DaVita, or more formally known as DaVita HealthCare Partners Inc (DVA), operates kidney dialysis service centers around the country.
CNN’s Situation Room with Wolf Blitzer called into question last night the validity of DaVita’s medical model, raising to light a potential defrauding of the federal government’s Medicare system. Two new whistleblowers are trying to sue DaVita over what they believe to be fraud of up to $800 million dollars – but this isn’t the first time the company has faced such whistleblower initiated lawsuits.
What Is DaVita and What is the Controversy?
While most of their revenue does come from Medicare and Medicaid, this in itself is not the issue at hand; rather, the claim by whistleblowers that the company has been throwing away perfectly good medicine in order to qualify for even more government funding: to a tune of $800 million. The court system has investigated DaVita before, but it has not yet engaged this time around.
Founded in 1999 and headquartered in Denver, DaVita is currently run by CEO Kent Thiry, famous for his company culture of integrity and ethics. The company was ranked #2 on CNN Money’s list of World’s Most Admired Companies in healthcare. DaVita is Italian for “giving life.”
DaVita Dialysis By the Numbers
DaVita has been doing extremely well in recent years. As of September 2012, DaVita owned and operated 1.912 outpatient dialysis centers nationwide, serving 150,000 patients. It has over 41,000 employees.
A major healthcare stock, DaVita (DVA) has been strong in recent quarters, boasting increased income and revenue in Q3 2012. The company saw the following positive performance numbers:
- In the first 3 quarters of 2012, DaVita’s net income went up 15.2% to $380.2 million.
- DaVita’s total net operating revenue rose 12 percent to $1.96 billion.
Who Owns DaVita:
- DaVita’s largest shareholder is Warren Buffett’s Berkshire Hathaway, holding 10.8% of the company as of the most recent filing. Berkshire has also been increasing its position over the past few months.
- Three major hedge funds also hold ownership stakes in DaVita: Lone Pine Capital; Viking Global Investors, and Pennant Capital.
Investor beware: despite recent success and growth, if these whistleblowers gain traction with the media, government, and public much like the investigation last time around – as they are currently seeking to do on CNN – DaVita’s stock could tumble quickly.
Why So Quiet?
As of Thursday morning, the only mainstream news media hits about DaVita are short summaries of the show’s report. So far, CNN aside, the media is giving this the silent treatment – it remains whether to be seen whether the government will pursue these charges.
{ 14 comments… read them below or add one }
There’s much more to the story. See this NYT piece from 2011 concerning the same case: http://nyti.ms/oQpwcS
http://www.5280.com/magazine/2012/09/strangest-show-earth
I am a physician in one of the top hospitals in the US
I use local injectable anesthetic in the operating room
A vial of this medication is never used more than once after which it is discarded even if it is mostly full for fear of contamination of the bottle or the same patient or other patients who may receive the drug.
Why not make smaller vials as DaVita’s competitors have done. Common sense dictates that patients require specified doses of medication based on their body types and ailments. It seems silly to make all vials the same size, or brilliant depending on the profit margins.
Sounds like a good idea.
I will address this to my hospital administrators.
I am a pharmacist who has worked extensively in many hospital settings including a dialysis center. I am also a director so I have the sometimes very hard job of trying to decipher what is right to do medically and at the same time saving money to curb spiraling healthcare costs. There is lots of waste that goes on and lots of ways to give each of these drugs. Complicating the matter is that a drug can be billed for or reimbursed differently. For example, the dialysis drug Procrit (given for low hemoglobin) comes in 1000unit, 2000unit, 3000unit, 10,000unit, and 20,000unit vials. The patients dose is 9000units. You can use four 2000′s and a 1000unit vial, you could use three 3000unit vials, or you could use a 10,000unit vial and just draw out the 9000units needed and toss the rest. The three 3000units probably seems like the best choice to most people but I will provide some reasons why that it might not be the case. The nurse will have to open three glass vials and enter each one with a needle, increasing the time (salary) and the risk of poking yourself(more money). With the 10,000unit you enter once. Having three vials involved in the dose increases your chances of a med error in the case that one is filled wrong or the nurse only uses 2 of the vials instead of all three. Another issue is many times the larger volume or concentration drugs are cheaper than the smaller ones, just like buying in bulk is always cheaper. It could be cheaper to give the 10,000unit vial (for the patient) depending who is billing. Medicare reimbursement and private insurance are all over the place. You would have to check into each patients reimbursement and dispense accordingly which would be impossible. Lastly, which is more wasteful, wasting the 1000units from the 10,000unit vial or using three glass vials to get one dose and the residual drug still in the vial being thrown out as it is impossible to draw out every last bit of the drug just like it is impossible to get all of the ketchup out of a bottle. There may be some dishonesty going on here but it is not as black and white as it may seem. I am guessing that is why the feds never prosecuted the first time. It will be hard to prove in court.
Also,when using 3 3,000U vials you have to use 3 syringes. I was a dialysis nurse for a very long time and over the years infrction control has improved dramatically. 1 syringe for one entry into a vial. The nurse time and cost of supplies are a consideration.
Thank you for the example provided RPH. I agree that are cases where judgement is required. However, in this case according to CNN December 1, 2012, the usage of 3 vials were changed to 1 once Davita was not allowed to bill for waste. Based on this evidence, it appears “from my point of view” that Davita was making decisions (as well as standard work procedures from corporate) based on profits as opposed to lean delivery practices (cost effectiveness). Of course, “my point of view” means nothing. The courts will decide based on the evidence presented as it should be unless Davita pays without admittance of guilt as they have done in Texas.
I have nothing good to say about DaVita- based on personal experience. Their staff is underpaid and overworked and the folks at the top are making the big bucks. They are the only game in my town and we had no other choice. It was a horrible experience from beginning to end- when my husband died. At least he didn’t have to go through that agony any more. I wouldn’t wish them on my worst enemy. I hope they go out of business.
I forgot to add that their staff, in addition to being underpaid and overworked is also inadequately trained.
Agreed, awful experience, inexperienced techs, understaffed with RNs-one per 10 patients, instructed to call 9-1-1 when patients passed out ( due to understaffing of qualified nurses), if a patient’s heart stopped during treatment could not provide CPR and waited for Fire Dept to arrive, lack of sensitivity to patients, patients not always monitored, medical debris on the floors, no privacy if needing to urinate during dialysis run-no curtains, all conversations with Drs, social workers etc heard by entire unit, just to name some things I hated while taking my son to dialysis every other day. It’s not a way to live….just a way not to die immediately. Horrible places!! Hard to wish on even your worst enemy!! I realize this thread focuses on medication issues but had to agree with Westfan because there is so much not okay with the way dialysis is run in general.
I agree with all you have said Zoe. Why does there have to be a profit motive involved? In socialized medicine countries dialysis is run in a much more human way. There was a wonderful revealing article by Pro Publica a few years back- I urge everyone to read it.
Are you serious? In socialized medicine…..in most countries…..the payer decides whether someone should receive dialysis. So if you are too old….sorry, you are out of luck. Unless you have the cash to pay for dialysis, you are going to die. With for profit, a company can afford to lose money on the majority of patients, and make up for it by higher paying insurances. Don’t request socialized medicine unless you truly understand it. Call someone who is 75 years old in England and ask them what will happen to them if they get kidney failure
My Grandfather received dialysis in England until he was 86 years old, when he died of a heart attack. Moreover the Health Service would send a taxi to pick him and one of my aunt’s up from his house at no charge. Quit your propaganda.