Where did big companies like DaVita go wrong?

[RealityCheck]

People have different reasons for thinking America is great.  I think it is great because of checks and balances.  The founders did allow absolute power in a monarch or a branch of government.  They knew people would abuse power if they could.  They designed a system with transparency so it had constant checks and balances.

In dialysis business today there are no checks and balances.  The Networks have no power ro censure units.  State Departments of Health have been ordered to concentrate on nursing homes for the past 8 years.  The major companies keep stats on how often the state visits and knows that losses to fines from inspections are statististically insignfiicant.  Drug companies fund the research and publicize the results with marketing campaigns not peer review in scientific journals.

The problem comes right down to your clinic.  It is run by a manager who may have no experience in medical care or in management and not uncommonly, no experience in either.  DaVita and the other big providers do this to save money and it also reduces any pressure to provide clinically responsible care.  There are no checks and balances on the way the company handles your clinic.   There is no transparency.  Patient advocacy groups are only symbolic.  They have no clout.

Can the managers hire their nephews and aunts?  yes.  Can they discharge patients who are ruining their clnical outcomes by skipping treatments?  Sometimes.  Can they pressure the most experienced, and highest paid staff to leave?  Often do.  Can they scoop up profits for shareholders and pay their managers and nurses so little and slash their health benefits so low that a nurse cannot afford to take her children to the doctor?  Yes.  There is no nursing union.  DaVita has a whole office dedicated to union-busting.

No state oversight, no unions, no checks, no balance,  no transparency.  You are receiving life-sustaining treatment in a shadow world of medicine and U.S. policy.  Reading through these posts, you see the symptoms of this problem.

[PatDowns]

More whistleblowing from insiders would be a good start.  What's your excuse?

[Stoday]

Looks like my clinic has the best of both state controlled health and private sector competition. I'll explain:

The UK National Health Service is the sole provider of services for cronic hemodialysis. There are privte hospitals, but only for acute HD and that's limited.

My hospital subcontracts the running and management of the hemodialysis clinic to a private contractor, currently B Braun. Thus the hospital is the regulator and includes quality controls in the contract. I know these are monitored; patients get an excellent service. I have spoken to patients who normally attend a hospital 25 miles south, who do not subcontract dialysis. Our unit is far better run.

[RealityCheck]

More whistleblowing from insiders would be a good start.  What's your excuse?

I don't have an excuse.  I have a story.   I can't share it here.  It isn't short and it's still going on.  I believe spreading awareness might help someday and that's why I posted.

[okarol]

Greed.

[noahvale]

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[willowtreewren]

Greed.

Agreed!

[RealityCheck]

I agree with you that it isn't up to patients to put a halt to the corruption of the system providing their care.  That would be like saying residents of concentration camps in WW2 should have reformed the German government.

I can tell you that the staff, or teammates, are not close to developing the capacity to protest, reform or expose.

The company is completely driven by MBAs.  Nurses are constantly marginalized, dismissed, minimized, circumvented.  Doctors compete with each other for the lucrative medical director jobs, which eventually pay about two or three thousand dollars an hour per year in urban clinics, where doctors can get $90,000 or more for a few meetings a year.  In terms of technicians and administrative assistant staff, DaVita works hard to hire people from cultures that respect authority.

Nurses may know that DaVita values profits over people, but it doesn't matter because they're voiceless.  And the MBAs may not really know.  They are intoxicated thinking they are working for a company that is making money while serving the planet and human beings selflessly, like papers they wrote in their masters' programs.

A very smart nurse once said in my hearing that the whole system is so corrupt, with the major corporations spending millions on lobbying and campaign gifts to insure their role in profit-reaping, that the system cannot be reformed.  It will have to collapse like the mortgage market.  It was very hard for me to accept that, but now I believe it.

[Bill Peckham]

Where did big companies like DaVita go wrong?


Is there some evidence that they've gone wrong? They operate as a business, with business ethics, they're doing what Medicare expects them to do, is paying them to do. Problems with DaVita are indistinguishable from problems with the US healthcare system generally.

[RealityCheck]

DaVita made a billion dollar profit last year and ran the clinics like Walmarts, not Neiman Marcus, Bill.  That's what's wrong with dialysis providers and healthcare in general.

[Bill Peckham]

DaVita's net income in 2010 was 400 million on 6 billion in sales. One way to look at it is they made about $27 per treatment on 17,992,805 total treatments delivered. Here's a link to their 10k http://quicktake.morningstar.com/stocknet/secdocuments.aspx?symbol=dva

DaVita operates their clinics to meet Medicare's standards, they're profitable because they have economies of scale and they have economies of scale because legislation passed by Congress encourages dialysis providers to seek economies of scale. The provision of dialysis is  working the way Congress wants it to work.

It doesn't have to be this way, but change would have to start with Congress. If Congress wanted to they could capture the majority of economic scale savings by purchasing EPO directly, rather than as they do under today's payment ... today they over pay DaVita and FMC to purchase EPO on their behalf because they have to fairly pay all nonLDO providers (or you could argue, as I do, that they fairly pay DaVita and under pay nonLDOs). If you removed EPO from the bundle then there would be a lot less of a benefit gained from being an LDO. An LDO would get supplies cheaper (needles, blood tubing, saline) but actual dialysis supplies comprise a tiny part of the cost of treatment. Other costs  - labor, bricks and mortar, insurance - do not see the same scale savings, thus if you remove EPO from the bundle you would do a lot to make Medicare payment provider neutral.


I'd also note that while there is legislation prohibiting Medicare from negotiating the prices of Part D drugs there is no such prohibition on Medicare negotiating Part B drugs.

[RealityCheck]

I have the greatest respect for your opinion and advocacy. 

I understand that the system exists because of a synergy between private and public policy and practice.  I just don't think it's as benign as you apparently do.

[Bill Peckham]

Oh I don't think it is benign. I've written a lot about the bad deal we got when we traded a system based on medical ethics for one based on business ethics. However, I think that what we have is what was intended. Medicare payment makes no distinction between DaVita and a nonprofit provider.

[PatDowns]

DaVita's net income in 2010 was 400 million on 6 billion in sales. One way to look at it is they made about $27 per treatment on 17,992,805 total treatments delivered. Here's a link to their 10k http://quicktake.morningstar.com/stocknet/secdocuments.aspx?symbol=dva

DaVita operates their clinics to meet Medicare's standards, they're profitable because they have economies of scale and they have economies of scale because legislation passed by Congress encourages dialysis providers to seek economies of scale. The provision of dialysis is  working the way Congress wants it to work.

It doesn't have to be this way, but change would have to start with Congress. If Congress wanted to they could capture the majority of economic scale savings by purchasing EPO directly, rather than as they do under today's payment ... today they over pay DaVita and FMC to purchase EPO on their behalf because they have to fairly pay all nonLDO providers (or you could argue, as I do, that they fairly pay DaVita and under pay nonLDOs). If you removed EPO from the bundle then there would be a lot less of a benefit gained from being an LDO. An LDO would get supplies cheaper (needles, blood tubing, saline) but actual dialysis supplies comprise a tiny part of the cost of treatment. Other costs  - labor, bricks and mortar, insurance - do not see the same scale savings, thus if you remove EPO from the bundle you would do a lot to make Medicare payment provider neutral.


I'd also note that while there is legislation prohibiting Medicare from negotiating the prices of Part D drugs there is no such prohibition on Medicare negotiating Part B drugs.

So Congress expects state surveyors to turn a blind eye to the quality of care in dialysis units?  Is that why less than 10% of facilites actually are surveyed in a given year and that only a dozen or so facilities have actually been shut down over the last 10 years?   Is it explicit that it is OK to set the bar so low for expectations? 

[Bill Peckham]

DaVita's net income in 2010 was 400 million on 6 billion in sales. One way to look at it is they made about $27 per treatment on 17,992,805 total treatments delivered. Here's a link to their 10k http://quicktake.morningstar.com/stocknet/secdocuments.aspx?symbol=dva

DaVita operates their clinics to meet Medicare's standards, they're profitable because they have economies of scale and they have economies of scale because legislation passed by Congress encourages dialysis providers to seek economies of scale. The provision of dialysis is  working the way Congress wants it to work.

It doesn't have to be this way, but change would have to start with Congress. If Congress wanted to they could capture the majority of economic scale savings by purchasing EPO directly, rather than as they do under today's payment ... today they over pay DaVita and FMC to purchase EPO on their behalf because they have to fairly pay all nonLDO providers (or you could argue, as I do, that they fairly pay DaVita and under pay nonLDOs). If you removed EPO from the bundle then there would be a lot less of a benefit gained from being an LDO. An LDO would get supplies cheaper (needles, blood tubing, saline) but actual dialysis supplies comprise a tiny part of the cost of treatment. Other costs  - labor, bricks and mortar, insurance - do not see the same scale savings, thus if you remove EPO from the bundle you would do a lot to make Medicare payment provider neutral.


I'd also note that while there is legislation prohibiting Medicare from negotiating the prices of Part D drugs there is no such prohibition on Medicare negotiating Part B drugs.

So Congress expects state surveyors to turn a blind eye to the quality of care in dialysis units?  Is that why less than 10% of facilites actually are surveyed in a given year and that only a dozen or so facilities have actually been shut down over the last 10 years?   Is it explicit that it is OK to set the bar so low for expectations?

I think if Congress thought surveys were as important as I think they are Congress would fund Medicare to do the surveying, instead of giving the job to the states as an unfunded mandate. I think Congress thinks that the pathetic job California does when it comes to surveying is a California problem.


Washington State has an effective survey system so I know it can be done.

[PatDowns]

Then this needs to be made a priority.  No?

DaVita's net income in 2010 was 400 million on 6 billion in sales. One way to look at it is they made about $27 per treatment on 17,992,805 total treatments delivered. Here's a link to their 10k http://quicktake.morningstar.com/stocknet/secdocuments.aspx?symbol=dva

DaVita operates their clinics to meet Medicare's standards, they're profitable because they have economies of scale and they have economies of scale because legislation passed by Congress encourages dialysis providers to seek economies of scale. The provision of dialysis is  working the way Congress wants it to work.

It doesn't have to be this way, but change would have to start with Congress. If Congress wanted to they could capture the majority of economic scale savings by purchasing EPO directly, rather than as they do under today's payment ... today they over pay DaVita and FMC to purchase EPO on their behalf because they have to fairly pay all nonLDO providers (or you could argue, as I do, that they fairly pay DaVita and under pay nonLDOs). If you removed EPO from the bundle then there would be a lot less of a benefit gained from being an LDO. An LDO would get supplies cheaper (needles, blood tubing, saline) but actual dialysis supplies comprise a tiny part of the cost of treatment. Other costs  - labor, bricks and mortar, insurance - do not see the same scale savings, thus if you remove EPO from the bundle you would do a lot to make Medicare payment provider neutral.


I'd also note that while there is legislation prohibiting Medicare from negotiating the prices of Part D drugs there is no such prohibition on Medicare negotiating Part B drugs.

So Congress expects state surveyors to turn a blind eye to the quality of care in dialysis units?  Is that why less than 10% of facilites actually are surveyed in a given year and that only a dozen or so facilities have actually been shut down over the last 10 years?   Is it explicit that it is OK to set the bar so low for expectations?

I think if Congress thought surveys were as important as I think they are Congress would fund Medicare to do the surveying, instead of giving the job to the states as an unfunded mandate. I think Congress thinks that the pathetic job California does when it comes to surveying is a California problem.


Washington State has an effective survey system so I know it can be done.

[Bill Peckham]

Then this needs to be made a priority.  No?

I'm not sure how I would advocate for improving the survey system. Basically it's a money issue.


On the Federal level Congress isn't going to give California additional money to do what other states are already doing.


On the state level there is a competition of needs and dialysis unit surveys are a low priority when weighed against all the other programs looking for funds in Sacramento.

[RealityCheck]

Oh I don't think it is benign. I've written a lot about the bad deal we got when we traded a system based on medical ethics for one based on business ethics. However, I think that what we have is what was intended. Medicare payment makes no distinction between DaVita and a nonprofit provider.

I don't think Congress understands what it will create when it passes laws and creates whole cultures of industry like what has grown up around dialysis.  There are many impulses reflected in legislation like the ESRD bills and Medicare D act.  In the case of dialysis, it failed to design a method to insure transparency and accountability for vast outlays of public funds.

What we have is not what patient advocates want, nor fiscal conservatives, nor liberal economists:  a few people getting rich by delivering medical care on a Walmart model.

[Bill Peckham]

Oh I don't think it is benign. I've written a lot about the bad deal we got when we traded a system based on medical ethics for one based on business ethics. However, I think that what we have is what was intended. Medicare payment makes no distinction between DaVita and a nonprofit provider.

I don't think Congress understands what it will create when it passes laws and creates whole cultures of industry like what has grown up around dialysis.  There are many impulses reflected in legislation like the ESRD bills and Medicare D act.  In the case of dialysis, it failed to design a method to insure transparency and accountability for vast outlays of public funds.

What we have is not what patient advocates want, nor fiscal conservatives, nor liberal economists:  a few people getting rich by delivering medical care on a Walmart model.

I can't say what Congress thinks, or what the typical Representative thinks. Medicare's ESRD program is too small to get the attention of most legislators (one once told me that the 20 billion dollar ESRD program was budget dust); the staffers that actually drive the policy compromises are very cynical and I think generally think everyone is trying get on the federal dime (which is probably true). However, the way things have turned out I think it is clear that there is a bias in the structure of the program that has lead to what we've ended up with, "Walmart" dialysis (catering to the lowest common (profitable) denominator?).

One factor is that Congressional staffers hear from the LDOs many times over the year. It's the LDOs (and Amgen) that can hire former staffers. It's the LDOs and Amgen that have many full time employees with the sole job of working on federal legislative strategy. Against their policy positions you have different organizations and individuals taking different positions, some better than others, but basically its amateurs against professionals. I mean really DaVita and Amgen are in their own class, FMC keeps a much lower profile but generally  they have political and regulatory strategies stretching over years, while everyone else is either advocating for legacy boiler plate positions or reacting to what pops up. I think DaVita and Amgen are advantaged by federal legislation because they have spent a lot of money influencing federal legislation.

[Steve-0]

The problem is that most of us are someone's paycheck, not a sick patient.   Our illness buys someone elses luxury.


~Steve

[noahvale]

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