Kindred Healthcare, Inc. (the “Company”) (NYSE:KND) today issued
a response to the proposed rule issued late yesterday by the
Centers for Medicare and Medicaid Services (“CMS”) regarding
Medicare payment rates for skilled nursing facilities for fiscal
year 2012.
“Kindred shares CMS’s goal that Medicare rates should support
quality care for increasingly medically complex patients who also
require intensive rehabilitation services in order to reduce
lengths of stay, return patients home more quickly and reduce
rehospitalizations,” said Paul J. Diaz, President and Chief
Executive Officer of the Company. “The proposed rule offers two
alternatives for a potential parity adjustment, one of which
recognizes that three months’ worth of data may be insufficient to
arrive at an accurate calculation of rates. Kindred strongly agrees
with this approach and urges CMS to ensure that adequate data
exists before arriving at definitive conclusions.”
“Specifically, Kindred has experienced a 4.2% decline in
Medicare average length of stay from 2008-2010 and a 2.4% decline
in the first quarter of 2011 compared to the same period last year.
This not only validates our value proposition of transitioning
patients home sooner, but also is relevant to an assessment of the
extent of a parity adjustment since Medicare saves money with fewer
patient days,” continued Mr. Diaz. “Accurate data is also necessary
before developing a rational policy for group therapy. While it is
appropriate for CMS to examine whether the use of group therapy is
a factor in arriving at accurate rates, Kindred's data shows that
only 11% of therapy hours are attributable to group therapy and by
far individual therapy is the most common treatment modality at
approximately 88%. Accordingly, we look forward to working with CMS
and Congress to ensure that adequate and appropriate payment rates
for the sector are based upon sufficient data analysis and enable
us all to fulfill our collective goal of providing quality
post-acute care for patients in the most cost-effective
setting.”
Mr. Diaz commented further: “We remain committed to our core
strategy of becoming the premier provider of diversified post-acute
services and we continue to be enthusiastic about strengthening and
expanding our service offerings through our announced acquisition
of RehabCare Group, Inc. (“RehabCare”) (NYSE:RHB). As previously
announced, we expect that transaction to close by June 30,
2011.”
Forward-Looking Statements
This press release includes forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of
1934, as amended. All statements regarding the Company’s expected
future financial position, results of operations, cash flows,
financing plans, business strategy, budgets, capital expenditures,
competitive positions, growth opportunities, plans and objectives
of management and statements containing the words such as
“anticipate,” “approximate,” “believe,” “plan,” “estimate,”
“expect,” “project,” “could,” “should,” “will,” “intend,” “may” and
other similar expressions, are forward-looking statements.
Such forward-looking statements are inherently uncertain, and
stockholders and other potential investors must recognize that
actual results may differ materially from the Company’s
expectations as a result of a variety of factors, including,
without limitation, those discussed below. Such forward-looking
statements are based upon management’s current expectations and
include known and unknown risks, uncertainties and other factors,
many of which the Company is unable to predict or control, that may
cause the Company’s actual results or performance to differ
materially from any future results or performance expressed or
implied by such forward-looking statements. These statements
involve risks, uncertainties and other factors discussed below and
detailed from time to time in the Company’s filings with the
Securities and Exchange Commission (the “SEC”).
In addition to the factors set forth above, other factors that
may affect the Company’s plans or results include, without
limitation, (a) the Company’s ability to integrate the operations
of the acquired hospitals and rehabilitation services operations
and realize the anticipated revenues, economies of scale, cost
synergies and productivity gains in connection with the RehabCare
acquisition and any other acquisitions that may be undertaken
during 2011, as and when planned, including the potential for
unanticipated issues, expenses and liabilities associated with
those acquisitions and the risk that RehabCare fails to meet its
expected financial and operating targets, (b) the receipt of all
required licensure and regulatory approvals and the satisfaction of
the closing conditions to the RehabCare acquisition, including
approval of the pending transaction by the stockholders of the
respective companies, and the Company’s ability to complete the
required financing as contemplated by the commitment letter, (c)
the potential for diversion of management time and resources in
seeking to complete the RehabCare acquisition and integrate its
operations, (d) the potential failure to retain key employees of
RehabCare, (e) the impact of the Company’s significantly increased
levels of indebtedness as a result of the RehabCare acquisition on
the Company’s funding costs, operating flexibility and ability to
fund ongoing operations, development capital expenditures or other
strategic acquisitions with additional borrowings, particularly in
light of ongoing volatility in the credit and capital markets, (f)
the potential for dilution to the Company’s stockholders as a
result of the RehabCare acquisition, (g) the impact of pending or
future litigation relating to the RehabCare acquisition, (h) the
impact of healthcare reform, which will initiate significant
reforms to the United States healthcare system, including potential
material changes to the delivery of healthcare services and the
reimbursement paid for such services by the government or other
third party payors. Healthcare reform will impact each of the
Company’s businesses in some manner. Due to the substantial
regulatory changes that will need to be implemented by the Centers
for Medicare and Medicaid Services and others, and the numerous
processes required to implement these reforms, the Company cannot
predict which healthcare initiatives will be implemented at the
federal or state level, the timing of any such reforms, or the
effect such reforms or any other future legislation or regulation
will have on the Company’s business, financial position, results of
operations and liquidity, (i) changes in the reimbursement rates or
the methods or timing of payment from third party payors, including
commercial payors and the Medicare and Medicaid programs, changes
arising from and related to the Medicare prospective payment system
for long-term acute care (“LTAC”) hospitals, including potential
changes in the Medicare payment rules, the Medicare Prescription
Drug, Improvement, and Modernization Act of 2003, and changes in
Medicare and Medicaid reimbursements for nursing centers, and the
expiration of the Medicare Part B therapy cap exception process,
(j) the effects of additional legislative changes and government
regulations, interpretation of regulations and changes in the
nature and enforcement of regulations governing the healthcare
industry, (k) the Company’s ability to successfully pursue its
development activities, including through acquisitions, and
successfully integrate new operations, including the realization of
anticipated revenues, economies of scale, cost savings and
productivity gains associated with such operations, (l) the impact
of the Medicare, Medicaid and SCHIP Extension Act of 2007 (the
“SCHIP Extension Act”), including the ability of the Company’s
hospitals to adjust to potential LTAC certification, medical
necessity reviews and the moratorium on future hospital
development, (m) the impact of the expiration of several
moratoriums under the SCHIP Extension Act which could impact the
short stay rules, the budget neutrality adjustment as well as
implement the policy known as the “25 Percent Rule,” which
would limit certain patient admissions, (n) failure of the
Company’s facilities to meet applicable licensure and certification
requirements, (o) the further consolidation and cost containment
efforts of managed care organizations and other third party payors,
(p) the Company’s ability to meet its rental and debt service
obligations, (q) the Company’s ability to operate pursuant to the
terms of its debt obligations, including the Company’s obligations
under financings undertaken to complete the RehabCare acquisition,
and the Company’s ability to operate pursuant to its master lease
agreements with Ventas, Inc. (NYSE:VTR), (r) the condition of the
financial markets, including volatility and weakness in the equity,
capital and credit markets, which could limit the availability and
terms of debt and equity financing sources to fund the requirements
of the Company’s businesses, or which could negatively impact the
Company’s investment portfolio, (s) national and regional economic,
financial, business and political conditions, including their
effect on the availability and cost of labor, credit, materials and
other services, (t) the Company’s ability to control costs,
particularly labor and employee benefit costs, (u) increased
operating costs due to shortages in qualified nurses, therapists
and other healthcare personnel, (v) the Company’s ability to
attract and retain key executives and other healthcare personnel,
(w) the increase in the costs of defending and insuring against
alleged professional liability and other claims and the ability to
predict the estimated costs related to such claims, including the
impact of differences in actuarial assumptions and estimates
compared to eventual outcomes, (x) the Company’s ability to
successfully reduce (by divestiture of operations or otherwise) its
exposure to professional liability and other claims, (y) the
Company’s ability to successfully dispose of unprofitable
facilities, (z) events or circumstances which could result in the
impairment of an asset or other charges, (aa) changes in generally
accepted accounting principles or practices, and changes in tax
accounting or tax laws (or authoritative interpretations relating
to any of these matters), and (ab) the Company’s ability to
maintain an effective system of internal control over financial
reporting. Many of these factors are beyond the Company’s control.
The Company cautions investors that any forward-looking statements
made by the Company are not guarantees of future performance. The
Company disclaims any obligation to update any such factors or to
announce publicly the results of any revisions to any of the
forward-looking statements to reflect future events or
developments.
Additional Information About the
RehabCare Transaction
In connection with the pending transaction with RehabCare,
Kindred has filed with the SEC a Registration Statement on Form S-4
(commission file number 333-173050) that includes a joint proxy
statement of Kindred and RehabCare that also constitutes a
prospectus of Kindred. Kindred and RehabCare will mail the
definitive joint proxy statement/prospectus to their respective
stockholders after the Registration Statement has been declared
effective by the SEC. WE URGE INVESTORS AND SECURITY
HOLDERS TO READ THE JOINT PROXY STATEMENT/PROSPECTUS REGARDING THE
PENDING TRANSACTION WHEN IT BECOMES AVAILABLE BECAUSE IT CONTAINS
IMPORTANT INFORMATION. You may obtain a free copy of the
joint proxy statement/prospectus (when available) and other related
documents filed by Kindred and RehabCare with the SEC at the SEC’s
website at www.sec.gov. The joint proxy statement/prospectus (when
available) and the other documents filed by Kindred and RehabCare
with the SEC may also be obtained for free by accessing Kindred’s
website at www.kindredhealthcare.com and clicking on the
“Investors” link and then clicking on the link for “SEC Filings” or
by accessing RehabCare’s website at www.rehabcare.com and clicking
on the “Investor Information” link and then clicking on the link
for “SEC Filings”.
Participants in the RehabCare
Transaction
Kindred, RehabCare and their respective directors, executive
officers and certain other members of management and employees may
be soliciting proxies from their respective stockholders in favor
of the pending transaction. You can find information about
Kindred’s executive officers and directors in Kindred’s joint proxy
statement/prospectus. You can find information about RehabCare’s
executive officers and directors in its definitive proxy statement
filed with the SEC on March 23, 2010. You can obtain a free
copy of these documents from Kindred or RehabCare, respectively,
using the contact information above.
About Kindred Healthcare
Kindred Healthcare, Inc., a top-200 private employer in the
United States, is a FORTUNE 500 healthcare services company based
in Louisville, Kentucky with annual revenues of over $4.3 billion
and approximately 56,700 employees in 40 states. At March 31, 2011,
Kindred through its subsidiaries provided healthcare services in
706 locations, including 89 long-term acute care hospitals, 224
nursing and rehabilitation centers and a contract rehabilitation
services business, Peoplefirst rehabilitation services, which
served 393 non-affiliated facilities. Ranked as one of Fortune
magazine’s Most Admired Healthcare Companies for three years in a
row, Kindred’s mission is to promote healing, provide hope,
preserve dignity and produce value for each patient, resident,
family member, customer, employee and shareholder we serve. For
more information, go to www.kindredhealthcare.com.
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