Kindred Healthcare, Inc. (KND)

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Kindred Healthcare Inc. (KND)

Lazard Capital Markets Healthcare Conference

November 14, 2012 1:00 PM ET

Executives

Paul Diaz – President and CEO

Hank Robinson - Senior Vice President, Tax and Treasurer

Analysts

Colleen Lang – Lazard Capital Markets

Presentation

Colleen Lang – Lazard Capital Markets

Okay great. Good afternoon everyone. And I am Colleen Lang, I am part of the healthcare services team here at Lazard. We are very excited to have Kindred Healthcare here with us today. And I’d like to turn the mike over to Paul Diaz, the company’s CEO to tell you more about their story.

Paul Diaz

Thanks Colleen. Appreciate the opportunity to be here, and thank you all for participating. So first off, we’ll just refer you to our website, where you’ll find a lot of information about the company. And we’ll mention that we’ll be making certain forward-looking statements today. And again, I think you’ll find a treasure of information on our website about the company and its operations.

So let me start. We are the premier provider of rehabilitation services in post acute care in the United States today, with approaching $6.5 billion of revenue in over 2,200 locations in 46 states. We are contract provider of care for over half a million patients a year through the efforts of our almost 80,000 dedicated employees.

I want to call your attention – and because a lot of the rest of our discussion today will focus on where we are taking the company. As everyone is pretty aware, we’ve got a pretty difficult payment environment that we’re working through with fiscal cliff issues and other things.

But over the last few years, in the context of the RehabCare deal, and as we continue to look forward going into 2013, we’ve a very aggressive effort to change our business mix in the context of where we see future growth in terms of patients and we see future opportunities and growth for shareholders.

Some of you may recall that our nursing home revenues were almost 50% of the company in 2010. Today they are 33%. The dynamics around skilled nursing facility reimbursement -- traditional skilled nursing facility reimbursement to be more precise, is quite difficult. And we expected that part of our business to continue to shrink as we work through an asset disposition strategy. Similarly as we’ve talked to investors on our recent earnings calls, we are continuing to move forward on an effort to not only change our business mix, but move it pretty dramatically towards integrated care opportunities in our integrated care markets.

And so I think over the next six or 12 months, you’ll see us continue to reposition the company throughout the sales and divestitures. And similarly you can see our RehabCare business has grown from 4% to 20%. And we would expect that over the next few years, our home health and hospice business within our integrated care business -- integrated care markets to grow from 2% to almost 10% over the next several years.

Similarly we see a lot of opportunities we will talk in a minute about, changing our revenue mix, our growth in commercial business, which is approaching $2 billion. Our growth again in our business segments which are only indirectly affected by reimbursement, we expect these parts of the pie chart to move pretty dramatically over the next couple of years.

In addition to being the largest diversified provider and again working to be the best, we are certainly the most diversified and the most integrated, and have the widest breadth (ph) in the principal markets in the United States. So we’ve identified 20 integrated care markets, that you’ll see depicted on this map. While we are working pretty hard, we’ll talk a little bit later about our Continue to Care strategy to develop a full suite of post acute services in response to growing desire by patients and physicians and ACOs and payors, to find more integrated care solutions for our patients.

We have really three key value propositions that I think drive our strategic opportunity. First, to participate and be a leader in coordinating and delivering high quality care. And particularly for those patients at a lower cost for the most expensive patients. So a great deal of interest in the care and management of dual eligibles, which I am sure you are familiar with.

We think about the 5% of the patients who in the Medicare program are consuming 50% of the costs. That’s right within our bandwidth of opportunity where we can add that value for patients and shareholders.

Second, we reduce costs by helping reduce length of stay from acute care hospitals to homes. So really across the continuum we’ve demonstrated, and you’ll see the data to support a great value proposition in terms of reducing length of stay across an episode, and reducing re-hospitalizations, which are obviously quite expensive as well.

A great deal of energy both in CMS and demonstration programs, but also in private ACOs and other market – private market activities on employing new care and payment models including bundle payment. So we are very active in those discussions around the country.

So a quick snapshot again about value proposition. Over a half a million patients cared for each year. 92% of our patients and families who recommend us again for care are important way we think about our performance. And against most national benchmarks in terms of quality and clinical outcomes, all of our divisions are at or exceeding those benchmarks in terms of quality outcome.

Read the rest of this transcript for free on seekingalpha.com