Monday, May 18, 2015

Retirement at Home

StrangeTony,

Thank you for your back porch update and reminiscing about your experiences with new corporate owners.  We're still learning what Kindred is about.  Unfortunately, communication seems no better than before.  My method of listening to quarterly earnings calls for executive strategy didn't work so well with Kindred.

Hospice was but a minor part of the conversation.  The language sounded something like, "hospice volumes are stabilizing, even making slight headway in Q1.  The company is positioning hospice for a return to sequential growth."

However Kindred's recent quarterly report had several interesting statements:

During the three months ended March 31, 2015, the Company recorded an asset impairment charge of $6.7 million related to previously acquired home health and hospice trade names after the decision in the first quarter of 2015 to rebrand to the Kindred at Home trade name.

Later on in the same document:

During the three months ended March 31, 2015, the Company recorded an asset impairment charge of $7 million related to previously acquired home health and hospice trade names after the decision in the first quarter of 2015 to rebrand to the Kindred at Home trade name. 

What's $300,000 between corporate friends?  This could be a typo or an accounting discrepancy.  With executive communications it's hard to know.  It's newsworthy to Gentiva sites who've had their assets impaired by past trade name changes, some multiple times.

Saturday, May 16, 2015

Buyout Memories


Anonymous from Gentiva,

Retirement is great.  Every now and then a bad memory of a former Generic Hospice buyout invades my brain as I sit on back porch sipping mint juleps.  There are flashes of false promises, vacuous language, image obsessed people in suits and a widespread, shallow excitement over all the money the company would save or make under the new combination.  This dull energy, like excrement, urine and water, flows downhill.  Our site was to spend less and make more for the company.  Customer needs, service levels and employee concerns (heaven forbid) were not in the equation.

What did we get?  A ceaseless rotation of corporate "leaders" who were supposed to support our site.  They delivered handcuffs in the form of "no overtime" and other absurd corporate edicts  The amount of work to be done didn't matter.  We had staff doing the work of 2.5 full timers.  There was no concern of burnout for loyal, dedicated employees.  Our abusive branch manager was a hero for getting this level of productivity.  They were lionized in the company's eyes when they should have been vilified. 

After one buyout, the new company wanted to hear from employees.  Corporate sent a human resources person to gauge the pulse of our site under our horrific branch manager.  They heard from most people, directly in one-on-one sessions.  The line of people shared their individual stories of how this leader had dashed our site's historically low turnover and high employee morale, achieving soaring turnover and plummeting morale.  After processing this feedback Human Resources invited anyone who didn't like it to leave.

Six months later they administered an anonymous employee survey.  If they didn't care about our plight when informed directly by dozens of loyal, dedicated employees what difference would a survey make?  A few new employees penciled in their rankings on a variety of measures.  Most of the rest of us trashed it, just as the company had trashed our verbally shared concerns.

I scribbled comments on each question, ignoring the rankings.  I simply edited the survey based on my experience.  In my attempt to recreate a few of those I offer:
My colleagues support one another in spite of local and executive management.
My branch manager creates unnecessary conflict
My branch manager serially picks people for micromanagement and abuse
Human Resources aids our branch manager's abusive counseling 
My colleagues are chronically underpaid and not appreciated.
Senior management has never visited our site. 
Good luck with the survey.  Enjoy the honeymoon while it lasts.  When the union settles in Kindred's true face will be revealed. 

StrangeTony

Saturday, April 18, 2015

Gentiva Wants to Hear Employees: Five Year Wait

StrangeTony,

President of Kindred at Home David Causby,, former Gentiva Chief Operating Officer, wants to hear from employees for the first time since Gentiva acquired Odyssey Hospice in 2010.  Causby announced Kindred at Home will conduct an employee survey.


I expect they will get an earful, given Gentiva's abusive management practices and years with no raises, interrupted by an occasional pittance of an increase. 

This survey will be the baseline for most former Odyssey Hospice employees.  How does one take five years of horrific management and distill it in one survey instrument?  That will be the challenge for many. 

There's also the question of how the survey fits within Causby's series of special bonus opportunities, one $500,000 and two $250,000 chances?  If the results are less than flattering what consequences await those who share their longstanding concerns?  Gentiva leaders are well known for retaliation, as evidenced by many comments on Generic Hospice and GlassDoor

Anyone raising concerns are labelled troublemakers, negative and are encouraged to leave, if not fired.  A survey is coming from a man whose history showed he couldn't care less about employees.  Kindred acquired a company with entrenched Human Abuse practices.  Will they dismantle this sick culture or reinforce it?  It will be interesting to see.

Anonymous (from Gentiva Hospice, now owned by Kindred)

Monday, April 13, 2015

2014 Good Year for Kindred Executive Raises


StrangeTony,

Kindred's definitive proxy statement revealed 2014 to have been a good, frankly great year for executive pay as it increased an average of 27%.  Did Generic Hospice give you a raise anytime in the last five years?  Gentiva was particularly stingy in this arena, frequently refusing to adjust pay while increasing workload and job responsibilities.  It may be good news that Kindred purchased Gentiva.  Their pay pockets appear to be looser. 

Anonymous (from Gentiva - a Kindred company)

Tuesday, March 31, 2015

Today Triggers $6 million for Kindred CEO


StrangeTony,

Within two weeks Kindred CEO Paul Diaz will receive a check for $6 million.  I consider it his bounty for bagging Gentiva.  This comes after Kindred wrote a check to David Causby for $1 million.  It's the Louisville Lottery but only senior managers can win.  You retired in the nick of time.


Between his recent stock sales with $1.3 million in proceeds and Diaz' $6 million check Kindred's CEO could easily retire.  He won't give up completely, but Paul is taking up the Board Vice Chairman role for Kindred.  The vice part seems to fit.

Anonymous (from Gentiva)

Monday, March 16, 2015

Kindred VP's Strategic Stock Sale


One Kindred Executive lightened his stock holdings post Gentiva acquisition.  The stock price was $2 dollars per share higher than his last sale on February 23, 2015.  He benefited personally from this strategic move. 

Wednesday, March 11, 2015

KND Earnings Call Puts Gentiva in Spotlight


Kindred CEO Paul Diaz and his lieutenants spoke frequently of Gentiva during their Q1 earnings call.

We’re also very pleased with Gentiva’s strong results in the fourth quarter and for the full year of 2014, which reaffirms our confidence in the combination.

Strong results is clearly overstating the case.  Gentiva ended 2014 well below expectations generated when Gentiva purchased Harden Healthcare's hospices and home health agencies.

On a pro-forma basis the company should be able to generate revenues between $2.1 and $2.2 billion, while adjusted EBITDA should come in between $210 and $220 million, excluding share-based compensation.

My take on the expectation shortfall:

Gentiva financially engineered much of Harden's value into thin air in 2014, evaporating $16 to $26 million in adjusted EBITDA and $110 to $210 million in expected revenues

This could be restated as:
 
"After underperforming financially for eight months of 2014, the management team rallied to produce an acceptable number.  We didn't mention human resources or customer service losses because finance is all that matters."  

Kindred issued the same refrain for its purchase of Gentiva:

The addition of Gentiva will support and enhance our financial performance and will create significant value for our patients and shareholders

Referral sources and employees were not mentioned in the equation. as neither is of considerable value.  Customers spoke loudly the last six months and few bragged about our financial performance or value for shareholders.

Gentiva's David Causby stands to gain as President of Kindred at Home from meeting budget and cost saving targets.   Diaz continued on the earnings call:

Gentiva, I think has been and will continue to be one of, if not the best run home health companies in the country. There’s obviously been a number of struggles on the hospice side coming off of a number of years post Odyssey, but I think their team has a great handle on what’s happening in that business as well, with a lot of changes that we’ve made there. 

Gentiva proved they don't understand hospice in countless ways, from high pressure sales tactics to ignoring and reducing benefits for employees.  After Gentiva leaders realized they couldn't run hospice effectively, they intermingled it with home health though its OneGentiva initiative.   

OneGentiva drove away a significant chunk of Harden's revenue.  What will happen under the next David Causby led integration?   . 

There are some systems integration around payroll and benefits and some things that we’ll have to work on into 2016. But to tell you Chad, I mean our goal is really to do our best to stay out of the way of what is really a great group and a great team with some really sophisticated systems, a great sales pipeline and sales process, a group that’s executing extremely well. They have good processes in place and we’re just trying to let them continue to be who they are.

Gentiva's leaders excel at one thing, micromanaging dollars.  That's it.  Earnings call language indicates Kindred is cut from the same cloth.  This came from the SEC filing:

On August 13, 2014, Gentiva management and its financial advisors met with Kindred to address preliminary due diligence questions raised by Kindred and its advisors. 

Gentiva slashed jobs in late August 2014 while Kindred conducted due diligence in Atlanta.  These actions caused our hospice's customer service scores to plummet.  This should not have been a surprise.  Staff shared patient complaints in weekly meetings.

Gentiva executives and underlings consistently turned their back to the consequences of their actions.  Shooting the messenger remains alive and well.  Image must be maintained, even if it has no basis in reality.



Kindred has clear expectations of beating $35 million in cost savings and $20-$30 million in revenue synergies by year end. 

A lot of that is front ended and we have a great planning process to - let me just say, we have a high degree of confidence on our ability to achieve the $35 million of realized. There will be a big portion of that obviously that will come earlier than later, but it’s all of the above than what you described. It’s people, process, systems, redundancies, not running two public companies, there is a lot of things out there that we’re continuing to work on and that, as I said, we have a high confidence we’ll achieve it before the end of the year.

Hospice discord arises from running a team enterprise in a non-collaborative manner.  This "great planning process" never expressed at our site under prior corporate ownership.  Every major change the last few years provided no opportunity for employee input.  Zero. It appears Kindred will continue this sad trend.

Our new capital structure will carry interest costs totaling roughly $230 million

Kindred's interest expense for 2013 was $108 million, while Gentiva incurred $113 million for the same year.  That $9 million increase must come from somewhere. 

We expect our maintenance CapEx, or what we call routine CapEx to be approximately $120 million to $130 million for the year. This includes $100 million to $110 million per year of CapEx that has been traditional for Kindred, plus roughly $20 million for Gentiva.

This amounts to $5 million on a quarterly basis, higher than Gentiva's traditional $3 to $3.5 million per quarter.  For Gentiva's 46,000 employees, as listed in a Kindred-Gentiva combination presentation, the $20 million in capital expenditures equals $435 per employee.  That doesn't sound like enough money to fund an electronic medical record system.


Q1 2015 is around the corner.  The Kindred-Gentiva story will have more chapters written.  We'll see if Kindred understands hospice any better than Gentiva. The Magic 8 Ball is skeptical.