Kindred Healthcare is making bold moves in the behavioral health space, using its national reputation and strong partnerships to drive rapid expansion. With the launch of Kindred Behavioral Health (KBH) just last year, the company has already established itself as a rising force in inpatient behavioral care, and its momentum shows no signs of slowing down.
Building on a Strong Foundation
Kindred Healthcare, headquartered in Louisville, Kentucky, has long been known as one of the largest specialty hospital providers in the nation. With annual revenues of about $3.2 billion, Kindred has a strong track record in transitional care hospitals and inpatient rehabilitation facility joint ventures. Its network spans more than 1,730 locations across 46 states, where it provides contract therapy and inpatient specialty care. After divesting its skilled nursing, home health, hospice, and community care operations a few years ago, the company sharpened its focus on hospital-based specialty services. This shift laid the groundwork for KBH, which leverages Kindred’s expertise in operating joint ventures and managing inpatient facilities.
Why Behavioral Health?
The demand for behavioral health services has been steadily rising in the United States, with shortages of inpatient psychiatric beds plaguing communities across the country. The COVID-19 pandemic further highlighted these gaps, making it clear that many health systems are struggling to meet the growing need for behavioral health treatment. Recognizing this urgent demand, Kindred’s leadership began to explore whether its proven model in specialty care could extend into behavioral health. Rob Marsh, Senior Vice President and Chief Operating Officer of KBH, explained that the idea for this new division grew directly out of conversations with health systems already partnering with Kindred in rehabilitation. When one system asked if Kindred could offer similar solutions in behavioral health, the company recognized an opportunity to expand.
Rapid Growth in a Short Time
Since its founding, KBH has already built a portfolio of about 190 beds and has announced several major partnerships. In June, KBH took over management of Riverside Medical Center’s 64-bed behavioral health unit in Kankakee, Illinois. The following month, it expanded in Texas by acquiring two WellBridge hospitals in the Dallas-Fort Worth area. Shortly thereafter, KBH partnered with Baystate Health to launch a $43 million joint venture in Massachusetts, which will operate a 120-bed behavioral health hospital. These deals illustrate the dual strategy KBH is pursuing: acquiring existing facilities and forming new joint ventures with health systems that want to expand behavioral health capacity.
The Joint Venture Model
Much like its success in rehabilitation care, Kindred is centering its behavioral health strategy on joint venture partnerships. These agreements allow health systems to provide comprehensive inpatient psychiatric care without shouldering the full financial and operational burden. Marsh emphasized that Kindred’s approach is designed to improve outcomes, boost profitability, and strengthen community services. By bringing KBH in as a partner, health systems can ensure their behavioral health units are managed efficiently while patients gain timely access to needed care.
Exploring Redeployment of Existing Facilities
Another avenue for growth is redeploying beds in Kindred’s existing transitional care hospitals. Previously known as long-term acute care hospitals, these facilities may provide opportunities to introduce behavioral health services in markets where demand is high. Although plans in this area were temporarily paused due to the COVID-19 pandemic, Marsh noted that the company intends to revisit the idea once the immediate crisis subsides. This redeployment strategy could allow KBH to expand quickly without the need for entirely new facilities.
Looking Toward Consolidation and Acquisition
While joint ventures remain the top priority, KBH is also considering acquisitions of mid-sized behavioral health providers over the next three to four years. Consolidation is a trend across the healthcare industry, and behavioral health is no exception. By acquiring existing providers, KBH could expand its footprint more rapidly while building on established patient and provider relationships. Marsh acknowledged that discussions with potential acquisition targets are already underway.
A Pipeline of Opportunities
Currently, KBH is working with around 15 health systems across the United States, according to Marsh. Some projects are further along than others, but the overall pipeline is robust, reflecting strong demand for inpatient psychiatric services. Health systems are eager to partner with a company like Kindred, which has a proven record of managing hospital-based specialty care. Marsh expressed confidence that this pipeline will continue to grow as more communities recognize the need for expanded behavioral health services.
Competition and Collaboration
Kindred is not entering this space in isolation. Established behavioral health leaders such as Acadia Healthcare and Universal Health Services (UHS) have long dominated the market. While KBH may compete with these organizations in certain regions, Marsh suggested that collaboration could also be possible. In markets where demand is overwhelming, KBH may find opportunities to partner with major players to meet community needs. For now, though, the focus remains on building out KBH’s own infrastructure and partnerships.
Short-Term and Long-Term Goals
KBH has set ambitious short-term goals, including doubling its bed capacity within the next 12 months. This would represent a rapid acceleration of growth for such a young division. In the longer term, KBH is taking a flexible approach. Rather than committing to a rigid expansion plan, the company intends to grow organically, responding to opportunities as they arise and to the evolving needs of health systems and communities. Marsh emphasized that behavioral health is viewed as a major growth lever for Kindred, and the company is committed to investing in the space for the foreseeable future.
Meeting a Critical Need
The significance of KBH’s expansion cannot be overstated. Communities across the United States are struggling with rising rates of mental illness and substance use disorders, while access to inpatient care remains limited. By leveraging its national reputation, strong partnerships, and proven management expertise, Kindred is well-positioned to help close the gap. Patients in underserved regions stand to benefit from increased access to specialized inpatient behavioral health care, while health systems gain much-needed support in building sustainable programs.
Conclusion
Kindred Behavioral Health is still in its infancy, yet it has already made a considerable impact on the behavioral health landscape. Backed by Kindred Healthcare’s national presence and reputation, KBH is using joint ventures, acquisitions, and redeployment strategies to expand rapidly. With an ambitious goal of doubling bed capacity in the next year and a pipeline of more than a dozen projects in motion, KBH is charting a path to become a leading provider in inpatient psychiatric care. At a time when demand for behavioral health services is at an all-time high, KBH’s growth offers a promising solution for communities across the country.
