2013 Quality and Social Responsibility Report

2013 Quality and Social Responsibility Report Creating Solutions in Post-Acute Care Through Patient-Centered Care Management CONTINUE THE CARE

Providing Care Management and Improving Outcomes Across the Post-Acute Continuum for More Than 500,000 Patients in 2013 Sending More Patients Home Faster Outperforming National Quality Benchmarks Reducing Rehospitalizations Kindred s Transitional Care Hospitals treated the most medically complex patients, discharging nearly 70% of patients home or to a lower setting of care after an average length of stay of 27.1 days. Kindred s Nursing and Rehabilitation Centers discharged 56% of patients home after an average stay of 32 days. From 2009 to 2013, we reduced the total average length of stay in our Transitional Care Hospitals by 10.3% and in our Nursing and Rehabilitation Centers by 11%. In 2013, Kindred therapists helped more than 518,500 patients attain nearly 80% OF THEIR PRIOR LEVEL OF function before transitioning home or to their next level of care. Patients in Kindred s freestanding inpatient rehabilitation hospitals achieved 19.9% greater functional improvement than the national average. 46% of Kindred s home health locations were named to the 2013 HomeCare Elite, a compilation of the top 25% of home health agencies in performance measures. From 2009 to 2013, we reduced rehospitalizations by 14% from our Transitional Care Hospitals, and by 15% from our Nursing and Rehabilitation Centers. 2

Patient-Centered Care Care management is vital in delivering patient-centered care, yet it is often missing in care options for our nation s aging population. As the nation s largest, fully diversified post-acute care provider, Kindred is breaking down the silos, delivering solutions to patients, families, hospitals, and managed care organizations to improve patient care and lower costs. At Kindred, we are committed to playing a leading role in solving the challenges of aging. By managing and coordinating the unique care and rehabilitative needs of each patient, we believe that recovery, wellness and a full life is possible. The Nation s Largest, Fully Diversified Post-Acute and Rehabilitation Care Provider...4 Care Management: Smarter Patient-Centered Care...6 Case Studies: Continuing the Care...10 Kindred at Home: Home Health and Hospice Services...12 Kindred Transitional Care Hospitals...14 RehabCare...16 Inpatient Rehabilitation...18 Kindred Nursing and Rehabilitation Centers...20 Investing in Our People and Communities...22 3

The Nation s Largest, Fully Diversified Post-Acute and Rehabilitation Care Provider Providing Integrated Post-Acute Care in Local Communities TRANSITIONAL CARE HOSPITALS (101) INPATIENT REHABILITATION HOSPITALS (5) HOSPITAL-BASED ACUTE REHAB UNITS (104) NURSING AND REHABILITATION CENTERS (100) REHABCARE SITES OF SERVICES (1,789) HOME HEALTH, HOSPICE AND PRIVATE DUTY LOCATIONS (159) LOCAL KINDRED MARKETS with A DEVELOPING continuum of post-acute services AND active integrated care partnerships Kindred is 63,300 dedicated employees taking care of 62,600 patients and residents every day in over 2,200 locations in 47 states. 4 About Kindred

OUR MISSION 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. OUR MANAGEMENT PHILOSOPHY At Kindred, we believe that if we focus on our people, on quality and customer service, our business results will follow. Kindred is expanding its capacity and expertise in delivering post-acute care across a continuum of care settings from hospital to home to enable the best in care coordination and clinical outcomes. Integrated Care Markets 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 lower costs. Kindred s Integrated Care Market strategy recognizes the need for all Kindred service lines to partner with healthcare networks, managed care providers and other healthcare entities in local markets to best meet patient needs, reduce costs and improve clinical outcomes. In 2011, 43% of Medicare beneficiaries discharged from a hospital required post-acute care. Mark Miller, MedPAC Executive Director, June 2013 Congressional Testimony 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 TRANSITIONAL CARE HOSPITALS PATIENTS DISCHARGED FROM KINDRED HOSPITAL- BASED INPATIENT REHABILITATION FACILITIES PATIENTS DISCHARGED FROM KINDRED NURSING AND REHABILITATION CENTERS 38% 25% 6% Home 77% 23% 56% Home Home Skilled nursing AND REHAB centers Home Health inpatient rehabilitation facilities Home Health Skilled nursing AND REHAB centers 17% 52% 26% Home Health Source: Kindred Internal Data About Kindred 5

Care Management: Smarter Patient-Centered Care Kindred s diverse foundation of quality post-acute care enhances our care management expertise, allowing us to return patients home as soon as possible while also providing care and services that will promote wellness and avoid hospitalizations. Our nation s healthcare delivery system requires and encourages collaboration among providers. Kindred has embraced this approach. In 2013, we actively developed programs to enable us and our partners to better manage episodes of care, create more seamless transitions between care settings and improve patient satisfaction and clinical outcomes. We provide care and support to each patient so that people can either remain at home without the need of a hospitalization, or to safely and efficiently transition through appropriate post-acute settings to return home as soon as possible. Kindred s care approach is to provide a continuum of post-acute care in local integrated healthcare delivery markets. The unique and specialized care delivered across all Kindred settings is integral to patient recovery and wellness. Patient-Centered Care Management Model Our Care Management approach coordinates five core capabilities to meet the unique needs of each patient throughout their pre-acute and post-hospital care. Building upon this foundation, in 2013, Kindred created its Care Management Division to further develop these capabilities to deliver coordinated care throughout the care continuum and our organization. Care Managers to Smooth Transitions In 2013, Kindred established Care Transitions Managers (CTM) to follow patients with specific diagnoses and/or risk factors through the entire care continuum in key markets. The CTM follows the patient throughout his or her stay at a Kindred Transitional Care Hospital, Nursing and Rehabilitation Center or at home with Kindred at Home until 35 days post-discharge. Early data has shown that by smoothing transitions of care, Kindred has improved the patient experience and reduced lengths of stay and unplanned hospital readmissions. Just as important is the difference our program has made in the lives of the patients we serve as they feel empowered, engaged and supported during the most difficult times. 6 Care Management

In our Boston Integrated Care Market, our Care Transitions Managers helped reduce readmission rates to 5.6% for high risk patients. This is in stark contrast to the nation s average rehospitalization rate of 18-21%. Patients and families expect and deserve quality-driven coordinated care throughout an entire episode from hospital to home. Creating safe and seamless transitions between care settings is just one way Kindred Continues the Care. Physician Coverage Across Sites of Care Mechanisms to Make Patient Care Placement Decisions Care Managers to Smooth Transitions PATIENT-CENTERED CARE MANAGEMENT APPROACH Information Sharing and IT Connectivity Condition- Specific Clinical Programs, Pathways and Outcome Measures Transitional Care Hospitals Higher Inpatient Rehabilitation Subacute Units Nursing and Rehabilitation Centers Assisted Living Outpatient Rehabilitation Home Health Care Hospice Personal Home Care Assistance Lower Patient Acuity Care Management 7

Physicians Driving Care Management In facilitating physician coverage across sites of care, Kindred has established physician leaders in our Integrated Care Markets. Building on these capabilities, in 2013, we acquired a senior care homebased primary care medical practice situated in our Cleveland Integrated Care Market. The practice provides full service primary care and urgent care services through house call services to patients throughout seven counties who cannot easily access traditional outpatient care settings. This homebased model has helped patients avoid unnecessary hospitalizations and emergency room trips with a 30-day rehospitalization rate below seven percent for four consecutive years. Moving ahead, we will test and advance new care management models which encourage greater direct physician involvement. Kindred and Cleveland Clinic Partner in Connected Care and Bundling Initiatives A January 13, 2014 Modern Healthcare cover story which assessed the role of post-acute care providers within the context of a full-service continuum discussed the evolving relationship between Kindred and the Cleveland Clinic. As reported: Kindred has contracted for the past five years with the Cleveland Clinic for the coordination of post-acute care for that health system s patients in Cleveland. Healthcare reform is pushing all of us to figure out how to take care of a patient in a very seamless manner across different venues where they receive healthcare, said Dr. Eiran Gordeski, director of the Cleveland Clinic s Center for Connected Care. We definitely want to work with post-acute care providers who are thinking about the continuum of care and are trying to make that transition of patients from one venue to another as seamless and as safe and as well-coordinated as possible. The Cleveland [Clinic] partnership was selected last January to take part in a three-year CMS demonstration of a bundled-payment model based on performance accountability for episodes of care. The medical director for the Cleveland Clinic s Center for Kindred is transitioning to become more of a full-service post-discharge continuum, able to support a patient following hospitalization no matter what their needs. Jared Landis, Senior Consultant for the Post-Acute Care Collaborative of the Advisory Board Company 8 Care Management

If we re creating a more seamless experience helping to manage these care transitions, we can simultaneously not only improve patient outcomes but reduce costs, said Kindred CEO Paul Diaz. That will clearly differentiate us in the minds of payers, accountable care organizations, hospital systems, physicians and most important our patients. Excerpted from Modern Healthcare, January 13, 2014 cover story: Quarterbacking Post-Acute Care Rehabilitation, who also serves as chief medical director for Kindred s integrated-care market in Cleveland, is providing medical oversight for the demonstration. Under the CMS Bundled Payments for Care Improvement initiative, Kindred is responsible for the health outcomes and cost of treatment for Medicare patients diagnosed with seven conditions chronic pulmonary disease, congestive heart failure, major joint replacement, sepsis, pneumonia and other respiratory infections for 60 days after discharge from the acute-care hospital. COMMUNITY HIE Our Health Information Exchange will provide easy access for physicians across sites of service to patient records. Kindred Nursing and Rehabilitation Centers SHORT-TERM ACUTE CARE HOSPITALS Kindred Transitional Care Hospitals Health Information Exchange Kindred began to roll out its enterprisewide Health Information Exchange (HIE), which will facilitate the sharing of electronic patient data between Kindred sites of care and with external healthcare partners. The interoperable IT framework, built on dbmotion s technology, will rely on a single patient identifier assigned by NextGate s Enterprise Master Patient Index (EMPI) to help manage care across settings and coordinate care transitions. Kindred s HIE will PHYSICIANS (Primary Care, Attending and Specialist) provide clinicians easier access to current and historical patient information, simplifying the coordination of care and delivering increased value to our patients and partners. Kindred at Home PATIENT CARE SUMMARY RehabCare MANAGED CARE PAYORS CASE MANAGEMENT For more information about our Health Information Exchange, visit us at www.kindredinnovations.com. Care Management 9

Paul and Carole Guilmette and their Care Transitions Manager, Kim Ramos, at their home in Framingham, Massachusetts Care Transitions Managers Continuing the Care When 81-year-old Paul Guilmette s wife, Carole, also 81, tripped, fell and seriously injured her leg, he dialed a familiar number: Kindred Care Transitions Manager Kim Ramos. The Guilmettes met Ramos when Carole Guilmette was a patient at Kindred Hospital Northeast Natick, after being hospitalized at an acute care hospital with congestive heart failure and renal failure. Ramos provided counseling, education and support as Carole recuperated at the transitional care hospital and was then discharged home with Kindred at Home care. As a care transitions manager, Ramos role is to follow patients through Kindred s post-acute continuum, collaborating with primary care physicians and making sure they are involved every step of the way as well as improving patients selfmanagement skills and enhancing communication between the patient, healthcare delivery teams and the patient s primary care physician. Care transitions managers like Ramos physically and telephonically follow patients like Carole through the entire postacute episode of care. When Paul Guilmette called Ramos that morning his wife fell, she advised him to call 911 for emergency care. After surgery on her femur and a blood transfusion, Carole required extended hospital care for recovery, so with Ramos assistance she returned to the Kindred hospital. Her stay at the transitional care hospital was followed by about ten days of rehabilitation at Kindred Transitional Care and Rehabilitation Avery Manor, and another discharge home with Kindred at Home care with Kim Ramos there to offer support to the Guilmettes every step of the way. Ramos job like all Kindred care transitions managers is to get to know the patients with whom she works and understand what their needs are, to head off problems before they arise, educate the patients and their families about the disease process and medication management, and serve as an advocate. Carole is largely back to her old self now, participating in the activities she loves the Guilmettes give Ramos, who still checks in on them weekly, a lot of credit for that. Said Paul: It s always like having a conversation with an old friend, who is confident and knowledgeable about the subject. Building those long-term relationships, that s what s most rewarding about what I do. Kim Ramos 10 Case Studies

By providing high quality medical house call services to patients who are at high risk for hospitalization, we can keep more people where they want to be out of hospitals and at home. Dr. William Mills, Founder of Western Reserve Senior Care, now a part of the Kindred Continuum Physicians Continuing the Care Care Where and When People Need it Most 88-year-old Virginia Wagner has a history of chronic obstructive pulmonary disease, congestive heart failure, diabetes, atrial fibrillation, stroke and gastrointestinal bleeding. Living in an independent senior apartment building, but using a traditional office based care model, Virginia was hospitalized four times in four months between November 2010 and March 2011 for exacerbations of her heart and lung disease. Frustrated by the trips back and forth to the hospital and nursing home, her daughter asked Dr. William Mills and his home-based primary care team to assume her care. The group began making monthly house calls, and arranged for regular blood work at home, medication assistance, a visiting home health nurse who weighed her regularly and helped her manage her salt intake, and a physical therapist who helped her gain strength and walk. Virginia was slowly able to regain her health and independence, and is thrilled that she has not been back to a hospital or emergency department in three years. Besides the obvious benefit to Virginia s health and well-being, the cost effectiveness of keeping her out of high cost care settings for the last three years represents a solution for many patients just like her. Dr. William Mills and Virginia Wagner at her assisted living facility in Kent, Ohio Case Studies 11

Home Health and Hospice Services Kindred at Home professionals deliver cost-effective care and support with the goal of maintaining a patient s quality of life at home. As part of our efforts to be a full-service healthcare provider across the continuum, we have grown to be one of the nation s leading home health and hospice operators with 159 locations in 13 states. Setting Kindred at Home apart from most competitors is the electronic linkages to a patients prior health needs, enabling home health clinicians and therapists to Continue The Care. Similar to Kindred s Care Transitions Managers, many of our home health agencies feature Clinical Integration Specialists who serve as patient advocates, working directly with patients, families and the entire care team to help prepare for the transition to home with appropriate care and services. Home Health Our homecare professionals deliver care and services for patients who need medical care and are able to remain in their home rather than enter an inpatient setting or those who are ready to return home but require additional therapy and/or nursing care. We offer medical interventions such as wound care and rehabilitation therapy, which are delivered in the comfort of a patient s own home. Experienced nurses, therapists and aides work with each individual and family members to maximize physical abilities, improve health and wellbeing, and provide essential education and management of medications and medical conditions, including IV therapy. Palliative Care Our palliative care teams include physicians, nurse practitioners and other specialists who work together with a patient s other physicians to coordinate healthcare resources and promote quality of life through pain and symptom management for people suffering from serious illnesses. They also serve as a resource in providing assistance with decision making and advance directives. These palliative care services are available to patients at the same time that they are receiving aggressive, curative treatments. As a home-based service, home health can be utilized to improve outcomes and achieve savings by managing patient transitions to and from facility-based care, teaching patients to self-manage their conditions in order for them to remain at home, and coordinating care across settings to ensure overall patient safety. Dobson, et al, 2012, Clinically Appropriate and Cost-Effective Placement (CACEP) 12 Kindred at Home

Kindred at Home Home Health Key Quality Measures 95.1% 92% 93.7% 92% 70.4% 61% 52% 51% 99.6% 97% 16.9% 16% Kindred at Home Home Health Patient Satisfaction 88.8% 88% 79.2% 79% Improvement in Ambulation Kindred Improvement in Management of Oral Meds Benchmark How Often Patients Taught about Meds How Often Care Began in Timely Manner How Often Checked for Risk of Falling Source: Centers for Medicare and Medicaid Services; Home Health Compare 2013 How Often Patients Admitted to Hospital Overall Care Kindred Patients Recommending Kindred at Home Benchmark Centers for Medicare and Medicaid Services; Home Health Compare 2013 Hospice Our hospice professionals provide a familyoriented model of care in order to meet the physical, spiritual and emotional needs of terminal patients and their families. Our multidisciplinary services enable patients to stay in a familiar and comfortable environment while delivering pain management, aggressive comfort measures and psychological support to create the best possible end-of-life experience. Kindred at Home Hospice Key Quality Measures 86.2% 85.9% Satisfaction/ Evaluation 77% 64.9% Kindred Benchmark Source: Kindred Internal Data Patients Brought to Comfortable Pain Level Within 48 Hours Kindred at Home home health and hospice locations outperformed national benchmarks in key quality measures, including patient satisfaction. 66 of Kindred s home health locations were named to the 2013 HomeCare Elite, a compilation of the top 25% of home health agencies in performance measures. Kindred at Home 13

Kindred Transitional Care Hospitals Kindred Transitional Care Hospitals play a vital role in the recovery process for the sickest and most medically complex patients who require acute care and rehabilitation over an extended recovery period. Transitional care hospitals are unique in their ability to care for difficult-to-treat, critically, chronically ill patients who require specialized and aggressive interdisciplinary care over an extended treatment period. These hospitals are certified as long-term acute care hospitals and licensed as acute care hospitals by the Centers for Medicare and Medicaid Services (CMS) with additional Medicare certification that patients require a prolonged clinical intervention (more than 25 days on average) rather than a typical short fiveday stay in a traditional hospital. Our Patients Patients requiring care in a transitional care hospital often have multiple comorbidities, multi-organ system failure, or require a lengthy reliance on a ventilator many of them following an ICU stay in a traditional hospital. Our specialized clinical services and extended care are best suited to treat those medically complex patients who are unable to recover in a short-term setting. Kindred Transitional Care Hospitals Quality Indicators 2.08 2 Kindred Benchmark Kindred 2007 Source: Kindred Internal Data 1.06 1.07.88 1.28 Kindred Transitional Care Hospitals Ventilator Wean Rates 44.42% 49.26% Source: Kindred Internal Data Catheter Associated UTI per 1,000 Device Days Line-Related Blood Stream Infection per 1,000 Device Days Pressure Wounds per 1,000 Patient Days 2009 2013 Kindred Transitional Care Hospitals are Reducing Rehospitalizations 9.65% 30.2 days 8.28% 27.1 days 14% Reduction Source: Kindred Internal 30-day Return to Acute Data Kindred Transitional Care Hospitals Are Reducing Average Length of Stay 10.3% Reduction Source: Kindred Internal Data 2009 2013 2009 2013 14 Transitional Care Hospitals

Since 2008, Kindred Transitional Care Hospitals Have Increased the Percent of Patients Discharged to a Lower Level of Care by 7.4% 65.2% 70.0% Source: Kindred Internal Data The low rates of readmissions from [long-term acute care hospitals] to [short-term acute care hospitals] suggest an appropriate level of care for the LTCHs studied. Discharges to a Lower Level of Care 26.7% 25% Discharges to Home 2008 2013 American Journal of Medical Quality (2013): Long-Term Acute Care Hospitals Have Low Impact on Medicare Readmissions to Short-Term Acute Care Hospitals Interdisciplinary Care Coordination Kindred Transitional Care Hospitals provide expert interdisciplinary and collaborative care that is tailored to the unique needs of each patient, including 24- hour physician support, special care units, telemetry units with on-site laboratory and radiology services and operating rooms. The complete team approach with condition-specific clinical programs facilitates improved outcomes and a greater chance of recovery. Kindred Patient Family Satisfaction Scores (% Usually/Always) 86.54% Call Light Response 93.41% How Often Doctors Explained Things Understandably 94.75% How Often Nurses Explained Things Understandably 96.85% Cleanliness of Room and Bathroom 94.65% How Often Was Pain Well Controlled 96.36% Overall Recommend 91.73% Coordination of Care From Shift to Shift Source: CMS Hospital Consumer Assessment of Healthcare Providers and Systems The Role of Transitional Care Hospitals Within the Care Continuum In late 2013, criteria to better define which patients are most appropriate for longterm acute care (LTAC) hospital level of care was signed into law. Enacting criteria has long been sought by Kindred and other LTAC providers as a way to affirm the important role of LTAC hospitals in the healthcare continuum for the most critically, chronically ill patients and to achieve a measure of predictability and stability for the sector. With Congress affirming the role of LTAC hospital care, the criteria also presents an opportunity for other medically complex patients to benefit from LTAC hospital care at a site-neutral rate similar to that paid to short-term hospitals. The new law establishes a platform that fosters stronger relationships and greater flexibility for managed care and shortterm hospital partners to discharge patients into our transitional care hospitals. Transitional Care Hospitals 15

Rehabilitation Therapy Services Rehab therapies are essential to improve patients functional abilities and independence. The delivery of cost-effective and medically necessary therapies to drive down the overall cost of care by shortening lengths of stay in hospitals or other settings and reducing readmissions to the hospital. Rehabilitation for a Full Recovery Throughout the entire healthcare delivery system including acute and post-acute care rehabilitation services are critical to achieve the goal of improving the well-being and physical abilities of each individual so that they may enjoy the highest quality of life possible. Regardless of care setting, the provision of physical and occupational therapies and speech-language pathology are an essential component in making recovery and wellness possible. In 2013, therapists in Kindred s rehabilitation division, RehabCare, delivered intense, medically necessary therapies to more than 518,500 patients in 1,789 distinct service locations providing improved function and ability. In addition to providing therapy services in the full spectrum of Kindred facilities and care settings, our therapists treated patients and residents across the entire care continuum from hospital to home as a contract rehabilitation partner to unaffiliated hospitals, inpatient rehabilitation hospitals, skilled nursing facilities, assisted living communities and home health agencies nationwide. Clinical Training and Expertise In order to ensure expert care, our rehabilitation teams receive ongoing education and training on clinically-proven best practices, protocols and precautions. Our national presence provides a vast knowledge base and experience level to apply advanced interdisciplinary rehabilitation interventions to bring out the best outcomes for each patient. Special clinical programs have been developed and disseminated related to falls management, cognitive retraining, pain management, positioning and other clinical conditions. Applying innovative approaches to care, including the use of Smart handheld technologies, enables our therapists to improve clinical outcomes and operational results. 16 RehabCare

At Kindred, 22,000 ipads and iphones are now being used by therapists nationwide, resulting in higher quality, lower costs and millions of dollars in savings and productivity gains for Kindred and its customers. RehabCare s Increase (%) in Functional Outcome Measurement Scores from Admission to Discharge 69.72 79.91 79.29 80.48 81.06 81.01 Stroke 77.45 Cardiac 80.0 Wound Brain Dysfunction 68.96 74.68 Neurological Orthopedic 88.44 86.34 Pulmonary Other Spinal Cord Amputation Arthritis Pain Syndrome Injury Source: Kindred Internal SRS Division Data, Using Modified Functional Outcomes Measures (FOMS) Intensive Therapy Reduces Length of Stay 25 20 10 5 0 Stroke Orthopedic Condition Cardiovascular and Pulmonary Condition Less Than 1 Hour of Therapy 1 to 1.5 Hours of Therapy 1.5 or More Hours of Therapy Source: Dianne Jette, et al (2005), Archives of Physical Medicine and Rehabilitation RehabCare 17

We see an increase in both [IRF Quality] measures from 2011 to 2012, about a 3 percent increase in Functional Improvement Measure gain and about a 1 percent increase in rates of discharge to the community. MedPAC Staff, December 6, 2013 18 Inpatient Rehabilitation

Inpatient Rehabilitation Physical rehabilitation provided in an acute care setting facilitates rapid recovery and return home through interdisciplinary care management. Inpatient Rehabilitation Hospitals and Acute Rehabilitation Units Through expert, intense and aggressive interdisciplinary therapy and medical care, Kindred s freestanding Inpatient Rehabilitation Hospitals and RehabCare managed hospital-based Acute Rehabilitation Units (ARUs) all certified as Inpatient Rehabilitation Facilities (IRFs) by CMS provide rapid recovery and improved function for patients. Our Patients Patients are treated for at minimum a total of three hours of therapy five days per week. Treatment delivery and intensity of service is determined as part of the individualized plan of care and will typically be a combination of 30-60 minute therapy sessions provided throughout the day by Physical and Occupational Therapy. Speech Therapy will be included if clinically necessary. Interdisciplinary Care Management Kindred Inpatient Rehabilitation Hospitals and RehabCare managed Acute Rehabilitation Units provide expert interdisciplinary and collaborative rehabilitative and medical care that is tailored to the unique needs of each patient, including 24-hour physician support. The complete team approach with condition-specific clinical programs facilitates improved function and independence. Kindred Freestanding IRFs Performance in Key Quality Measures (%) Kindred/RehabCare Managed ARUs Performance in Key Quality Measures (%) 15 35 5 10 30 5 9.06 26.46 26.29 31.88 10.42 2.94 8.17 9.97 26.58 2.39 2.45 2.39 0 0 0 0 0 0 Rehospitalization FIM Gain FIM Efficiency Rehospitalization FIM Gain FIM Efficiency 75 69.76 72.74 80 75.3 75.17 Kindred Freestanding IRFs RehabCare Managed ARUs National Average Source: Weighted erehabdata National Average Source: Weighted erehabdata 0 0 Discharge to Community Discharge to Community Inpatient Rehabilitation 19

Kindred Nursing and Rehabilitation Centers Kindred s Nursing and Rehabilitation Centers provide intensive clinical and rehabilitative services in a cost-effective setting to make recovery possible and help patients return home. Transitional Care and Short-Term Rehabilitation As the type of patient requiring skilled nursing care and therapy after a hospital stay has evolved over the past several years, we have focused the care delivered within our transitional care centers/units to focus on patients who benefit from aggressive short-term rehabilitation and medical care enabling regained function, independence and their return home. Our goal is to improve patient outcomes, increasing function and ability, while reducing the length of stay in a center. Typically the patients best served in this setting are recuperating from joint surgery, stroke or other debilitative conditions. Alzheimer s and Dementia Care For many individuals with advanced dementia or Alzheimer s disease, a Kindred Nursing and Rehabilitation Center is their home as they are no longer able to safely and securely live independently in the community. We offer safe, compassionate care delivered by specially trained clinicians in an environment that fosters dignity and respect providing peace of mind for their loved ones. Subacute Units Situated within our transitional care hospitals, our subacute units licensed as skilled nursing facilities provide medical care and rehabilitation to the patients whose medical condition improved to a level where they can be treated in a lower intensity, lower acuity setting. Being co-located within the hospital enables care coordination and seamless medical treatment by the same physicians, therapists and care professionals ensuring a safe transition. 20 Nursing and Rehabilitation Centers