Kindred Leverages National Reputation to Rapidly Expand New Behavioral Health Arm

Kindred Healthcare is leveraging its reputation as a leading specialty hospital company to fuel the growth of its relatively new behavioral health business.

Founded last year, Kindred Behavioral Health (KBH) is already on its way to becoming an industry leader in inpatient care. It has about 190 beds in its portfolio to-date and is coming off a summer filled with notable deal announcements.

On top of that, KBH is staring down a pipeline filled with opportunities, according to Senior Vice President and Chief Operating Officer Rob Marsh. Health systems across the country have shown “tremendous interest” in partnering with KBH to build behavioral health facilities and programs in their communities, he said.


“Right now, we’re probably working with somewhere in the neighborhood of 15 health systems throughout the United States,” Marsh told Behavioral Health Business. “Some of those are a little further along than others, but I feel very confident that the pipeline is just going to continue to expand.”

Creating KBH

Kindred Healthcare’s national brand presence is largely to thank for KBH’s quick growth. Kindred sees the project as an extension of what it already does well: provide specialty care in inpatient settings through various relationships with partners.

Louisville, Kentucky-based Kindred is one of the largest health care companies in the nation, with annual revenues of about $3.2 billion. Since divesting its skilled nursing assets and selling its home health, hospice and community care businesses a few years back, the company has positioned itself as a specialty hospital provider.


Today, it specializes in transitional care hospitals and inpatient rehabilitation facility (IRF) joint ventures (JV), while also providing contract therapy services in 46 states. In all, Kindred provides services in more than 1,730 locations across 46 states.

Meanwhile, KBH was born out of Kindred’s existing JV relationship, in addition to the shortage of institutional behavioral health care beds across the country.

“Two years ago, a health system said, ‘Gosh, you guys do such a great job with rehab. Is there anything you could offer in behavioral health?’” said Marsh, an Acadia Healthcare (Nasdaq: ACHC) veteran who joined KBH in June 2019. “That got the board … thinking about how we might be able to expand, so it’s because of Kindred’s great name that KBH is even here.”

After Marsh came to the company, KBH spent months building out the infrastructure, policies and teams it needed to start caring for behavioral health patients in different markets. 

Then, this summer, along came an onslaught of deal announcements.

First, KBH announced in June that it was taking over the management of Kankakee, Illinois-based Riverside Medical Center’s 64-bed behavioral health unit. Then, the following month, it acquired two WellBridge hospitals in the Dallas-Fort Worth area and announced a new JV with Baystate Health to build and operate a $43 million, 120-bed behavioral hospital in Massachusetts.

Those four deals are just the beginning. KBH’s pipeline is filled with similar projects, Marsh said.

Going forward, the company’s core concentration will be on the joint venture operation of inpatient behavioral health facilities with health systems, he said. It’s secondary priority will be on entering into management services agreements, also with health systems.

“We’ve developed essentially a game plan to be able to drop into a particular health system and manage their distinct behavioral health unit in a way that [improves] overall outcomes, … as well as profitability,” Marsh said.

KBH will also work to redeploy beds at existing Kindred transitional hospitals, previously known as long-term acute care hospitals. The organization started exploring potential opportunities to do that late last year. However, those plans have been temporarily paused due to COVID-19, Marsh said.

“Once we get through this initial surge and we see the demand for those transitional beds fall back to what we consider a steady run rate, then we’ll pick back up where we left off with exploring behavioral health units within those facilities,” he said.

Marsh also sees opportunities to potentially consolidate with and acquire existing mid-sized behavioral health providers over the next three to four years. In fact, KBH has already started having conversations with some providers in the space, he said.

Meanwhile, behavioral health powerhouses like Acadia and Universal Health Services (NYSE: UHS) may see some opportunities to partner with KBH in certain markets, but that’s less of a priority, Marsh said.

For now, KBH’s goal is to double its bed capacity within the next 12 months. Long-term, Marsh said KBH doesn’t have any specific growth plans in place, but rather that KBH will expand as appropriate.

“We don’t have a preconceived idea on where behavior health will go,” he said. “We simply know that it’s a growth lever for the organization, and there’s tremendous need. We plan on growing organically, as partners are there, as opportunities arise and as communities need the service.”

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