gain exceeding $600 million.

Effectively Kindred will take the $700 million from BlueMountain Capital and pass it directly to Ventas.  For BM Eagle Holdings it's buy 36 Ventas nursing homes get the rest for free.

There's a huge disconnect inside this deal.  Ventas owned nursing homes sold at a huge premium and Kindred gave away the physical assets of 25 nursing homes and 3 ALF's.

Kindred's big win comes from "the creation of an approximately $380 million net operating loss carryforward associated with the sale transaction."  That will generate "approximately $140 million of cash tax benefit over time."  The two other wins are simply holding onto stuff the company already owns, working capital and a "retained Las Vegas facility, hospital-based sub-acute units and other retained assets." 

Kindred's stock has been on fire lately.  I wonder what it will do after the market digests the nursing home fire sale that disproportionately enriches Kindred's former owner..

I do worry about the 11,500 Kindred employees going to BM Eagle Holdings.  In the hospice world Kindred pay has been stagnant as benefits deteriorated.  How much worse might these employees fare under private equity ownership?

The deal is expected to close in two stages but should be completed this year.  Kindred CEO Ben Breier will get how big a bonus?  Whatever amount the board awards for this deal should be split 11,500 ways and mailed across 18 states.  Employees should get something for being sold out.  Ben Breier and Stephen Farber should get nothing for turning their back on Kindred's original mission.  Other divisions should know we're disposable as well.  Executives could turn on us at any time.

Anonymous  (from a saleable division in executive enriching Kindred)

Friday, June 30, 2017

New Kindred Executive: Venemous Toad?

Strange Tony,

Corporate assigned a new junior executive to our hospice site.  I'll call him Toad.  So far he's been very quiet.  That can be a sign of someone who prefers to watch and learn, but that's been a rare practice of prior Kindred vice presidents.  Toad's predecessors preferred to:

A.  Talk over listening
B.  Jump to conclusions over researching issues
C.  Shoot any messenger raising legitimate concerns
D.  Foster or avoid conflict rather than manage and reduce it.
E.  Play favorites
F.  Beat people up over numbers

Our new VP arrived at a time of incredible division within our hospice.  Conflict increases when leaders use strategies that keep people separated and uninformed. Ninety five percent of conflict can be resolved with one simple intervention, help people complete communication. This solution has been a mystery to Kindred managers who sow division and manage by whim.

Our hospice divide deepened when staff sold their soul to horrific management for the illusion of personal protection and connection to power.  Kindred leaders took information nuggets from soul-selling staff, instantly twisting and misusing them as weapons.  Enough hospice staff made this sick deal that our hospice culture could be terminal.

It will take a sophisticated VP with deep leadership skills and experience to save our historically great hospice.  Such people are rare in today's EBITDAR obsessed, capital optimizing, human abusing, compliance lip service-oriented world of healthcare mismanagement.

Kindred does not have systems to find and employ such leaders.  It's just not in them.  We'll see how bad Toad's venom is.  Will it be more or less toxic than those who came before him?

Anonymous (Waiting for next Kindred axe to fall)