Kindred Pays Record CIA Fine

StrangeTony,

Just in case you missed it.  The Office of Inspector General for Health and Human Services announced:

Kindred Health Care, Inc., the nation's largest provider of post-acute care, including hospice and home health services, has paid a penalty of more than $3 million for failing to comply with a corporate integrity agreement (CIA) with the Federal Government, Department of Health and Human Services' Inspector General Daniel R. Levinson announced today.

It is the largest penalty for violations of a CIA to date, the Office of Inspector General (OIG) said.

The record penalty resulted from Kindred's failure to correct improper billing practices in the fourth year of the five-year agreement. OIG made several unannounced site visits to Kindred facilities and found ongoing violations.

The message from on high is to grow and there's significant pressure to admit patients.  It's been that way for years, under both Gentiva and Kindred.

CIA-required audits performed by Kindred's internal auditors in 2013, 2014, and 2015 found that the company and its predecessors had failed to implement policies and procedures required by the CIA and that poor claims submission practices had led to significant error rates and overpayments by Medicare.

Kindred was billing Medicare for hospice care for patients who were ineligible for hospice services or who were not eligible for the highest level and most highly paid category of service, OIG said.

That level would be general inpatient care or GIP.

A higher up shared the company refunded over $1 million to Medicare.  That fits with the over $3 million penalty as the government levels treble damages.  So that's a $4 million hit, all of it due to bad management.

I wonder if this will impact Kindred at Home President David Causby's $1 million bonus due September 2017?  He became Gentiva's COO in October 2013.  That means Causby was "leading the day-to-day operations of our business" for all but ten months of the period covered in the settlement.

Meeting admission criteria and accurate billing are critical day-to-day operations. For much of the review period Causby was the accountable leader.

Anonymous (from Kindred at Home)

Yet Another Visit from Kindred VP of Some Sort

StrangeTony,

Our hospice site had another visit from a Kindred high up. I offer coaching from their recent visit, plus comments shared from other Kindred hospices. 

1.  "Pick up the pace" & "Close hard"

Census drives revenue, plain and simple.  Any recognition of excellent service meant nothing to the hierarchy of number obsessed executives.  Executive exhortations are barked out in a manner based on their unchecked assumptions.  My co-workers are already working hard, doing their best, with love, care and passion.  What might they feel pressured to do to meet management's numbers expectations?  Executives cared not the consequences as long as patient headcount rose. 

2.  "Senior leaders love us the same way our nurse assistants love their patients."

Our nurse assistants don't take things away from patients, like senior executives did with PTO, health insurance and retirement benefits.  All three benefits have been reduced in the last few years by Gentiva/Kindred executives.  One is slated for elimination, if it hasn't already disappeared.  That's the company retirement match.

I do see the love shown Gentiva COO/Kindred at Home President David Causby in his serial $1,000,000 bonus opportunities.

The company does treat us like our site treats our nurse assistants (overworked, underpaid and at best underappreciated)  Local management consistently tells our NAs they are the low men/women on the totem pole.

3.  "Your site makes the company a lot of money."

Never have they shared how the monstrous amount of money our site made the company comes back to those of us doing the actual revenue generating work.  I assume this money ends up as bonuses for people up the chain.  We, the people supposedly being "Taken Care of", aren't seeing any of our monstrous profits.

4.  "Get it together folks.  Census matters.  Profit matters."

Apparently employees need to be motivated from above to work harder, jump higher, and recruit more patients in order to save the jobs of people sitting on either side of our chair.  It was fitting that barbecue was served given our site is under performing.

I've never heard a sacrifice senior management has made to keep things going in difficult times.  They show up, bark out their prized financial metrics, launch a few platitudes, rarely offer a sincere thank you,  readily dispense brow-beatings, and move on.  It's a relief when I can exit the building.  Kindred executives have a way of using up all the oxygen.  

A few never bothered to ask my actual role at our hospice.  I've been called nurse and social worker and I'm neither.  When Kindred executives leave breathing and sphincters can return to normal.  Seeing a patient or family member is the balm for exposure to toxic leaders, as is hearing from other dedicated hospice workers.  Thanks to Generic Hospice readers who e-mailed me their experiences.

Anonymous (from Causby's baby)

Health Insurance Drivers for 2017

StrangeTony,

Chief People Officer Stephen Cunanan received 36,000 shares of Kindred stock on March 24, 2016.  That same day the company awarded Kindred CEO Ben Breier 283,0000 shares.   Breier recently told Wall Street analysts he feels "pretty good" about getting back to over $1 billion EBITDAR in 2017.

What kind of health, dental and vision insurance benefits do you think they're working to bring Kindred employees for the coming year?  Expect to pay more for less coverage, especially if Mr. Cunanan wants to increase the value of his 83,500 shares of Kindred stock or if Mr. Breier desires to maximize the worth of his 678,000 shares.

The company is "still working on health benefits."  Generally, their work is our pain.  Consistently, executives focus on personal gain. 

Anonymous

Executives Paving Way for ?

StrangeTony,

Word has it a corporate big chief will visit our hospice site soon.  No dates or names have been shared yet but we've been instructed to "clean up" for a visiting corporate dignitary.  The latest update from Kindred at Home President David Causby said an opportunity exists to improve relations with senior management. 

If we rarely or never see them are we in relationship?  If they talk and we only listen are we in relationship?  If we are relegated to a once a year survey for feedback is that relationship?  What if we see no action taken on concerns shared in the last survey?  Is that considered relationship?

I'd be interested in hearing from peers who've experienced recent visits from Kindred executives.  What's the tone from up high?  What priorities did they share?  Feel free to comment or e-mail.  It would be interesting and instructive to hear.

Anonymous (from Kindred)

Kindred At Home Employees Should Know

StrangeTony,

Kindred President Ben Breier shared important information for Kindred staff during today's second quarter earnings call.  Seeking Alpha's call transcript had the following information from Breier.

Let me start as I usually do by extending my deep appreciation on behalf of the entire leadership team to our now more than 100,000 teammates across the country. Each day our partners of Kindred work hard to improve the lives of the more than one million patients we care for annually. The excellent care delivery and clinical outcomes we generate are the direct result of their efforts.

Kindred at Home employees should be aware of our impact on the wider company.  President Breier praised us in the call.

Kindred at Home which comprises our home, health, hospice community care and home base primary care businesses now drives more than one third of our revenue and half of our consolidated earnings.

Those who came from Gentiva should know our lower health insurance and retirement benefits helped Kindred's bottom line, which we already disproportionately enhance.

We’ve done a great job in terms of continuing to as I talked earlier drive synergies of Gentiva. I think we’re getting close to the end on that we’re almost up to the $85 million level there.

In summary, Kindred at Home employees have done great work, most of us have taken it on the chin benefit wise and the company has benefited greatly financially.  Surely a reward is coming to the lion's share of Kindred's 100,000 employees?  Nope.

... we’re sort of at kind of a run rate on where we think labor is. I am not sure we’re going to see acceleration, it’s pretty tough and summer seems to be always the toughest part of the year, labor wise for us, also people go on vacations, people start to retire, people think about different things. So I don’t think we contemplated much of a change from our run rates into our ‘17 guidance. 

Employees can sleep fitfully knowing Kindred executives see little they need to do labor wise.  Former Gentiva employees may enter 2017 with no retirement match.  It's not clear how much worse employer provided health insurance will become but the drop in coverage from Gentiva to Kindred was severe for many of us.

We’re still working on health benefits. And just there’s a lot of moving parts I think still. But generally those are the pieces that as we think about getting back to at least $1 billion (of EBITDAR) next year that’s how we feel pretty good about getting to that point.

If executives feel good that usually translates to lots of employees feeling bad. StrangeTony, you retired at the right time.

Mizuho Securities Sheryl Skolnick recently took Kindred to task for taking liberties with accounting adjustments.  President Ben responded to her question on what's driving wide variability in quarterly earnings.

... complex site of the house if you will.

Unfortunately Breier was talking about the company's LTAC business not CFO Stephen Farber's shared driveway.  Might his former house sale be part of the guidance for third quarter being lower?  It depends on how things roll up.   

Anonymous (from Kindred's basement)

Kindred Executives Sell Stock

Strange Tony,

Securities and Exchange Commission filings indicate three Kindred executives sold stock last week.  Those selling include President Ben Breier who sold nearly 5,000 shares on 7-29 for $12.26 per share, leaving him with roughly 680,000 shares.

Chief People Officer Stephen Cunanan sold the next day  Oddly his 3,500 shares priced at the exact same level, $12.26 per share.  He holds 83,500 shares after the sale.

Executive Vice President Jon Rousseau also sold nearly 4,000 shares on 7-30 for the very same $12.26 per share.  His stock holdings stand at nearly 74,000.  All three executives sold  under Code F, which is for "payment of exercise price or tax liability using portion of securities"

Kindred announces Q2 earnings tomorrow and Mizuho Securities' Sherly Skolnick might be on the call.   She asked former Gentiva President Tony Strange challenging questions over the years.  It's Ben Breier's turn to talk about what matters to executives.  It's clearly their compensation. 

Anonymous (under Kindredful Management)

Watching Company Assets Go to Kindred CFO

StrangeTony,

A company's chief financial officer has financial fiduciary responsibilities.  One CFO job description says:

The chief financial officer position is accountable for the administrative, financial, and risk management operations of the company, to include the development of a financial and operational strategy, metrics tied to that strategy, and the ongoing development and monitoring of control systems designed to preserve company assets and report accurate financial results.

Kindred CFO Stephen Farber is the recipient of a second relocation package which included $250,000, the purchase of his home for $2.15 million and payment of legal, design and construction of a new driveway.   Louisville's WDRB says:

Minow, who co-wrote a business school textbook called Corporate Governance, said it would be hard for the company to defend paying for Farber to move once he had settled in Louisville.

“A relocation fee is supposed to be for when they move in order to take the job,” said Minow. “You’re not supposed to pay for them to move because they don’t get along with their neighbor.”

Stout, who chairs the corporate governance group at the Minneapolis law firm Fredrikson & Byron, said the money Kindred has spent on Farber’s behalf is “nickels and dimes in a multi-billion-dollar company,” but it sends the wrong message about the “company culture” to Kindred’s thousands of employees.

“Integrity starts at the top, and tone at the top is important because it sets the tone for the organization,” he said. “It’s very hard to get the employees of the company to take ethics and culture seriously if the people at the top aren’t.”

Top executives and the Board decided to mobilize significant company resources to manage their CFO's dispute with a neighbor.  It took two Louisville news organizations to shed light on the situation.

“The true test of a man’s character is what he does when no one is watching.” ― John Wooden

And this test reveals what about our company and its leaders?

Anonymous (from Kindrexecutive Sweet)