UPDATE: An earlier version of this post said Kindred would be relocating its corporate headquarters due to concerns over Kentucky’s malpractice laws. That was incorrect. The company would consider relocating only its nursing center business.
Kindred Healthcare (NYSE:KND) may consider exiting its nursing center business in Kentucky within the next two to three years if there is no change to Kentucky’s medical malpractice law.
“We made $6.5 billion in revenue last year, made $80 million in profits and paid $70 million in malpractice costs,” CEO Paul Diaz said this morning at a Greater Louisville Inc. event.
“When we mess up, we take responsibility and open the checkbook. But if we can’t provide the kind of care we want to provide, we will leave.”
Kentucky is one of a few states — including Arizona, Pennsylvania and Wyoming — in which the state constitution explicitly prohibits caps on medical malpractice damages.
Indiana or Ohio both have caps on medical malpractice lawsuits, as do California, Florida, and Texas – the location of Integra Healthcare Kindred’s most recent acquisition.
As well as tort reform, Diaz said he wants to advance medical review panels as part of the solution.
A Deep-dive Into Specialty Pharma
A specialty drug is a class of prescription medications used to treat complex, chronic or rare medical conditions. Although this classification was originally intended to define the treatment of rare, also termed “orphan” diseases, affecting fewer than 200,000 people in the US, more recently, specialty drugs have emerged as the cornerstone of treatment for chronic and complex diseases such as cancer, autoimmune conditions, diabetes, hepatitis C, and HIV/AIDS.
“We want medical evidence to matter in these situations,” he said.
Kindred CEO: we are a regulated public utility with a profit margin of 1.3%; hard to invest in new tech
#longtermcare#hit— Veronica M. Combs (@vmcombs) August 22, 2012
In addition to the cost of malpractice lawsuits, Kindred has had $150 million in reimbursement cuts over the last 18 months.
“We have had to freeze wages, freeze benefits and cut back on technology investments,” he said. “Making cuts on the backs of the providers is not a long-term solution. We need a taxpayer conversation that goes beyond rhetoric.”
Kindred CEO: we went to a smoke free campus and people started chewing tobacco, so we had to go tobacco free. You live and learn.
— Veronica M. Combs (@vmcombs) August 22, 2012
Diaz also talked about personal responsibility and end-of-life care.
“There are no consequences if you don’t take your medicine or lose the 20 pounds,” he said. “Private companies are adding more sticks to the carrots of their wellness programs, but we all have to step up.”
Diaz has recent firsthand experience with end-of-life care as he helped his mother with cancer treatment.
“We are doing a lot of unnecessary end-of-life care,” he said. “We went through three months that no one should have to go through.”
Diaz said that the doctors he dealt with gave the family a lot of unrealistic expectations.
“It’s not that the oncologist was a bad person, it’s just that it’s not really what my mom wanted,” he said. “And if I couldn’t do it for my mom, nobody can.”
