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)

February Be Kind to Rich Executives Month

StrangeTony,

Kindred's board of directors showed more executive love this past week with its wholesale granting of free shares of stock to the all male executive review at Kindred HQ.  I found it odd in light of my hospice coworkers struggling to pay uncovered healthcare costs from last year.

Low to no raises have employees scrimping to set aside any money in the restarted 401k.  For every $40 an employee contributes Kindred will contribute $4.  Gentiva would've given $8.

Prior earnings calls contained verbal panders to employees but executive actions shouted the opposite since Paul Diaz snagged Gentiva.  For that the board granted Paul a $6 million check and kicked him upstairs.  Pay and benefits wise our hospice has gone down a rung since his multi-million dollar payday.

I'm glad there's Kindred love to give.  I wish employees were feeling some of it.

Anonymous (from Kindredful)

Causby's Latest Stock Award

Strange Tony,


On 2/02/2017 EVP & President Kindred at Home David Causby received 17,692 new shares of common stock bringing his total Kindred holdings to 179,162.

Pursuant to his Employment Agreement, the reporting person (David A. Causby) was granted 53,077 restricted stock units, vesting in three equal annual installments beginning February 2, 2016.

And what did the company give employees the last few months?  A co-worker remarked we didn't get candy for Christmas in 2016.  Executives sent sweets our first year under Kindred ownership.

Causby will get another $1 million bonus for showing up to work on August 1, 2017.  So that's where our candy money went.  Will they go after our lunch money next?

Anonymous (from Kindred loves executives)

Kindred's Dealing with Ventas

Strange Tony,

Kindred President Ben Breier opened his portion of the third quarter earnings call with:

"Last night we announced the strategic decision to exit the skilled nursing facility business, which is the final step in a process that began for us 15 years ago when Kindred operated over 300 skilled nursing facilities.'

'A full exit of this business, together with the significant cost realignment initiative we are undertaking in connection with the exit, are substantial steps forward in our effort to continue to transform Kindred's strategy and growth profile to enhance shareholder value. We're pleased to be working with Ventas to finalize an agreement that will create value for Ventas and Kindred shareholders, and facilitate Kindred's exit from the skilled nursing business."

Most people don't know but Ventas birthed Kindred via a spinoff on May 1, 1998.  The two companies remained intertwined ever since.

Kindred reduced its significant nursing home division by selling facilities in 2013 and 2015. Breaking Ventas leases cost Kindred serious money:

In January 2015 Kindred paid Ventas a $40 million early termination fee associated with nine leased facilities.  In 2013 Ventas received a $20 million early termination fee associated with fifty nine leased facilities.

Kindred paid $521 million in rent to Ventas over the last three years. 

• $172 million for the year ended December 31, 2015
• $192 million for the year ended December 31, 2014
• $248 million for the year ended December 31, 2013

That relationship will be tested in Kindred's decision to exit the nursing center business, which Breier said is struggling to meet budget targets.

"Our exposure to the challenges facing the nursing center industry are expected to amount to $40 million to $50 million worse than our 2016 operating plan."

Kindred plans to sell its remaining nursing homes during 2017, but it will need to buy them from Ventas before reselling them.  McKnight's said "Kindred's skilled nursing portfolio includes the 36 Ventas facilities, 26 facilities the company owns and 25 that are rented from other companies. Kindred expects to bring in $100 million to $300 million from the sale of the portfolio."

In prior nursing home asset sales Kindred recorded an asset impairment charge of $8 million and a loss on divestiture of $2 million.

The nursing center wheel is about to fall off the Kindred wagon.  Oddly, it could fall to Care Capital Properties, Ventas skilled nursing REIT spinoff.  That might explain Kindred executives clarity on how much they expect to make on the sale.

“We expect the after-tax net proceeds from the sale of these assets will range from $100 million to $300 million after transaction costs, severance expenses, and the amount payable to Ventas for the sale of the Ventas Properties,” he said. “We expect to apply these anticipated net proceeds to reduce funded debt, which combined with the impact of our cost realignment initiative, the elimination of approximately $90 million of annual rents, and the reduction of approximately $30 million of annual capital expenditures will reduce our leverage.”

Why should anyone at hospice care what happens in the nursing center division?  With $1.2 billion in revenue gone executives will likely provide us more attention.  In Gentiva or Kindred that is generally an uncomfortable thing.  Their plans didn't work for the nursing center segment, likely because they were divorced from reality.  There is a limit to staff's ability to endure executive ignorance, aggression and impatience.  It's a harsh contrast to the hospice movement's core founding principles.

Anonymous (from Kindredful)

Retirement Plan for Non Executives: Keep Working

StrangeTony,

Gentiva employees experienced a series of benefit reductions in 2014, the very year executives agreed to sell the company to Kindred.  That pattern continued while Kindred executives kept telling employees we were "better together."  That was clearly not the case in the retirement arena.

Gentiva COO David Causby did not want to hear employees voice and he does not look after them now as Kindred at Home President.  Yet the company continues his obscene pay levels, which includes another $1 million bonus for showing up to work on August 1, 2017.

Kindred plans to restore a minuscule 401k match beginning in February 2017.  It will match $1 for every $10 an employee contributes.  That's well below Gentiva's 401k contribution level.  For an employee to take advantage of this benefit they would need lots of discretionary income.  Most of my hospice coworkers don't have funds to contribute given years of nonexistent to paltry raises and shifting significant first dollar health care costs to employees.  That occurred with the elimination of the physician copay benefit in 2016. 

It looks like another Kindred benefit for wealthy executives.  Kindred continues to be Better Together for this exclusive bunch.

Anonymous (from Kindredpoor)

Kindred's 2016 Accomplishments

Strange Tony,

Kindred published a list of accomplishments for 2016.  “In 2016, we made significant progress in our continuing efforts to grow the Company and improve our quality outcomes across our care settings,” said Benjamin A. Breier, Kindred’s President and Chief Executive Officer. “We are setting the foundation for a stronger Kindred as we drive effective patient-centered care solutions and proactively address the changing healthcare marketplace.”

Here are a few Kindred accomplishments for Legacy Gentiva employees:

1.  Eliminated physician copay benefit in employer sponsored health insurance for 2016.  This made employees responsible for the whole bill for a primary care illness visit and any specialty doctor visits.  A coworker at our hospice saw her cost for physician care soar from $200 to over $1,000 from this one change.

2.  Reduced 401k match by 25% in 2016 with total elimination for 2017.

3.  Purchased home of CFO Stephen Farber for $2.15 million after providing corporate legal and architectural services to resolve disputes between Farber and his neighbors.  This came after giving Farber another $250,000 in moving expenses in late 2015.  Kindred paid to have trees removed and a new driveway installed and is selling the property for $2.4 million.

4.  Conducted another employee survey and ignored concerns expressed.  Some involved legal and compliance issues.

5.  Decided to exit the nursing home sector, which was the core mission when Kindred was spun off from Ventas in 1998.  REIT Ventas focused on nursing homes and spun off the management or operating side of the company.  Kindred will have to dance with its former owner over 36 Ventas owned nursing homes as it makes the exit.

6.  President Ben Breier told Wall Street analysts the company wants over $1 billion in EBITDA for 2017.

7.  2016's end puts Kindred at Home President David Causby a mere eight months away from his next $1 million bonus.  While legacy Gentiva employees continue falling behind in pay and benefits our leader gets huge bonuses for just showing up.

I'm sure there are more accomplishments for executives, but those seem worth revisiting.

Anonymous (from Kindredful)

Kindred Selling Glenview Home Purchased from CFO Farber

StrangeTony,

The story of Kindred Healthcare's unusual 2015 benefit for CFO Stephen Farber may soon come to an end with the sale of the former Farber home for an asking price of $2.4 million.  Kindred purchased the home because three well off Kentucky men couldn't get along while sharing a common driveway.  One could expect a lecture from Jacob Marley to these men about the chains they forged by their selfish and greedy actions.

The same executives who purchased the Farber home eliminated legacy Gentiva employees' miserly retirement match come January 1, 2017.   How many tiny Tims are in the homes of Kindred employees struggling to get by today?  How much harder will their lives be later in life so Presidents Ben Breier and David Causby can squeeze out a few million more dollars in synergies?