Kidney-dialysis titan DaVita defends patient care, business practices

[okarol]

Kidney-dialysis titan DaVita defends patient care, business practices

By Christopher N. Osher, Jennifer Brown and Michael Booth
The Denver Post

POSTED: 05/07/2011 11:24:05 PM MDT

The relocation to Denver last year of kidney-dialysis titan DaVita was good news to a local economy battered by the recession.
But as the Fortune 500 company's $101 million, 14-story corporate headquarters rises in Lower Downtown, it continues to battle questions about its business practices.
Chief among the accusations, raised in federal investigations and lawsuits, is that DaVita overused a lucrative anemia drug called Epogen in order to receive higher government reimbursements.
The Food and Drug Administration has warned since 2007 that the drug, routinely used to help anemic patients on dialysis, also can increase the risk of death when used at certain levels.
DaVita officials energetically defend their company and say they never put patients at risk.
They say that doctors ultimately decide how much Epogen to use and that the company's protocols on the drug's use are aimed solely at keeping patients healthy. They said a corporate recommendation in December to use less of the drug was tied to evolving science and not to a reduction in government reimbursements that took effect three weeks later.
"DaVita has done, in my view, a spectacular job of improving — in fact, year-after-year improvement in all the clinical outcomes that we monitor," said Dr. Allen Nissenson, the company's chief medical officer.
DaVita executives also point out that investigations are common in the health care industry and that the company has not been prosecuted or had to settle any federal claims. Meanwhile, some of DaVita's competitors, including chief rival Fresenius Medical Care North America, have settled with federal prosecutors.
Still, the investigations into DaVita continue.
In Colorado, court documents show federal investigators subpoenaed records in December from a health care consulting company that works with DaVita. The investigation looks at whether DaVita submitted "false or otherwise improper claims" to Medicare and Medicaid.
According to DaVita, that subpoena is related to an investigation by the Dallas office of the Inspector General for the Department of Health and Human Services, which also is probing DaVita's financial relationships with doctors who refer patients to DaVita clinics.
In addition, the U.S. attorney's office in St. Louis is conducting a probe into Medicare reimbursements, including for the drug Epogen, that went to the company.
Kent Thiry, DaVita's chief executive, said in a February 2010 earnings call with investment fund managers that getting investigated "comes with being a prominent health care service company in America."
Thiry said that while DaVita strives to comply with all rules, "In some cases, playing it totally safe would be the same as unilaterally disarming and exiting the market. And so, this is not to say we predict we're going to go the next 10 years without having to issue a check, that that wouldn't be prudent rather than go through a couple-year battle."
There also are two so-called whistle-blower lawsuits against DaVita — one from a director of a dialysis clinic and the other from an accounts manager for the manufacturer of Epogen — that allege DaVita overused the anemia drug to drive up revenues.
"We believe we can demonstrate DaVita was pushing the envelope and pushing the boundary of what would be good medical practice, and administering Epogen to people who didn't really need it, . . . and they were primarily motivated by profit," said Mike Caddell, a Texas lawyer representing one of the whistle-blowers.
DaVita officials declined to address specifics in the lawsuit but pointed out that whistle-blower lawyers stand to gain large percentages of any potential award.

Imitating a healthy hormone
Most dialysis patients are anemic. The synthetic Epogen corrects anemia by imitating a healthy kidney hormone that boosts red blood cells and, therefore, oxygen in the blood. When their red blood cell count is too low, patients feel wiped out — as someone from sea level would feel suddenly landing on a 14,000-foot peak.
But overcorrecting that by creating too many red cells in effect thickens the blood and can cause fatigue, stroke and heart problems.
Despite clinical trials and an FDA warning about using Epogen to raise the number of red blood cells too high, Medicare continued to financially reward dialysis companies for their Epogen use.
Since 2006, Medicare reimbursed dialysis companies 6 percent more than the companies paid the manufacturer for the drug. Money from the anemia-prevention medicine last year fueled 18 percent of DaVita's revenue, according to its U.S. Securities and Exchange Commission filings.
But that payment system changed in January. Now companies receive a flat rate to care for a patient rather than bill for every treatment or dosage of drugs.
The new payment system severs the link between higher usage of Epogen and larger reimbursement checks from the federal government.
"The new bundling reimbursement policies shift the incentive away from using more drug and toward using less drug," said Michael Yee, an analyst with RBC Capital Markets.
In December — about three weeks before the new Medicare rules took effect — DaVita instituted a new protocol recommending doctors withhold Epogen when the drug boosted patients' blood above 12 grams of hemoglobin per deciliter rather than 14, as was formerly the case.
The FDA has recommended since 2007 that doctors decrease Epogen doses when a patient's hemoglobin level approaches 12 because of clinical trials that showed increased rates of death at levels targeted above 12.
Company officials said they were unable until recently to cut off dosages at level 12 without dropping hemoglobin in some patients to dangerously low levels.
DaVita's Nissenson said the company was attempting to get more of its patients within the 10-12 hemoglobin window "long before there was a whisper of bundling."

Two firms, 60% of market
DaVita is the second-largest dialysis provider behind Fresenius Medical Care North America. The two for-profit companies account for 60 percent of the market.
Denver leaders hailed DaVita's decision in May 2009 to relocate here from El Segundo, Calif. The company says it plans to fill its new headquarters with 1,000 workers.
Thiry bikes with Denver mayoral candidate Chris Romer and sits on a city budget task force. Thiry and Gov. John Hickenlooper appeared together on stage in February for a corporate relocation celebration that had all the fervor of a pep rally, complete with DaVita workers in plumed Three Musketeer hats and plastic swords who responded with boy-girl "Yo, DaVita" shoutouts.
Thiry has donned a Three Musketeer outfit to remind employees of the company motto: "All for one, one for all."
The 55-year-old, who holds a master's degree in business administration from Harvard, is described as a charismatic leader and is widely credited with pulling the company, then known as Total Renal Care, back from the verge of bankruptcy in 1999.
He created a company where he is the mayor of what he calls "DaVita village" and the employees are teammates. The result has been a Wall Street growth machine. Over the past decade, DaVita has amassed 1,612 dialysis centers nationwide. It treats about 125,000 dialysis patients, many of whom have their treatment paid for by the government.
Since 1973, almost anyone who needs dialysis in this country has been able to get it through the federal Medicare program. Americans with kidney failure have guaranteed government insurance regardless of age or income, thanks to an act of Congress that followed harrowing stories of the rationing of care.
The program has grown to a $23 billion annual expense to taxpayers, providing care to about 340,000 patients, many of whom are poor and from disadvantaged communities. Of that expense, about $2 billion has been spent annually on Epogen — the largest Medicare drug expenditure.
Medicare and Medicaid payments make up more than 60 percent of DaVita's revenue, according to the company.
End-stage kidney-disease patients usually stay on dialysis for the rest of their lives or, for a small percentage of patients, until they receive transplants.
Patients with highest levels
DaVita certainly is not the only kidney-care company under scrutiny for its use of Epogen. But DaVita patients historically have had the highest hemoglobin levels — levels controlled by the drug — of any company, according to congressional testimony and the U.S. Renal Data System.
Studies have shown that high hemoglobin levels — particularly those targeted above 12 in pre-dialysis and dialysis patients — can pose an increased risk of heart attack and stroke.
The first drug trial to raise concerns came more than a decade ago. That study, sponsored by Amgen, the manufacturer of Epogen, was halted in 1996 when there were more deaths and heart attacks among patients treated with anemia drugs that pushed hemoglobin levels up to 14.
The study found 30 percent of the patients at the upper range of dosing died, compared with 24 percent of the patients who received Epogen that kept their hemoglobin level at 10.
A clinical trial in 2006 was halted after it found chronic pre-dialysis kidney patients treated with Procrit, an anemia drug similar to Epogen, had more deaths and heart attacks when their hemoglobin levels were raised to 13.5. In a group of 715 patients given the higher dose, 52 died; in a group of 717 given the lower dose, 36 died. Although that study was based on pre-dialysis patients, the FDA warning that followed is for all patients with chronic kidney disease.
That same year, during a congressional hearing to investigate Epogen's use, then-U.S. Rep. Bill Thomas, R-Calif., told Medicare officials: "You seriously need to consider that your payment policy is killing people."
In 2007, the FDA released a "black box" warning — the most serious kind of drug warning — saying hemoglobin levels pushed high by Epogen could lead to heart attacks and stroke. The FDA recommends decreasing the dose of Epogen when a patient's hemoglobin level approaches 12. If that doesn't work, the recommendation is to temporarily stop prescribing Epogen.
Following additional studies that raised further concerns, an FDA-approved 2010 guideline regarding the drug now states patients "may die sooner" when they are "treated with Epogen to a hemoglobin level above 12."
But the FDA's action does not carry the force of law, and DaVita, until December, continued to have a corporate protocol that called for halting doses of the drug only when a patient's hemoglobin level rose above 14. Doses were started again when the patient's level dropped below 13.
DaVita officials said the 2006 studies did not cause "an overnight revolution." And they point out that Medicare policy has permitted Epogen reimbursement payments for patients with hemoglobin levels above 13 as long as the level doesn't stay that high for more than three months.
Government scrutiny of Epogen has been "active, detailed and vigorous," said William Myers, DaVita's vice president of corporate communications. "In turn, our adherence to government guidelines has been strict, meticulous and transparent."
Asked about the high hemoglobin levels of its patients, DaVita countered that it has focused on maintaining a low percentage of patients with hemoglobin levels under 10, and in order to do that, its levels have been at the higher end of the curve. Scientific research has shown allowing a patient's hemoglobin level to slip below 10 is extremely dangerous and even deadly.
Indeed, just 3 percent of DaVita patients in 2003 and 2.8 percent in 2008 had hemoglobin levels below 10, according to the U.S. Renal Data System. But 56.3 percent of DaVita patients had levels 12 and above in 2003 and 38.3 percent had levels 12 and above in 2008.
Other companies had similarly low percentages of patients on the low end of the hemoglobin spectrum and significantly fewer patients on the higher end than DaVita. Fresenius, for example, had 3 percent of patients with hemoglobin levels under 10 in 2008, while 24 percent had levels 12 and above.

Unrelated to payment system
DaVita's leading anemia-management expert, Dr. David Van Wyck, said the Epogen protocol initiated in December is not related to the new bundled-payment system.
Rather, he said, it's a combination of evolving science, the additional Epogen guidelines approved by the FDA in 2010 and new Medicare quality-improvement measures that reward dialysis companies for having more patients' hemoglobin levels within the 10-12 range.
Van Wyck said the latest protocol marked the first time DaVita figured out how to cut off Epogen when patients reach level 12 without causing too many patients to slip below level 10. "It was a huge accomplishment," he said.
Besides, Nissenson said, there was "massive scientific disagreement from 2000 to 2006" about the use of Epogen. And, he said, "within the scientific community still, this is an unresolved debate."
Dennis Cotter, president of the Medical Technology and Practice Patterns Institute, home to some of the country's often-cited kidney-care researchers, said there was no new scientific discovery that would have prompted DaVita's change in protocol in December — just ahead of the new reimbursement policies.
Cotter estimated DaVita's new protocol could cut the company's use of Epogen in half, saving millions of dollars in drug-purchasing costs, now that the government isn't reimbursing the company for each dosage.
DaVita executives discounted Cotter's criticism, saying he is not familiar with the company's internal research, which is used to design protocols.
Another kidney expert said he believes the 2007 FDA warning about the dangers of Epogen at high levels had little effect on the drug's use at for-profit clinics when they should have cut back.
Instead, use remained high in those clinics until the changes in government reimbursement were on the horizon, said Dr. Ajay Singh, an associate professor at Harvard Medical School.
"You could argue that the stimulus for that was the financial stimulus," said Singh, who headed the clinical trial in 2006 that showed anemia drugs might be unsafe for kidney patients at higher doses.
Dr. Melissa Yanover, formerly associated with DaVita and now at a Fresenius clinic, said the medical community, not just for-profit clinics, has pushed for higher hemoglobin at times because many doctors believed research would prove the benefit. Even after studies showed risks at higher hemoglobin levels, doctors have differed in their own target levels and how much to cut back Epogen dosages, Yanover said.
And she said the for-profit system deserves credit for bringing high technology and efficiency to renal care in a way government never could.
Efforts to curb dialysis companies' use of Epogen might not be over.
Medicare is currently reviewing the dosing limits of Epogen and is accepting public comments.
Cotter wants Medicare to adopt stricter per-patient dosage limits in line with FDA guidelines."How can (Medicare) continue to ignore the risks that FDA has already recognized and deemed sufficient to take action?" he asked in a letter last month to Medicare.
The nation's system to pay for dialysis during the past decade was not designed to optimize patient care, the independent Medicare Payment Advisory Commission has reported to Congress. Still, Dr. David Spiegel, a professor and director of the University of Colorado's chronic hemodialysis program, said he does not believe for-profit dialysis companies intentionally harmed anyone for the sake of making money.
"The mission of corporations is really for their bottom line and their stockholder. The mission of a health care company is to do what's in the best interest of the patient," Spiegel said. "When you merge those two worlds, you are potentially asking for and setting up situations of conflicts of interest and maybe misaligned incentives."

Charts and Graphs

Davitas financials
http://www.denverpost.com/portlet/article/html/imageDisplay.jsp?contentItemRelationshipId=3744050

Use of Epogen in Dialysis Patients http://www.denverpost.com/portlet/article/html/imageDisplay.jsp?contentItemRelationshipId=3744063

Davita Mortality rate http://www.denverpost.com/portlet/article/html/imageDisplay.jsp?contentItemRelationshipId=3744069

Jennifer Brown: 303-954-1593 or jenbrown@denverpost.com Christopher N. Osher: 303-954-1747 or cosher@denverpost.com

About DaVita

Kent Thiry became chief executive of the struggling Total Renal Care in 1999 and renamed the company DaVita in 2000.
Key numbers:
•35,000 "teammates"
•$6.5 billion in annual revenue
•1,612 dialysis centers in U.S.
•125,000 patients

Tell us

The Post is interested in your tips. You can reach our investigative reporters at 303-893-TIPS (8477), toll-free at 866-748-TIPS or at TIPS@denverpost.com.


Read more: Kidney-dialysis titan DaVita defends patient care, business practices - The Denver Post http://www.denverpost.com/ci_18017133#ixzz1LkSF58Sy

[Jie]

Anyone who has a loved one dying heart attack at DaVata should sue it. It does not make any sense for the defence that before the neph made decisions for high dosages, and now the DaVata directed the neph for not using the high dosages. Even 10-12 HGB now, it is lower than the recommendation of 11-12. Everything is for making money.

[plugger]

Not the first time DaVita has been in the news here in Colorado:

Rivals wary of dialysis giant DaVita's aggressive business style
By Jennifer Brown
The Denver Post
Posted: 07/14/2009 01:00:00 AM MDT
Updated: 07/14/2009 08:40:38 AM MDT

Joe Corrigan, 87, undergoes dialysis at a Western Nephrology center in Westminster. He has relied on treatments for nearly three years. (Helen H. Richardson, The Denver Post)

News that Fortune 500 company DaVita Dialysis is moving its headquarters to Denver socked its competitors like a punch in the gut.

To its rivals, the kidney-care giant is a bully armed with high-powered attorneys who use lawsuits as tools to intimidate.

DaVita executives counter that they are simply strong competitors — they act as aggressors only when doctors or nurses or other dialysis companies break promises and double-cross them.

Either way, a string of DaVita-filed lawsuits around the country — with two major battles boiling in Denver and Colorado Springs — shed light on the ruthless competition over dialysis patients in an industry that costs Medicare alone more than $8 billion per year.


DaVita's competition in Colorado's two largest cities was almost nonexistent.

The mud began to fly last year when the second-largest group of Denver kidney doctors, called nephrologists, ended their exclusive affiliation with DaVita and partnered with a Massachusetts dialysis company entering the Denver market. Near the same time, the largest nephrology group in Colorado Springs dumped DaVita in favor of Liberty Dialysis, which recently opened two dialysis centers in the city.

DaVita quickly sued doctors in both cities, plus a nurse battling breast cancer who quit her job at a DaVita dialysis center and took one with Liberty.

The hostility between the companies is so intense, it's seeping down to the patients.

"With everything that is going on, you feel like you are becoming sort of a dialysis dollar," said Julie Estes, a 53-year- old Colorado Springs woman who spends three days a week, four hours at a time, hooked to a dialysis machine in order to stay alive.

Deals with doctors

DaVita says it "paid millions" in 1998 to the doctors of Western Nephrology in Denver to retain them as medical directors of six dialysis centers in the metro area for 10 years. The doctors signed non-compete agreements, promising not to join forces with DaVita rivals or steal any of the California-based company's nurses.

Patients are free by law to choose any dialysis center they want. But dialysis companies bank on the fact that snagging the most popular kidney doctors in town to serve as medical directors of their centers will bring in the most patients — and the most dollars.

Every dialysis center is required by federal law to have a medical director to oversee the care of patients and the water purification system used to flush toxins from the blood of people with failing kidneys.

It's a side job, separate from a nephrologist's practice, that some estimate takes only a couple of hours each week. Companies and doctors declined to say what salary comes with the job, but estimates range from $20,000 to $200,000 per year depending on the competitiveness of the market.

After 10 years with DaVita, when they believed the non-compete agreement was about to expire, Western Nephrology doctors began making plans to become medical directors of shiny-new American Renal Associates dialysis centers opening in Denver with a flat-panel TV and heated, massage chair at every dialysis station.

Four of the new centers are within 3 1/2 miles of existing Da Vita centers. The non-compete agreement that Western Nephrology doctors had signed for DaVita prohibited them from having relationships with competitors within a 35-mile radius.

DaVita contends in its lawsuit that it found out about Western Nephrology's "secret campaign" because the dialysis company they were working with applied for Medicare billing numbers for five new centers in the Denver area.

In its counterclaim, American Renal Associates accused DaVita of violating federal antitrust law — the company had controlled at least 80 percent of the Denver market. DaVita lagged in updating its dialysis centers until competition was imminent, according to court records. And the claim accused DaVita of "filing legal actions that are objectively baseless" merely as an "anticompetitive weapon."

DaVita tried to stop the doctors' partnership with American Renal Associates with a court injunction, which was rejected.

"There were numerous reasons we didn't want to continue our relationship with DaVita — one was that we didn't care for the way they cared for patients," said Dr. Michael Anger, one of the Western Nephrology physicians.

The doctors say they wanted to stay on as medical directors of the DaVita centers as well as the new centers opened by American Renal. But DaVita wouldn't allow it.

"If somebody has a monopoly, it's economically very advantageous to them," Anger said. "I think they are still trying to intimidate us."

In its defense, DaVita — the largest dialysis company in the country, with 115,000 patients and 1,500 centers — says it has only an "incredibly small percentage" of doctors with contractual issues.

"Here is the simple truth: These doctors are not living up to a contract they freely signed," said Chris Riopelle, DaVita vice president of corporate development. "We lived up to our end; they didn't live up to theirs."

Suit, countersuit

Colorado Springs kidney doctor Jesse Flaxenburg says his wife and daughters burst into tears the night he was served, at home, with a lawsuit from DaVita.

The physician, who works for Pikes Peak Nephrology, is now mired in an ugly lawsuit and countersuit against DaVita. Ten-year non-compete agreements the doctors had signed with DaVita were expiring this month, and the doctors instead wanted to work with Liberty Dialysis.

"I consider DaVita's tactics to be unethical attempts to intimidate me," said Flaxenburg, who never signed a non-compete agreement with DaVita. "I have no doubt they will end up losing or withdrawing these lawsuits."

In their countersuit, filed in April, Pikes Peak doctors say DaVita's "cost-cutting measures and administrative bureaucracy" were taking precedence over patient care. The doctors say they were concerned about the centers' staff's overuse of the anti-anemia drug Epogen, plus poor wages and working conditions for nurses.

Despite the opening of two Liberty dialysis clinics in Colorado Springs, DaVita said it has retained 90 percent of its patients in that city. DaVita says Pikes Peak nephrologists have tried to coerce patients to quit using DaVita.

"Some patients are being pressured by their doctor to leave a place where they feel safe and loved," Riopelle said.

Estes, who has been on dialysis for eight years, stayed with DaVita even though her doctor's office, Pikes Peak Nephrology, mentioned more than once that Liberty had opened a new clinic nearby.

"I don't see me, at this point, changing clinics because of the new guy in town," she said.

Estes suspects, though, the new competition spurred DaVita to bring in heated chairs and make the clinic a "warmer atmosphere."

Scooping up doctors

The competition for staff also is fierce.

Former DaVita employees said that just before they found out Liberty was coming to town, they were asked to sign agreements promising they would not work for any competitor for at least six months after leaving DaVita. The agreements also spelled out "stay-put bonuses" of $11,000 in 2009 and $9,000 in 2010.

DaVita since has sued Pueblo registered nurse Diane Odell, who quit DaVita in November to work for Liberty.

DaVita also has sued kidney doctors in Reno, Nev.; Salt Lake City; and Pocatello, Idaho, among other places — all for aligning themselves with rival dialysis centers.

When DaVita realized Pikes Peak Nephrology doctors — who have 325 of the 370 patients on dialysis in Colorado Springs — were about to partner with Liberty, DaVita chief executive Kent Thiry desperately tried to keep them.

The company keeps tabs on newly trained nephrologists and tries to scoop them up before the competition. The company has entered agreements with 178 new doctors in the past year and a half alone.

DaVita was nearly bankrupt when Thiry took over in 1999, company executives said.

"He built a great team, and they turned the company around," Riopelle said, adding that employees — called teammates — were allowed to pick the new company name, which means "giver of life" in Italian.

Riopelle said DaVita is focused on patient care and would rather tout its "superior clinical outcomes" than the size of the televisions in its clinics.

He brushed off accusations that the company is moving from El Segundo, Calif., to Denver to give itself a public-relations boost in Colorado.

"We moved our headquarters to Colorado because we believe it is a great place for our business, our teammates and their families to grow," Riopelle said.

Staff researcher Barry Osborne contributed to this report. Jennifer Brown: 303-954-1593 or jenbrown@denverpost.com

http://www.denverpost.com/firstinthepost/ci_12830453

[plugger]

Thiry and Gov. John Hickenlooper appeared together on stage in February for a corporate relocation celebration that had all the fervor of a pep rally, complete with DaVita workers in plumed Three Musketeer hats and plastic swords who responded with boy-girl "Yo, DaVita" shoutouts.
Thiry has donned a Three Musketeer outfit to remind employees of the company motto: "All for one, one for all."

Musketeer?  Shouldn't it be "Mouseketeer"?  M-I-C-K-E-Y M-O-U-S-E!!!   (sorry, couldn't resist -  I'm referring to the old Mickey Mouse club for you younger folk)