Exhibit 99
1
* One minority owned
What We Do
•
Skilled Nursing Facility-Based Rehabilitation Programs
•
1,197 programs – 6.4 million patient visits annually
•
Hospital-Based Rehabilitation Programs– 172 Total Units
•
Acute Rehabilitation Units
•
115 programs –46,000 discharges annually
•
Subacute/Transitional Care Units
•
18 units –134,000 patient days annually
•
Outpatient Rehabilitation Programs
•
39 units –1.1 million visits annually
•
Freestanding Hospitals
•
6 Inpatient Rehabilitation Hospitals*
•
256 Beds –2500 discharges annually
•
3 Long-Term Acute Care Hospitals
•
186 Beds – 1400 discharges annually
•
Other Healthcare Services
•
Phase 2 – consulting services for acute care hospitals
•
Polaris Group - consulting services for long-term care facilities
•
VTA Management Services – therapist staffing for healthcare facilities and schools in
New York
3
Hospital-based
Skilled-based
Free Standing
Other Healthcare Services
Where We Are
Nearly 1,400 locations servicing approximately 24,000 patient visits each day
4
Medicare Reimbursement for
Post-Acute Services
Post-Acute Services
Medicare reimbursement for post-acute services:
•
Totaled $42 billion in 2005, an increase of 68% since 1999
•
Projected $97 billion by 2014
•
Represents 13% of Medicare’s total spending
CMS contains costs by its PPS adjustments and regulations
5
Our Revenues Follow Patient Care
Trends
Trends
In the time period studied by Moran Report, September 2006:
•
Moran facilities declined 18.4%
•
RehabCare facilities decreased
3.5%
3.5%
•
Since Q3/03, RUG assessments
nationally increased 12%
nationally increased 12%
•
Rehab RUG assessments in that period
increased 21%
increased 21%
•
During the same period, the number of
skilled facilities nationally remained
relatively stable
skilled facilities nationally remained
relatively stable
•
The number of rehabilitation assessments
outpaced the overall increase in total
assessments
outpaced the overall increase in total
assessments
6
Hospital-Based
Rehabilitation Programs
(HRS Division)
$43.8M
SNF-Based
Rehabilitation Programs
(Contract Therapy Division)
$103.4M
4Q/06
Total Revenue $182.2 million
Other Healthcare
Services
Services
$11.3M
6%
24%
57%
Freestanding
Hospitals
(IRFs and LTACHs)
$23.7M
13%
Our Revenue Trends
Hospital-Based
Rehabilitation Programs
(HRS Division)
$46.7M
SNF-Based
Rehabilitation Programs
(Contract Therapy Division)
$46.7M
4Q/04
Total Revenue $95.1 million
49%
49%
2%
Other Healthcare Services
$1.7M
7
Skilled Nursing Facility-Based
Rehabilitation
Rehabilitation
•
Largest Medicare post acute reimbursement setting
•
Growing care setting, in part due to 75% Rule
•
Lower operating margins require scale for better economies and
improve profitability
•
Acquisition of Symphony
•
Adds critical mass for selective markets; entry into other
markets
•
Adds significant therapist resources and client
relationships
relationships
•
Provides $10-14 million projected annualized cost savings
and operating efficiencies over 18 months – Q4 2006 exit
run rate of $8.5 million cost savings annualized
8
Hospital-Based Rehabilitation
•
Provides 3-5 year contractual relationships with host hospitals
and health systems with existing market share and flow of
patients
•
Remains highest margin business with cash flows to fund other businesses
•
Expect 3-5% historical growth to return after full implementation
of 75% Rule
9
Freestanding Hospitals
•
Provides anchor operations in continuum markets
•
Continues strategy of working with host hospitals and health
systems with existing market share and flow of patients
•
Establishes ownership position and reduces risk of contract
loss
•
Provides a vehicle for expansion of bed capacity
•
Enhances control over quality and competency in clinical and
medical matters
10
Freestanding Hospitals
Joint Venture Strategy
Joint Venture Strategy
Definitive Agreements – Previously Announced
•
Austin -
•
Phase 1 - 20-bed IRF – open mid-2007
•
Phase 2 - replace 20-bed IRF with 36-bed IRF and
40-bed LTACH – projected open 2009
40-bed LTACH – projected open 2009
•
North Kansas City – 35-bed LTACH – open early 2008
•
St. Louis - 35-bed IRF – open early 2009
Other Development Projects
•
Howard Regional – 26-bed LTACH – open late 2007
•
Peoria – 50-bed LTACH – subject to certificate of need
•
In addition to these 5, there are 6 joint venture projects in various stages of development
11
Current Key Initiatives
Improve margins in all businesses
•
Pricing
•
Productivity
Integration of Symphony and synergy realization
•
Roll out handheld technology and train new personnel
Grow freestanding hospital business
•
Joint ventures and acquisitions
Labor resource management
•
Attract and deploy therapists
•
Expand staffing coordination
•
Grow campus recruiting
•
Reduce contract labor
More fully develop continuum market strategy
•
Better manage scarce resources
•
Focus business development efforts
Client retention
•
Develop closer partnerships using technology and clinical resources
Impact of regulation
•
75% Rule, Part B Therapy Caps, Physician Fee Schedule, 25% Rule for LTACHs, Fiscal Intermediary activism
14
Medicare Reimbursement Initiatives
Impacting Rehabilitation Services
Impacting Rehabilitation Services
•
75% Rule
•
Limits the type and number of rehabilitation patients that can be cared for in an acute hospital setting
•
Part B Therapy Caps
•
Limits the amount of therapy services which can be provided to Part B patients in skilled nursing facilities
•
Physician Fee Schedule
•
Establishes reimbursement for Part B
services, including therapy. Adjusted
annually by CMS and Congress
services, including therapy. Adjusted
annually by CMS and Congress
•
25% Rule for LTACHs
•
Restricts HIH LTACHs from accepting more than 25% of their admissions from host acute care hospital
•
Currently operating at 65% compliance in the 60%
compliance requirement
compliance requirement
•
Goes to 65% and 75% beginning July 2007 and
2008, respectively
2008, respectively
•
Proposed legislation calls for freezing threshold
at 60%
at 60%
•
Exception process extended to Jan 1, 2008
Congressional action required for
changes/extension
Congressional action required for
changes/extension
•
Congress eliminated proposed 5% rate reduction
planned for Jan 1, 2007
planned for Jan 1, 2007
•
Part B revenues represent about 35% of our
skilled nursing revenues
skilled nursing revenues
•
Proposed rule issued on January 25, 2007 by CMS
extends 25% admission restriction to all LTACHs
(including freestanding and grandfathered)
extends 25% admission restriction to all LTACHs
(including freestanding and grandfathered)
•
If adopted in its current form, it may have some
negative operating impact on our New Orleans
LTACH and an impairment charge
negative operating impact on our New Orleans
LTACH and an impairment charge
15
What Sets RehabCare Apart
•
25-year expertise in providing post-acute services
•
Unique continuum of care business model
•
Growth orientation with demonstrated ability to grow revenue organically and through acquisitions
•
Proven ability to adapt to market and regulatory changes
17
Safe Harbor
Forward-looking statements have been provided pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties that may cause our actual results in future periods to differ materially from forecasted results. These risks and uncertainties may include but are not limited to, our ability to consummate acquisitions and other partnering relationships at reasonable valuations; our ability to integrate acquisitions and partnering relationships within the expected timeframes and to achieve the revenue, cost savings and earnings levels from such acquisitions and relationships at or above the levels projected; our ability to comply with the terms of our borrowing agreements; changes in governmental reimbursement rates and other regulations or policies affecting reimbursement for the services provided by us to clients and/or patients; the operational, administrative and financial effect of our compliance with other governmental regulations and applicable licensing and certification requirements; our ability to attract new client relationships or to retain and grow existing client relationships through expansion of our service offerings and the development of alternative product offerings; the future financial results of any unconsolidated affiliates; the adequacy and effectiveness of our operating and administrative systems; our ability to attract and the additional costs of attracting and retaining administrative, operational and professional employees; shortages of qualified therapists and other healthcare personnel; significant increases in health, workers compensation and professional and general liability costs; litigation risks of our past and future business, including our ability to predict the ultimate costs and liabilities or the disruption of our operations; competitive and regulatory effects on pricing and margins; our ability to effectively respond to fluctuations in our census levels and number of patient visits; the proper functioning of our information systems; natural disasters and other unexpected events which could severely damage or interrupt our systems and operations; and general and economic conditions, including efforts by governmental reimbursement programs, insurers, healthcare providers and others to contain healthcare costs.
18
Investor Presentation
Fourth Quarter, 2006