Financial Rapscallions Damage a Once Great Hospice

Strange Tony,

"Home Health Care News" ran a piece on how private equity firms think.  An operating partner at our new owner said:

"The simplest way I find to explain it is: if we’re successful, we take good companies, and we make them great companies.”

That's bull excrement in light of our hospice experience under majority private equity ownership.  TPG Capital and Welsh, Carson, Anderson and Stowe owned 60% of Kindred at Home from July 2018 to August 2021.  

The market will tell you right away.

It did.  Their greatness resulted into an over 50% drop in census.  Turnover went through the roof after they eliminated half the office jobs, cut two paid holidays, reduced holiday pay by 33% and installed crappy technology that stole pay and mileage reimbursement from dedicated hospice workers.  

Signature programs for hospice patients disappeared.  Financial rapscallions cut the many little things we did for patients in recognizing special days (birthdays, anniversaries) and honoring their service in the U.S. military.  

Before Humana et al we put much thought into our annual memorial service for grievers, planning a number of ways for families to remember and honor memories of their deceased loved ones.  Tight budgets eliminated nearly all of those personal touches.

Fortunately, our hospice's founding Medical Director missed financial rapscallion ownership as a board certified physician in hospice and palliative care.  That was a blessing, however he did experience it as a patient while the COVID-19 pandemic roared through our community and filling ICUs.  He'd watched the development of MRNA vaccines and strongly believed in their use.  Our hospice said his nurse had been vaccinated.  That was a lie.  

In addition, this nurse had been arrested for harming a family member,  A second arrest for the same crime occurred after our Medical Director's death.  Vaccine and family abuse information seems pertinent to a family intent on keeping their loved one safe.  That occurred under private equity ownership.

I don't recall anything close to these violations during my time with hospice prior to financial rapscallion ownership.

"Home Health Care News" would do better to interview hospice workers and learn how private equity firms damage care delivery and short shrift employees.  Sadly, courage is in short supply.

Anonymous

New Name: Gentiva Hospice

Strange Tony,

Our hospice's name is set for another change.  It's our seventh name change and most arose from corporate buyouts.  I thought the Gentiva name might return as it surfaced in a corporate office e-mail account.

The incomplete heart or odd shaped G above the Gentiva Hospice name symbolizes financial rapscallion and executive greed.  

I find it strange that executives happily and repeatedly  trash any brand loyalty our hospice earned in the community.  It may not be a bad thing given how badly Humana, TPG and WCAS bled us of cash and trashed what was once nationally recognized hospice care.

A toast to our new incomplete heart, G for greed logo.

Anonymous

Life Under CDR Sponsorship

Strange Tony,

Our Kindred Hospice site is now sponsored by Clayton, Dubilier and Rice.  Last time it took six months for TPG Capital, WCAS and Humana to gut services by slashing staff, reducing benefits and instituting complex, unreliable technology.  Customer service scores went into the toilet with not one word from above on this clear evidence of the carnage they'd imposed.

As we are in our honeymoon period I thought I'd look at other CDR affiliates and see what their staff said.  This is from a Healogics Vice President:

Every 6 months your job title will change, your boss will get fired and yet another restructure will occur. There is zero stability and always an evolving cut list. The strategy area is who is completely insane in constant restructuring and playing musical chairs with jobs, titles, department heads. The strategy is long time friends with CEO so unless your in their club look elsewhere. The culture is Toxic. They once made us tell everyone they were losing their job on 12/23. There is zero employee stability. You can work here for a short stint but keep that resume up to date because you will be on the quarterly cut list in short order. And steer clear of head of sales, strategy and ceo, that’s the boys club driving the bus. They do not care about employees.

A Healogics manager said:

You can guarantee every 2 years or less a major restructure in upper management. Decent work life balance. Not competitive pay. Not much opportunity for advancement.  

Agilon is another CDR healthcare affiliate.  A Utilization Management Reviewer said:

Great benefits. Poor management and upper management will not hear your concerns. This company is all about numbers/money. Lots of turnover. Very sad place to work. 

 A Review Nurse offered a similar assessment:

Very high turnover. If you have any issues like unfair treatment or hostile work environment and try to communicate that to management or corporate they will set you up to be fired instead of investigating the situation. Lots of discrimination and if you point that out, you will be fired.

Vera Whole Health is a new sister company for Kindred Hospice. 

When we all came over from other clinics and practices, we were told about some very grand ideas and concepts, such as communication and camaraderie, team work, and a close tight knit culture. In all reality, most of us never really saw that. Management does not really listen to the issues that were brought to them.

Vera Health leadership has this history:

Strange, almost "cult' like adoration given to, and expected from, the CEO. They talk a good talk, but the reality in the care centers does not live up to the hype. I would not recommend anyone to work for this company!

These assessments from nurses, managers and staff from sister CDR companies do not bode well for our hospice's future.  How far will we continue to fall from our award winning days?

Anonymous

Charlotte Buyer Borrowed to Fund CDR's 60% Stake

Strange Tony,

Humana's complicated sale of 60% of Kindred Hospice/Community Care to financial rapscallion Clayton, Dubilier and Rice has been consummated via a company named Charlotte Buyer Inc., which borrowed over $1.6 billion to fund the deal.

The Q4 2021 Annual Health Statement for Arcadian Health Plan (part of Humana) shows Charlotte Buyer to be an affiliate of Humana.  The filing showed numerous organizational charts for Humana's hospice and home health assets under the Gentiva umbrella.  .  

Charlotte Buyer is the intermediary company for Curo Health Services' hospice assets.  It is not the intermediary for other Gentiva/Kindred hospices that rose up under Integracare, Healthfield, Harden Healthcare, Odyssey, or VistaCare/Family Hospice umbrellas.  

Humana, TPG and WCAS borrowed under the Gentiva Health Services name to fund the deal in 2018.  Moody's most recent credit rating for Gentiva New said: 

Any divestiture of the hospice/ community care assets would trigger the requirement within the credit agreement to repay the debt and as a consequence could result in a different rating outcome. 

Oddly Humana went a level down to an entity that only covers a portion of the hospice assets.  I don't recall Curo having Community Care services.  They came from the Kindred at Home side.

Moody's rating of Charlotte Buyer noted:

The borrower under the credit agreement is Charlotte Buyer, Inc. There is a downstream guarantee from an intermediate holding company, but not from KAH Hospice Company, Inc., i.e. the future filer of the financial statements.

Borrowers need an upstream guarantee from Gentiva Health Services for multiple reasons. 

The credit agreement  permits the transfer of assets to unrestricted subsidiaries, up to the carve-out capacities, subject to "blocker" provisions which prohibit the transfer of intellectual property, that is material to the operations of the company, taken as a whole, by way of sale, conveyance, transfer or other disposition  to an unrestricted subsidiary.

Non-wholly-owned  subsidiaries are not required to provide guarantees; dividends or transfers resulting in partial ownership of subsidiary guarantors could jeopardize guarantees subject to protective provisions which only permit guarantee releases if such transfer is not done in connection with a non-bona fide transaction (as determined by the parent borrower conclusively and in good faith) and for the primary purpose to cause such subsidiary to become an excluded subsidiary and be released from the guarantee.

There are no express protective provisions prohibiting an up-tiering transaction.

I would not want to hold Charlotte Buyer debt as it represents a fraction of Gentiva Health Services hospice and community care assets.  

What kind of sleight of hand will executives and our new financial rapscallion owners use to take advantage of hospice staff? 

Anonymous

CDR Now Majority Owner of Kindred Hospice

Strange Tony,

Humana did it.  They sold our hospice down the river to yet another financial rapscallion.

Humana Inc. today announced that it has successfully completed its previously-announced transaction with private investment firm Clayton, Dubilier & Rice (“CD&R”) to divest a majority interest in the Hospice and Personal Care divisions of Humana’s Kindred at Home subsidiary (“KAH Hospice”). These divisions include patient-centered services for Hospice, Palliative, Community and Personal Care. Upon closing, the Hospice and Personal Care divisions have been restructured into a new standalone company.

...the new standalone company, soon to become Gentiva.

It's official.  The Gentiva name is coming back, just as I pondered last September.

It looks like Gentiva might be returning, especially as the Director of Corporate Communications for the company has a gentiva.com e-mail address. 

 A regulatory filing with the state of Oregon stated:

CD&R Falcon Holdings, L.P. (“Falcon Holdings”), the sole limited partner of Falcon Hospice, would acquire a 60% ownership interest in KAH Hospice Company, Inc. (“KAH Hospice”). KAH Hospice is currently owned by Gentiva a wholly owned subsidiary of Humana.

The Oregon analysis highlighted the negative impact Bain Capital's ownership had on Aveanna Healthcare,  

"caregivers were made to focus on profit maximization and overextend themselves...patient care ultimately suffered."  Bloomberg article 10-22-19

Former Gentiva CEO Tony Strange is CEO of Aveanna.  

Oddly, Humana's most recent SEC filing showing Q2 results has not one mention of their wholly owned subsidiary Gentiva.  

CDR borrowed $1.6 billion via a term loan from Goldman Sachs to help finance the deal.  It originally sought nearly $2.5 billion in loans but dropped a $400 million term loan A.

I was unable to find a debt rating for any of the possible entities associated with the deal, Falcon Holdings, CD&R Falcon Holdings, Kindred Hospice, KAH Hospice, or Gentiva (the name used for prior debt ratings).

There is a B3 debt rating for Charlotte Buyer, Inc. that covers Kindred at Home Hospice/Kindred Hospice.  It states:

The borrower under the credit agreement is Charlotte Buyer, Inc. There is a downstream guarantee from an intermediate holding company, but not from KAH Hospice Company, Inc., i.e. the future filer of the financial statements.

KAH Hospice is majority private equity owned, which could lead to an increasingly aggressive financial policy over time.  

Alternative sources of liquidity are limited as substantially all assets are pledged. 

 ...financial policies will be aggressive under majority private equity ownership including debt-funded acquisitions to drive growth.

Next level financial rapscallion ownership is upon us.  I expect it to be extremely painful.

Anonymous

Financial Rapscallions Harm More than Our Hospice

Strange Tony,

Financial rapscallions continue to harm hospice care.  Kaiser Health News reported:

According to a 2021 analysis, the number of hospice agencies owned by private equity firms soared from 106 of a total of 3,162 hospices in 2011 to 409 of the 5,615 hospices operating in 2019. Over that time, 72% of hospices acquired by private equity were nonprofits. And those trends have only accelerated into 2022.

My coworkers know the bane of private equity from three years of abuse under the hands of TPG Capital, and Welsh, Carson, Anderson and Stowe.  Humana will sell us down the river to yet another profit maximizer, Clayton, Dubilier and Rice.   

Kindred Hospice revenues were $399 million for Q1 and $382 million in Q2 or $781 million for the first six months of the year.  Pretax profits were $62 million for Q1 and $64 million in Q2 or $126 million for the first half of 2022.  

Humana's Q2 SEC filing is sparse on Kindred Hospice's financial operations and capital structure.  It provides even less for the home health operation it is keeping.  I don't understand how the SEC lets Humana get away with providing so little information on a company it acquired in full in August 2021 and still owns/operates.

Financial rapscallions want as little information in the public sphere as possible.  That way people won't see their greed and cruelty on paper.  Rest assured, their distorted priorities are acutely felt by hospice staff and patients.  The cuts just keep on coming.

Anonymous

Hand of Marcy Hospice

Strange Tony,

Our hospice met the new Regional-Local Assistant Vice President of Operations Minus Marketing Marcy Quarter. She shared her priorities as our hospice awaits sale to yet another financial rapscallion with multiple last names (Clayton Dubilier Rice).

Marcy wants to lever technology to cut expenses as it pushes a "one size fits all" hospice model.  She said:

The company used big data to find the average use of medications and supplies for each hospice diagnosis.  Any item exceeding company averages will not be allowed without extensive review and approval from the RLAVPOMM level. 

Similarly we data mined staff mileage and mileage above the company average will not be paid unless documented thoroughly.  Your tablet will no longer automatically calculate mileage to the patient's home for reimbursement purposes.  That is now your responsibility.  However, you should not fudge any mileage figures as your tablet will be used as a data validity check on any submissions.

Overtime has been banned for all hourly employees.  For all other key measures the former average is the new maximum.  That said, the executive team's expectations of increased census and revenues remain in place.  Customer service scores remain important but are secondary to expense control and revenue enhancement.  Any questions? 

A foolish new chaplain asked Marcy to clarify things for him should he find himself in a home with a dying patient as his clock hits forty hours for the week.

"You are to cease work when you hit the forty hour mark."  

He commented that his faith and assessment of the situation might require him to remain with the patient and family.

"That is not allowed."

It's but the latest insult to our once great hospice.  We're now under the Hand of Marcy.  Lord help us.

Anonymous