Kindred Healthcare and Select Medical Holdings are swapping hospitals in a transaction that also includes an $800,000 payment by Kindred to Select, Kindred announced on Feb. 18.
Kindred has signed a definitive agreement to sell four of its transitional care hospitals, licensed as long-term acute care, and acquire five long-term acute care hospitals currently operated by Select Medical Holdings.
Kindred CEO and President Benjamin Breier said the move is in anticipation of new long-term acute care patient criteria being released by the Centers for Medicare and Medicaid Services.
"These transactions accelerate our efforts to reposition our LTAC businesses in front of LTAC patient criteria, with the goal of improving our long-term growth, profitability and financial position and improving healthcare delivery in our integrated care markets," Breier said.
The CMS rule will provide reimbursement at the full payment rate if patient has spent at least three days in an intensive-care unit or at least 96 hours on a ventilator. Hospital stays that don't meet this criteria would receive a per diem site-neutral payment rate.
Kindred executives said last year they viewed the site-neutral payments as an opportunity.
Subject to customary conditions to closing, Kindred expects the deal to close during the second or third quarter of 2016, it said.
Kindred will acquire leased hospitals in Indianapolis, Indiana (45 licensed beds), San Antonio, Texas (44 licensed beds), Houston, Texas (86 licensed beds), Denver, Colorado (28 licensed beds) and Colorado Springs, Colorado (30 licensed beds).
Kindred will sell the hospital it owns in Cleveland, Ohio (108 licensed beds) and three leased hospitals in Cleveland (75 licensed beds), Atlanta, Georgia (72 licensed beds) and Northern Indiana (32 licensed beds) to Select.
Kindred Healthcare, based in Louisville, Kentucky has annual revenues of approximately $7.2 billion. It operates, or through its subsidiaries, has healthcare services in 47 states, including 95 transitional care hospitals, 18 inpatient rehabilitation hospitals, 90 nursing centers, 101 inpatient rehabilitation units (hospital-based) among others, and a contract rehabilitation services business, RehabCare.