Friday, February 27, 2015

Gendred Unleashed


I offer a new moniker for the Gentiva-Kindred combination, Gendred.  It sets the tone for Kindred, which took on massive debt to integrate Gentiva, a company with remarkable skills in driving away employees and referral sources.

It fits a company with a new COO from private equity. Healthcare leaders should have better things to talk about than optimizing capital structure.  What happened to providing quality service and doing what's actually in the best interest of the patient?  Those questions are nowhere to be found at our hospice site.

Private equity focuses on financial machinations, most of which trample the people side of the equation.  This perspective fits with Gentiva's tone deaf Human Resources.  I expect Gendred to build on this existing Human Abuse department. 

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.  Kindred leaders failed to mention Gentiva executives' initial promises for the Harden integration.  Instead Paul Diaz was effusive in his praise for beating a revised lower mid-year expectations. 

Gentiva's senior executives drove more value from the company between Kindred's due diligence and the deal's closing.  Their service reduction strategies took down our site's customer service scores by several notches.  How might Gendred further ignore patients, family members, employees and referral sources? 

Gendred promised there would be "few changes" at the local or site level.  Word has it "few" will change into "many." The company's strategy to delever will require accelerated cost cutting.  The question is how much revenue Gendred will drive away in the process?  Although Gendred is a mere four weeks old I'm concerned it may already have nasty teeth, the slicing, slashing, mashing and gnashing kind.

Walmart's CEO wrote recently to his thousands of employees:

We also made a few changes aimed at productivity and efficiency that undermined the feeling of ownership some of you have for your business.  When we take a step back, it’s clear to me that one of our highest priorities must be to invest more in our people this year.
In other words executives overreached, made our service worse and put our employees in positions where they could not be successful.  Gentiva did that very thing last summer while Kindred conducted due diligence on the merger. Walmart's CEO stepped back, turned away, repented.  It's not clear Gendred has the capacity to do the same.

Kindred carries on Gentiva's abysmal leadership at our site.  There is no listening, no understanding, thus no ability to address root causes or test appropriate interventions.  Managers deny frequent service failures and defend vendors providing hapless service to our patients.

Only Gendred's managers have brains.  No other input is warranted or desired.  I'm continually amazed by unilateral actions taken by Gendred management.  Their actions are not serious, not credible, as they don't understand relationships and miss causes by the widest margin.

Gendred's managers go out of their way to limit information and feedback.  Questions are used to garner tidbits that support their distorted views of employees, our site and our community.  They don't know a one of us, much less our team, not in the least.

I consider many people heroes for speaking truths and providing outstanding care amidst absurd limitations.  Gendred's mendacious managers deride truth tellers, regularly affixing them with a negative label.  Our staff do their best to ignore these highly paid, small minded management miscreants by continuing to deliver great care.  I see fewer good people with each passing day.

Here's a hint Gendred executives:  Managers invoking defensive routines, like name calling or labeling, are not listening.  I can't use the word leaders.  It's a sorry lot.

Wednesday, February 11, 2015

Kindred's Staff Turnover


In 2013 Kindred's home health, hospice and personal care division, now known as Kindred at Home, had 38% employee turnover on an annualized basis.  Buyouts create an environment where positions are eliminated and employees have little to no allegiance to the new owner.  Some may find the company better together.  Alternatives include badder together, better apart and bitter together. 

If Kindred performs like Gentiva while it integrated Harden, millions in revenue and scores of people will be lost.  No matter the slick language used to deceive, cost cutting resulted in service level reductions at our site.  Gentiva employees already know the damage from absurd expectations with ever constrained resources.   

Gentiva drove the heart out of our hospice.  Kindred may or may not bring it back.  The next few weeks will be informative.  Will Kindred continue the insanity?  I'm praying for the company to turn around, to repent.  If not, maybe HealthSouth will want experienced hospice staff.

Friday, January 30, 2015

Gentiva Execs Sign Off


StrangeTony,

I left work today for the last time as a Gentiva employee.  Monday morning I work for a division of Kindred Healthcare.  Top Gentiva executives offered golden parachute goodbyes today.  Executive Chairman Rod Windley and CEO Tony Strange will take their millions and ride.

The role we will miss most is being cheerleaders and supporters for the field.

When do cheerleaders and supporters surreptitiously reduce PTO benefits and the employer health insurance contribution, while giving one measly raise in seven years?  What cheerleaders leave with millions ($) apiece while granting employees a one time loyalty bonus in the hundreds?  How can supporters ignore long term, obscene levels of turnover in the "greatest group of employees in the industry"?

My fellow employees were grateful for the final crumb from the executive banquet table.  It had been awhile since we'd had a taste of what they dine on three times a day.  Will Kindred's leaders be different?

Kindred hired a new Chief Operating Officer from an affiliate of private equity firm Warburg Pincus.  Gentiva acquired Harden Healthcare's home health and hospice division from Capstar Partners, also a private equity firm.

Through Gentiva's heavy handed integration of Harden expected combined revenues fell short, turnover increased and goodwill written down.  The cause?  Bad management in the words of one higher up.  I found that to be quite a confession from this group of "cheerleaders and supporters."

Kindred bought Gentiva's sites, but many are shells of their August 1, 2014 self.  Our depleted site starts anew on Monday under Kindred management.  Signs are costs will continue to be managed to the detriment of employee retention and customer service.

My plea would be for honesty, listening, partnering and giving employees what they need to serve well.  That includes tools, time and fair compensation.  If Kindred continues Gentiva's abusive management practices, don't imitate the last regime.  Please don't mask your cuts, discounts or unrealistic expectations with flowery lies.

Anonymous (from Gentiva's on our last day)

Sunday, January 25, 2015

Kindred Bullish on Gentiva's Cost Side

StrangeTony,

Modern Healthcare reported:

One of the most dramatic business story lines last summer was the back-and-forth merger battle between Kindred Healthcare and Gentiva Health Services. The two post-acute care providers ultimately agreed to a $1.8 billion merger deal in October.

Kindred President and Chief Operating Officer Ben Breier, who will take over as Kindred's CEO this March, said the company has created an “integration management office” to oversee the melding of the two companies, composed of Kindred executives and consultants.

Originally, Kindred predicted that it would save $35 million in the first year of the merger and $70 million in year two. It now expects to exceed those estimates. “We're very bullish on what we're seeing on the cost side,” Breier said.

This may sound familiar to Gentiva employees as executives used similar language regarding the Harden acquisition. While senior executives bulled on the cost side, revenue expectations for the combined company were adjusted down more than once.  It's not clear senior leaders understand the long term importance of employee retention, maintaining service levels and stable brand recognition in local communities.

Forbes ran a story on the growth of "chain hospices."

Hospices are scrambling to consolidate so they can benefit from the economies of scale and marketing advantages of being big. Publicly-traded companies are responding to investor demands for increasing revenues.

At least one company, Adaptive Insights, hopes to retain Gentiva's business and not be driven out in Kindred's cost reduction effort.  It claims to have provided $1 million in annual benefits. 

Gentiva needed a more flexible, cloud-based financial planning solution that could support its complex business model, M&A growth, and productivity, with limited reliance on IT. Adaptive Insights helped Gentiva to model its mergers and acquisitions, and the Adaptive deployment grew from a divisional level to quickly become the corporate standard for all of Gentiva.

Currently, Gentiva's entire organization uses Adaptive Insights for budget planning -- providing a 360-degree view of the company, for all users. Gentiva's users have reported significant time savings, and Adaptive's budgeting process has reduced workloads by more than two months for the finance team. 

Will Adaptive Insights be kept or ejected by Kindred's executives and consultants?  That question applies to many of us who've lived Gentiva's knee jerk management for years.  What is our future with the new company?  "Bullish on the cost side" is a bad sign.

Also, cost bullish Benjamin Beier owns nearly 500,000 shares of company stock. Fun fact for what likely will be un-fun times.

Anonymous (from Gentiva)

Thursday, January 22, 2015

Gentiva Shareholders Vote for Kindred Buyout


StrangeTony,

SEC filings revealed:

LOUISVILLE, Ky. (January 22, 2015) – Kindred Healthcare, Inc. (“Kindred” or the “Company”) (NYSE:KND) announced that, at the Special Meeting of Stockholders of Gentiva Health Services, Inc. (“Gentiva”) (NASDAQ:GTIV) held today, the Gentiva stockholders approved Gentiva’s combination with Kindred. 

Kindred expects to close the transaction on February 2, 2015.  What will Kindred be for Gentiva employees and patients? 

Anonymous (from Gentiva until February 2nd)

Monday, January 19, 2015

Kindred to Consummate Gentiva Transaction


StrangeTony,

Kindred talked about the impending takeover of Gentiva at the J.P. Morgan Annual Healthcare Conference:

Secondly, as part of consummating the Gentiva transaction which we announced publicly, we expect to close on February 2 here. So just in a couple of weeks. We will become the largest provider of home health and hospice in the country. Well over $2 billion of revenue, approaching almost $2.5 billion of revenue. Included in that is about $850 million of hospice revenue, the rest of it being on the home health, skilled nursing side and personal care side in a place that as we will talk more about our integrated care strategy, we at Kindred Healthcare believe that as the consumer continues to be more responsible for their first dollar out of pocket, as medical technology continues to improve and as our ability to continue to take care of a patient at the end of their stay grows that being able to provide care in the home is going to be more and more important in the future of healthcare delivery. And so being the largest in the home care space is very, very important to us as well. 
That's twelve days before Valentine's Day.  Time will show how much love Kindred shows Gentiva employees. Here's the close from Kindred's President and CEO Ben Breier:

As I mentioned earlier, not only you know are we confident in the work that we’re doing today in the context of integration, but that we believe that this is moving us into higher revenue growth businesses, as I mentioned earlier with higher EBITDA margins, better growth rate characteristics than what we’ve ever had at any other time in the history of Kindred. 

We take a lot of pride and spend a lot of time thinking about the leverage aspects of our Company and we’re going to work hard, investors, equity investors should note we’re going to spend a lot of time this year and beyond thinking about the continued focus on delevering our Company. We’re in a reasonable position now, but certainly as we start to grow into Gentiva, we’d like to get that leverage number into sort of the 5 times range and ultimately as we get through the first two years of the Gentiva close, we think that investors should expect us to be sort of more in the 4.5 range from a leverage perspective. 

 And so last — just from I think to a close from an investment perspective and an investment rationale perspective you know, we aspire to do really what we hope are amazing things inside of the healthcare delivery system. We really do think that we’re in a position to reshape the way healthcare is delivered for an aging population in America which we take very importantly. We think that, as I mentioned, we’re uniquely positioned in a fee-for-service world today to move our fee-for-service business into more of a value-based purchasing environment where over the course of the next couple of years, people will want to pay us for taking care of a patient more broadly. This continue the care strategy that we have developed, we think is absolutely a strategic advantage to how we deliver care out in the marketplace. If you think about our business today and how it compares to any of our competitors out there really, there is nobody that has the deep local market penetration with the broad national scale that we have to manage costs but really develop brand and be able to take care of patients all across the continuum like Kindred Healthcare does. 

 And as we continue to connect the dots on health information, IT, and on care coordination, we will continue to be much more effective at how we manage these patients. You know we’ve had transformational growth, there’s no question about it. I mean, both doing Gentiva and Centerre, it represents, I think, certainly the strength of the back office of our Company and our ability to integrate these businesses. And so this transformational growth you will continue to see play out over the course of 2015 which will have a strong growth profile with, as I said, improving margin characteristics. We will have you know what we think are substantial operating cash flow possibilities with a deleveraging profile

Warms the hospice heart doesn't it?

Anonymous (from Gentiva)

Thursday, January 15, 2015

Gentiva Headcount Down 11%


StrangeTony,

In three months time Gentiva's employment numbers dropped 5,000 people, according to Kindred Healthcare.  Kindred plans to close on Gentiva in early February.  Gentiva leaders say few changes will occur at the site or branch level.  How many of the missing 5,000 came from local operations vs. corporate layers?  Kindred did not break that out.

Anonymous (from Gentiva)