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The Case for Post-Acute PartnershipsKindred Healthcare

William M. Altman, Senior Vice President of Strategy & Public Policy

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Discussion Agenda

Why Develop a Post-Acute Strategy?

Kindred’s Integrated Care Strategy

Partnership Examples of Acute and Post-Acute Collaboration

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Why Develop a Post Acute Strategy?

Demand for Post-Acute Services

Aging Demographics

Post-Acute Utilization

PaymentReform

Value Based Purchasing

Readmission Penalties

Episodic / Bundled Payment

IncreasedCompetition

Customer Satisfaction

Care Coordination

Reducing Hospital Readmissions

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Positioned to Take Advantage of a ChangingHealthcare and Payment Environment

“Continue The Care”

Patie

nt S

ervi

ce In

tens

ity

Patient Illness Severity

HOME

SKILLED NURSING FACILITIES

HOSPICEHOME HEALTH

CARE

OUTPATIENT REHAB

ASSISTED LIVING

ACUTE CAREHOSPITALS

TRANSTRANSCARECARE ICUICU

IN-PATIENT REHAB

LTACsFREESTANDING/ HIH

SAUSAU

TCC &

TCU

ADULT DAY CARE

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35% of Medicare beneficiaries are discharged from acute hospitals to post-acute care

Patients’ first site of discharge after acute

care hospital stayPatients’ use of site

during a 90 day episode

SHORT-TERM ACUTE CARE HOSPITALS

Intensity of Service

LONG-TERM ACUTE CARE HOSPITALS

LowerHigher

INPATIENT REHAB

SKILLED NURSING FACILITIES

OUTPATIENT REHAB

HOMEHEALTH

CARE

37%2% 10%

11%

41%

52%

9%

21%2% 61%

(1) Source: RTI, 2009: Examining Post Acute Care Relationships in an Integrated Hospital System

Tremendous Opportunities Exist to Better Manage Patient Care for Patients Discharged to Post-Acute

Medicare Patients’ Use of Post-Acute Services Throughout an “Episode of Care” (1)

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Positioned to Help Determine the Most Appropriate Setting for Patients as they

Continue Their Care Throughout a Patient Episode

35% 25% 5%

Skilled Nursing

and Rehab

Centers

(1) Source: Kindred Internal Data, 2010 data.

Home *

(16% with Home

Health)

Inpatient Rehab Facility

Patients Discharged From Kindred Long Term Acute Care

Hospitals

13%77%

Skilled Nursing

and Rehab

Centers

Home *

(45% with Home

Health)

Patients Discharged from Kindred Inpatient

Rehabilitation Facilities

50%

Home*

(31% with Home

Health)

Patients Discharged Kindred Nursing and

Rehabilitation Centers

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Operational Imperatives with Payment ReformPREPARING FOR SHARED RISKPREPARING FOR SHARED RISK

Stakeholders

Physicians

Providers

Patients

Payors

Clinicians

Improve Patient Quality

Reduce Hospital Readmissions

Provide Greater Transparency

Be More Efficient / Grow Volumes

Aligned Incentives

Information Sharing

Care Management Models

Physician Engagement

Key

Enab

lers

Ope

ratio

nal

Impe

rativ

es

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Hospital ReadmissionsHospital Readmissions

By the Numbers 1

Hospital ReadmissionsBy the Numbers 1

20% of Medicare patients are readmitted within 30 days

34% of patients are readmitted within 90 days

56% of patients readmitted within one year

50% of patients readmitted within 30 days and had NOT visited a physician between discharge and readmission

Heart Failure

COPD

Pneumonia

AMI

CABG

PTCA

Other Vascular

Top ReadmissionDiagnostic Categories

Top ReadmissionDiagnostic Categories

1 “Rehospitalizations Among Patients in the Medicare Fee-For Service Program”, Jencks, Williams, and Coleman, New England Journal of Medicine, April 2, 2009

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Step-Wise Approach to Integrated Payment

Mechanisms to Track and Share Key Data

Baseline Performance Measures

Processes for Patient Placement

IT Linkages

Clinical Program Alignment

Coordinated Case Management

Physician Integration

Shared Quality Measures and Goals

Aligned Financial Incentives

Strategic Oversight

Strengthen referral relationships between current sites of care

Establish Joint Operating Committee

Initial Focus on High Impact Outcomes (e.g., rehospitalizations)

Path to Integration1. Collaborative

Oversight2. Information

Sharing3. Care

Management Strategies

4. Care and Payment Integration

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Options for Developing a Post-Acute Strategy

Develop Internally

Establish and develop internal post-acute care capacity – deploying limited capital

and clinical resources

Outsource Manage relationships with multiple providers for all levels of post-acute care

Partner Partner with progressive post-acute providers to fulfill patient needs

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Discussion Agenda

Why Develop a Post-Acute Strategy?

Kindred’s Integrated Care Strategy

Partnership Examples of Acute and Post-Acute Collaboration

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$2.8 billion revenues(1)

HOSPITALSLong-term Acute Care Hospitals

Inpatient Rehabilitation Hospitals

Largest operator in U.S. (2) 120 LTAC hospitals

8,609 licensed beds (3)

5 IRFs 183 licensed beds (3)

$2.2 billion revenues(1)

Third largest nursing center operator in U.S. (2)

224 nursing centers 27,252 licensed beds (3)

6 assisted living facilities413 licensed beds (3)

NURSING CENTERSNursing & Rehabilitation

Centers

$1.3 billion revenues(1)

Largest contract therapy company in U.S.(2)

1,760 external locations served through 10,300 therapists (3)

104 hospital-based acute rehabilitation units (3)

REHABILITATION SERVICESRehabCare

(1) Proforma revenues for the twelve months ended June 30, 2011 (divisional revenues before intercompany eliminations).(2) Ranking based on revenues.(3) As of June 30, 2011.

Diverse Post-Acute Service Lines

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Positioned to Take Advantage of a ChangingHealthcare and Payment Environment

“Continue The Care”

Patie

nt S

ervi

ce In

tens

ity

Patient Illness Severity

HOME

SKILLED NURSING FACILITIES

HOSPICEHOME HEALTH

CARE

OUTPATIENT REHAB

ASSISTED LIVING

ACUTE CAREHOSPITALS

TRANSTRANSCARECARE ICUICU

IN-PATIENT REHAB

LTACsFREESTANDING/ HIH

SAUSAU

TCC &

TCU

ADULT DAY CARE

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Coordinating Clinical Services & Programs Across Service Lines to Improve Outcomes and Prevent Readmissions

Services Services Services Specialty Programs Therapies

Respiratory & Pulmonary Care

Cardiac CarePulmonary Care

Intensive Short-Term Complex Rehabilitation

Cardiac CarePulmonary Care

Cardio-Pulmonary and Medically Complex

Complex Wound CareIV antibiotic Therapy

Clinically Complex CareReconditioning

Wound Care

Severe Stroke, Brain, Spinal Cord, and Other

Neurological ImpairmentWound Care Wound Care Therapies

for Complex Wounds

Short-Term Rehabilitation

Intensive Short –Term & Orthopedic

Rehabilitation

Complex Cognitive, Physical Rehabilitation

Orthopedic and Neurological

Rehabilitation

Orthopedic RehabNeurological / Stroke

Rehabilitation

DialysisPain Management IV Therapy Dialysis, Wound Care,

Pulmonary TherapyLong-term Chronic Care

Palliative & Hospice CarePalliative & Pain

Programs

Long-Term Acute Care Hospitals

Hospital Based Sub-Acute Units

Inpatient Rehabilitation

Facilities

Skilled Nursing & Rehabilitation

Centers

Rehabilitative Therapy

Kindred Long-Term Acute Care Hospitals:

28,766 (64%) patients went home or to a lower level of care in 2010 after an average length of stay

of 30 days

Kindred Long-Term Acute Care Hospitals:

28,766 (64%) patients went home or to a lower level of care in 2010 after an average length of stay

of 30 days

Kindred Inpatient Rehabilitation Facilities

34,960 (76%) patients returned home after an

average length of stay of 12 days in 2010

Kindred Inpatient Rehabilitation Facilities

34,960 (76%) patients returned home after an

average length of stay of 12 days in 2010

Kindred RehabilitativeTherapy

Patient functional improvement from

evaluation to discharge was 76.4% in 2010

Kindred RehabilitativeTherapy

Patient functional improvement from

evaluation to discharge was 76.4% in 2010

Kindred Nursing and Rehabilitation:

39,836 (50%) patients returned home after an

average length of stay of 32 days in 2010.

Kindred Nursing and Rehabilitation:

39,836 (50%) patients returned home after an

average length of stay of 32 days in 2010.

Home Health & Hospice

Services

Skilled Nursing Care w/ Specialty Programs

Wound Care, CHF, Methadone Dosing, Med

Management, Safety Assessments, IV Therapy

Physical, Occupational & Speech Therapy

Psychiatric Nursing

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LTACHs (121)Inpatient Rehab Hospitals (5)Nursing and Rehabilitation Centers (224)Acute Rehabilitation Units (113)RehabCare External Customers (1,563)Home Care and Hospice (19)

Existing Cluster MarketPotential New Cluster Market(as of June 1, 2011)

Increased Focus on Developing Market Specific Integrated and Coordinated Care Delivery Models

With Focus On Developing Cluster Market Service Offerings

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Provide superior clinical outcomes and quality care with an approach which is patient-centered, disciplined and transparent

Lower costs today by reducing lengths of stay in acute care hospitals and transition patients home sooner at the highest possible level of function

Reduce rehospitalization through our integrated and interdisciplinary care management teams and protocols

Support integrated care and payment models and better manage transitions in care because of the diversity of post-acute service lines and experience in managing a post-acute episode of care

Kindred’s Post-Acute Value Proposition – Generating Savings Today and Tomorrow

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Key Attributes for Successful Collaboration

Information Sharing

Communication mechanisms - Joint Operating Committees

Information Technology Linkage

Inclusion of stakeholders

CareTransitions

Post-acute clinical programs designed fit hospital need

Coordinated staffing, training, and nurse competencies

Shared clinical protocols; Care pathways

Physician Engagement

Physician leadership and buy-in

Medical privileges across sites of care

Awareness of practice patterns, confidence in partners

Quality & Outcomes

Shared quality and operating measures

Established baseline performance and agreed targets

Focus on high impact outcomes (e.g., re-hospitalizations)

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Discussion Agenda

Why Develop a Post-Acute Strategy?

Kindred’s Integrated Care Strategy

Partnership Examples: Advancing Acute and Post-Acute Collaboration

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Kindred is Actively Engaged with Hospitals, Health Systems, and Managed Care Organization in Piloting Integrated Care and

Payment Models (ACOs, Bundling, Rehospitalization Pilots, Etc.)

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Partner-Specific Collaborative StrategiesThe right starting point is the one that we can act on together, todayThe right starting point is the one that we can act on together, today

Variety of ways advance coordinated care models

PhysicianIntegration

CHF CarePathway

Shared PI Process &

Nurse Training

Cleveland Clinic

Saint Francis Healthcare

Though the initial focus of the partnerships are different, they key processes supporting their success are the same: Joint Operating Committees with key clinical and administrative leadership Specific operating goals and objectives Performance dashboards, with a focus on high Impact outcomes for immediate

results

Levels of Care for Patient Placement

Healthcare Partners

Norton Healthcare

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Physician Integration

Kindred Post-Acute Service Lines2 Long-Term Acute Care Hospitals1 Hospital-based Sub-acute Facility3 Area Skilled Nursing and Rehab Centers1 Assisted Living FacilityContinuity of Rehabilitation Services across Sites of Care

Partnered with the Cleveland Clinic for post-acute services to better manage care transitions outside of the Short Term Acute Care delivery system

Cleveland Clinic physicians follow patients to Kindred’s post-acute operations, including Medical Leadership at the sub-acute skilled nursing center.

Established linkages between the Clinic’s EHR and Kindred post-acute site of services. Formal joint operating committee with Cleveland Clinic leadership with a

collaborative focus on continuity of care, re-hospitalizations, and quality. Clinical Programs include Wound Care, Ventilator Care, Infection Management, and

short–term Orthopedic and Neurological Rehabilitation.

Operate 50% of acute care bedsCare model includes employed PhysiciansHealth System has Electronic Health Record (EHR)

Cleveland Clinic

Re-hospitalization rates from SNF have been substantially reduced

Kindred Healthcare and the Cleveland ClinicKindred Healthcare and the Cleveland Clinic

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Kindred - Cleveland Clinic Relationship

• Cleveland Clinic physician coverage for both LTAC & SubAcute level of care

• Cleveland Clinic physician offices at Kindred Fairhill LTAC

• Kindred begins as an academic site for Cleveland Clinic residents & medical students

2009 2010 2011• Initiation of the Cleveland Clinic –

Kindred “Futures” Committee

Kindred and the Cleveland Clinic established a post-acute collaborative in 2009 through a Cleveland Clinic RFP with an initial focus on Kindred’s hospital based sub-acute facility and long-term acute care hospitals.

• Monthly Joint Quality Committee• Full-time Dedicated project

management• Information technology

infrastructure in place

• 675 patients cared for under this model of care.

• Relationship expands to “The Greens” free-standing Transitional Care Center

• Interface for physician notes from EPIC to ProTouch goes live

• Collaborative process improvement initiatives resulting in better performance

• Developed methodology to determine avoidable return to acute care

• Identification and review of quality indicators, definitions and calculations to assure true performance comparisons

• Kindred SAU & SNF admits first patients to the Heart 2 Home program

• Dr. Michael Felver Medical Dir. of Transitional Care Unit

• Patient outcomes managed by the Cleveland Clinic physician group reviewed separately

• Quality indicators have improved since the beginning of the relationship

Information Sharing

CareTransitions

Physician Engagement

Quality & Outcomes

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Physician Communication

EMR Linkage Joint Operating Committee (JOC)

Performance Improvement

•Employed physician model contributes to relationship continuity

•Cleveland Clinic physicians provide coverage at Kindred Post-Acute Sites

•Improved responsiveness to Clinic physicians

•Developed an interface for the patient registration systems

•Setup medical record access to the Cleveland Clinic’s HER

•Automating movement of H&Ps, progress notes, and discharge summaries

•Monthly meeting composed of administrators, physicians, quality and case management staff

•Operates under charter defining the objectives of the committee, the parameters of the relationship, and the establishment of a mission

•JOC uses performance dashboard including LOS, readmission rates, patient satisfaction, quality metrics (e.g., falls, wounds, infections, wean rates, mortality)

•Cleveland Clinic patients are reviewed separately from the general population

Key Elements of Kindred-Cleveland Clinic RelationshipMultiple Communication Elements Drive SuccessMultiple Communication Elements Drive Success

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Clinical Integration

Norton is a Brookings – Dartmouth ACO demonstration site Strong connection exists between Norton Hospitals and Kindred

LTACs in terms of patient referrals and physicians practicing in both systems

– Norton hospitals account for ~ 25% of the total admissions to the 2 Louisville Long-term care hospitals

– Norton hospitals account for ~ 11%of the total admissions to the seven nursing and rehabilitation centers in the market area.

Kindred Post-Acute Service Lines2 Long-Term Acute Care Hospitals

1 co-located hospital based sub-acute unit

2 Louisville nursing and rehab centers with 1 transitional care unit

5 southern IN nursing and rehab centers with 2 transitional care units

4 not-for-profit hospitals1.4 million yearly patient encounters11,000 employees2,000 physician medical staff60,000 admissions per year

Norton Healthcare

Kindred and Norton HealthcareKindred and Norton Healthcare

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Established a task force to evaluate Hospital readmissions and potential opportunities to improve performance

Analyzed post-acute utilization, physician practice patterns, and readmits with Kindred leadership

Clinical Integration

To address concerns – engaged the System director for Case Management and Clinical Effectiveness to evaluate:

– Competencies– Performance

Improvement– Quality

Strengthening care coordination, patient assignment, and coverage between Norton physicians and Kindred sites of service:

– More physicians following patients

– Improved communication

Utilize shared analytics with a focus on reducing Rehospitalization

Shared staff competencies, quality measurements

Hospital Readmissions and

Length of Stay

Physicians within the same physician group had different practice patterns for patients discharged to post-acute care settings:

– STAC LOS– Readmit rate

Barriers needed to be addressed in order to improve utilization of post-acute, specifically, physician confidence in the quality of care and continuous performance improvement processes

Kindred - Norton Collaborative

Physician Alignment

Established a “Joint Operating

Committee”

Kindred clinical liaisons screen

patients on day 3 of hospital stay

Implemented Norton critical care training for Kindred clinical

staff

Developed a shared quality dashboard &

PI process

Clinical Competencies & Nurse Training

Expanding hospitalist coverage between

acute and post-acute sites of care

Kindred and Norton HealthcareKindred and Norton Healthcare

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Care Pathways

Kindred has partnered with Saint Francis Health System, implementing a Joint Operating Committee that is supported by a formal charter and specific objectives

The focus is to better integrate our clinical teams and to develop diagnosis specific care pathways, with initial focus on CHF patients.

Approach is data driven, utilizing six-sigma trained members Kindred has an Integrated approach to Medical Leadership across our post-acute

sites of care, including:– Joint physician advisory board to promote care coordination between sites of

care.– Market Medical Director for Wound Care – Physicians which attend in both acute & post-acute settings

Kindred Post-Acute Service Lines2 Long-Term Acute Care Hospitals6 Skilled Nursing and Rehab CentersHospice and HomeHealthContinuity of Rehabilitation Services across Sites of Care

4 major hospital systems provide short -term acute care services within the Indianapolis market

These health systems utilize a broad range of physician affiliations

Key Market Characteristics

Kindred and the Saint Francis Healthcare SystemKindred and the Saint Francis Healthcare System

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Kindred-Saint Francis Joint Operating Committee

Integrate Kindred case management services with St Francis Hospitals, St Francis Health Network and ADVANTAGE Health Solutions case management processes, related to inpatient hospitalizations as well as emergency department admissions

Develop and implement processes, procedures, and workflow that contribute to high-quality, efficacious and cost-effective care in the post-acute settings

Jointly develop, deliver and analyze key metrics relating to care management across the acute-post acute continuum and within post acute venues

Develop key clinical focus areas for improvement (e.g., CHF care pathways) and develop processes, tools and systems to implement the programs

Develop a continuous quality improvement mechanism to assure early indicators of success or failure are recognized and incorporated

Develop a strategy to imbed SFHN physicians in Kindred post-acute sites of care to enhance clinical capabilities, communication and continuity

Share best practices as they evolve, including tools for predicting patients at high risk for readmissions and action steps to manage these patients

Goals and Objectives for the CollaborativeGoals and Objectives for the Collaborative

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Patient Placement Criteria for Post-Acute Levels of Care

Kindred Post-Acute Service Lines3 Long-Term Acute Care Hospitals1 Hospital-based Sub-acute Facility2 Area Skilled Nursing and Rehabilitation CentersContinuity of Rehabilitation Services

Kindred post-acute services agreement is with Healthcare Partners a physician group who contracts with Managed Care Payors to provide health care and case management services.

Eight distinct levels of care across three Kindred post-acute service lines, with corresponding rate and clinical criteria for each care level.

Centralized Kindred post-acute assessment and admissions function to place patients in the most clinically appropriate setting.

Formal joint operating committee with HCP, with a collaborative focus on continuity of care, re-hospitalizations, quality, and cost efficiency.

Benefits include cost optimization and improved care coordination.

Higher than Average Managed Care Penetration Rate

Several Managed Care Payors Retain Physician Case Management Group

Key Market Characteristics

Kindred and Healthcare Partners, Las Vegas - Physician GroupKindred and Healthcare Partners, Las Vegas - Physician Group

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Healthcare Partners - Las Vegas, NV

HCP IPA at risk w capitation

Recognize value of post-acute care

Physician involvement in post acute settings is high

Patient type matched with post acute site capabilities

Priced by patient type as PPD

Key Aspects of the Kindred and Healthcare Partners RelationshipKey Aspects of the Kindred and Healthcare Partners Relationship

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24 Hour Centralized Admissions

Direct Admissions from ER, Home and Physician Office

Manage patients down AND up the Continuum

Bi-Weekly Interdisciplinary Team Meetings

Systemic / Quality Responses

Joint Family Conferences

Kindred’s Las Vegas Continuum of CareCoordination of CareCoordination of Care

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Patient Change in Status Kindred staff performs assessment HCP physician determines action

RTA Categorizations (for JOC discussion) Scheduled: Planned service; Upgrade within Kindred

Preventable: Kindred responsibility contributed to the need for transfer

Non-preventable: Clinical need supported transfer

Avoidable: Non-Kindred responsibility contributed to the need for transfer

Kindred’s Las Vegas Continuum of Care

Process: Joy Cleveland

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Readmission Process and CategorizationReadmission Process and Categorization

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How is the Continuum Performing- Numbers at a Glance

34.8% of all Hospital Division LTACH discharges went to a SNF

27.2% of Las Vegas LTACH discharges went to a SNF

61.6% of the Las Vegas LTACH discharges that went to a SNF went to a Kindred SNF/SAU

16.8% of Las Vegas LTACH discharges went to a Kindred SNF/SAU

32.5% of total Kindred Las Vegas market admissions were HCP specific

SNF/SAU HCP Admits: 49.2%

HD HCP Admits: 6.3%

7.3% of total Kindred Las Vegas market admissions were cross-referral (came from another Kindred facility)

LTACH PatientsDestination St. Rose Sahara Flamingo Total % of TotalTransferred to SNF 22.4% 29.2% 28.2% 328 27.2%Home 31.2% 22.6% 23.2% 299 24.8%Hospital 21.7% 32.4% 20.5% 288 23.9%Expired 9.1% 6.0% 14.4% 133 11.0%Rehab Facility 11.0% 4.4% 5.6% 78 6.5%Other 4.6% 5.3% 8.0% 79 6.6%Total Discharges 263 318 624 1,205 100.0%

SNF PatientsReferring Facility Hillhaven Torrey Pines Flam SAU TotalSt. Rose 36 54 6 96Sahara 4 21 3 28Flamingo 24 8 46 78Total Admissions 64 83 55 202

34.8%27.2%61.6%16.8%

Admissions Aug YTD

Admitting Facility TotalAdmits from

HCPHCP % of

TotalAdmits from

KindredKindred %

of TotalSt. Rose 239 0 0.0% 0 0.0%Sahara 318 0 0.0% 0 0.0%Flamingo 629 75 11.9% 20 3.2%Flamingo SAU 352 137 38.9% 55 15.6%Hillhaven 402 118 29.4% 64 15.9%Torrey Pines 1,106 660 59.7% 83 7.5%Total 3,046 990 32.5% 222 7.3%

% of Vegas LTACH discharges to SNF that went to Kindred SNF/SAU:

% of total Vegas LTACH discharges that went to Kindred SNF/SAU:

Discharge Destination Aug YTD

Admitting Facility Aug YTD

% of total Hospital Division discharges that went to SNF:

% of total Vegas LTACH discharges that went to SNF:

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Important Considerations in Evaluating Kindred as a Post-Acute Partner

Culture of quality improvement, track record of producing quality outcomes, and a commitment to transparency

Expertise / commitment to enhance patient care episode management across the post-acute continuum

Willingness and ability to commit capital

Commitment to “evidence-based” operations and research to advance innovations and improvement

Willingness to work with Texas Health Resources as a partner

Working more closely, we have significant opportunities to advance our clinical coordination and improve patient care and quality.