Friday, March 31, 2023

The Weight of Another Buyout

Strange Tony,

What would you think if a former Medicare Chief was in the lineage of both sides of the Gentiva Hospice - Heartland Hospice deal?  One has to go back to 2009 when Gail Wilensky, Ph.D. was on the board of directors of both Gentiva and ManorCare, a former parent corporation for Heartland Hospice.

Gentiva is buying Heartland for $710 million from Promedica Senior Care (formerly HCR ManorCare).  The Carlyle Group bought ManorCare.  It later ran ManorCare into the ground.

Gentiva had its own history of buyouts and corporate combinations, Family Home, VistaCare, Odyssey, Gentiva Health Services, Kindred Healthcare, Kindred at Home and back to Gentiva.  The company has been majority owned by financial rapscallions since 2018.  

Let's hope current owners Clayton, Dubilier and Rice don't crash us like Carlyle did to ManorCare.   My fellow hospice workers are dinged up from all the cuts on the people side of hospice delivery.  One wheel is off and several more are wobbling mightily.

I wonder how much additional debt Gentiva will take on to buyout Heartland.  How much higher will interest expenses rise and where will CDR look to cut to pay for those increased financing costs?  The pinheads in Atlanta won't tell us.  Maybe Moody's will in their Charlotte Buyer rating update.  

Anonymous

Monday, March 27, 2023

Hospice Clearly Lost its Way

Strange Tony,

Ira Byock, M.D. is on record that hospice needs to be blown up and started over.  When asked about regulatory solutions in a recent panel he referred to statements issued by several professional hospice associations.  Dr. Byock said the industry knew enough in 2008 to issue those guidelines.

On the panel was the Chief Medical Officer of Vitas Hospice Joseph Shega, M.D.. A Vitas piece on his promotion states:

He joined VITAS in 2013 as a regional medical director and was promoted to senior vice president and national medical director in 2016.

Vitas is owned by Chemed which is publicly traded on the NYSE.  In October 2017 Vitas settled with the Justice Department for $75 million for fraudulent billing.

The settlement resolves allegations that between 2002 and 2013 Vitas knowingly submitted or caused to be submitted false claims to Medicare for services to hospice patients who were not terminally ill.

The settlement also resolves allegations that between 2002 and 2013, Vitas knowingly submitted or caused to be submitted false claims to Medicare for continuous home care services that were not necessary, not actually provided, or not performed in accordance with Medicare requirements.

According to the complaint, the defendants set goals for the number of continuous home care days billed to Medicare and used aggressive marketing tactics and pressured staff to increase the volume of continuous home care claims, without regard to whether the patients actually required this level of crisis care. 

The interview did not mention this settlement.

 Dr. W. Edwards Deming rued the negative impact on quality arising from temporary corporate ownership with the express purpose of garnering huge returns from flipping the company.  He referred to this emerging phenomena in his Seven Deadly Diseases.

The world's quality guru, Dr. W. Edwards Deming, spoke in 1984 about an economy without takeovers, without leveraged buyouts (LBO firms).  LBO morphed into private equity before exploding the last two decades.  Greed is their constancy of purpose.

Dr. Byock noted that the hospice industry gets a bad rap for patients that get better under our care.  Our hospice got many patients better under the expert care of our founding Medical Director.  As soon as they no longer met hospice criteria he discharged them.  

Corporate structures changed that.  Our Hospice and Palliative Medicine board certified doctor had to submit a request to remove a patient from hospice care that often took weeks for the Regional Medical Director to process.  I heard our Regional Medical Director tell our IDG Team that those patients were good for six months and only needed to be discharged at the next recertification.  Our Medical Director disagreed but had no power to change corporate policy. 

Our founding Medical Director knew good managers appreciated staff.  He was repeatedly disturbed by the myriad of cuts imposed by new owners, the last two have been majority private equity.  Owners cut paid time off, reduced the number of holidays and cut holiday pay 33%.  I watched financial rapscallions institute new software that robbed employees of pay for time worked and mileage driven in the provision of care. 

Dr. Byock may want private equity owned hospices to increase their margin but he needs to look and see on whose back that occurs. 

Our founding Medical Director enjoyed telling the story of the corporate office having a special dark room, not much bigger than a closet, where they take a new manager and suck out half their brain.  I very much enjoyed watching the faces of those he told.  It generally took a few minutes for it sink in.

Thank you to Death Nurse for making me aware of the panel interview and sharing their wisdom in this arena.  "Game over" for hospice is due to the infiltration of financial rapscallions in the very fiber of American politics.  When private equity billionaires make government policy, they can do what they want.

Anonymous

Wednesday, March 15, 2023

Gentiva Deal for Promedica to Close in Q2

Strange Tony,

Gentiva's purchase of ProMedica's Heartland Hospce/Homecare will close in Q2 2023.  Goldman Sachs committed financing for the deal while six other investment banks advised Clayton, Dubilier and Rice (60% owner) and Humana (40% owner).  

Original financing for CDR's stake in Gentiva went through Charlotte Buyer.  Moody's is yet to issue an update to their rating given the deal terms.

This shows how disconnected hospice has become from its founding principles.  It's now an executive and financial rapscallion moneymaker.  Sad, even tragic for those our hospice serves..

Anonymous

Thursday, March 2, 2023

Gentiva Scarfing Up Heartland Hospice


Strange Tony,

Gentiva Hospice will buy Promedica's Heartland Hospice/Home Care in a $710 million deal.  Gentiva is buying 120 hospice locations serving 9,000 hospice patients with 4,000 employees.  

“This transaction is an exciting development for patients and their families that will enable us to extend our best-in-class caregiver recruitment and retention programs and provide high-quality care to more patients in more areas throughout the country,” Causby said in a press release. “Heartland is a high-quality hospice and home care provider that shares our values on compliance and putting patients first, and my colleagues and I look forward to growing our number of caregivers so we can expand access to the highest-quality care for more seniors.”

Gentiva CEO David Causby is familiar with merging hospice organizations.  Then COO Causby botched the integration of Harden's hospices into Gentiva. 

Our hospice never heard from Causby, not as COO, CEO or CEO/financial rapscallion partner.  He's consistently shown "profit matters" most.  When talented, dedicated hospice nurses raised quality of care issues they were shown the door.

"Senior Housing News" report on the buyout stated:

Although Gentiva couldn’t share a precise breakdown for the number of assisted living residents it caters to....

More like wouldn't.  Homecare Homebase tracks patient location and is able to differentiate between various types of senior living.  

Moody's rates Gentiva's (Charlotte Buyer) debt and is yet to mention any impact of deal financing.  There are two equity partners, CDR (60%) and Humana (40%).  The announcement indicated additional debt will be incurred.

Goldman Sachs Bank USA is providing financing to Gentiva. Deutsche Bank Securities Inc., UBS Investment Bank, BNP Paribas Securities Corp., Citizens Bank, N.A., Truist Securities and Wells Fargo are serving as financial advisors and providing financing.

Heartland Hospice was once part of ManorCare.  The Carlyle Group, another financial rapscallion, drove ManorCare into bankruptcy.  Promedica purchased ManorCare's remains in 2018.  Both companies were based in Toledo, Ohio.

There is a history of financial rapscallions bleeding both Gentiva and Heartland.  Spin is as spin does.  That's not the heart of hospice.   It is the corporate executive/financial rapscallion way.  Our hospice has felt their greed over and over and over.

Anonymous