Massive Change Looms for Kindred

Strange Tony,

Kindred Healthcare's sellout to Humana and two financial rapscallions looked traumatic enough for dedicated employees.  The deal involved splitting Kindred, a company cobbled together in early 2015.  It also drove a knife through Kindred's strategic vision of a one-stop shop for post acute healthcare services.

Executives and conflicted Board members defended the deal.with:

The structure was developed based on extensive work with investment bankers and other advisors who have experience with similarly complex transactions.  It was determined that a structure with two companies owned by a group of investment partners would yield the most optimal result for our employees executives, our patients and our stockholders..

Investment bankers, other advisors and our new owners charge fees for advising and executing the deal.  Kindred executives could release the total amount of these fees, which will dwarf the paltry $4.4 million the company paid for employee retirement benefits in 2017.  This "optimal result for employees" includes no changes to base salaries or pay rates after the transaction close.

The first challenge is trashing Kindred's strategic vision..

The next challenge arises from purchase of Curo Health Services, the second complex deal announced by Humana and its financial rapscallion partners.  Our new owners like Curo's "highly capable management team and a tech-enabled, centralized model for hospice care."

The double merged company "will leverage data and analytics to measure and advance evidence-based clinical outcomes for patients and seamlessly coordinate the transition from home care, to in-home palliative care, and thoughtfully into hospice."

Curo does not have home health.  Its systems are hospice only.  Curo employees suffered under financial rapscallion owners GTCR and Thomas Lee Partners.  Curo's systems measure financial performance in order to give their private owners the cash they desire. 

Our consortium ownership wants Kindred at Home to grow EBITDA, which is the basis for Humana to buy out its partners in future years.  Our owners may pull out chunks of company cash along the way.  It's what financial rapscallions do. 

Curo has more hospice locations, 245 vs 178 for Kindred.  There will be huge overlap in some markets and new owners normally salivate over slashing redundant expenses while keeping all the revenue.  Flashback to Gentiva's buyout of Harden Healthcare in 2014:

Harden-related synergies are expected to be approximately $28 million by 2015. This includes approximately $16 million from the elimination of overlapping corporate costs, and the remainder from the consolidation of regional area and branch organizations, as well as other cost-savings initiatives. 

Gentiva butchered the integration with Harden Healthcare's hospice sites.  Hospices aren't puzzles that can be casually disassembled, combined and reassembled.  When service suffers patients and referral sources notice. If service gets bad enough they switch their preferred hospice.  Employees can do likewise.

Curo's hospices are less than half the size of Kindred's on an average revenue basis.  For the year ended 9-30-17 Curo averaged $2 million in revenue per hospice vs. Kindred's $4.1 million. 

Merging Kindred at Home's 178 hospices into Curo is a huge challenge, especially as it's hot on the heels of the Kindred split.  Curo encompasses eight hospice brands, while Kindred at Home still has a smattering of various home health and hospice brands.

Over time Humana will want brand harmony.  What's a potential solution to Curo/Kindred's brand proliferation?

Con may be appropriate for our new ownership group.  How much Viva will they bring employees?

Anonymous (soon to be Curo'ed)