Friday, January 17, 2014

Gentiva Wage Constipation at J.P. Morgan


Two of Gentiva's heart breakers spoke at the 32nd J.P. Morgan Healthcare Conference today.   President/CEO Tony Strange and CFO Eric Slusser made the trip to California to speak, but they couldn't stay for the panel discussion due to travel plans.

Technology wise Gentiva partnered with deVero, a small California company.   They essentially took Gentiva's existing paper processes and digitized them.  They rolled it out to 260 some locations in the last two quarters of last year. 

Repeated explanations of OneGentiva didn't help me understand why the company put three drastically different products under the same management in order to have one face for referral sources.

Strange suggested their is no low hanging fruit in clinical care, saying "We have to deliver what the patient needs?" 

The company plans to be an acquirer of other post acute care providers going forward.  CEO Tony Strange believes valuations are rich and likely to come down in price.  Given Gentiva paid a premium for Harden, will its valuation do likewise?  Look for goodwill write downs if Strange is correct on valuations falling due to rate pressures over the next four years.

Gentiva associates should know the company will continue to have to make difficult cuts to protect margin in the challenging healthcare environment.  That means more than a week of PTO per year is at risk.  

Tony closed the session with an extended comment on employee wages:

"We have been able to manage the wage pressure on margins just through gaining efficiencies through technology, some of those kinds of things.  We've not seen a tremendous increase on wage pressure in our margins.  However, I say that with, I think the economy has helped us with that.  I think we have people that are protecting their jobs.   We've seen less people leaving to go to work for other places, but as the economy improves, we could very well see, umm, as the economy improves or if the economy improves, we could see wage pressures increase accordingly at that point, but thus far we've been able to manage the wage pressures pretty consistently within our current margins.  I think we're going to be out of time."  
Actually, it's employees who got shorted time, a week's worth of PTO, by Strange and crew.  Few got a raise that came close to matching inflation over the multi-year period of zero salary increases. 

Why would margins need to be stable and cash flow healthy?  To fund executive performance cash awards.  A brief walk through last year's proxy statement reveals the extent to which executives were enriched.   What multiple of a Nurse Aides pay did these leaders' make?   Nurse Aides are the lowest paid position within the company.

Our hospice division Human Abuse Director visited our site, having the gall to say, "I love each of you like our nurse aides love our patients."  At the end of her fake embrace she asked for questions.  A thirteen year veteran nurse, also an outstanding employee of the company, asked when she might get a raise, having not had one for three years.

The Human Abuse person said, "Regional leaders will meet in Atlanta soon and they will be charged with finding the money in their budgets to give raises."  Note:  Senior executives had not budgeted for a raise for that year.  It's the level below that's supposed to find funds for a paltry increase.

This interaction is typical for Gentiva, where leaders are inauthentic, laying blame for their decisions anyplace but at their feet.  The only consistent thing I've gotten from Gentiva corporate types are lofty words and mendacious action.

Today's J.P. Morgan presentation was more of the same.  Employees are to be sacrificed to protect margin. How can someone continue to love their job when they work for such a crappy company?  I find it more difficult to do so each and every day.

I'm sorry, but when I thing of our senior executives, OneGentiva doesn't fit, not in the least.  OneGenitalia provides a better description.


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