Saturday, March 4, 2017

Kindred Closes on Dreadful 2016

Strange Tony,

Kindred executives told their 2016 financial story to Wall Street analysts on Tuesday.  This is the group that just got free stock from Kindred's Board for losing $7.65 a share.

President Ben Breier opened the call with his usual pander to employees, "I'd like to start my comments by thanking everyone who helped make 2016 such a successful year for Kindred."  So successful that Breier had to cut the employee Christmas gift.   Employees wouldn't have had time to eat it, not with our increased workload.

Kindred at Home delivered another quarter of solid volume.  Hospice delivered same-store revenue growth of 6.5% on same-store admissions growth of 4.4%.

Core EBITDAR margins for both home health and hospice contracted due primarily to nursing labor headwinds. These headwinds came from a combination of the macro labor conditions we spoken about and quite frankly some self-inflicted costs stemming from our continued integration of pay practices and electronic medical record systems. We expect to make meaningful progress on the controllable part of this labor equation in 2017.

There are some exogenous related issues around some wage rate creep in that business but I would view Q4 as much more of a self-inflicted wound as I would and exogenous issue. We have gone through sort of the final stages in that business of consolidating our electronic medical records of consolidating pay practices and what I would really describe the fourth quarter in our Kindred at Home labor line being is really more of a productivity issue than an average wage rate issue.
Productivity is associated with creep and executives in many employee's minds. Consider Breier's comment to analysts:

On the hospice side you may even see high single-digit growth rates there and that you should expect that you know depending on how we're able to deal with our labor issues that a significant portion of that can drop through (to the bottom line and executive incentive pay).
I don't know one coworker who has gotten a high single digit raise in pay in a year, much less a series of years. 

Look we left some dollars on the table clearly because of some of the premium labor issues we're dealing with and I would expect that you'll see some improvement in that number  
Who knew Ben Breier's wager table is our paycheck?  Some employees earned too much last year for the Creep Suiters.  However, most have continued falling behind financially doing the work we love. 

"We have a very focused initiative right here on trying to take more cost out"
As for productivity many of my coworkers donate time to patients.  How much extra free time will executives subconsciously demand as they control the labor equation and take more costs out?  This group wants more than the few thousand free shares they recently received and they will do it on employees backs.

Anonymous (from Kindredful)

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