KINDRED HEALTHCARE ACQUIRES SPECIALTY HEALTHCARE SERVICES

Louisville, KY - April 1, 2002 – Kindred Healthcare, Inc. (NASDAQ: KIND) today announced it has acquired Specialty Healthcare Services, Inc., a private operator of six long-term acute care hospitals. In the transaction, Kindred purchased all of the stock of Specialty for $45 million. The acquisition was financed through the use of existing cash. Kindred did not assume any long-term debt in the transaction.

Specialty operates three, free-standing long-term acute care hospitals in California (248 beds) and a long-term acute care hospital within a hospital in Cleveland, Ohio (75 beds), Philadelphia, Pennsylvania (43 beds) and Charleston, South Carolina (59 beds). Specialty also has entered into another hospital within a hospital arrangement in Dallas, Texas, which is scheduled to open in the second half of 2003. Specialty generated revenues of $76 million in 2001.

"This acquisition represents an exciting growth opportunity for our Company," commented Edward L. Kuntz, Chairman and Chief Executive Officer of Kindred. "Expanding our capacity by over 8 percent further strengthens our position as a leading provider of long-term acute care hospital services. This acquisition improves our position in existing markets and introduces our services to new markets in Ohio and South Carolina." Mr. Kuntz also stated that Kindred expects that the transaction will be slightly accretive to earnings in 2002.