KND
#Yes.
Thank you, <UNK>.
We'll share, look, we are very pleased with that announcement.
I think it's a really important strategic moment for our Company and I will reflect investors back.
When we made the announcement to exit the Skilled Nursing Facility in total, a lot of investors and even some analysts on the sell side have been quick to ask and to write.
Well, does that mean your integrated care Continue to Care strategy is not what you think it is anymore.
And what we said was no, not at all.
We just have never had the appropriate and necessary amount of skilled nursing coverage in the 20 or 25 largest MSAs that we wanted to provide skilled nursing center care in our Continue to Care markets and we were faced with a clear assessment of do we double-down on the nursing center business or do we exit entirely and focus on partnerships.
And our partnership with the Genesis is just that.
We think they are one of the finest operators of Skilled Nursing Facility business in the country.
They're going to be very helpful to us with this clinical collaboration in many markets we serve.
As I mentioned in my prepared remarks, we have lots of RehabCare customers who we think we will bring into the network and there's lots of other good regional and national providers that we are in active discussions with, as well.
We have said for a long time that we believe we can run these integrated care Continue to Care markets without actually having to own the nursing center operations and assets and this clinical collaboration with Genesis is really that first example.
Remember, Genesis also no longer has any home health or hospice business and we hope that we can become a preferred provider for them there.
And we think that, as sides continue to be drawn and people keep looking for more collaborative opportunities, that this is going to be an industry-leading measurement towards how we collaborate with each other, so we are very pleased with that.
Look, I think that most of the controllable labor issues in cost side that we had was in the Kindred at Home division and not all of it was controllable.
I mean, there is clearly some wage pressure happening in the home health space.
But I think a large portion of it was ---+ I would put the quarter, if you think about the pressures on a year-over-year basis, I would argue probably somewhere in the $7 million to $10 million range of labor pressures related to productivity that I expect that we will make progress on moving forward in Q1 and beyond.
Maybe not as much in Q1, but certainly in Q2 and beyond as the system issues clear themselves out and we get back to, and the pay practice issues that we've been dealing with, and we get back to a more normalized run rate.
So, I think you can use that number as a fairly good starting point in the Kindred at Home business, so that you can see their ability as they continue to maintain their top line, they are going to get back to a robust bottom-line growth rate as they get some of those labor issues under control.
I think, <UNK>, on the hospital side, it's a little bit more tricky.
I mean, I think that those longer-term nursing center shortage issues are going to sustain themselves for a period of time.
And so on that front, we are really working hard on that business to continue to really try and be as efficient as we can with our above-the-building resources that we have.
And Pete Kalmey, who runs that business, and his team are doing a terrific job trying to take other costs out.
Because I think, as I've said, I think, quite frankly, we will continue to see those labor pressures in that business probably for the next couple of quarters.
Does that help.
I think primarily it's the LTAC issue, <UNK>.
I mean, you really, in Q4 of 2017, as I said in my earlier comments, I think to a question <UNK> asked, you really have your first quarter where you're going to have a market basket increase for the first time in a long time, and where you're going to have a normalized comp on a year-over-year basis.
And with all the work, <UNK>, that we're doing around finding replacement patients, post-intensive care patients in our LTAC business, with what we think we have already accomplished in Q4, as you get back into that seasonably stronger Q4 with a good apples-to-apples comp, with a market basket and with hopefully your home health business now on track in terms of its own labor rates with the IRF business continuing to grow at the pace that it's growing at, I think you can add it all up.
It just lines itself up that you're going to see pretty good momentum in Q4 of this year.
Well, there is the potential for impact in Q4 of 2018.
We have ---+ I'm not going to get into the specifics, <UNK>, about, because we're not going to guide that specifically.
I will tell you, we have included some effect on the second phase of criteria in Q4 of 2018 and so there is some degradation in that business in Q4 of 2018 if that's what you're asking about.
But, as I said, look, we're pretty hopeful that as we move through the next seven quarters, that we get to a point in Q4 of 2018 where we can make a real rational decision on whether or not it makes sense to keep taking those site-neutral patients.
So my answer is there is some diminishment of expectations in Q4 there next year, but we think it's coming off a much smaller base.
Instead of coming off an 11% site-neutral base, it's probably going to come off of a 3% or 4% or 5% site-neutral base.
So, the drop-off is much, much less and that's how we build that into the guidance.
Okay.
Well, we appreciate all of the activity and interest in the Company.
We know it's been a busy quarter and a busy year.
But thank you, everyone, for your interest and we'll look forward to talking to you next quarter.
Thank you all.
