State won't tell initial home-health bid

Company, which won program with highest offer, says information proprietary

At the request of the winning bidder, the state Department of Health has declined to disclose how much Kindred Health Care Inc., which purchased the state's in-home health care services program for $39 million, initially proposed to pay for the program.

The Louisville, Ky., company submitted the highest bid of six companies, and its bid had the highest rating overall from the department's evaluators, the department's chief financial officer, Robert Brech, said when the state and company officials announced the deal June 20.

Kindred has determined that its bid information is proprietary information, Brech said this week.

Since Kindred "will likely bid on potential takeover prospects in the future, releasing its bid could lead to a disclosure of proprietary information," Brech wrote in an email to the Arkansas Democrat-Gazette. "To be honest, I was surprised that at least some of the others didn't object as well." He was referring to other companies that also submitted proposals to the state to purchase the program.

Brech cited Arkansas Code Annotated 25-19-105 in declining to disclose Kindred's bid information. Brech was responding to the newspaper's request for that information under the Arkansas Freedom of Information Act.

He noted that part of that law exempts from public disclosure "files that if disclosed would give advantage to competitors or bidders."

When asked why Kindred didn't allow the disclosure of its initial proposal to the state, Brandon Ballew, senior vice president and chief operating officer for the Kindred at Home division, said, "Kindred was selected as the winning bidder by the state and purchased the in-home health care operations for $39 million.

"That information has been disclosed publicly by the state and by Kindred," Ballew said Wednesday in a written statement. "We are focused on providing quality patient care to the residents of Arkansas. The transition is going well. We retained the employees, are serving the patients who previously were cared for by the state of Arkansas and are admitting new patients."

In response to the newspaper's request for this information, Brech said the five other companies that submitted bids proposed paying the following amounts:

• Home I.V. Specialists, $22.5 million.

• Amedisys Inc. of Baton Rouge, $14.8 million.

• Arkansas Post Acute Care LLC of Fort Smith, $10.145 million.

• Hospice Home Care Inc. of Little Rock, $4 million.

• Arkansas Hospice Inc. of North Little Rock, $3 million.

While the other companies proposed purchasing the entire in-home health care services program, Hospice Home Care and Arkansas Hospice proposed purchasing only the hospice part of the program, Brech said.

Brech said Wednesday that part of the negotiations between the state and Kindred "was an adjustment on the price," although most of the negotiations were over how to the handle the transition of the program to the private sector.

"We did negotiate down" from Kindred's initial bid, in part because the department provided initial "financials" about the program's revenue and costs from January's "snapshot," and the program's revenue and costs subsequently changed, Brech said. The self-sustaining program largely is financed by Medicare, Medicaid and private health insurance, he noted.

The $39 million price was still much higher than the second-highest bid of $22.5 million, Brech said.

Brandi Melton, president of Home I.V. Specialists and Baker Health Care, said Wednesday that it's "extremely interesting they weren't releasing their information.

"When they bid, I was surprised because they just closed on that South Carolina deal," she said. According to a February article on the Home Health Care News website, Kindred took over the care program run by South Carolina in a transaction worth about $18 million.

Home I.V. Specialists has offices in Jonesboro and Little Rock, and Baker Health Care has offices in Jonesboro and Mountain Home. The companies work with home health agencies, according to their websites.

Amy Wilbourn of Fayetteville, an attorney representing Arkansas Post Acute Care, said she's not "particularly interested in what [Kindred's] first bid was.

"Clearly they were out to win it," she said. "They negotiated an amount in far excess of the next bid."

A spokesman for Amedisys declined to comment this week about the bids. The company is a leading home health and hospice-care company and its shares trade on the Nasdaq exchange, according to its website.

Corey Gilmore, a spokesman for Arkansas Hospice, said, "We were the only nonprofit to place a bid." A spokesman for Hospice Home Care could not be reached for comment by telephone this week.

The Department of Health's sale of the program to Kindred closed Aug. 1. The state expects to net $24 million from the transaction.

Kindred is a publicly traded Fortune 500 company. It reported revenue of $7.2 billion last year and has 102,000 employees in 46 states, including Arkansas.

The state program, started in 1981, offered home health care, personal care and hospice care.

A year ago, the department notified employees of its plan to sell the program. Revenue had dropped from $71.5 million in fiscal 2011 to $58.5 million in fiscal 2015, and the program's number of in-home patients fell from 18,649 to 13,399.

In the transaction, Kindred acquired the department's licenses to provide home health and personal care services in 69 counties and to provide hospice services in 42 counties. Kindred now provides in-home health care services in 72 of the state's 75 counties.

As part of the agreement, Kindred agreed to retain all current employees and agreed to serve all current patients upon their consent, including the home health and hospice services that Kindred previously provided in Arkansas.

So far, Brech said, "Everything has gone much better than I expected."

Melton said she worries that Kindred will "go back to business as usual and accept the patients that they want to accept" after a few years of operating in Arkansas.

Brech said he is unaware of any complaints about the treatment of patients under Kindred's care.

A similar comment came from a spokesman for Gov. Asa Hutchinson.

"We are not aware of any complaints about the transition. First and foremost, under Kindred Health, in-home services will continue uninterrupted across the state. In addition, the state will no longer have to compete with the private sector and will save a substantive amount of taxpayer money as a result," said J.R. Davis, Hutchinson's spokesman, in an email.

A Section on 08/11/2016

Upcoming Events