Planning for the future of healthcare—Benjamin Breier, President and CEO, Kindred Healthcare

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DISCLAIMER: The views and opinions expressed are those of the interviewee and are not necessarily those of McKinsey and Company.

Shubham Singhal: Ben, if you look at the big picture, what do you see as the two or three biggest trends in US healthcare?

Benjamin Breier: The first thing is, who is going to be responsible for patient care as we move through healthcare reform?

What’s becoming a large trend in healthcare is this idea that hospitals, particularly, are going to continue to see increased penalties for hospital readmissions. They are going to continue to see an increased trend in being responsible for not just what happens to a patient inside of their own four walls, but what happens to a patient in a 30-, 60-, and 90-day episode of care. And that, overarching to all of this, [we] have to be much more consumer-centric. When you take those three things together, that fundamentally is a big trend that all of us are going to be seeing.

Secondarily, everybody continues to try and figure out how to position themselves to deal in a value-based world where they can take risk, where they can think more about how to get paid for quality and for outcomes than necessarily on a fee-for-service basis. Looking back over the last number of years, we would've thought we’d maybe be further along than we are. But I still think that it’s a large and broad trend that we should all be thinking about.

The last one is back to consumer-based healthcare. What’s happening with higher-deductible plans? What’s happening with more out of pocket, where the consumer is getting more and more responsible for making the choice as to who they want their payer to be and what services they want. We're all going to have to do a better job thinking about the consumer focus of patient care in the future.

Innovating around Kindred’s biggest priorities

Shubham: One of the things, Ben, you've talked about along those things is a lot of innovation. So, maybe you can talk a bit about what you see [are] the biggest priorities for Kindred and how you’re innovating around this.

Ben: For us, the biggest realization in the space that we’re in is that you can only sustain for so long as a fee-for-service provider in an environment where rates are under pressure always, reimbursement is under pressure always, regulation is under pressure always—and that’s not going away under really any circumstance.

For us, our innovation has been both around the mix of businesses that we’re in, the way we deliver care, and how we’re trying to be an integrated care deliverer. But the number one innovation is, can we become a company that not only provides services, with a vast and large array of post-acute service capabilities, but can we be a post-acute manager? A company in which we’ve developed products, solutions, and innovations that we can, quite frankly, sell to people who need the various innovations that we’ve worked through over years, so that we can wind up with different streams of how we get paid. Not just seeing patients, but being more of a manager, if you will, of what’s happening with those populations.

Shubham: That's interesting. So, what is the value in this integrated approach?

Ben: Well, if we believe [that] what’s good for the consumer is good for healthcare, then an integrated approach is really important. We know that from a financial perspective, an integrated approach saves money. Study after study has shown that late-stage interventions that are unnecessary, that transitions of care that are not well managed, that’s where the real waste, particularly in the Medicare system, really comes into play. For us, as we think about integrated care, how do you give the consumer, the patient, a better experience as they move through what is a very complicated system—even for those of us that know a lot about how to navigate the healthcare system? When we wind up in a position with a loved one or ourselves trying to navigate it, it’s amazing at how complex we, all of a sudden, realize that it is. So, managing this care in an integrated fashion is good for us financially and also good for the patient from a consumer perspective.

Shubham: Any particular innovations around that, that you want to talk about?

Ben: For us at Kindred, we’re excited about a couple [of] specific things that we’re working on. The first is something that we’ve now talked a lot about publicly, our Kindred Contact Center.

Our Kindred Contact Center is the air traffic control hub for everything that we do at Kindred. It will become the backbone of the product in the solutions services and business that we sell to lots of different people that are experiencing the same kind of needs that we’ve witnessed across the country.

The Contact Center is divided into three parts. The first is what we would call the consumer-facing part. If you called 1-866-KINDRED today—which I think last year, well over 700,000 consumers called 866-KINDRED in only its fourth or fifth year in existence—what they would do is ask questions around what’s happening with their loved one or what’s happening in terms of finding how do we transition into some level of post-acute care.

We really started this approach as just trying to reach and be much closer to the consumer. It’s turned into this massive analytic capability to build a database of the consumers, and their loved ones, that are needing to utilize healthcare.

We run something called our Kindred AfterCare Program. We are calling every patient who has been to one of the branches of Kindred Healthcare. Last year, a million people came through our doors. We’re calling them at 15, at 30, at 45, and 60 days. And we’re checking their blood pressure, we’re checking to make sure they’re taking their medications, we’re checking to make sure they’re doing various things. That not only turns into opportunities for us to reconnect with patients and bring them back on case load, which is good for us in a fee-for-service world—it clearly limits hospital readmissions.

The middle piece is where I think the real magic happens, the Care Management piece. We have developed, with our partners [at a company called] Inovalon, something that we call a patient-placement platform. This is really, for the first time, allowing us to use all of the analytic data that we’ve developed over the last ten or 12 years at Kindred, along with much of the claims data that Inovalon and some of their payer customers have. And we’ve brought this together to try and give us an objective patient-placement system.

One of the really key problems that we have in healthcare when a patient leaves a hospital is having an objective sense of where should they go. And this objective patient-placement platform, that’s our opportunity to really help manage patients through an integrated care post-acute continued approach. What we are finding is that it’s less about us having to own every one of those sites of service and every one of those assets, and more about our product capability around coordinating this care and building high-performance virtual networks in which we announced, six months or so ago, a pretty interesting initiative with Genesis Healthcare in which they became a nursing center key partner for us. We have lots of different partners like that across the country. We want to bring great companies and great providers together, but offer these kinds of products and services to people that need them so badly.

Shubham: That’s terrific. So, you’re saying, this goes well beyond your care delivery sites? So, as you look forward, just where does this innovation take Kindred from where it has been?

Ben: We think that we can be a solutions provider, an innovator, if you will, of providing a care management product, whether it’s on the front end, whether it’s on the care management middle section of it, or in the AfterCare side of the world. And we think we have an opportunity to grow our business pretty significantly in terms of offering that product.

You really don’t have anybody who’s been on both sides of the house, who really understands how to build a successful high-performance network with good-quality operators, who knows how to manage inside of that network, and who can partner with big short-term acute hospitals and payers in lots of different markets across the country.

We think there’s a great niche that needs to be filled. There [are] lots of people who are trying interesting, innovative things, but we would argue nobody has invested more, or [is] further out in front of it than we are. So, over the next few years, we hope that it’ll resonate both in terms of money saved and in terms of [the] new business.

Growth and innovation in today’s environment

Shubham: So in healthcare, we live with regulatory uncertainty all the time, and now it’s perhaps heightened again. How are you thinking about growth and innovation in that context?

Ben: It is certainly hard figuring out how to deploy capital, both human and financial, when the rules can change on you overnight—[is] about as complicated a scenario as any board, or executive, or any management team has to face. And I would argue that for many of us in healthcare, we’re all facing that same thing.  

First, at the end of the day, those that can deliver high-quality care in the lowest-cost setting are going to win under any kind of a scenario. We know that the consumer wants to find value and wants to find not just good-quality outcomes, but real value.

And so our investment obviously in Kindred at Home—the largest home health and hospice and community care company in the country—is something that we’ll continue to double down on and grow. We think being in the home is a really important way to meet that consumer need and do it at the best possible price point.

We also think that investing in relationships and partnerships across the country is going to matter more and more. On the post-acute delivery side, as you think about payers that are managing particularly big commercial, or Medicare Advantage, or Medicaid managed lives, and hospital systems that are managing lives and managing populations, that not everybody has to be everything to everybody, and that partnership should be created. And so we’re deploying capital in lower-cost settings and in partnerships and relationships that we think really are going to be winners at the end of the day.

Shubham: That's terrific. What’s your favorite example of leadership in healthcare?

Ben: My favorite example of leadership in healthcare probably would have to belong to Milton Johnson over at HCA. They have great assets and they have a great portfolio—that certainly is a place to help. But I have found Milton to be an incredibly passionate leader about doing what’s right for the quality of healthcare and for delivering on outcomes. And that’s really a core, I think, piece of leadership within healthcare—that while all the various regulations and reimbursements are changing, can you be focused on that, number one.

Number two, again, to some degree because of their portfolio, but I think also because of his leadership and some of the leaders that came before him at that company, there’s a sense over there that they want to innovate, be ahead of the curve.

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