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)