Business model of Kindred Healthcare

Customer Segments

Kindred Healthcare’s customers principally comprise post-intensive care patients and sufferers of long-term acute conditions. Kindred Healthcare primarily seeks to serve patients that have spent time in hospital, transitioning their care from managed facilities to their own homes. This includes short-stay patients through its network of nursing centres.

While the Company’s end customers are its patients, the Company derives its revenue primarily from third-party payors, including government reimbursement programs such as Medicare and Medicaid and non-government sources such as Medicare Advantage, Medicaid Managed, commercial insurance companies, health maintenance organisations, preferred provider organisations, and contracted providers.

Kindred Healthcare operates across the US, operating a network of facilities that spans 46 US states. The Company does not serve an international customer base.

Value Propositions

Kindred Healthcare provides value to its customers in the following ways:

• Its diversified portfolio of services, with the Company providing a range of care options and services through its transitional care hospitals, home health and hospice operations, rehabilitation facilities, contract rehabilitation services, and nursing centres.
• The quality of its services, with the Company established as a provider of quality and reliable transitional care services, having a good reputation within the industry;
• Its specialist personnel, with the Company employing qualified nurses, therapists, physicians, clinical associates, home health and hospice employees, and other specialist healthcare professionals across its operating segments, and a team of experienced industry executives;
• Its use of innovative technologies, with the Company implementing state-of-the-art information technology systems and technologies in order to enhance the efficiency of its operations; and
• Its broad domestic reach, with the Company’s network of facilities spanning 46 US states, providing access to care in local facilities for much of the US population.

Channels

Kindred Healthcare operates a website at www.kindredhealthcare.com, through which it provides information on its various services, facilities, and activities. The Company also operates an online paperless pay service, which allows patients to pay for services digitally.

Kindred Healthcare operates sales and marketing teams that are tailored to each of its operating segments, and are organised by geographic region. The Company provides its services directly to customers through its workforce of nurses, therapists, physicians, clinical associates, home health and hospice employees, who serve patients through the Company’s network of facilities.

Kindred Healthcare’s facilities comprise 95 transitional care hospitals, 604 community care and home health locations, 18 inpatient rehabilitation hospitals, 100 hospital-based acute rehabilitation units, and 90 nursing centres.

Customer Relationships

Kindred Healthcare operates a self-service online paperless pay services, which allows customers to pay for services independently, without interacting directly with members of the Company’s sales and marketing teams.

Kindred Healthcare’s sales staff consult directly with customers in order to establish the most appropriate form of care for each individual patient. The Company subsequently provides a significant degree of personal care to patients through its team of medical staff, operating across its network of healthcare facilities. Patients are provided with all aspects of care, and have access to healthcare professionals for advice and assistance at all times.

Kindred Healthcare provides a range of information to customers on its websites, including up-to-date coverage of Company activities through its blog. Customers are also able to contact the Company directly with enquiries and complaints by post, over the phone, and via an online contact form.

Additionally, Kindred Healthcare operates several social media accounts – including with Facebook, Twitter, Pinterest, YouTube, Google+, and LinkedIn – through which it is able to interact with customers directly.

Key Activities

Kindred Healthcare is a US-based healthcare services company. The Company organises its operations into four principal business segments: Hospital, which provides long-term acute care services through the operation of a national network of approximately transitional care hospitals; Kindred at Home, which provides home health, hospice, and community care services; Kindred Rehabilitation Services, which provides rehabilitation services through its network of inpatient rehabilitation hospitals and acute rehabilitation units; and Nursing Centres, which provides care through the operation of a national network of approximately nursing centres.

Key Partners

Kindred Healthcare collaborates with a range of companies and organisations across its operating segments. These partners include:

• Supplier and Vendor Partners, comprising suppliers of equipment, tools, and drugs for use across its medical facilities, and suppliers of services and technologies that are utilised throughout the enterprise;
• Non-profit and Community Partners, comprising a range of charitable and non-profit organisations, with which the Company collaborates on various community and social projects;
• Healthcare Partners, comprising various healthcare facilities and organisations, with which the Company collaborates in sharing resources and information and devising methods by which to reduce hospital readmissions; and
• Educational Partners, comprising various academic institutions, with which the Company cooperates on educational programs and training schemes.

Kindred Healthcare has educational partnerships with Webster University and Western Governors University, and has partnered with a number of acute care hospitals – including Mercy Hospital in St. Louis – as part of its Health Information Exchange and in relation to the national Hospital Readmission Reduction Program.

Key Resources

Kindred Healthcare’s key resources are its supply chain, its healthcare infrastructure and medical equipment, its IT and communications infrastructure, its partnerships, and its personnel.

Among Kindred Healthcare’s key resources are its owned and leased properties, notably its national network of transitional care hospitals, comprising transitional care hospitals, community care and home health locations, inpatient rehabilitation hospitals, hospital-based acute rehabilitation units, and nursing centres, as well as its network of offices.

Kindred Healthcare’s ability to attract and retain well-trained and experienced medical professionals is also key to its ongoing operations, notably its extensive team of nurses.

Cost Structure

Kindred Healthcare incurs costs in relation to the procurement of medical supplies and equipment, the management and operation of its healthcare facilities, the maintenance of its IT and communications infrastructure, the management of its partnerships, and the retention of its personnel.

In 2015 Kindred Healthcare’s largest expense related to the payment of salaries, wages and benefits to its 53,600 full-time and 48,400 part-time and per diem employees, which amounted $3.61 billion. The Company also accrued significant costs related to the procurement of supplies and the payment of rental fees, which totaled 384.65 million and $382.61 million respectively.

Revenue Streams

Kindred Healthcare generates revenue through the provision of various transitional and rehabilitative care to patients across the US. The Company’s revenue is derived primarily from third-party payors, in particular government reimbursement programs such as Medicare and Medicaid, as well as health maintenance organisations, commercial insurance companies, preferred provider organisations, and health maintenance organisations.

In 2015 the Company generated annual revenue of $7.05 billion, up considerably on the $5.03 billion recorded by the Company in 2014. The Company’s Hospital segment is the Company’s largest revenue generator, accounting for $2.44 billion of the Company’s revenue for 2015. This was followed by the Kindred at Home segment, which generated $2.24 billion.