Thinking about growing Kindred’s primary-care doc capability

Ben Breier is president and chief operating officer of Kindred Healthcare, a post-acute-care provider that reported $4.9 billion in revenue in 2013. The Louisville, Ky.-based company operates transitional-care hospitals, nursing and rehabilitation centers, and assisted-living centers, with more than 2,300 locations. This month, Kindred formalized a $720 million deal to acquire Gentiva Health Services, a home health and hospice provider. Breier, who has served as COO since 2010 and president since 2012, previously served as president of Kindred’s hospital and rehabilitation divisions. Before that he was an executive at Concentra and Premier Practice Management. Modern Healthcare reporter Beth Kutscher spoke with Breier about the company’s plans to build its care-coordination business, prepare for value-based payments and evaluate other partnerships. This is an edited transcript.

Modern Healthcare: What’s going on in the post-acute-care industry, and how does the addition of Gentiva help you respond to those trends?

Ben Breier: There have been a lot of pressures over the last couple years for all parts of the post-acute-care industry. We have this massive graying of America. People are living longer and in many cases have multiple chronic diseases. All of us have to figure out how we can manage this growing population in a costeffective, value-enhancing and consumer-driven way.

Kindred has gone through this incredible transformation from a very siloed, institutional-based setting to the point, with the combination with Gentiva, where over 50% of our revenue is going to come from non-inpatient settings. We think a company that has broad national scale and a platform of support-centered infrastructure, including deep local market penetration, can be a provider of choice for hospitals, insurers and consumers.

MH: How will Kindred’s care coordination work in practice?

Breier: We have developed this strategy at Kindred called Continue the Care. It’s a three-step process. In the 25 or 30 integrated markets that we’ve designated, we have developed a full continuum of post-acute care. That may be a couple of transitional-care hospitals, a couple of subacute facilities, and a couple of inpatient rehab facilities, home health, hospice, wrapped in with rehab-care providers.

The second component is we want to provide care-management services. That’s a patient-care advocate who is helping to move a patient throughout the entire episode of care, making sure the patient is moving into the right part of the delivery system and that we’re managing their medications. Third, we want to test and implement pay-for-value payment models.

In a number of markets we serve today, such as Cleveland, Indianapolis, Boston, Las Vegas, Dallas, Houston, Phoenix, Seattle and Northern California, we now have deployed the full suite of services. We have deployed the care-transition program, and we are working with payers and consumers to move patients through our system in a more effective manner. That is leading us to the third piece of testing new payment methodologies. We are participating in the CMS’ bundled-payment project in Cleveland. We are taking risk today with payers in ways that in post-acute we never have done before.

MH: What percentage of your revenue is coming from these value-based contracts?

Breier: It’s still under 5%, but we see that growing exponentially over the next five years.

MH: Can a post-acute-care provider assume full risk on its own or do you need to partner with a primary-care or acutecare provider?

Breier: Doing things on your own is becoming tougher and tougher. The U.S. system cannot afford to have everybody try and be everything to everybody. We think having partners who understand the niche they’re supposed to play is ultimately going to be the most successful. That said, you need to have a coordinated effort. Physician input on care utilization is going to be the most important part of the strategy. If you don’t have

the physicians integrated and aligned in their incentives, none of this will come to pass.

Once you have the doctors on the primary-care side, you need both an acute and a post-acute set of services and you need that to be coordinated so people are talking to each other.

MH: As you build this care-coordination and payment-for-value strategy, are there other business lines that you need to be in?

Breier: We’re in six now, and each has its own complexities. When you take those six and you try to coordinate it and get them talking to each other, that is the next level of complexity.

We don’t want to be everything to everybody. We have the humility to know that it’s really hard to run these businesses. Having more of a presence in the physician side, particularly the primarycare side, is probably where we will continue to think about growing. We like the assisted-living space a lot, but I’m not sure that you’ll see us do anything there in a meaningful way. For the most part, we now have everything else on the postacute side under our roof with the combination with Gentiva.

MH: What are your plans for the Silver State Medicare ACO?

Breier: We did the transaction this past spring. It’s the first time we have taken an ownership position in an ACO. This is a physician-driven ACO that covers about 12,000 Medicare lives, and we think that’s going to grow significantly. We’ve got about 180 primary-care physicians in the network today, and these are mostly independent physicians in the Las Vegas market.

We’re learning a lot about how to manage an ACO, create transparency around where patients are and where they need to go, manage data and make sure physicians feel enabled to manage patients more effectively. This a pilot for us as we think about expanding our ACO footprint across the country. The initial reaction from physicians and the initial data we are generating on managing care more effectively has been very compelling.

MH: Has the Obamacare Medicaid expansion made a difference for Kindred in terms of patient volume and payment?

Breier: Much of what we saw in the second quarter continues into the third quarter in terms of the continued shift in our own mix into the Medicaid population. A lot of the Medicaid increases we are seeing are coming from those states that are either far along in implementing their Medicaid-Medicare dual-eligible program or that have expanded Medicaid to low-income adults. As I said in my earnings call last quarter, at our short-term acute hospitals you see the self-paying patient numbers going precipitously down as they are replaced with Medicaid patients. A lot of those patients who are now paying patients are entering the post-acute world. That has created relative strength in volumes in our year-overyear volume growth.

MH: Does whether or not a state has expanded Medicaid influence your business strategy in terms of which states you want to be in?

Breier: It could, but it hasn’t yet.