Care Transitions Across the Continuum kickoff presentation as presented by Paul Diaz, CEO, Kindred Healthcare and Ben Breier, President and COO, Kindred Healthcare.

1. PRESENTED BY:
Paul J. Diaz, Chief Executive Officer
Benjamin A. Breier, President and Chief Operating Officer
1

2. Our Mission
Kindred Healthcare’s mission is to promote
healing, provide hope, preserve dignity and
produce value for each patient, resident,
family member, customer, employee and
shareholder we serve.
2

3. Leading Diversified Post-Acute Provider
With a Focus on Developing Integrated Care Market Capabilities
Transitional Care Hospitals (117)
Inpatient Rehabilitation Hospitals (6)
Hospital-Based Acute Rehab Units (104)
Nursing and Rehabilitation Centers (224)
RehabCare Total Sites of Service (2,104) Existing Integrated Care Market (12)
Home Health, Hospice and Private Duty (102) Potential Integrated Care Market (9)
Regional Support Centers
As of September 30, 2012
3

4. Kindred’s Value Proposition/Strategic Opportunity
and our “CONTINUE THE CARE” Campaign
• Be a leader in helping to coordinate and deliver high quality care at the
lowest cost (particularly for those patients who are the highest users of healthcare
services)
– By providing superior clinical outcomes in the most appropriate setting, with an
approach which is patient-centered, disciplined and transparent
– By transitioning patients home at the highest possible level of function and
wellness, therefore preventing avoidable rehospitalizations
• Lower healthcare costs by reducing lengths-of-stay in acute care hospitals
and throughout an episode of care
• Participate in the development of new care delivery and payment models
– To better coordinate care and manage patients with chronic conditions, including
the dual-eligibles
– To reduce avoidable rehospitalizations with our partners through our integrated
care management teams and protocols
4
4

5. Kindred Healthcare
Delivering on Quality, Value and Innovation in Patient Care Delivery
527,000 Patient Outperforming
patients and residents and Family National Quality
were cared for by
Kindred across the
Satisfaction Benchmarks
92% of our patients, Kindred Transitional Care Hospitals,
post-acute continuum
residents and Nursing and Rehabilitation Centers
– 2012 annualized.
families indicate they and PeopleFirst Homecare and
would recommend Hospice continued to improve key
Kindred again. quality indicators and beat industry
benchmarks through mid-2012.
Sending More … and More Quickly… … Reducing
Patients Home… (Reducing Average Length‐of‐Stay) Rehospitalization
From 2008 to mid-2012, From 2008 through mid-2012, Kindred Transitional Care
Kindred Nursing and we have reduced the total average Hospitals reduced
Rehabilitation Centers have length of stay in our Hospitals rehospitalization rates by
discharge 18% more by 8.5%, and in our Nursing and more than 16% from 2008 to
patients home – with Rehabilitation Centers by 26%. mid-2012 (down to 11.2%) and
nearly 53% of patients our Nursing and Rehabilitation
discharged home in 2012 Centers have reduced
after an average stay of 30 rehospitalizations by 10%
days. over the same time period
to 17.8%. 5

6. Hospital Quality Data
Kindred Exceeds National Benchmarks Patient/Family Satisfaction Scores
on Many Key Quality Indicators (1 = Poor, 5 = Excellent)
(Lower is better)
5
2.5 4.52 4.59 4.47 4.56
4.34
2.2 4.19
1.97
2 4
1.8
1.49
1.5 1.3 3 2006
1.1
0.99 2012
1
0.71 2
0.5
1
0
Ventilator-Associated Line-Related Blood Catheter Associated Pressure Wounds
Pneumonia Stream Infection Urinary Tract Infection
0
National Benchmark Kindred 2012 Kindred 2006 Overall Care Pain Call Light
Management Response
As of September 30, 2012
6

7. Nursing and Rehabilitation Centers
Survey Quality Outcome Ranking Report June 2012
Selected Corporations Average Rank Rank Kindred ranked # 1 in Quality 6
Kindred Healthcare 2.50 1 consecutive quarters
Genesis Healthcare 3.13 2
Golden Living 4.25 3 Ranking based on the following 8
standard survey measures:
Good Samaritan Society 4.50 4
Fundamental Clinical Consulting 5.13 5 1. Average # Deficiencies
2. Average # Deficiencies adjusted for state
HCR Manor Care 6.00 6 variation
Extendicare 6.38 7 3. Percent facilities with “Serious” deficiencies
4. Percent facilities with “Serious” deficiencies
Sun Healthcare Group 6.75 8
adjusted for state variation
Life Care Centers of America 8.13 9 5. Percent facilities with “substandard care”
Sava Senior Care 9.88 10
6. Percent facilities with “substandard care”
adjusted for state variation
Lavie 10.38 11 7. Percent “deficiency free” facilities
Skilled Healthcare Group 11.00 12 8. Percent “deficiency free” facilities adjusted
for state variation
7

8. Kindred Nursing and Rehabilitation Centers
Outperform National Benchmarks on Many Key Survey Quality
Outcomes
30
27.22
25
19.55
20
Nation
15
Kindred
10.45
9.36 As of
10 September 30, 2012
6 5.89
5 3.09
1.36
0
Total Health Percent Severe Percent Substandard Percent Zero
Deficiencies - Deficiencies (% ) Care Deficiencies (% ) Deficiencies (% )
Average (Lower is Better!) (Lower is Better!) (Higher is Better!)
(Lower is Better!)
8

9. Inpatient Rehabilitation Hospitals
Exceeding National Benchmarks
30 3 80 76.01 74.22
26.49
25.51 2.57
25 2.5 2.3
60
20 2
15 1.5 40
10 1
20
5 0.5
0 0 0
FIM Gain FIM Efficiency Discharge to Community
Kindred Inpatient Rehabilitation Hospitals National Average
(Higher is better)
As of September 30, 2012
9

10. RehabCare
Increase (%) in Functional Outcomes From Admission to
Discharge
70 65.2
60 56
52 51.6 50.6 51.5
50 46.8
40
30
20
10
0
Stroke Pulmonary Wound Brain Neurological Orthopedic Other
Cardiac Dysfunction
As of September 30, 2012
10

11. PeopleFirst Homecare and
Hospice Exceeding National Benchmarks
98 98 98 98 99 98
100 93
89
80
65 63
60 PeopleFirst Homecare and Hospice
National Benchmark
40
(Higher is better)
20
0
How Often How Often How Often How Often Wound How Often
Checked for Pain Treated for Pain Breathing Im proved or Checked for Risk
Im proved Healed Post-Op of Pressure
Sores
98 96 99
100 93 93 95
91 91
80
60
40
25 26
20
0
How Often How Often Care How Often How often How Oftem
Treated to Began in a Tim ely Patient/Fam ily Checked for Risk Patients Adm itted
Prevent Pressure Manner Taught about of Falling to Hospital (low er
Sores Medication is better)
11

12. Vivi’s Story
12

13. CONTINUE THE CARE
Advancing Our Integrated Care Strategy
13

14. Why Post-Acute Care is an Important Part of
the Evolving Healthcare Marketplace
Demographics
Aging Demographics
and Demand for Post‐Acute Utilization is increasing
Post‐Acute Increasing Incidence of Chronic Disease
Services are Imperative to get Patients Home more quickly and to
Growing
Coordinate Delivery of Care Through a Full Episode
Post‐Acute Care
is a Critical Part Patient Satisfaction
of Quality Quality and Clinical Outcomes
Improvement Care Coordination across Sites of Care
and Patient‐
Centered Care
Reduce Hospital Readmissions
Post‐Acute Care
Can Help Reduce Value‐Based Purchasing
Costs in a Readmission Penalties
Rapidly Changing Episodic / Bundled Payment
Payment
Environment
“Accountable Care” and Risk Payments
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14

15. Tremendous Opportunities Exist to Better
Manage Patient Care for Patients Discharged
From Acute Care Hospitals
Currently there are 47.6 million Medicare beneficiaries with an
estimated 9,100 individuals added to the program each day.(1)
35% of Medicare Beneficiaries are Discharged from Acute Hospitals to Post-Acute Care
Medicare Patients’ Use of Post‐Acute Services Throughout an “Episode of Care” (2)
Higher Intensity of Service Lower
SHORT‐TERM LONG‐TERM INPATIENT SKILLED OUTPATIENT HOME
ACUTE CARE ACUTE CARE REHAB NURSING HEALTH
REHAB CARE
HOSPITALS HOSPITALS FACILITIES
Patients’ first site of
discharge after acute 2% 10% 41% 9% 37%
care hospital stay
Patients’ use of site
during a 90 day episode 2% 11% 52% 21% 61%
(1) Source: U.S. Census Projections
(2) Source: RTI, 2009: Examining Post Acute Care Relationships in an Integrated Hospital System
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15

16. Kindred Is Positioned to Help Determine the
Most Appropriate Care Setting For Patients as
they Continue Their Care Throughout
a Post-Acute Episode
Patients Discharged From:
Kindred Nursing and
Kindred Transitional Care Hospitals Kindred Hospital‐Based IRFs Rehabilitation Centers
27% 6% 76% 53%
37% 14%
Home Home Home
Skilled Inpatient Skilled
Nursing 18% with Rehab 35% with Nursing 35% with
and Home Facility Home and Home
Rehab Health Health Rehab Health
Centers Centers
Source: Kindred Internal Data ‐ September, 2012 YTD
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16

17. Positioned to Take Advantage of Changing
Healthcare Landscape
Uniquely Positioned For Bundled Or Episodic Payment Environment
“Continue The Care”
Patient Service Intensity
ACUTE CARE
HOSPITALS
TRANS
LTACHs CARE
ICU
FREESTANDING/ HIH
IN‐PATIENT
REHAB SAU
SKILLED TCC
&
OUTPATIENT NURSING TCU
REHAB FACILITIES
ASSISTED
HOME LIVING HOSPICE
HEALTH
CARE
ADULT DAY
CARE
HOME
Patient Illness Severity
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17

18. Strategic Plan
• Success in the Core
– Take care of our teammates and promote performance improvement
– Continue to improve quality and clinical outcomes
– Promote our value proposition and grow admissions and rehab contracts
– Execute on cost reduction initiatives and process transformation ‐ Project Apollo
• Accelerate our Integrated Care Market (Cluster Development) Strategy
– Develop service lines, clinical programs and integrated care management capabilities
across the care continuum ‐ Continue the Care
– Expand and integrate health system, physician and managed care relationships
– Continue to invest in IT (electronic health record) linkages
• Aggressively expand Home Health and Hospice Services through acquisitions, JVs and
de novo development
• Change business and asset mix and re‐deploy capital into faster growth, higher margin
businesses through portfolio realignment and continued development in our
Integrated Care Markets
• Participate and Invest in New Integrated Care and Payment Models/Businesses,
including ACOs and Bundled Payment Demos with Government Sponsors (CMS), Health
Systems, Physician Groups and Managed Care Payors
• Continue to explore avenues to create shareholder value and improve the
capital structure of the company
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18

19. Kindred’s Strategy is Designed to Prepare
for Significant Policy and Market Trends
Current Approximate Potential Future
Payor Mix Payor Mix
Managed Care
Fee for Managed FFS
service Care The Next 10 Years…
(FFS) ACOs, bundle
holders
Hospitals
Health systems
Other PAC providers
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19

20. Different Payment Models to Define a Path to
Risk-Based Contracting Across a Post-Acute
Episode of Care Over Time
Today Near‐Term Future
High
Shared Risk
Gain Share for Post‐
with Partial Acute
and/or Shared
Episode
Kindred Risk
Risk for Post‐
Acute Episode (e.g.,
(e.g., case rates bundling or
Pay for or bundled case rates
Performance
payment within for full
sites of service
and/or across a
post‐acute
with Bonus
Medicare‐ post‐acute episode)
Payments and
Based Rates Penalties episode for
Level of Care specific
PPD diagnoses)
Low High
Financial Alignment
20
20

21. Kindred’s Integrated Care Strategy is designed to prepare
for a Delivery System that is more Clinically Integrated with
Shared Financial Incentives
Key Elements Steps to Advance Care and Payment Integration
Full Continuum CONTINUE THE CARE
of Post‐Acute Care Services
1 • Expanding Home Health and Hospice capabilities
in Local Integrated Care
• Enabling Physician coverage across sites of care
Markets
Patient‐Centered Care MANAGING TRANSITIONS IN CARE
Management Capabilities • Developing tools to ensure appropriate patient placement
that Extend Across Post‐ and case management
2 Acute Sites of Care to • Connecting sites of service through IT and clinical
Improve Quality and program linkages
Reduce Costs
ADAPTING TO NEW PAYMENT SYSTEMS
Aligned Payment
3 Today: Fee‐for‐Service
Incentives between
Providers of Healthcare Near‐Term: Pay‐for‐Performance
Services and Payors Goal: Shared Incentives, Post‐Acute Bundle or
Episode of Care
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21

22. Accelerate Integrated Care Market and Network
Development Strategy Through Multiple Pilots and
Advancement of Key Enablers:
1 2 3
“Care Management” Managed Care Physician & Medical Staff
Develop and test capabilities Development
through demonstration Advance volume and rates
projects and pilots, including strategies and test different Implement medical
patient assessment and case payment models, including leadership and physician
management tools and clinical Bundled Payment Project alignment across acute and
programs that are linked with CMS post‐acute sites of care
through an episode of care
4 5
Network Development I‐T Interoperability
Implement strategies, Advance Electronic Health
including Joint Ventures, Record strategy (linking EMR
ACO participation with between our sites of care and
Payors, Physicians and physicians, payors and
Health Systems hospitals)
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