Learning to walk or talk again is hard enough, so Select Medical wants to make selecting a medical rehabilitation facility easier. The company provides inpatient rehabilitation at 111 long-term acute care hospitals (LTCH) and 12 inpatient rehabilitation facilities in 28 states. These centers, usually located in leased space within general hospitals, specialize in treating complex medical conditions such as respiratory failure or spinal cord injury that require long term care. Most patients are admitted as transfers from general hospitals. The firm also operates 954 outpatient rehab clinics across the US. Select Medical also offers contract rehab services at nursing homes and other locations.
Select Medical's specialty hospitals account for 75% of its total revenues and Medicare reimbursements account for more than 60% of its specialty hospital revenues. Patients with respiratory and neuromuscular disorders make up two-thirds of its inpatient population. Patients' averages stay at its hospitals is 26 days while the average stay at their inpatient rehab facilities is 16 days. Its specialty hospitals operate under the names Kessler Institute, Regency Hospital, and Select Specialty Hospital.
It is the largest operator of outpatient rehab clinics in the US and it primarily serves patients with musculoskeletal conditions. Typical services include post-operative physical therapy, speech training, occupational therapy as a result of workers' compensation claims, and athletic training. Private commercial insurers and service contracts account for 90% of its outpatient clinic revenues.
Select Medical's revenues have gradually increased through the years, but in 2011 its revenues jumped 17% to $2.8 billion up from $2.3 billion in 2010. The boost was a direct result of its 2010 acquisition of Regency Hospital Company that included 23 specialty rehabilitation hospitals. That year's net income increased accordingly to almost $113 million, up from $84 million in 2010.
Select Medical has grown its specialty hospital business through a number of acquisitions, including Kessler Rehabilitation, SemperCare, and Regency Hospital Company. Such long-term care facilities receive Medicare reimbursements at higher rates than general hospitals. However, such reimbursements come with tighter strings attached and Select Medical is kept on its toes trying to navigate Medicare regulations and repayment rates.
One regulation on such "hospitals-within-hospitals" has halted development of new centers since 2007, spurring the company to seek its growth through acquisitions of existing centers and joint ventures. To that end, it struck a venture in 2011 with Baylor Health Care. to manage two rehabilitation hospitals and more than two dozen outpatient centers. Health care reform legislation is likely to bring additional changes to the company's strategy.
In contrast, the company's outpatient facilities and contract services have fewer strings attached. To expand its market share it opens new facilities, introduces new programs and services, and stays open to possible acquisitions.
The company was founded by chairman Rocco Ortenzio and his son, CEO Robert Ortenzio, in 1996; they took it public in 2001. It rejoined the private company ranks in 2005 in a buyout led by private equity investment firm Welsh Carson, which took it public again in 2009. Welsh Carson continues to hold about 45% of the company's stock while the Ortenzio family holds more than 7%. – less