Kindred Healthcare Recaps Quality Improvements and Growth in 2012

Kindred Healthcare, Inc. (the “Company” or “Kindred”) (NYSE:KND) today released a year-end recap of major achievements for the Company in 2012.

Kindred’s dedication and progress in improving quality, clinical outcomes and patient satisfaction in the communities it serves, is highlighted in the Company’s 2012 Quality and Social Responsibility Report. The report also recaps Kindred’s “Continue the Care” strategy - its efforts to provide coordinated care throughout an entire patient care episode from hospital to home. In addition, the report outlines the Company’s partnerships with hospitals and other healthcare providers to develop a more patient-centered, integrated and efficient care delivery system. The report is available at www.kindredhealthcare.com/our-company/our-quality.

“In 2012, Kindred continued to make progress in improving quality and patient satisfaction and delivering better clinical outcomes for patients in settings across the post-acute continuum,” said Paul J. Diaz, Kindred’s Chief Executive Officer. “We thank our caregivers and colleagues throughout our organization who delivered on Kindred’s promise of hope, healing and recovery, as they worked to advance our Mission in spite of a very challenging operating environment.”

Major initiatives and highlights for Kindred in 2012 include:

Clinical Excellence

Kindred Outperforms National Benchmarks throughout the Enterprise - In 2012, Kindred’s transitional care hospitals, nursing and rehabilitation centers, inpatient rehabilitation facilities and homecare locations outperformed national benchmarks in many key quality indicators such as line-related blood stream infections in our hospitals, survey quality performance in our nursing and rehabilitation centers, national quality measures in homecare and functional improvement in our inpatient hospital-based rehabilitation units.

Hospital Division Quality Improving - In 2012, Kindred’s transitional care hospitals treated the most medically complex patients, discharging nearly 70% of patients home or to a lower level of care after an average length of stay of 27 days. From 2008 to 2012, rehospitalization rates were reduced by more than 8%.

Top-rated Nursing Center Division - Despite caring for increasingly sicker patients year after year, 53% of Kindred’s patients in our nursing and rehabilitation centers returned home on average in 31 days. Since 2008, Kindred’s nursing and rehabilitation centers discharged 32% more patients home, decreased rehospitalization within 30 days of admission by nearly 12%, and decreased the average length of a patient stay by 27%.

RehabCare - Delivering rehabilitation services in the most sites nationwide, RehabCare provided intensive physical, occupational, and speech-language therapies to approximately 543,000 patients and residents in 2012, helping them to achieve more than 78% improved function and independence from what they were able to do prior to our care.

Homecare and Hospice - More than half of Kindred at Home’s homecare locations were named to the 2012 HomeCare Elite, a compilation of the top-performing home health agencies in the United States. This annual review identifies the top 25% of Medicare-certified agencies and further highlights the top 100 and top 500 agencies overall. Winners are ranked by an analysis of publicly available performance measures in quality outcomes, process measure implementation, patient experience (Consumer Assessment of Healthcare Providers and Systems (CAHPS®) Home Health Care Survey), quality improvement, and financial performance. From 2011 to 2012 our homecare locations reduced rehospitalizations by 28%.

Kindred Named to CMS Bundled Payment Pilot - In late 2012, the Centers for Medicare and Medicaid Services (“CMS”) named Kindred as a participant in its Bundled Payments for Care Improvement initiative. In the Cleveland, Ohio, market, Kindred will partner with hospitals to test models of care across the post-acute continuum in important clinical areas such as cardiac care, pulmonary, and ortho-rehab to improve quality, reduce lengths of stay and reduce hospital readmissions over a 60-day episode of care from hospital to home.

Investing in Patient-Centered Integrated Care - As our nation’s healthcare system moves to one that rewards value over volume for patient care, greater care coordination will be essential to achieve improved patient outcomes, seamless care transitions and will require new partnerships and collaborations. In order to promote care coordination along the post-acute care continuum, Kindred is pursuing a strategy of establishing and supporting Integrated Care Market capabilities. This strategy recognizes the need to partner with local healthcare networks, managed care payors and other healthcare providers to best meet patient needs, reduce costs, and improve clinical outcomes.

Increased Number of Net Clinical Employees - Already one of the nation’s largest private employers with 78,000 employees, in 2012 Kindred increased the number of net clinical employees by 2,300. This includes 253 nurses, 459 certified nursing assistants and 1,588 physical, occupational, and speech-language therapists.

Business Growth

Growing Our Homecare and Hospice Division - In 2012, Kindred expanded its homecare and hospice operations with the acquisition of three homecare agencies with 50 locations in three Integrated Care Markets. The Kindred at Home homecare and hospice division now consists of 101 sites of service in 69 local communities or metropolitan areas throughout ten states. Thirty-eight locations are strategically located within an established Kindred Integrated Care Market.

New Facilities - Kindred opened two new freestanding inpatient rehabilitation hospitals in Humble, Texas (46 beds) and Austin, Texas (50 beds) in the first half of 2012. Kindred opened a replacement hospital in Dayton, Ohio (67 beds) in the third quarter of 2012 and a replacement hospital in Charleston, South Carolina (59 transitional care hospital beds and 35 co-located sub-acute beds) in the fourth quarter of 2012.

Future Growth - Kindred announced plans to build new Transitional Care Centers in Indianapolis, Indiana (100 beds) and Las Vegas, Nevada (150 beds).

Education and Corporate Citizenship

Clinical Impact Symposium - In November 2012, Kindred conducted its fourth Annual Clinical Impact Symposium - Care Transitions Across the Continuum - attracting physicians, clinicians and therapists from all divisions to learn from the nation’s leading experts in care transitions. By bringing together over 400 professionals from across the Kindred enterprise and from many different disciplines, Kindred furthered its commitment to provide the best in interdisciplinary care for our patients and customers.

Employee Training and Tuition Reimbursement - As part of the Company’s commitment to attract, develop and retain outstanding talent and to provide them with the training to continue to excel and grow professionally, Kindred invested $34 million in employee training and $3 million in tuition reimbursement in 2012.

HOPE Fund - An essential part of the Kindred mission is to also take care of each other. Since 2005, the HOPE (Helping Others Persevere through Emergencies) Fund has provided $3.6 million in assistance to 3,387 employees facing challenging and catastrophic life events. In 2012, our compassionate employees donated 6,115 hours of paid time off to their fellow teammates in need.

Social Responsibility - Kindred’s commitment to its patients and residents extends to helping raise money and awareness to fight the diseases that most affect them and their loved ones. Throughout 2012, employees nationwide participated in events and fundraisers strengthening the Company’s state and national relationships with the American Lung Association, the Alzheimer’s Association and the American Heart Association. In 2012, Kindred entered into a year-long partnership with the American Lung Association as their first national corporate team partner. As a Gold National Team for the Alzheimer’s Association’s “A Walk to End Alzheimer’s,” Kindred had 125 teams that raised more than $250,000 for the cause.

Awards

• 2012 Fortune’s Most Admired Companies - Kindred ranked among the Most Admired Healthcare Companies for the fourth year in a row.
• Barbara Baylis, Senior Vice President of Clinical and Residential Services for the Company’s Nursing Center Division, was named the 2012 recipient of the prestigious Mary K. Ousley Champion of Quality Award by the American Health Care Association (“AHCA”). AHCA presents the Mary K. Ousley Champion of Quality Award to an individual or organization that has made a significant national contribution to advancing quality performance in the long-term care field.
• Five of the Company’s nursing and rehabilitation centers were recipients of a 2012 Silver Quality Award from AHCA and five of the Company’s nursing and rehabilitation centers were recipients of a 2012 Bronze Award.
• In 2012, 22 of Kindred’s nursing and rehabilitation centers received My InnerView’s “Excellence in Action” awards, which recognizes superior customer and workforce satisfaction.
• Rick Chapman, Kindred’s Executive Vice President, Chief Information Officer and Chief Administrative Officer, was named to InformationWeek’s list of Top 10 Healthcare IT Innovators for 2012.
• Kindred was ranked 48 on the InformationWeek 500, competing based upon innovative use of technology to improve business results.
• 2012 Modern Healthcare “100 Most Influential People in Healthcare” - For the fifth consecutive year, Modern Healthcare recognized Mr. Diaz among the most influential leaders in healthcare.
• Modern Healthcare named Mr. Diaz as one of the Top 25 Minority Executives in Healthcare. This is the third time he has made the list. Recipients are selected based upon leadership, showing the ability or power to effect change in the healthcare industry, demonstrating a willingness to share expertise with others in the field, serving as a role model or mentor to other minority healthcare executives, and assuming a leadership position in the industry outside of the candidate’s own organization or company.
• Dr. Eric S Yaeger, Medical Director of Kindred Hospital Denver, was named the 2012 Outstanding Clinician for both the Colorado Thoracic Society and the American Thoracic Society for his substantial contributions to the clinical care of patients with lung disease.
• Kindred was selected by DaVita, the dialysis division of DaVita HealthCare Partners Inc. (NYSE:DVA), as the 2012 “DaVita Hospital Services Partner of the Year.” The award is intended to recognize companies who align with DaVita’s mission and values. DaVita’s award is based upon partners who provide high quality of care for patients with a focus on clinical excellence and continuous improvement, which is one of DaVita’s core values.
• Last year, 18 Kindred Hospitals were honored by the American Association for Respiratory Care with the Association’s 2012 Quality Respiratory Care Recognition. Our hospitals received the designation based upon strict safety and quality standards related to the provision of respiratory care services by qualified respiratory therapists.

About Kindred Healthcare

Kindred Healthcare, Inc., a top-125 private employer in the United States, is a FORTUNE 500 healthcare services company based in Louisville, Kentucky with annual revenues of $6 billion and approximately 78,000 employees in 46 states. At September 30, 2012, Kindred through its subsidiaries provided healthcare services in 2,212 locations, including 117 transitional care hospitals, six inpatient rehabilitation hospitals, 224 nursing and rehabilitation centers, 27 sub-acute units, 102 hospice, home care and private duty locations, 104 inpatient rehabilitation units (hospital-based) and a contract rehabilitation services business, RehabCare, which served 1,632 non-affiliated facilities. Ranked as one of Fortune magazine’s Most Admired Healthcare Companies for four years in a row, Kindred’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. For more information, go to www.kindredhealthcare.com.