Kindred Healthcare, Inc. (KND)

KND 
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Kindred Healthcare, Inc. (KND)

May 21, 2013 10:00 am ET

Executives

Paul J. Diaz - Chief Executive Officer, Director and Chairman of Strategic Development Committee

Benjamin A. Breier - President and Chief Operating Officer

William M. Altman - Executive Vice President for Strategy, Policy and Integrated Care

Gregory C. Miller - Chief Development Officer

Richard A. Lechleiter - Chief Financial Officer and Executive Vice President

Presentation

Paul J. Diaz

Good morning. Welcome to a very special day for us, so we're very excited to have so many friends and investors, shareholders here with us today. On behalf of my partners and I and our Board of Directors, many of which are with us today as well, we thank you for your continuing support of the company and, again, for attending the session today. We hope to have some fun. We hope to engage you in a dialogue and discussion about the very exciting path we see for ourselves going forward. We'll certainly talk about the success that we've had in the near term, particularly over the last several quarters in terms of executing on our business plan. But especially, we're excited about talking about the future and the opportunity both for patients and shareholders going forward.

Before I jump into the program, I do want to take a second to, because we have a lot of our teammates on the line today, to recognize and have a small moment of silence and prayer for those folks in Oklahoma City, who have been devastated today. We had I think, Ben and Jeff told me, about 5 kids in that elementary school. We've got about 5 -- 15 teammates that have lost their homes. Thank God no one has lost their lives, but our Oklahoma City hospital is engaged in trying to be there for folks in that community and it shouldn't be lost in us, so that's a big part of who we are and in every community that we serve. So we'll just take a second to think about those folks.

Anyway, mission is important to us. Oh, how could I forget? How could I be remiss? So we will be making certain forward-looking statements today. Quite a lot for you to read there. More importantly, on our website, I think you'll find a tremendous amount of information about the company and transparency around the company. We do town halls throughout the United States and we post them on our website for our teammates to see later and obviously, for investors, payers and policy makers to understand what our story is about as well. So please refer to the website for further information.

So let's jump in and then my partners are going to share the podium today in terms of where we are and where we're heading. We are really pleased that we continue to deliver on our mission. We're caring for over 0.5 million patients each year. That is happening because of the dedication and commitment of almost 80,000 of our teammates across the U.S. and almost 2,200 sites of service. And thanks to them, we continue to deliver despite the obvious external challenges we've had in reimbursement and regulatory changes. They have continued to stay steadfast and focused on outcomes for our patients and delivering on our mission. We as a management team and the board, and you've heard some examples of that, have a very simple philosophy. We had to take care of our people. We've got to focus on the quality of services that we provide and that will drive our business results. We think that is critical for the near term and an imperative for the long term. So again, thanks to our teammates we do that.

So today, we're going to talk a lot about our business mix, how that continues to evolve and how our revenue mix continues to change and grow as well. And we're going to focus you later on some more concrete examples of why changing the business mix matters to the profitability of the company, the growth of the company, the margins and ultimately, the opportunity to grow shareholder value.

I'll also tell you and Ben's going to talk a lot more about our energies and effort to expand our Managed Care relationships in the context, as you all know. And Bill Altman will talk about the broadening nature of Managed Care in terms of the duals, the expansion of ACOs, the great opportunities that we see to change our profile. And again, explicitly, we're going to give you a little bit more about what we think changing that business mix means over the next few years.

We are the premier, leading diversified post-acute provider in the United States. We say that with all the conviction in the world that we need to keep earning that and working towards that. But you'll see in our report out on operations today that we are delivering on quality. We are delivering on being cost efficient and we are working hard to deliver for our shareholders as we've done these last several quarters. A big part of our strategy is our integrated care market strategy and Continue the Care. Continue the Care is the way we are looking to care for patients across an episode of care, and we believe that the best way to execute on that strategy is in our integrated care markets, where we're working to broaden our scope of services, deliver a more seamless care with fewer tension and stress in those patient care transitions and we take an opportunity to significantly expand shareholder value.

So the value proposition for us as we look forward within this opportunity to Continue the Care for patients is the same challenge that everyone in health care has and same opportunity. Can we be a high quality provider, do it in a very transparent way and be low cost? And so each and every day, we are working to provide the highest quality of services in all of the types of service that we're in, and there's a great amount of energy and dedication to that. Ben will speak to the performance improvement initiatives in our core. And being a low-cost provider as patients transition and as you've heard in the video, our focus is recovery and getting patients home. And if we can do that by getting patients at the most cost-effective setting, then that's where we think the health care delivery system is moving. So lowering costs by reducing length of stay across an episode of care by ensuring that they are at a point of recovery that they don't bounce back to the hospital, the $20 billion rehospitalization number that people often talk about is central to our value proposition. And part of how we think we will do that over the long term is participating in the accelerating both private and public formation of new collaborations at the local level, whether they're described as Accountable Care Organizations or other types of partnerships.

So Ben will go into this in more detail. But again, I think it's important to recognize that with all the external challenges are -- we've had, we continue to deliver on our mission to patients. If you look at the quality indicators across all of our business segments, we are among the top of our peers in terms of performance, in terms of quality, patient satisfaction, rehospitalization rates. And as I said, central to our value proposition is getting patients home, getting patients home more quickly and reducing rehospitalization through an episode of care. The challenge, and Bill will talk about this, is we don't get paid for this today. In fact, every day we reduce the length of stay, we're doing a great thing for a patient. We're doing great things for payers, but our payment system is not aligned. So we are challenged and are embracing the challenge of being successful in today's fee-for-service world. But understand, and I think many of you understand, that tomorrow's world and payment system's tomorrow will be based on this value proposition. So we're leaning hard into this, even as we're managing through fee-for-service today.

So what are we going to talk about today? Let me sort of set the stage for the conversation in terms of our multi-pronged strategy. And I'll take a few minutes on this before I turn it over to Ben because I think it's pretty important. Fundamental to everything we do is success in the core. And I don't think there is a company in our space that hasn't had more success over the last decade, quarter-after-quarter, year-after-year in terms of executing in our core operations, delivering care for our patients in a consistent way, doing it cost effectively, collecting our receivables, doing the blocking and tackling that's essential. All the other strategy stuff we have, you can't get any traction on that if you're not doing the fundamentals well. So we're an organization that continues to focus a lot on success in the core. And you're going to hear from Ben today the innovations we're trying to bring to that in terms of people services, information technology, et cetera. So again, a great credit to our operators and our clinical folks in terms of the success we keep having in our core operations. But we also think critical for today in terms of differentiation and tomorrow in terms of future growth in the context of integration of health care is advancing our care management capabilities, advancing through our integrated care markets those care management capabilities and we'll be talking about that.

You also have seen and heard through our results that we're very excited about the growth that we've had in RehabCare. And Pat Henry, our president at RehabCare, is in the back and she'll be available for some comments later. But the progress that we've made in -- over the last 2 years are not only integrating people first and RehabCare but today, growing that business, reducing turnover, increasing productivity, great patient outcomes and margins is quite a story that we want to focus on. And so we think there are opportunities to grow there. We think there are opportunities to invest capital in RehabCare as well, and it's a source of the future growth of the company that we're very excited to talk with you about today.

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